Why a second GFC could be good for your investment property
Posted on Monday, August 29 2011 at 4:55 AM
European debt, American recession and a looming second global financial crisis (GFC). Sounds familiar, doesn’t it? Well, according to Understand Property, another economic slump around the world is potentially a good thing for your investment property.
This is because another GFC could actually send investors scurrying to the relative safety of housing, which is nowhere near as volatile as other forms of investment.
Another reason that many people haven’t yet considered as to why Australia stands to benefit is because of debt in Europe.
“People have an option not available to governments to solve a crisis – they can leave,” Understand Property says.
“It’s happened before and it will happen again and if the situation deteriorates in Europe, as it probably will, we may once again throw open our nation’s doors to a new wave of European migration.
“Thousands of disgruntled Spaniards, Irish, Portuguese, Italians and Greeks will seek their fortunes here. Not only is our economy insulated from Eurozone woes by being increasingly reliant on Asian economic fortunes, the arrival of a new wave of migrants will generate economic growth and just as our history shows, the housing market will boom for investors in the areas where they choose to settle.”
The obvious choices would be capital cities, but perhaps they could also find employment in our regional areas. And the mass migration could occur sooner, rather than later.
Understand Property says the US is printing more money to inflate itself out of debt, but Europe doesn’t have the same choice, because of the Euro. So if another GFC occurs, it will hit Europe much harder.
“When the smaller countries joined the Eurozone, they traded in their Drachmas, Escudos and Pesetas for Euros. They lost the ability to print money they now need to buy their way out of trouble.
“The only option left for the debt ridden nations of the Eurozone is extreme belt tightening. It will get worse before it gets better and could result in the break-up of the entire EU system, with political turmoil, severe depression and high unemployment in the worst hit countries.”
