Australians positive about local economic prospects

08/11/2011

A renewed sense of optimism about the future of our economy is prevailing among Australians, according to new research¹ out today from CUA. Almost six in ten (58%) Australians feel confident our economy will remain strong and stable over the coming year, with a similar percentage (61%) believing we will fare better than the US and Europe.

CUA’s Borrowing and Investment Intentions Survey conducted by Auspoll, also highlights that any uncertainty Australians may have in relation to the local property market is only short term, with almost six in ten (58%) feeling positive about it improving over the next five years and less than two in ten (18%) believing prices will drop.  In addition, looking at just the next 12 months, of those people intending to take out a loan (33%), more than half (52%) intend to do so to purchase either an investment or residential property, with property relatively more likely to attract new investors compared to other investment options.

According to Andrew Hadley, Group General Manager, Strategy and Marketing at CUA, these findings provide a welcome contrast to the gloomy commentary that has been dominating recent headlines.

“The past few years have certainly been challenging economically and, while global economic uncertainty prevails, the continued strength and resilience of the Australian economy and financial system appears to be helping fuel a renewed sense of confidence and optimism among the Australian public. Undoubtedly, the recent cash rate cut announced by the Reserve Bank of Australia (RBA) will help to further drive this sentiment,” said Mr Hadley.

“As a nation we have been shoring up our savings and been cautious about making any major purchases and this has been particularly noticeable in the property market. It’s therefore encouraging to see that CUA’s Borrowing and Investment Intentions Survey highlights a positive attitude towards our property market over the medium term, especially in relation to investment property where more than six in ten Australians (63%) who are looking at buying an investment property over the next twelve months are totally new to the market,” he said.

Recent economic data and economic commentary that supports this optimistic outlook includes:

• Despite volatility in Building Approvals for September, (ABS 8731.0 Building Approvals Australia – September 2011 ), the most recent Housing Finance figures show a trend increase for the past six months on thevalue of all approved dwellings financed (ABS 5609.0 Housing Finance, Australia – August 2011)
• Australia’s unemployment rate is at 5.2%, compared to the Euro area at 10%, the US at 9.1%, the UK at 8% and Canada at 7.1%. (Federal Treasurer’s Economic Note no 039, 16 October)
• The proportion of consumers that have recently bought an investment property – as well as the proportion intending to buy an investment property – has been climbing steadily since 2009, increasing from 5% (2009) to 9% (2011). (Datamonitor: Mortgage Outlook in Australia 2011, September 2011)
• Over 750,000 Australians have entered the workforce over the past four years – seven million Americans have lost their jobs over the same period. (Federal Treasurer’s Economic Note no 039, 16 October)

Following the RBA’s latest rates announcement, CUA has cut 25bp off its Standard Variable Home Loan, pushing it below 7% to 6.97% (effective 14 November 2011).