Back at the start of June, Belshaw's prognostications on Australia's economic outlook provided a stocktake on the economic outlook as I saw it. Nothing profound, just a benchmark that I could assess later developments against. My view as an analyst is that on some issues you need to put down what you think is happening, why its happening, what it means. If you don't do that, how are you going to make a rational future assessment of your own views?
Turning now to the detail of his remarks, there is nothing there that conflicts with my own June prognostications. I can let those stand.
Finishing with Sydney real estate prices, here are just four reasons why I think that they will either crash or, as has happened in the past, enter into a long period of no real growth.
- Interest rates will rise, reducing real estate returns. If interest rates don't rise, it will be for economic factors that will, of themselves, act to reduce real estate prices.
- Lower immigration, reducing Sydney's population growth.
- Better returns from other investment activities, including investment in real estate in other places.
- Low rental returns in Sydney with limited immediate capacity to increase rents given stagnant incomes.