Property Futures

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Conundrum Down Under: housing shortage vs population in Australia

Conundrum Down Under: housing shortage vs population in Australia.

Conundrum Down Under: housing shortage vs population in Australia

Plenty of talk about Australia’s housing shortage. But what if the time comes when nobody’s left to buy? By Scott O. Talbot

We don’t have to look too far on the Internet for opinions, seminar sprookers* and doomsayers offering enlightenment and crystal ball advice on the Australian property market and opportunities. Without doubt, even industry experts are perplexed by the mixed messages and agendas of the contributors.

The truth of the matter is, understanding or predicting the Australian real-estate market is about making ‘babies’, and it is joined at the hip of immigration policies of the government, the mining sector, and the economic prosperity of the country– not the opinions of realtors and seminar sprookers.

On a recent business trip to Hong Kong, I caught up with an old friend and philanthropist-mentor from my days in New York City politics. A former Managing Director of Citibank, with US$8 billion in his portfolio, friend with the Buffett’s, a board member of my charity and the type of person you look up to for high-level opinions and knowledge. I will refer to my friend as Steve.

Getting the topic of economic turmoil and the troubles of Europe and the USA out of the way, Steve in his loud American accent declared that ‘there is nothing intelligent about [Australia’s] economy or politics.’ Slightly offended, but more curious to the contextual meaning of this statement, he continued explaining.

‘Scott, to understand why Australia didn’t even get a cold during the [global financial crisis], and to this day stands at the top of the economic ladder, you have to understand the principles of making babies.’ As I did, I thought a few too many drinks, but he continued.

‘You have three distinct economies in Australia,’ he said. First economy is Mining. You simply scoop it out of the ground ship it to China and buy some merchandise back along with the rest of the world. You have so many resources in the ground that this will continue forever as long as the world consumes. China will still place its orders, and Australia will continue to profit from digging it out of the ground.

Second economy is Food. Australia is feeding the world. As everyone has seen in the press, China has been busy buying up farmland and over 50% of certain fresh produce in Singapore is from Australia. This is of no surprise to myself — I was in Nanjing, China, recently and enjoyed an Australian steak, and tonight I am ordering home delivery in Beijing ‘Aussie Lamb Chops’.

Third economy – if you ever have the pleasure of meeting Steve, you will appreciate some theatricals that coincide with the conversation – Steve picks up his beer and demonstrates Australia’s third economy. ‘No, it isn’t beer,’ he said.

He pours a tiny drop into his glass and states, ‘Immigration. This, my friend Scott, is the most un-intelligent economic policy Australia has, that no other country in the world can produce.’ (Pour in a lot or pour in a little – immigrants verses the beer demonstration.)

‘You are making only 1.7 babies and as you know civilisation will soon be extinct if you’re not making 2.8+ babies per year. You will not need to build new homes, schools, and shopping centres, you will be in an economic slide to disaster this century.’

ScottTalbot-table1‘Your country has the space, infrastructure, climate, stable government, and great economy, [and it has] no guns and a quality life unique in the world.’ Steve furthered: ‘These positive attributes can be said about a few countries; however, where your country wins is your undeniable popularity. Walk down a street in any country in the world and ask a simple question: ‘Today, we are handing out passports. Which country would you like to live, work and raise your family?’

The response is more likely: ‘Australia.’ ‘This is the single most important ‘un-intelligent’ factor that secures your third economy.’ Indeed, apply this knowledge into simple supply and demand controls and you have an economic weapon against any unforeseen localised or global economic crisis. Oversupply of cars or housing? Hand out some $1 million – to $2 million-dollar visas and watch them arrive by the plane load ready to buy your houses, cars and furniture, eat in your restaurants, and send their children to your schools. More consumers means productivity fixed in a flash.

That being said, Australia’s economic policy is joined at the hip with immigration – open the immigration doors too widely, and you will have a boom-crisis on your hands that will overinflate every single market sector on simple supply and demand. Too much demand is probably your greatest economic concern. It needs to be a controlled, intelligent, sustainable growth policy, married to immigration.

Australia is a nation built on immigration. Nearly 50% of Australians are either born overseas or have a parent born abroad. It has become a leading country because many ethnic groups have enriched it culturally, socially and economically.

The Australian government wants 200,000 more immigrants this year for ‘population, participation, and productivity growth’.
Don’t miss an opportunity to start a new life or investment in Australia.

*A sprooker is a seminar speaker we see at property fairs or the like who will say anything to earn a sale’s commission.

For more information: www.investaustralia.org

ScottTalbotScott O. Talbot is the Managing Director of UCHK Consulting Limited and one of Australia’s most respected international businessmen, community leaders and philanthropists. He has over 25 years of experience in strategic property investment, business development, politics and philanthropy.

UCHK Consulting Limited provides high-net-worth foreign property investors approved investment opportunities information and logistics. It offers opportunities to easily connect with investment properties with high potential for capital growth; knowledge and services for efficient planning and management of big and small property investments; innovative ways to increase and streamline investment returns; and market information and analysis to assist clients align their property investments with their wealth creation goals.

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This entry was posted on April 3, 2013 by in Future, Investment, Property and tagged , , , .

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