re: house prices in perth..
cant argue with this - queensland is also a big beneficiary of the resources boom as is South Australia and NT. There is an immense sucking sound of people and capital moving from Vic and NSW to these states as the boom rolls on.
Anyone who thinks the boom is over is dreaming - I know companies paying double for trained personnel than they did 3 years ago. It will take a huge change for the shortage to reduce.
Bottom line is perth, brisbane, etc are growth cities and Sydney and Melbourne are ex-growth. Wealth is being created.
From Southern Cross Equities today:
The re-election of the Queensland Labor Government under Peter Beattie over the weekend was the 11th consecutive re-election of an incumbent Government in Australia. It also marks the 17th consecutive loss at a State level by the Liberal Party, and they are also well on their way to losing their 18th in a row when they snatch defeat from the jaws of victory in the NSW election next year.
The question this poses is why are incumbent Governments being voted back in with such consistency, and in many cases, with an increased majority? I can't just be that the Federal Labor Party and State Liberal Parties are useless, there must be something bigger and fundamental also at work.
I believe the 11 consecutive re-elections of incumbent Governments are driven by the electorate not wanting to risk change. Every Australian who wants a job has a job (4.9% unemployment), wages are rising, interest rates remain low by historic standards, and voters simply don't want to risk "management" change when their own household economic situation has never been better. Real wealth has been created in Australia, and voters simply don't want to risk voting in unproven management.
I also believe this trend to re-elect incumbent Governments also reflects and underlying economic confidence. Yes, voters don't want to risk what we have, but they are also effectively voting for more of the same. That voting for more of the same reflects underlying economic confidence, and again reinforces our view that Australian households have become "aspirational".
I have been of the view for many years that Australian households have become "aspirational". They aspire for more, and they are prepared to use debt to finance their aspirations. We now hear the term "cashed up bogan" used to describe the new-found wealth and discretionary spending power of the rising middle class in Australia. The "cashed up bogan" wants a big house, and all the toys, but he's prepared to work hard and make sacrifices to get those material signs of success.
While everyone, including myself, points to the long-term power of the massive rising middle classes of China and India, the country with the middle class who has already risen is Australia. You can see it everywhere, but you can particularly see in trends in lending and spending.
Persistent skilled labour shortages have driven the price of that skilled labour significantly higher, and the vast bulk of that genuinely skilled labour resides in middle Australia. They are leveraging their personal pricing power, and you can particularly see this in the Western Australian property market.
You can also see the private equity firms attempting to buy leverage to this theme via the discretionary retail sector. The equity market is worried about the effect of rising interest rates and petrol prices on discretionary spending, and marking down P/E's, yet the private equity guys are snapping up all our retail assets. Private equity is buying this theme, and I think they are right to buy this them of the aspirational Australian household.
Love the phrase "cashed up bogan". Looking forward to growing my mullet and buying my ute soon.
