Economists talk about the “multiplier effect” of money. In simple terms this is when a business gets paid, uses the money to pay employees, suppliers and tax, and then that money in turn is spent by the employees, suppliers and the government at other businesses who in turn use this to pay their employees, suppliers and tax…and on it goes. The multiplier effect comes when $100 gets on-payed approximately 8 times. Importantly when there is a “new $100” into the economy then it has a greater impact as it flows through the economy… it “multiplies”, being spent over and over again.
The circle of Money?…and why our property will Boom
In SE Qld, and in the smaller micro market of our patch of real estate, we have a combination of money from a new wave of cashed-up Sydney investors, the “unbalanced” property price growth of NSW/Vic to SE Qld, plus our own “prosperity multiplier” coming from tourism thanks to a lower Aussie dollar, the Gold Coast Games, construction boom, and infrastructure spending. SE Qld property, including “our local patch” will feel the “multiplier effect” from this injection of “new” money.
The fundamental economics for SE Qld far outweigh the negatives and regional issues associated with the mining slow down. “Location” in the broader context for SE Qld has never been more important for SE Qld property markets price growth. The fundamentals all point to good price growth sustained over several years at least.