{"id":11421,"date":"2017-04-25T03:00:29","date_gmt":"2017-04-24T17:00:29","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=11421"},"modified":"2017-04-25T03:00:29","modified_gmt":"2017-04-24T17:00:29","slug":"is-one-growth-driver-more-important-than-others-michael-yardney","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/is-one-growth-driver-more-important-than-others-michael-yardney\/","title":{"rendered":"Is one growth driver more important than others? – Michael Yardney"},"content":{"rendered":"

Clearly there are many different growth drivers, but is there one that stands out, one that is more important than the rest?
\nThat\u2019s the question we ask Michael Yardney<\/strong><\/a>.
\nTranscript:<\/strong>
\nKevin:\u00a0 <\/b>A great question that we\u2019re asked quite often on the show is \u201cWhat is likely to drive future property price growth?\u201d Clearly, there are many different growth drivers, but is there one that stands out, one that\u2019s probably more important than the rest?
\nThat is my question today for Michael Yardney <\/a>from Metropole Property Strategists<\/a>. Hi, Michael.
\nMichael:\u00a0 <\/b>Hello, Kevin.
\nKevin:\u00a0 <\/b>Can you answer that question? Can you actually get it down to one?
\nMichael:\u00a0 <\/b>There is definitely one that\u2019s more important than the rest, because in my opinion, economic growth is what\u2019s going \u2013 in the medium to long term \u2013 to drive property price growth.
\nBecause economic growth leads to jobs, jobs lead to wages growth, people come in and move because of jobs, and when people move to an area, that creates initially rental demand, moving on to eventually house-buying demand.
\nSo of all the factors, economic growth is an important one.
\nNow, of course, all those other things are important as well \u2013 consumer confidence, interest rates, business confidence, political certainty, the banking system \u2013 but all that creates economic growth, so they very much lead to that.
\nKevin:\u00a0 <\/b>Are there some key employment statistics we should consider, Michael?
\nMichael:\u00a0 <\/b>It\u2019s important to understand how we now create economic growth, because our capital cities are now attracting 81% of job creation. Go back a decade; that was only 60%. In other words, we are building things, making things, creating things differently, and the forecast is for more jobs to be created in our capital cities than elsewhere in the future.
\nThat\u2019s because we\u2019re no longer manufacturing things, we\u2019re no longer living off the land.
\nIf you look at some statistics, last year, Melbourne created 72,786 jobs, Sydney created 54,000 jobs, and that made up a huge bulk of all the job creation in Australia. But more importantly, Kevin, they were full-time jobs. In other areas, if you look at hospitality, if you look at retail, a lot of those are part-time jobs \u2013 not the same.
\nKevin:\u00a0 <\/b>When you look at the graph that you\u2019ve shown me here, that is just so obvious, isn\u2019t it? 54,000 in Sydney, 72,000 in Melbourne, 18,000-odd in Brisbane \u2013 it\u2019s lightyears. It really is between Sydney and Melbourne.
\nThey\u2019re quite staggering figures.
\nWould it be right then that investing outside of the major economic centers is fraught with risk?
\nMichael:\u00a0 <\/b>In my opinion, job creation is increasingly important for future property performance. Those areas with limited employment opportunities are likely to struggle with regard to figure capital growth \u2013 and rental returns, even. The opposite trend is, of course, going to occur \u2013 that those areas where the jobs are being created, there are going to be more people wanting to go there, and it\u2019s a snowballing effect.
\nMore highly skilled jobs, Kevin, are the ones that pay more, and they\u2019re the people who have higher disposable incomes and who can afford to buy new houses or investment properties or new cars, and that creates more business in the local economy and it snowballs.
\nKevin:\u00a0 <\/b>Correct me if I\u2019m wrong, though, it wasn\u2019t always that way, was it \u2013 economic growth not always concentrated in our major capital cities?
\nMichael:\u00a0 <\/b>No, it wasn\u2019t, Kevin. Just back a century ago, and we were really dependent on the bush. About four million Australians lived in rural properties or small towns of fewer than 3000 people.
\nMost were market towns. We were served in an agricultural community, so we lived on the land. A century ago, only a third of Australians lived in cities even the size of Toowoomba, over 100,000 people.
\nIt was mainly primary production. Mining also had a bit of a say in it. Then post World War II, we became a manufacturing country and things changed. We started to industrialize, and there was a big shift to urban living and into suburban homes. Then go back to the mid-1960s, three out of five Australians lived in a major city and manufacturing was creating most of the jobs.
\nBut that\u2019s no longer what drives us now, Kevin, so when we think about Australia\u2019s economy and our exports, we tend to think about wool or sheep or iron ore or minerals, but in fact, interestingly a large part of our economy and exports today is services with health and education and tourism. We are now a service-based economy, Kevin.
\nKevin:\u00a0 <\/b>It\u2019s fascinating when you look at it that way, Michael. What is the bottom line?
\nMichael:\u00a0 <\/b>It appears safe to assume that service industries are really going to be our biggest source of employment and increasingly, the muscle behind economic growth in the future.
\nAnd most service-related jobs are going to be in our capital cities, but more than that, Kevin, they\u2019re going to be in the central areas of our capital cities, and that\u2019s what\u2019s going to create the ongoing jobs growth, the ongoing wages growth, the ongoing population growth.
\nSo to invest outside the three or four big capital cities of Australia in my mind is foolish. It doesn\u2019t mean there aren\u2019t opportunities elsewhere, but it\u2019s just too hard to swim against that very strong tide of economic growth, Kevin.
\nKevin:\u00a0 <\/b>Great talking to you, Michael. Michael Yardney<\/a> from Metropole Property Strategists.<\/a> By the way, before I let you go, congratulations on taking out that award for your blog site, Property Update<\/a> \u2013 one of the most popular, most read blogs in the world, I believe.
\nMichael:\u00a0 <\/b>Kevin, <\/b>I was amazed when I got ranked by Feedspot as the world\u2019s number one property website and blog. That was against some very tough international competition. It wasn\u2019t even something I entered into; they emailed me and said, \u201cHey, you won.\u201d
\nKevin:\u00a0 <\/b>Fantastic. Well, congratulations, Michael. Once again, Michael\u2019s blog site is Property Update,<\/a> and he\u2019s a regular guest on our show, as well. Thanks for your time, Michael. We\u2019ll catch you again next week.
\nMichael:\u00a0 <\/b>Thanks, Kevin.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"

Clearly there are many different growth drivers, but is there one that stands out, one that is more important than the rest? That\u2019s the question we ask Michael Yardney. Transcript: Kevin:\u00a0 A great question that we\u2019re asked quite often on the show is \u201cWhat is…<\/p>\n","protected":false},"author":176692471,"featured_media":11431,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,36,22,25,27],"tags":[101],"class_list":["post-11421","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"\nIs one growth driver more important than others? - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/is-one-growth-driver-more-important-than-others-michael-yardney\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is one growth driver more important than others? - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Clearly there are many different growth drivers, but is there one that stands out, one that is more important than the rest? 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