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February 15, 2013

Why so glum, Australia?

Last week I wrote about how Australians are now the wealthiest they’ve been in five years. I bet if you asked the average person how they feel, they wouldn’t be too optimistic about their financial position. Why?


The continual barrage of negative media is still spooking many Australians. With all the overseas worries as well as local concerns – things like the mining boom slowing and pessimism about the state of our economy – folks have been saving rather than spending since the GFC.

They’re stashing their cash in savings accounts, paying down their credit card debts and throwing more money onto their mortgages.

Social researcher Mark McCrindle recently told news.com.au that Australians were feeling insecure rather than wealthy, with memories of the GFC still very raw. That’s hitting sentiment, especially as they watch daily coverage of financial turmoil overseas.

“Then they open their mail and their water and electricity bills are going ballistic,” McCrindle says. “We’ve found when people are looking to 2013 and the fears they have about the year ahead, cost of living is number one. Even for Generation Y it’s number one.”

He also believes Australia’s economic fundamentals are “great”, with low interest rates, low unemployment and a stable economy.

“But it doesn’t matter how often the Treasurer says we are in the best place in the world, it just doesn’t feel that way. Whether the storm clouds prove to be a storm or not, people are seeing storm clouds. People feel the economy could turn quite quickly and they don’t want to be exposed again.”

We’ve gone through some difficult times, but consumer sentiment is starting to turn and I think this will improve over 2013. As more Australians become confident, they’ll start spending again. This is good for the economy and good for property.

Some will upgrade their homes, others will buy their first home – which is more affordable now than it has been in a long time – and others will get involved in investment.

There’s no doubt we live in the lucky country, however some people can’t see past the problems. Over the year as pessimists argue that the glass is half empty and optimists see it as half full, the realists will be drinking the whole lot and taking advantage of the opportunities the markets will present them.

Michael Yardney is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He is best-selling author, one of Australia’s leading experts in wealth creation through property and writes the Property Update blog.

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