23 Dec The facts behind job stats – Simon Pressley
Jobs stats is one of the indicators of a healthy or unhealthy property market. It might be just one of many, but as you will hear in this conversation with Simon Pressley, it could be one of the most critical.
Kevin: It’s always a good discussion for us to have about what is it that influences property prices, and you’re no stranger to the fact that if you’re a regular listener to the show that we talk about a number of indicators. One of those is jobs and it’s a pretty important one, but to talk about that and the other points too, I’m joined by Simon Pressley from Propertyology. Simon, thanks again for your time.
Simon: Always good to be on, Kevin.
Kevin: Simon, let’s talk about jobs and job growth and what we’re seeing. What do you think in the years ahead are going to be the key indicators to keep property prices growing?
Simon: Yeah, look and contrary to what I guess the broader commentary is at the moment which is very much one of doom and gloom, Propertyology actually anticipates that as early as late next year, Kevin, we could see parts of Australia actually having a property boom. Right here and right now, it’s tight credit that’s been a drag on property prices, but the underlying fundamentals are I’d argue stronger now than what they’ve been at any time over the last decade, and job growth is one of those. We’ve now had two consecutive calendar years where this country has created more than 300,000 extra jobs in a single calendar year.
Simon: Now I’ve been back through all the ADS data, and I could not see any time in Australian history where we’ve had two consecutive years of 300,000-plus jobs, and we need that sort of stuff for property markets to grow. When you’ve got improving economies, you not only create more jobs and attract more people to a location, but you increase confidence within a community and you increase the potential for wage growth. We need these things to buy property now when they’re expensive.
Kevin: We do, and when we look back on the figures that you’ve supplied me in the graph, we’re looking at 2017, 2018, those two consecutive years you’re talking about, they’re amongst two of the best years we’ve had in the last decade.
Simon: Yeah, that’s right. 2008, I call that the good old days, because it was pre-GFC. The world changed significantly at the end of 2008, but we created about 300,000 jobs in 2008. We actually lost jobs in 2009 from the GFC, and then we had a stimulus package for those who can recall that in 2010. But even in a stimulus package year, and what was it, 50 billion dollars or something that we threw at the economy, it created about 260,000 jobs in 2010 with the stimulus package, and we’ve been nowhere near that volume of jobs since then until the last two years. We need to be patting ourselves on the back and looking at lots of really positive things about our economy which provide that really solid floor that’s going to push property markets up, just not in Sydney and Melbourne.
Kevin: That stimulus package, while it may have been very good in 2010, it probably still had a residual impact on 2011 and ’12. Even though the job numbers did decline in those two years, it just shows you how devastating that GFC was.
Simon: Yeah, that’s right. I guess at the time it was described as the Armageddon, the biggest worldwide economic downturn in the history of mankind. Lots of countries obviously went in recession. Australia managed to avoid that, but I cannot stress enough I believe that right now our economy has never been in better shape in the last decade, which is totally contrary to the broader negative tone that’s circulating in the media at the moment.
Kevin: And if we look at some of the job growth in some of the regional areas as well, we’re seeing spectacular growth in some of those, in the regional areas, putting aside the cap cities which really haven’t grown all that much by comparison.
Simon: Yeah. We’ve got a graphic we’ll put up on the Propertyology website where we show the cumulative increase in job volumes in our eight capital cities over the last two years, and then in amongst that is some of the regions and they’re two or three times the increase in job volumes in parts of our regional markets. Some of those regional locations have already experienced some really strong property price growth and others have had the job creation, but that’s yet to filter through to property price growth, and that’s some signals for what lies ahead in those locations.
Kevin: Well, there you go. That’s what you sort of get when you work with a company like Propertyology, and Simon, you’ll have those up on your website as well. If you can send me a link to that article, we’ll put that in the commentary here with this interview, and you can click on that link and it’ll take you straight through to Propertyology. If you could do that for me.
Simon: Yep. I will. You’ll find those charts in our property market outlook blog that will be hitting the website in the next couple of days.
Kevin: Beautiful stuff. Okay, Simon Pressley from Propertyology. Thanks for your time, mate.
Simon: My pleasure. Thank you.