I recently read a disturbing “confidential” memo from a leading South Australia real estate agent advising his vendors to sell at what ever price the could as the market would be getting worse. Last time he scared his Vendors I bought a property through his agency for $50,000 below what it to be worth, the market flatted for a while then strengthened, so I made a substantial benefit from ignoring his advise.
Before taking anyone’s advising think stop and ask the question will they make a profit if you follow their advice. If the answer is yes, before you act please seek and listed to alternative advisers who are not going to profit from your choices.
The credit crisis and United States economy will effect us however we also have to look at what our number one trading partner, China is doing with their 1.4 billion potential consumers and economy and ask will it create any protection from what is happening?
As Australians we are fortunate that the economic packages announced by our Federal Government are mainly aimed at new infrastructure with a small portion to bale out failing parts of our economy, unlike America where the packages are designed to fill a huge a debt-ridden hole created by an excess of greed. Unlike the Americans the Chinese in their controlled economy have aimed their $US786 billion package totally at infrastructure program airports, roads, railways, and electricity networks. These are all designed to bring their products to the markets in an efficient manner once the global crisis is over and if history teaches us anything, one day it will be.
The crisis is a great opportunity for China as falling world commodity prices has slashed the cost of these projects, for instance Copper a last year ago was $US9,000 a tonne now it is $US3,000 a tonne. The same is happening to steel and the other commodity prices required for these great infrastructure projects. With all large infrastructure projects it takes a number of months top get up and running before the base products need to ordered e.g. extra iron ore for steel. In 2007 China imported over $12 billion worth of iron ore and concentrates from Australia and around $5 billion of other metal related products. As China starts its infrastructure growth it will need all the same core commodities it has traditionally purchased from Australia plus new products. This alone should soften the effect of the global fallout on Australia.
Back to Real Estate and day to day life.
If you have the resources behind you like the Chinese Government and are willing to look 5 years plus, with falling interest rates it is a good time to invest in your future.
If you don’t have the financial resources and are concerned about keeping your home, review your spending, set a budget and reduce your debt levels, clear those credit cards – build equity in your home.
Regardless if you have finance or not, you can still prosper, live your life to the full, work hard, invest, stay strong as a family, educate your self and family, find your purpose in life. As your prosper, your employer or company will prospers, our towns and cities will prosper, our State and Australia will prosper.
Chinese Australian trade figures are at http://www.dfat.gov.au/geo/fs/chin.pdf
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