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Slow, Steady Economic Growth Projected for 2014

Announcement posted by Purely Finance 22 Aug 2014

Financial planners and mortgage brokers in Perth reveal why real estate may be the best investment for 2014.
Perth, WA, 22 August 2014 - Amidst projections of slow, steady growth for the Australian economy in 2014, Australians are looking for investment vehicles that will outperform the economy as a whole. It is the opinion of one firm that real estate will not only be the safest investment of 2014, but will outperform the Australian economy by as much as 200% for the year.

By the Numbers

Although consumer confidence has increased, the housing market is showing signs of a full recovery and Australians spent over $1 billion a day during the latter part of Christmas shopping season, economists urge caution. Currently, a growth in household spending of between 2.25% and 2.50% is projected for 2014, causing Callam Pickering of Business Spectator to write an article called “Slower Growth Could Become the New Normal.”

Callam, like most economists, is concerned with declining workforce participation combined with job creation that isn’t quite keeping up with the pace of population growth. The November 2013 Australian unemployment rate was 5.8%, which was up from 5.4% in December. While this is not a high percentage, it is the decline of a growth indicator even as the economy continues to slowly grow.

Moreover, unemployment could rise to as high as 6.25% toward the end of 2014. Callam believes that non-participation, or a number of unemployed simply removing themselves from the workforce, is influencing the economy to produce the effects of a net unemployment rate of 7.0%. 

The mining industry has played a part in keeping the Australian economy afloat for much of the last ten years, with two commodity price booms leading the way to a sustained mining boom. In 2013, though, the mining industry began streamlining operations and shedding jobs. While the mining industry is still driving the economy, especially in WA,  the boom period has been replaced by a different paradigm, in which output and efficiency are high, but employment has been decreased to a level which allows mining companies to maximise their income opportunities.

What One Perth Firm Recommends

Nick Aves, Director of Purely Finance, believes that real estate is the safest investment for 2014. According to Mr Aves, “While the Australian economy is only projected to grow at a maximum of 2.5% in 2013-14, the Perth housing market is projected to grow by 8.0%. That means that Perth real estate is projected to perform three times better than the Australian economy.” 

Mr Aves continued, “We see this as a great opportunity for those who are tentative about investments to use real estate as their main vehicle. The RBA is keeping the interest rate at an all-time low of 2.5% and lenders are passing their savings on to their customers. HSBC lowered their home loan variable rate from 5.34% to a very friendly 4.75% at the end of January. This will allow a lot of small investors to enter the market.”

Mr Aves concluded, “Sadly, low interest rates won’t last forever. While we would like to see them stay low, history suggests that rates will begin to rise soon. We believe that those who don’t act now are going to cost themselves money.”

Purely Finance is a team of mortgage brokers and financial planners who offer a plethora of business, personal and home loans while providing the expertise to maximise their potential revenue. For more information, call (08) 9453 8888 or visit their website: http://www.purelyfinance.com.au/.