{"id":6112,"date":"2015-10-19T01:00:55","date_gmt":"2015-10-18T14:00:55","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6112"},"modified":"2015-10-19T01:00:55","modified_gmt":"2015-10-18T14:00:55","slug":"what-drives-our-economy-now","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/what-drives-our-economy-now\/","title":{"rendered":"What drives our economy now – Michael Yardney"},"content":{"rendered":"

 
\nIn today’s show Michael Yardney<\/strong><\/a>,\u00a0\u00a0from Metropole Property Strategists,\u00a0will tell us what\u2019s going to drive our economy now that the mining boom is over.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 Well, the mining boom is well and truly over, so what\u2019s going to drive our economy now? That\u2019s the question we pose today of Michael Yardney from Metropole Property Strategists.
\nMichael, your answer to that?
\nMichael<\/b>:\u00a0 I think we use to, in the old days, live off the sheep\u2019s back around Federation time, and then we were a manufacturing country. We were protected from the Global Financial Crisis by the fortuitously timed resources boom spurred by China\u2019s insatiable appetite for almost anything we could dig out of the ground at the time. But, Kevin, that boom is over, and I don\u2019t think it is going to come back again ever to that level.
\nThe government was looking for other ways to drive our economy. Initially, it was real estate, the property sector, the construction sector, and that has carried us through for a few years. But I guess a good question is what industries are going to take us into the future? The simple answer is service industries, Kevin.
\nKevin<\/b>:\u00a0 Let\u2019s talk a bit more about that, Michael.
\nMichael<\/b>:\u00a0 Service industries are going to drive our long-term growth, and that\u2019s in particular the health industry, the finance industry, insurance, and education. It\u2019s not just servicing Australians but servicing our geographic neighbors, also, including Asia and China.
\nInterestingly, I was surprised when I read a report from the ANZ Bank and Price Waterhouse saying that service-based industries \u2013 like I said, finance, engineering, education, tourism \u2013 already employ nine out of ten people, Kevin. They account for 75% of Australia\u2019s GDP, so it\u2019s quite significant.
\nBut the suggestion is it\u2019s where the growth will be in the future, and that\u2019s where wages growth is going to be. In my mind, that\u2019s what investors should keep an eye on, because that\u2019s where people are going to also be able to afford \u2013 if they get higher wages growth \u2013 to pay more for properties, and that will lead to capital growth of properties, as well.
\nKevin<\/b>:\u00a0 But, Michael, these service industries are predominantly city-based, aren\u2019t they? What does that mean for the regional areas?
\nMichael<\/b>:\u00a0 Unfortunately, it means that more of our migrants and more of our locals are going to be moving to the big capital cities. If you look at 2015 \u2013 the current year \u2013 Sydney has created 87,000 jobs. The rest of Australia, including all the other capital cities, created just over 80,000 jobs.
\nThe vast majority of jobs created are currently in Melbourne and Sydney, Sydney taking the lion\u2019s share. That\u2019s where most of the migrants are coming. Remember our large population growth is basically being driven by overseas migration. Sure, we\u2019re taking some refugees, and sure, we\u2019re taking some family reunions, but the vast majority is people wanting jobs.
\nYou\u2019re right, Kevin. There\u2019s going to be a bigger gap between the regional cities and the big capital cities. Even within the capital cities, Kevin, the majority of economic growth is going to center around their CBDs where the big office buildings for a lot of these industries are.
\nKevin<\/b>:\u00a0 Michael, we\u2019ve seen in the past where governments have tried to encourage people to go and work remotely, particularly with things like the Internet, being able to work in those areas. Is that a possibility? Is that going to be the savior for some of these regional areas?
\nMichael<\/b>:\u00a0 Kevin, they\u2019ve always talked about decentralization, and the government has attempted by moving government organizations and tax officers to the regional area. They\u2019ve also encouraged industries to move there with tax breaks. But in my mind, that\u2019s really just fiddling around the edges. That\u2019s unlikely to be a driver of major growth of population, wages, and real estate in the future.
\nLike other countries, our economy is going to change to being service-industry based in the big capital cities, and in particular to world-class cities of Melbourne and Sydney. That means we\u2019re going to have more yuppies\u2026 Remember that term from the 1980s?
\nKevin<\/b>:\u00a0 Yes.
\nMichael<\/b>:\u00a0 \u2026Young, upwardly-mobile professionals who are going to be willing to and able to afford to pay a premium for housing because they\u2019re going to want to live closer to where there work is. There\u2019s going to be gentrifying of those inner suburbs. They\u2019re not going to want that really long drive or public-transport commute to the outer suburbs.
\nKevin<\/b>:\u00a0 Thank you, Michael. We\u2019ll leave it there. Michael, of course, and his blogsite, PropertyUpdate.com.au.
\nMichael Yardney, thank you for your time.
\nMichael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  In today’s show Michael Yardney,\u00a0\u00a0from Metropole Property Strategists,\u00a0will tell us what\u2019s going to drive our economy now that the mining boom is over.   Transcript: Kevin:\u00a0 Well, the mining boom is well and truly over, so what\u2019s going to drive our economy now? 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