mrd

The Australian Bureau of Statistics (ABS) recently released its population projections which highlight strong population growth between now and 2056. This week RP Data looks at these statistics and highlights some key findings from this information including: growth by state and capital city and the implications of such strong growth…..

By 2056, Queensland will be the second most populous state and will house one quarter of all Australian residents compared to 24% of all residents which are projected to live in Victoria. Queensland is projected to overtake Victoria as the second most populous state in 2050. Western Australia’s portion of the Australian population is also projected to increase with the states population growing from 10% of the total Australian population during 2007 to 12% of the total population during 2056.

Essentially, this increase in population throughout all areas directly equates to demand for new housing. Based on a total population increase of almost 10.5 million persons between 2007 and 2056 a significant number of new dwellings will need to be delivered to cater to this strong demand.

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If the consequences of the current financial challenges faced by the United States right now could be contained to Wall Street then there would be no debate in Congress; because there would be no bail out on the table.

Unfortunately, if allowed to run the full course, this catastrophe on the Wall Street financial markets would flow through and effect all Americans in both a seriously and significantly way.

It would not stop at the borders of the United States, but would flow around the world affecting us all.

Therefore to simply say “why should we bail out the fat cats” and oppose the bailout, demonstrates a lack of clear understanding.

While Wall St has caused this problem, it is the systemic failure of the American government over various administrations that is at the root of this problem.

They failed to:

• Reign in those excesses
• Address the corruption
• Regulating the markets
• Prevent the free market concept being subjected to extremism

The Government did not directly cause the problem, but indirectly they are guilty of contributing to it. Their failure to build the secure railway track has resulted in this runaway train wreck.

Therefore, in my opinion, the United States Government does have a moral obligation to contain the damage, rebuild the track and protect the average citizen from fallout that they probably cannot imagine right now may befall them.

The free market has delivered a problem under a regulative environment that was doomed to failure. Therefore, the Government now has an obligation to fix that regulatory environment to ensure this never happens again.

Unfortunately, like it or not, the only way confidence and strength will come back into the economy is via the free market; and that free market is currently crippled. Given the U.S. Government has been a part of the problem, they must be a part of the solution; as fair or as unfair as that may seem to the average person.

Happy Investing,

Nick Lockhart

RP Data – Rismark Property Value Index Release
Released 01 October 2008

The national end of month property indices report released today by RP Data & Rismark International confirms that the supply and demand imbalance currently being experienced in the Australian property market has placed a floor under housing prices, resulting in minimal value falls.

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The so called economic guru’s are very quick with their opinions and commentary on the state of economic affairs; but remember they are only expressing their opinions. While I don’t profess to offer financial advice, or to have the answers to “life, the universe & everything”, I too have opinions.

In the lead up to the end of the 06/07 tax year, when “the experts” were promoting the virtues of investing into the Howard/Costello “tax effective Superannuation offer”, I didn’t believe them. Today I hear economic guru’s peddling the fear that our property market will follow the US lead and fall by up to 20%. Guess what, I don’t believe them!

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With the collapse of Lehman Brothers and the bargain basement sale of Merrill Lynch in the US, many economic commentators are predicting a second official rate cut next month in an attempt by the RBA to ease domestic financial conditions. Highlighting this renewed confidence, trades on the Sydney Futures Exchange indicate a 100% likelihood that rates will fall by 25 basis points on October 8th.

In all likelihood we will see higher levels of confidence return to the property market on the back of rate falls and demonstrated domestic stability. The most recent consumer sentiment figures released by Westpac and the Melbourne Institute have risen considerably during August and September, providing further evidence that market conditions are likely to improve.

With fewer buyers in the market, ABS statistics are highlighting a reluctance by developers to initiate the building of new housing projects. This may be good news for sellers, as the lack of new stock helps to underpin existing market listings with a floor price. Investors should also benefit as population growth and a general housing shortage will likely drive up rents in coming years.

Dwelling commencement figures recently released by the Australian Bureau of Statistics (ABS) show dwellings commencements have declined for the second quarter running. Construction on just 38,348 homes commenced in the three months to June, a seasonally-adjusted drop of 3.7% on the March quarter.

Source: My RPData

I regularly teach on:

• The right financial structure
• Solid research that considers future demographics etc
• Having ALL necessary information and understanding to ensure any investment decision is made “fully informed”
• And so on

I don’t usually say so, but I believe financial success will elude the ‘wrong people’… in the long term! With that statement as my backdrop please allow me to share three helpful thoughts with you.

1. Honesty in Business

Like me do you ever become irritated by the way you are treated by salespeople? It annoys me when a question I may ask of a sales representative is interpreted as giving him a licence to sell me something. I also find it disturbing when the sales representative omits vital information that may influence any purchase decision. Let me give you a recent personal example…

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Roy Morgan Consumer Confidence Rating has stopped falling – up 1.3 points to 92.0. Now 48% of Australians expect bad times for the economy in the next year
Article No. 776 – Latest Roy Morgan Consumer Confidence Rating: July 11, 2008

So, what are you expecting? I ask this because you will get out of life what you expect… not what you deserve!

Life and the economy move in cycles. Many people fall victim to these cycles. To avoid “victim status” and ensure an onwards & upwards journey (good times & bad) you must maintain a right attitude and right focus.

Katrina and I are very positive about the future. In recent months we engaged the services of Business Consultants who are assisting us to restructure our business to facilitate our growth plans moving forward.

My ‘mrd journey’ has taught me much to date and there are a few interesting parallels that I would like consider between building a traditional business and building an investment property business.

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A real life example of how investing has worked for us and can for you too…

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OWNING a place of your own has been an entrenched part of Australian culture since Federation but the “Australian dream” now seems unattainable for many. The latest in a long line of depressing statistics about the difficulties of buying a home are figures from the Real Estate Institute of Australia showing that in major cities such as Melbourne, a household on average wages cannot afford a median-priced house.

Explanations of the situation often assume that we have a relatively short-term problem. They boil down to economic factors: too much demand and too little supply. Some people suggest that housing markets will ultimately self-correct through declining house prices and, however unpalatable this may be to those who already own a house, this will help people wanting to buy and deal with affordability problems.

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BRISBANE small businesses are the country’s most self-assured, with confidence soaring in the first quarter of the new financial year, according to latest Sensis Business Index.

Business confidence among Brisbane small and medium enterprises now sits at 76 per cent, 14 per cent above the national metropolitan average. The survey also found profitability for Queensland SMEs sits well above the national average, having jumped 20 per cent in the past year.

“In fact, Queensland small businesses have the most bullish sales outlook for the next three months of all states and territories in Australia.”

Source: Sunday Mail