With the recent devastation caused by flooding across the majority of Queensland a lot of people may be left asking, “What’s next?”.
Post GFC many businesses are still a long way from recovering to a level of trading that they had seen in earlier years. Real Estate agents here on the Gold Coast say that in the past 6 months the property market has been as bad as it ever has been.
Contrary to this we are told inflation is rising and therefore interest rates must rise as well. Is this because that people in our part of the nation were overcommitted to begin with? Or is it that other parts of the country like Melbourne and Sydney are experiencing conditions that are nothing like the ones we are currently experiencing here?
No matter what the answer is, the interest rates have continued to rise and they are not going to make any exceptions for us.
So just when everyone has accepted this, the clouds gather and down comes the rain to an extent not seen in most people’s lifetime.
Houses flooded, families separated and businesses shattered, how much more can people take in the space of a couple of years?
But don’t despair, as although this flood as caused a great number of problems, I believe it will have one positive impact, that being it will spark the local economy back to life when the water recedes.
Think about all the items that need to be replaced - new cars, new electrical appliances, whole new buildings. What do you think Toyota and Harvey Norman outlets are doing right about now? My guess is stocking up.
What about the builders and other related trades? These people have been struggling more than most in recent times, and now they are faced with repairs/rebuild work across most of the state that will go on for an estimated 5 years. As bad as it sounds, some trades will be looking at the floods as a blessing in disguise.
It doesn’t stop here, not only will all these businesses employ more people who in turn inject money back into the economy, but you have the run on effect from all the other businesses that associate with these industries. This can cover areas such as Finance, Automotive Accessories, Building Materials, the list goes on and on.
But don’t get too excited, there is a downside to this hopeful recovery. If things do turnaround, and spending increases, this will also mean that inflation is also likely to increase. The result of increasing inflation is increasing interest rates and this as been the Reserve Bank’s reason for raising rates in the past 12 months. It has been said that it was likely that we get a rate rise in the first half of 2011, and now maybe due to the floods it may be postponed slightly, but it will be only a matter of when.
As for the local property market, it’s like trying to predict the weather.