Are Low Interest Rates a Risk to the Property Market and Economy?

April 2021

Content provided by Msquared Capital
Article written by Paul Miron, Managing Director, Msquared Capital

It is to the astonishment of most economists, politicians and property experts that we are experiencing an extraordinary V shape recovery.

This week’s fundamental economic good news is that the unemployment rate has fallen to 5.8%, smashing everyone’s expectations. The property market seems to be booming, job adverts are increasing and consumers are now freely going back to pre-Covid-19 spending levels. Millennials are once again ordering smashed avocados whilst leisurely completing their online home loan applications in order to begin the hunt for their first property purchase. Their first purchase, mind you, is now mostly sponsored by the government’s extraordinarily generous schemes, like the home builder ($2billion worth) and other various grants as well (up to $50,000 per person).

This is a far cry from our expectations a year ago, when Prime Minister Scott Morrison sternly prepared Australians for a 6-month hibernation, followed by high unemployment rate and a long hard economic recovery. Well, that is one political promise that I am glad he has broken!

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