Overnight the American Fed has cut interest rates for the 2nd time in 9 days. The .5% cut has now reduced the short term rate to just 3% with many experts believing the Fed will cut rates by a further .25% in March.
With America on the verge of a recession and it's housing prices in retreat it is often discussed how this affects Australia's future and its housing market.
America slowed to 0.6% annual growth in the last quarter of 2007 which is completely different to where the Australian economy has been heading, the OECD forecasts the Australian economy to grow by 3.3% in 2008.
While not immune to the sub prime disaster that's happening in the USA at the moment, Australia has not got it self into the same mess. If you are looking for a sign at the moment then look at all the credit card companies pitching ads with very low rates for credit card debt transfers!
In fact because of our strength not through lack of it we may see a further interest rate rise shortly, this is sure to test the outer suburbs of capital cities but I feel will leave the inner city area's largely unaffected with strong house growth predicted again this year.
Australia has a diversified group of trading partners; Australia has been ranked the most resilient economy in the world for 5 of the past 6 years (IMDWCY2007) in part because of that.
Asia forms the majority of who we trade with and has a large affect on the strength of our economy, currently this is strong and is predicted to keep growing and quickly!
While no country is immune to changing economic conditions, Australia's future and property market look strong for the outlook ahead while home owners in America should brace themselves for some tough times still ahead!
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