What is the year 2011 going to offer us in property investing in Australia?
This is a $M question today following the dramatic events of January throughout the country.
Not only have people’s lives been turned upside down, but the farming and some of the commercial industry has taken a huge hit as well. Growth in inflation has been temporarily slowed but given a few months of reconstruction, revamping and regrowing the future should settle down as normal.
In saying that, what is normal? I guess it is the usual up and down of the investment cycle which is affected by internal and overseas events. In some ways much of this is out of our control and as events worldwide affect the various markets.
A negative view of inflation may slow the property market temporarily and it may even go down a little in some places. But what is ahead for later in the year. As Australia recovers from the events inflation will most likely start climbing again and if it does this is a good thing for the property market.
Inflationary times are good for the property market because usually property prices climb as inflation improves and the economy shows strong growth.
The Australian economy has been strong leading into 2011 and the disasters that we have experienced will put a strong demand on labour, creating greater pressure on wages, which will most likely rise before food production is back into full swing.
Short term, home owners and property investors who have not had that buffer will experience a tough time as commodity prices increase in the short term.
Next post we will look at property investing following such a national disaster.