Australia Has Truly Coped With The Global Financial Crisis
There is little doubt that Australia needs more new dwellings. This is quite in the fitness of things, considering the population growth, prevailing low interest rates and the beautiful and timely lessons that we have learnt from the GFC. Larry Schlesinger for the Property Observer ‘observes’ the trend.
Australia is one of the very few countries which did not motor headlong into the GFC. Instead, it used the economic meltdown as a “lesson teaching adversary” and exercised timely damage-control lessons.
Australia came out wiser from the GFC
It is well known how the lessons helped us:
1. Instead of borrowing in haste and in huge lumps, we reduced our appetite for loans.
2. We started paying debts fast, a tendency that has remained with us till today despite the low interest rates.
Often enough now, we get an opportunity to reduce our monthly mortgage (the cash rate cuts allows the liberty) but we, the Australian citizenry, which has come out wiser from the GFC, keep paying similar mortgage to push off the debt away as quickly as possible.
3. We have also begun to believe in the sermon “Save for rainy days”. Triggered by any global calamity (much like the sub-prime/housing crisis in the US), we may have another recession any time. Who knows? So we look to save as much as we can.
These traits have helped us in:
- Keeping ourselves unextended financially
- Remaining well-off in terms of the borrowing capacity
- Being capable to pay upfront costs of homes with our savings.
Conclusion- We are right up there to meet the housing demand.
Low interest rate sets up the perfect buying platform
Low interest rate is another big reason why the housing demand is expected to pick. After all, it gives us the opportunity to pay lesser mortgage and secure our homes for lesser money (calculated over the total payable mortgage).
Population growth will fuel housing demand
Schlesinger also sheds light on the fact that population has picked up really well in recent times and is continuing to do so. This would further necessitate construction of residences to meet the number of people being added each year.
Mr. Stevens is right, we are a lucky country indeed
Schlesinger turns his focus on the “we are a lucky country” speech by the RBA Governor Glenn Stevens and says that we have many reasons to cheer. Australia has kept its inflation in real check and has put a tab on the unemployment rate too.
Timed damage-control during the GFC has given us the momentum to come up as quickly as we have. In short, we are placed ahead of many of the developed and developing countries.
You can read the original article here.
Everything points towards a greater number of dwellings
I loved this piece by Schlesinger.
Population growth, in my opinion, will continue to be resurgent. It will be aided by natural increase (births-deaths) as well as overseas migration in large numbers.
Yes, the altered labour quota, courtesy the Federal Budget, may decelerate the movement of overseas labourers to an extent.
Australia is quite geared up to meet the housing demand and reads it as a boon, which is the right perception to behold.
The government is also doing its bit by proposing new grant schemes made relevant to only new dwellings.
Citizens have more money in their kitty than they are given to believe and low cash rate is just the kind of succour to become investors, owner-occupiers or FHBs.
We are surely expecting to get a crazy number of houses up very soon.
Where would you rate Australia in terms of coping with the Global Financial Crisis?