I Don't Get It..

[Marti]

There today on TV was our Prime Minister, Julia Gillard saying her government’s proposed carbon tax is ok, as the economy can afford it. She referred to planned mineral and resource infrastructure investments totalling some $430 billion to support our growing trade with China and the Pacific region. The same rhetoric is also coming from the Reserve Bank stating that our economy is strong.

So why does it feel we are close to a recession. Although we have close to full employment, a shortage of skilled labour and robust wages, consumers just don’t wish to spend their now high savings. As a result house prices are falling as the worry has been interest rates are on the rise making repayments harder for families to meet. But for the first time, economists are forecasting a substantial cut in interest rates during the next 12 months. Dr Bill Evans from Westpac last Friday anticipates a 1 per cent base rate cut in 12 months. But in comparison we don’t trade that much with America, Italy, Greece Spain and the UK. Are these counties with their weak markets likely to affect our economy in the next few months?

So is this the time to be considering a rental investment property purchase or battening down the hatches. Any where would you invest? The mining resource towns and states of WA and Queensland or closer to home so you can keep an eye on your investment, just in case of trouble.

 

[Aaron_C]

There's no booming economy. It's all a farce to keep the masses happy

 

[Belbo]

Marti, you seem to be asking something like - If we are indeed on the brink of a recession, where is the best place to invest in residential property in Australia?

My short answer would be - If you can't foresee good capital gains anywhere in Oz on account of impending recession, then invest where you can get good yeilds.

As to whether a modest carbon tax reducing growth by a mere 0.1% will tip us into recession, I strongly doubt it.

As to whether a Greek default or the US deficit deadlock could tip the world economy into recession, I suspect there's a greater possibility of that.

For magnificent yields, yes, the mining towns are ideal, however rental demand in those towns (and hence those high yeilds) might also collapse in a second, substantially more serious, GFC. That would require China's demand for our commodity exports to fall significantly though, and while not impossible by any means, it seems to me quite unlikely.

A safer strategy might be to look for solid yeilds in quality regional markets where there is a broader diversity of industry, and there are many of those right across the country.

If you really think everything's headed for hell in handbasket though, perhaps just buy gold and a gun and retreat into the hills.

 

[charlieandkath]

Gladstone Qld. Look at some other recent threads on Gladstone to get a feel.

 

[mattnz]

But in comparison we don’t trade that much with America, Italy, Greece Spain and the UK. Are these counties with their weak markets likely to affect our economy in the next few months?

The thing we have in common with these countries isn't trade related, but the massive amounts of debt that needs to be funded in the international markets.

Most of Australia's housing bubble is funded by the same debt markets that are also currently holding up the economies of America, Italy, Greece and Spain. If they default, watch Australia's cost of funds go through the roof, if the banks can get funding internationally at all.

 

[Belbo]

The thing we have in common with these countries isn't trade related, but the massive amounts of debt that needs to be funded in the international markets.

Most of Australia's housing bubble is funded by the same debt markets that are also currently holding up the economies of America, Italy, Greece and Spain. If they default, watch Australia's cost of funds go through the roof, if the banks can get funding internationally at all.

If it's a 'bubble', why are you investing in Gladstone?

 

[mattnz]

If it's a 'bubble', why are you investing in Gladstone?

I am selling up in Melbourne and am very bearish on 99% of Australia's property market.

Gladstone has its own economic influences which will allow it to grow while the rest of Australia struggles. In a town of 40,000 people, $40+ billion is being invested in the next 3-4 years, equating to $1 million per man woman and child. These projects already have contracts for the next 20 years worth 10s of billions and will go ahead regardless of what happens in the rest of the economy. It is the only location in Australia I have confidence in for the next 3 years for significant growth.

On my Gladstone development project, at current prices I would make at least $300k and if they continue to rise, I will make much more.

I hope this clarifies.

 

[Belbo]

I am selling up in Melbourne and am very bearish on 99% of Australia's property market.

Gladstone has its own economic influences which will allow it to grow while the rest of Australia struggles. In a town of 40,000 people, $40+ billion is being invested in the next 3-4 years, equating to $1 million per man woman and child. These projects already have contracts for the next 20 years worth 10s of billions and will go ahead regardless of what happens in the rest of the economy. It is the only location in Australia I have confidence in for the next 3 years for significant growth.

On my Gladstone development project, at current prices I would make at least $300k and if they continue to rise, I will make much more.

I hope this clarifies.

Very much so. Thanks for the explanation.

 

[BayView]

So why does it feel we are close to a recession. Although we have close to full employment, a shortage of skilled labour and robust wages, consumers just don’t wish to spend their now high savings.

The economy is not strong, employment is not full, and consumers don't have high savings.

What we have is a dead retail climate, we have less full-time employment and more casual employment so employers can chuck them out when things go pear-shaped (and the Gubbmint includes the casuals as real employment), and conumers aren't saving - they are still heavily in debt, but are not adding to it.

 

[Samantha]

Where is a good place to invest?

Wundowie WA -40 mins out of Midland and 30 mins to Northam which has just been named a Supertown. When I saw MacDonald go up in Northam I invested in Wundowie. Wundowie is a hamlet surrounded by state forest in the hills. It is 4km off the highway.


Midland has a university campus going in. The Supertown status has been given to 8(?) regional towns in WA and they will be injected with $M's for health, housing, education.

The beauty of the place it has split zonings and triplex potential if you are hooked up to deep sewerage. The town has deep sewerage. Rentals are readily sought after due to workers from the nearby abbatoir.

The Shire will tell you they do not support development but they do not decide the WAPC do. The Northam Shire website has the TPS that shows the development potential.

If you want to know anything about the place PM me.