There is no doubt, last year was pretty bad. No amount of spin can make us feel anything but contempt for the year that was 2020. However, with the new year in full swing, I am bullish about what the future holds for the Australian economy and property markets, and from what I predict, it’s going to stay that way for the next decade.

So in the interests of moving forward, here are my top 10 reasons why you should share my optimism:

Australia’s response to Covid: The politics of Covid aside, there is no doubt that we have done well in addressing and containing the spread of the disease when compared to most other countries. We have very few active cases, and very few daily infections so this is going to make Australia and even more attractive proposition to potential immigrants. If Australia was not already the best country in the world to immigrate to, our response to Covid will certainly add to our desirability.
Immigration: Australia relies on immigration to help our continued growth as a nation. We are not having enough babies to continue this growth “organically”. As we can control our borders (see below), we will look to immigration to help build Australia’s future. I have heard many times that immigrants are bad for Australia because they take jobs away from “ordinary Australians”. This is utter rubbish, and furthermore, I argue that every immigrant to Australia creates many jobs. Which landlords rent them a home when they first arrive, who sells them a car, who builds them a home for their family, who sells them their food, who teaches their children? Immigration builds the economy and creates jobs and undoubtedly creates the need for further housing.
Australia can control our borders: While we may not have done so earlier in the pandemic, we physically can control out borders effectively. This should mean that our rate of Covid cases from outside Australia will be limited going forward provided we are vigilant with everyone entering Australia.
Vaccines: These are now just around the corner and will help control the further spread of Covid hopefully eliminating further need for mass lockdowns.
Low interest rates: I’m sure you all know this, but interest rates are at an all-time low which means borrowing money is a whole lot cheaper. When money is cheap, people tend to spend, and spending money is what gets the economy growing.
Accommodating lending policy: The government has instructed the banks of Australia to relax lending restrictions to Australians and Australian businesses. When banks lend, people borrow and then spend. When more people are in the market to buy property because they have more money to spend, property prices rise due to increased demand.
Stimulus to the economy: Any government will likely do everything in its power to continue to stimulate the economy. Continued economic growth is always a key pillar of any election pitch so all political parties will want to be able to say they grew the economy, and with a federal election due by early next year (and some political pundits expecting it will be called this year), expect continued Government investment in economic growth drivers.
Australian’s hold the vast majority of their personal wealth in residential property: The total value of Australian Residential Property is $6.6 trillion. Our next biggest asset class is Superannuation worth $2.9 trillion followed by the Stock Market with $1.6 trillion. It’s in everyone’s individual interests (and therefore any government’s interest) to make sure property does not significantly decrease in value. This ensures political decisions will always help keep our property market buoyant and growing. (Sources: RP Data, illion Data, Association of Super Funds of Australia).
Debt to asset ratio in Australian property: You may have read stories about how the average household is in more debt than ever before. Property is more expensive now than it has ever been so this makes perfect sense to me. What is rarely reported is how much debt Australian’s hold versus the value of property. As stated above the total value of Australian residential property is $6.6 trillion dollars but the total debt against this property is just $2.1 trillion dollars (or less than 30% debt). As a nation we have a low debt to property asset ratio. (Source: illion Data)
As a population we seem to be able to adjust: This point does not apply exclusively to Australia, but we have adapted reasonably well to what 2020 threw at us. We are still a politically stable, safe country and the average citizen still lives very well when we compare ourselves to most other countries. It is in all our interests to continue to adapt to keep alive our high quality of life.

There you have it, 10 reasons to smile and look forward to the future. Remember after every storm, there is a rainbow; if you look, you will find it, but if you are smart, you will create it.

Michael