The Coalition has retained and strengthened its position as the government of the day.
A clear majority and mandate to move forward with policies that make sense. In fact, the key point of the election is that common sense prevailed. I did forecast the Coalition to win and remained resolute in this view throughout. The opinion polls always had a large “undecided” component, and polls in any case are always where people register their protest vote against the government. Yet move forward to vote for that government on election day. This is a common pattern which can be seen around the world. I wrote at the time, that when Shorten announced his extreme climate change initiatives, he shot himself in the foot. Then, in quick succession, the government recorded a budget surplus, proving its credentials to govern responsibly.
So that was the election. What now?
As also forecast, asset markets, visibly so in the stock market already, and also happening, I would suggest, even in this first week after the election will be renewed, perhaps even aggressive, action in the property market. There were even loans for development organised, that were on the proviso of a Coalition victory. The building industry will advance, and so too will property prices.
Let there be no mistake here, for property most definitely, but also for the economy at large, there has been a build up of strong demand, held back in fear of a Labor government, over some 6-12 months, that will now be unleashed into the real world of actual activity.
This force cannot be underestimated.
Imagine 6-12 months of natural demand in all areas of the economy, but none more so than in the property sector, that has been artificially withheld. That will now, most likely in a rush, be unleashed on a largely un-suspecting market place. Very few commentators and investors recognise this process at all. Let alone how massive this could well prove to be.
Given the extreme nature of the ALP’s policies on a variety of fronts, the economy was almost brought to a standstill by the caution exhibited by businesses and investors. The recent slow-down some economists are speaking of today, is purely a function of this apprehension. That apprehension removed, we can expect some heady days ahead.
Economic growth will quickly re-accelerate to above 2%, and perhaps 3% by year end. Businesses will be expanding again, which means pay rises and greater employment. All of this will support fresh property market interest in an overflow on top of all that pent up, dammed demand, from before the election.
The extent of this re-acceleration across the board will keep the Reserve Bank of Australia on hold. Which is a good thing. As a rate cut now would only suggest to people that there was something to be concerned about. Rates are low enough to support both strong economic growth and again firming property investment. The RBA is likely to remain on hold for another two years. Certainly so in the short term as it monitors the post election economic environment.
Overall, watch for property prices in general to begin to accelerate once again, and it will only be the quick thinkers who can keep up. Even Sydney and Melbourne may well turn the corner on this fresh enthusiasm in the economy that will only become more and more self evident as time goes on.
The areas of the Australia property market that have remained strong all through this intense period of political and policy uncertainty, such as South East Queensland, are set to boom further. Yes, the great rate of growth for the special case that is South East Queensland is set to strengthen even further.
Property … this should prove one of the best times ever to invest.
Clifford Bennett - Chief Economist
Tedder Avneue, Main Beach Qld 4217
[email protected] www.cliffordbennett.com.au
Disclaimer: Clifford Bennett makes every attempt to ensure that the information contained in this document is accurate and up to date. Clifford Bennett disclaim liability for any direct, indirect, accidental or consequential damages arising from the transfer and use of this information in this document and its attachments.
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Posted By Clifford Bennett on Wednesday 29th May 2019 @ 16:07:35
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