New year, sim­i­lar trends

It should be steady as she goes for the banks, share mar­ket, prop­erty mar­ket and the fed­eral gov­ern­ment in 2017, pre­dicts Graeme McDon­ald

ABC (Australia) - - FINANCE -

Well, a Happy New Year to you all. In many cases, you are only a week or so from the start of the school year. I am guess­ing right now your thoughts are on last-minute main­te­nance, timetable sched­ul­ing, or won­der­ing why one of your drivers hasn’t re­turned your call about when they get back from their sum­mer break. Ah, the joys of be­ing a busi­ness owner, but we all know we wouldn’t have it any other way.

So rather than run through a whole heap of tech­ni­cal stuff about the econ­omy and neg­a­tive growth and all the stuff that pretty much brings tears to our eyes when we read it in the pa­per, even if I do put a bit more of a lay­man’s spin on it, I thought I would do a bit of crys­tal balling to see what’s in store for us this year.

So here we go. Firstly, the Re­serve Bank will do very lit­tle that will im­pact us this year. It may, at some stage, feel pres­sured into a rate drop, but I think that is un­likely. That said, even if it did drop the rates .25 per cent as it is known to do, lit­tle or none of the rate drop will ow through to the con­sumers.

Banks are no longer able to con­tinue to pass on rate de­creases as, de­spite what you may think, their cost of funds is higher than what the RBA cash rate is. And, as many of you are prob­a­bly share­hold­ers, you will still ex­pect a div­i­dend, and that money has to come from some­where – banks still need to make a prot.

Se­condly, the share mar­ket will con­tinue, as it has done for­ever, to rise and fall based on what the mood of the mar­ket is on the day.

I think we will see the in­di­ca­tors move this year and the mar­ket trade more of­ten between 5400 and, say, 5700. The pre­vi­ous 12 months saw it work­ing between a range of 5100 to 5500. This will mean that, in the main, we will see a rise in the value of shares.

The share mar­ket will see this growth as peo­ple look for al­ter­na­tives to gen­er­ate in­come and re­turns as the prop­erty mar­ket con­tin­ues to grow, and put some peo­ple out of the in­vest­ment space.

Speak­ing of prop­erty, the cap­i­tal city prop­erty mar­ket will con­tinue to see growth as peo­ple still chase the dream of be­ing a home­owner. Qual­ity es­tab­lished sub­urbs and houses will still grow in value, while outer sub­urbs will still be af­ford­able.

The apart­ment mar­ket is a bit of an un­known, with large num­bers of these to hit the mar­ket in the next 12-18 months, cre­at­ing a bit of a glut in this area. Banks have tight­ened up on the apart­ment space by in­creas­ing their de­posit re­quire­ments and hav­ing in­structed val­uers to value con­ser­va­tively when look­ing at sale con­tracts. While on prop­erty, banks are tight­en­ing up on their lend­ing to in­vestors by in­creas­ing rates and low­er­ing lend­ing mar­gins.

To be hon­est, I think it will be an okay year. We shouldn’t face any great dis­as­ters. The fed­eral gov­ern­ment will still be a cir­cus as all the in­de­pen­dents clam­our for some air­time and chest-thump­ing space. Some states will prob­a­bly fall into that sim­i­lar space, as they seem to lurch from one dis­as­ter to an­other.

Bot­tom line, I think, is to smile ev­ery day, do your best, and this time next year we should all be in a bet­ter place.

Any­way, enough from me. If you would like to in­ves­ti­gate any­thing raised here or dis­cuss any other is­sue, please feel free to give me a call, I’m avail­able through­out the year.

This time next year we should all be in a bet­ter place

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.