China’s economy is slowing

Unless you have just arrived back home from a holiday without any TV, radio or internet, you will have seen that the world stock markets have taken a battering in the past week. Everyone’s eyes have been on China and the speed, or lack thereof, of its economic growth. And all thoughts go to “What does that mean for us!”

The stock markets around the world are correcting, and they must; and no doubt the Australian Dollar will also correct and come back to something sensible in the 60’s as opposed to the parity situation with the US of previous years. And it is the $A correction that will hold the property market in good stead. As the $A drops, it will mitigate the Chinese slow down, it will allow for a dramatic increase in tourism to Australia and it will force Australians to stay here and holiday. Companies exporting goods will also earn more as the $US is worth more $A.

Many commentators have talked about the slow down hitting the property market and whilst it will have an impact, I believe it will simply offer different options for people. Firstly, if the investor from China is not earning as much money as their economy is slowing down, then they will spend less on an investment property here. That is true, but their currency is now worth more and therefore they need less to offer the same amounts.

Secondly, Chinese nationals have been big players in off the plan investments. If they begin to sell these properties because they need the money, then there may be some good bargains to be had. And finally, many Australians will see the stock market as too much of a roller coaster ride and look to put their savings into property.

Overall, the property market in Melbourne will probably have a slightly lower turnover than last year, and this should have the effect of simply slowing growth. Will there be a plunge in property prices? I do not believe so. In fact, I believe growth will drop back to about a normal year of around 7% for the year depending on suburb type.

The whole team is back on deck and we are looking forward to the year ahead of us. The auction season will fire up next week and we are already seeing many new properties come onto the market. If you are interested in purchasing property, if you are a landlord and want some property management advice or you are renovating any of your properties this year, please feel free to call and have a chat and see if we can be of assistance.

Ian James
Director
JPP Buyer Advocates