Real estate and the economy – an enduring partnership

x_157_87844_0_14101376_300Purchasing property is significant for many reasons. It means having shelter over your head, as well as financial security and an investment in the future.

Sitting alongside these more conventional understandings, however, is the real estate industry’s symbiotic relationship with the local, state and national economy. For taking out a home loan and getting a slice of Australian real estate is not just a boost up the property ladder – it’s also a boost to the Australian economy.

The mining boom and the Australian economy

The Australian economy works like that of any other modern nation: Consumers buy goods, creating profits for producers, who invest this money into creating more assets and goods, leading to employment and wage growth – a cycle which perpetuates once these individuals start spending their money.

For a number of decades, the Australian economy was driven by a boom in mining, which spurred on the rapid growth of states like Western Australia. According to an August report released by the Reserve Bank of Australia, this boom had lifted household disposable income by 13 per cent, as well reducing unemployment during the time it was in operation. However, with the mining boom coming to close, many are looking for what will replace it as the driver of the Australian economy.

The housing industry has been put forward as a potential alternative.

Residential housing is key to the Australian economy

A number of recent pieces of data have nicely illustrated the importance of the housing industry to the national economy – as well as that of New South Wales.

For example, the Property Council of Australia recently highlighted the fact that stamp duty receipts were a crucial part of the 2013-14 state budget. In other words, the money in the government’s coffers, needed to pay for infrastructure development and other essential public services, is strongly dependent on the continued strength of the NSW real estate market.

“The government has consistently recognised the crucial role of property in the state’s economy, particularly the housing construction market,” Property Council NSW Division Executive Director Glenn Byres said in an October 28 release.

Mr Byres further pointed out that the NSW property industry accounted $16 billion worth of wages and one-tenth of all jobs in the state.

Elsewhere, RP Data Research Director Tim Lawless noted the reverberating positive effects a recent rise in land sales would have on Australian property.

“A rise in land sales implies a rise in detached housing construction about six months down the track which in turn provides a┬ásubstantial multiplier for the Australian economy; more jobs, more building materials, home furnishings, appliances and white good sales,” he said in an October 23 release.

So there you have it. Purchasing a property in Sydney and New South Wales isn’t simply an investment in your future – it’s an investment in the wider economy.

Leave a Reply

Your email address will not be published. Required fields are marked *