'Unpresidented' has become The Guardian's word of the year. A massive case of a Freudian slip by Mr Trump if ever there was one! (Millenials you'd better Google that)! Maybe the president elect is subconsciously doubting his own abilities to do the job?
Regardless of your political views, it can definitely be said that the current world economic situation is, indeed 'unprecedented'. Never before has technology woven world financial markets together both financially and psychologically (perhaps the even more important factor) in the way they are now. China coughs and we get a financial cyclone in Australia. The US has an election hangover and our interest rates rise without having had anything to do with the Reserve Bank. Simplistic maybe. But I feel it is a realistic assessment of our current financial status. There is no more denying the fact that we are now - pretty well officially - a global economy. And our real estate and financial markets are becoming more and more tied into this economy every day.
A lot of people might not realise, that Australia is very much prized property on a global scale. The Sydney and Melbourne markets are just the beginning. It is estimated that up to 80,000 properties in Melbourne sit vacant. Yes vacant. How? Why? They are being held as investments. Vancouver has the same situation. Multi-million dollar rows of houses - empty.
You see, there is value in resources that most Australians take for granted. Clean air and water, for a start. This week in Michigan, USA, one community declared a state of emergency because it was discovered their children are all suffering from lead poisoning from contaminated water supplies. And also this week, Beijing more or less shut down due to a blanket of smog the size of Victoria in what is being called an 'airpocolypse'.
It was once said to me when thinking about the value of my mortgage broking business that "Clean air and large mortgages don't go together" In the past, this has been true. Property values in the large cities have always been higher than regional areas. But maybe this is changing. It's no wonder the Cairns Post has been trumpeting about recent large scale foreign investments in the region. There really is nowhere else like Cairns in terms of climate, political stability and our abundant natural resources of clean air and water.
But there is a lot of political instability in the wider world. Chinese-US tensions could very well affect our region, with the favourite quote of the day being that it could cause a "$5 trillion meltdown" (Cairns Post quoting www.nationalinterest.org).
So Donald's 'unpresidented' situation will no doubt affect us. And so far it has. This month we have had quite a few 'out-of-cycle' interest rate rises by many lenders. Basically, this means that market conditions forced the rise - not the Reserve Bank. Or, to put it simply - the funds from overseas investors on the mortgage securites market dried up.
It seems that dirty air half a world away, and an election of a TV star entrepreneur, changes things for us pretty quickly. We can't afford to ignore this. Literally. $15 more a week on the average Home Loan just knocked 3 weekly lattes (or a famous smashed avo breakfast) out of everyone's budget that has a variable loan this week. That's a big 'ouch' for anyone - let alone a lot of parents earning well below the National 'average' wage of $75,000. And it's hardly news out there yet.
The moral of the story? Still make hay while the sun shines. Spend less and pay off your loan/s while you can. Because even if things don't change quickly, at least you won't have to worry as much when you have a large redraw balance at hand.