Episode Details

For Australians, real estate is something of a national obsession.

That's understandable given our home is often the biggest investment most of us will ever make.

I've been investing in residential property for almost 50 years now, and throughout those decades there have been doomsayers and scaremongers claiming the Australian property market was a bubble waiting to burst.

Reputations were staked on it, bets have been made and the media has offered these property pessimists more than their fair share of air time.

Yet the crash never arrived. Instead, our property markets are booming with a number of capital cities already exhibiting double-digit capital growth this year.

And Australia's economic growth has also confounded the pessimists as we experienced the "V-shaped" recovery that, to be honest, very few expected.

While much of the commentary is about the micro factors – what's happening on the ground in our property markets - I like to regularly get together with property commentator Pete Wargent in these big picture podcasts to look at the macroeconomic factors affecting our economy and the property markets to help give you some more clarity about what the future holds so you can make better investment and business decisions.

The Big Picture with Pete Wargent

Since last month Australia's economic recovery has continued to unfold, more jobs have been created, and the property market continues to grow.

Australia's economy recovery

The latest GDP figures show that Australia has enjoyed a V shape recovery, though that's ancient news now.

Our economic output is now higher than it was before the COVID-19 recession hit, with easy monetary policy, booming commodity prices, demand for resources from the rampant Chinese economy and fiscal policy stimulus all playing a part.

• The public service is doing okay while the private sector has borne the brunt of the Covid 'recession'.
• Australia's robust economic recovery has merited an upgrade to a "stable" footing from ratings agency S&P Global. This has been matched by enthusiastic bets on interest rate hikes.
• As the Reserve Bank of Australia's July meeting approaches, when the central bank will review its quantitative easing program.
• The Reserve Bank at this month's meeting reiterated its position that the cash rate is "unlikely" to rise until 2024 at the earliest.

Biggest lift in business investment in 9 years

• New business investment (spending on buildings and equipment) rose by 6.3% in the March quarter.
• This together with the strong construction industry points to strong overall economic growth.

Why jobs confidence is a big deal

Policymakers are pushing hard for a strong improvement that will see a return to 'full employment that brings an end to the persistently low wages growth that has held the economy back over the last decade.

There are important implications from Aussies feeling secure about their jobs:

• Catalyst for spending
• Additional support for housing demand

Budget deficit

• The economy is in better shape than expected around six months ago and therefore so is our budget. This gives the government options to provide more assistance to have individuals and businesses.
• The recovery has led to a 4% improvement in the deficit so far this year.

Why Australia needs higher-paid migrant workers

Recently the Grattan Institute released a report into Australia's migration policy suggesting we focus on increasing the number of young skilled workers, rather than the government's current emphasis on older less-skilled migrants.

Grattan suggested this would help boost the economy by as much as $9 billion

8th consecutive current account surplus

In the March quarter, the current account surplus widened to 18,300,000