Sydney Economic Forum May 2016
Hans Kunnen is the Chief Economist at StGeorge Bank. He was the speaker at the Loan Market/Ray White Economic Forum recently. Martin attended with his colleagues from Ray White in Windsor and Nth Richmond.
Some of Hans key thoughts were;
Rates outlook. Historical lows. Maybe one more 0.25% drop this year (Aug or Sep) on variable loans but fixed rates have probably bottomed. Fixed rates may increase slightly later in the year, and an increase in US interest rates is the likely trigger).
There’s been a drop of 29% of the Australian Dollar compared to US dollar in the past 3 years – this makes Australia cheaper for foreign buyers. It's also a better economy to invest in than US, Japan and Europe who all have interest rates lower than 0.5% (so their expected growth is very low). This results in strong foreign investment in Australia.
NSW population is growing by approximately 100,000 per year and there is still a shortfall in housing in NSW. There’s also significant infrastructure projects happening here in roads, airports, trainlines etc - much more than other states.
We have significant national debt but it's level isn’t high compared to other countries doesn't concern Hans - Governments keep revising their estimates so don't expect to see us returning to surplus in the forseeable future.
Sydney Auction clearance rates are still very high - over 70%
Sydney property vacancy rates very low - helps demand for property.
Sydney becoming less affordable - it's gone from 6 years wages (1999) to 10 years wages (2015) to buy the average home
The forum gave us great information to share with our clients.