Andrew Bell’s Market Wrap: Some Surprising Economic News

Issue 16 |  August 1st | Some Surprising Economic News

Hi, Andrew Bell here and I have some really interesting news to share with you this week.

Consumer confidence is a key component of the real estate market. When confidence is up there is significantly more activity, which is ultimately reflected in prices paid. For four decades Australia has run a current account deficit and it has relied on capital inflows from abroad to fund its standard of living, but Exante Data – a New York based macro-economic firm – has predicted Australia will print its first current account surplus during the coming quarter, and the first since 1975. It has been driven by a surge in commodity prices, however the analysis shows a more structural trend that is developing within the Australian economy that suggests surpluses may be maintained for years to come. The report says Australia is on the verge of a profound moment that will compel analysts, investors and policymakers to rethink their view on Australia. We have been seen as a very volatile country in the past but the report is suggesting that is changing, and in fact, it suggests Australia is standing out globally as one of the few countries with improvement in current accounts whilst many other countries are seeing their current account heading downward. It is really putting Australia in a very strong position on the international stage.

To add to that, the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity into the future, has shown a strong turnaround in the month to June driven by sharemarket gains, better than expected dwelling approval numbers and higher commodity prices. The Index, which measures likely growth over the next three to nine months compared with the trend growth, has risen.

Whilst this should boost consumer confidence, one of the most obvious signs of a very healthy economy is unemployment, which seems to be stuck around the 5.2 per cent level. This is why we are still likely to see one further interest rate drop of a quarter per cent, but that may well be the last we will see.

One other piece of interesting information that leads to consumer confidence is that the average household wealth in Australia has passed the $1 million mark for the first time ever, up more than 37 per cent compared with a decade ago thanks to property prices and surging superannuation balances. It is not just the rich who are driving up the average according to the latest Survey of Income and Wealth by the Australian Bureau of Statistics. Despite common belief, the income and wealth inequality has remained relatively stable since 2013/14 and the distribution of income between rich and poor actually improved marginally in the past decade.

Rising property values are the main contributors to the increase, which shows how significant property is to the wealth of Australians and should be a sign to everyone that they need to make sure they have their share of real estate in their family assets. The average household superannuation balance has almost doubled from $112,500 in 2005/06 to $213,700 in 2017/18.

Some really good and positive stories that don’t always get the attention of the media but do have underlying support to the future of Australia, certainly in the medium term.

It is no surprise we are seeing activity in the real estate market continuing with its solid performance post the election, and whilst we are not seeing any significant surge in prices, it is just a wonderful market in which buyers and sellers can both proceed with confidence and in which we can help Australians into their first home or their new home, or indeed their investment property.

Do not forget to book for this year’s Ray White Surfers Paradise Muscular Dystrophy Ball. We have some exciting auction items, including a Return Trip to Melbourne on a private jet, with accommodation, helicopter transfers, and lots of other exciting pieces to that package. It will be a great night and we would love to have you there with us.

For more information visit the website or contact Selena Carson (s.carson@rwsp.net or 0410 650 185)

That is all for this week. I look forward to being with you in two weeks time.

Kind regards,

Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group

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