The Property Planner, Buyer and Professor: Recent Episodes
PropertyPlannerBuyerProfessor
Residential property is the only asset class we live in, it is where we raise our family’s, and it is our most expensive investment, yet property advice remains unregulated. Our objective is to educate time-poor professionals through deep insights from our experts who have provided thousands of Australians with personalised advice and education spanning two decades. In a climate where we are overloaded with information and one size fits all recommendations from the media, well-meaning friends and family and so-called advisers, we will distill the raw truth from the ill-informed.
So join the Property Planner, David Johnston, The Property Buyer, Cate Bakos and the Property Professor, Peter Koulizos as they take you on a journey of discovery through the maze of property, mortgage, and money decisions to empower you to create your ideal lifestyle!
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Rentvesting is not for everyone, but many people do not even consider it, which may be to the detriment of their finances or lifestyle. Maintaining an open mind to rentvesting and exploring it’s potential will provide you with greater clarity on your pathway forward, whether you take that path or cross it off as an option.
Dave explains what rentvesting is, and why it's becoming a popular strategy among first-time buyers. From desireable rental locations to growing wealth, there are plenty of reasons why some choose to adopt this strategy.
Mike touches on the key benefits and he highlights his own rentvesting benefits that he's currently experiencing. Cate covers off some of the reasons why rentvesting is more affordable in capital cities, particularly the lower-rental-yielding cities such as Melbourne and Sydney.
Dave shares a real-time example in Melbourne's leafy Hawthorn East. He contrasts a mortgage versus a rental property for a make-believe couple and the cashflow differentials are quite a surprise!
For a first home buyer versus a renter, the difference in monthly cost is more than three times. Was buying always this difficult? Cate dares to ask the question and Dave steps our listeners through the last forty years. But Cate sheds light on the cost of property on the opposite side of town. How do these locations compare, and what is the multiple of the average annual wage these days?
Mike explains why it's so difficult to get into highly sought-after locations, but he also explains why the number of rentvestors is so limited. And there are quite a few reasons! But how short a tenure is too short for a rentvestor? Tune in to find out.... .
... and our gold nuggets!
Dave Johnston's gold nugget: Carefully consider your own personal situation and goals. Rentvesting can be great, but it's not for everyone. It only makes sense that your property decisions should be informed by your over-arching property strategy. And how will your next purchase impact your future purchases? This is a very important question.
Mike Mortlock's gold nugget: Mike uses a car analogy. Selecting the right car for the right track is critical. "Asking the place where you want to live to be the investment as well, is sub-optimal for property success."
Cate Bakos's gold nugget: Cate reminisces about a successful real life client scenario that was based on a well-carved out strategy.
Show Notes: https://www.propertytrio.com.au/2024/07/01/rentvesting/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Helping versus hindering our children's financial futures... it's all about mindset! Dave hosts today's episode and the Trio enjoy sharing their thoughts about the various ways we can help our children get a foot on the property ladder.
First homebuyer participation is up a little bit when contrasted against recent years. Dave runs through some of the key reasons that could be contributing to this increased level.
First home buyer activity bounced up with targeted government incentives during GFC recovery and COVID recovery. Both also had record low interest rates.
“The series shows only two substantial spikes in first home buyer loans between 2008-09 and 2020-21. These can largely be explained by temporary government incentives for housing purchases. There was a temporary boost to the first home owner grant introduced around the GFC, and a temporary HomeBuilder grant introduced around the onset of the pandemic (which was not specifically targeted at first home buyers, but could be used in combination with the then recently introduced ‘First Home Loan Deposit Scheme’).” (Source: Core Logic)
The Trio take a walk down memory lane as they recall some of the various first home buyer incentives introduced by our governments since the GFC. Dave canvases the concept of false economy when it comes to incentives and price points that some buyers chase that don't completely align with an optimal strategy.
Cate delves into some of the issues that could arise when parents' generosity is too great. From a lack of appreciation to jealousy among peers, (and many others), there are some significant risks that need to be considered.
Cate chats about hers and her husband's approach with their daughter's property deposit savings regime. From a small inheritance from her grandmother a few years ago, followed by ETF share portfolio outperformance of that little nest egg, this seventeen year old has been making regular contributions to her portfolio with her part time job. What is the deal that Cate has struck with her? Tune in to find out...
The Trio reflect on the great encouragement that their own parents imparted. Thinking about the great lessons and moments of pride during our own childhood can lead to some great ideas that can be paid forward.
And lastly, Cate talks about some of the non-financial ways that we can make a positive difference for kids these days.
.... and our gold nuggets!
Cate Bakos's gold nugget: When you're working out how you can help your kids with their financial future, make sure you let it be their journey.
Mike Mortlock's gold nugget: Mike reflects on Cate's daughter's $5000 nest egg which was compounding. That 'early win' is a very valuable introduction to good investing.
Dave Johnston's gold nugget: Getting his children applying some research and selecting companies in a share portfolio from the age of grade six is an exciting plan that Dave has been considering.
Show notes: https://www.propertytrio.com.au/2024/06/24/helping-our-children/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Mike kicks off this episode, and the Trio chat about the ferocity of the Perth market and they ponder the nature of cyclic markets. Is Perth cyclic? And is this city sharing a pattern with any other cities, or is Perth unique? And how is it possible that rental growth is still strong when investors are buying up?
Brisbane's outperformance is noteworthy too, with this beautiful city taking the lead on Melbourne.
Hobart's decline in rents defies most of the nation, but Cate explains some of the driving forces at play. Namely, the sea-change/sea-change moves during lockdown are reversing for many, and combined with the update in overseas holiday activity (to the detriment of domestic travel), cities like Hobart are experiencing different trends to most of our other capital cities.
Mike tackles yields and marvels at the combined capitals average yield, but as Cate reminds listeners, average yields are not a perfect measure because the ratio of houses/units across our cities varies greatly. If only Core Logic could give us a separate measure for houses versus units!
And what is happening with listings? We have more new listings than previous years, but our total listing figures are below historical levels. This tells us that buyer demand is strong, and is soaking up the listings faster than they are hitting.
While the Spring market has returned after two years of glitches to 'the norm' over COVID, some things have changed. Cate talks through some of these, including off-market listings.
"Such a tale of eight cities", says Mike as he compares the difference in listing volumes across several capital cities.
But by drawing our listener's attention to the three data sets, (new listings, old listings, total listings), in triplicate they tell a very interesting story. Cate ponders the viability of gauging the retraction of old listings when it comes to identifying markets that may be over-heated.
This month's Westpac Consumer Sentiment Index is reasonably unchanged from last month. There is no doubt that the affects of higher interest rates are biting for many households. However, as Cate says, "It's a bit of a boring chart, but right now, boring is good."
Lending indicators are showing some strong numbers; with the exception of construction. Despite investor numbers coming off a low base, Dave explains that buyers are making decisions now that it's obvious that the risk of interest rate increases is lower.
Cate shares an interesting chart that segments funding into construction, established, land, new builds and alterations/repairs. There is no doubt that the pain of the construction industry is showing up in the data.
The bond yields shows that the rate today is predicted by the markets to be the 'new norm'. Dave steps the listeners through some of the charts, including the unemployment data.
"Unemployment has often been the collateral damage as the RBA has been increasing rates to bring down inflation, but this time they are trying a different tact, and they've actually said that", states Dave.
And... time for our gold nuggets...
Cate Bakos's gold nugget: Buyers have to consider a broad picture before they circle in on one city that's doing well. Getting our hands on the rate of change of old listings offers a bit of valuable insight.
David Johnston's gold nugget: Market updates talk about the monthly market gyrations, but ultimately it's about the big picture and the long term that really matters. And what's right for your personal circumstances is vital. Understand your own strategy and understand the price point that's right for you.
Show notes: https://www.propertytrio.com.au/2024/06/17/ep-262-may-market-update/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Dave opens our episode with a cautionary tale. We are grateful to our listener, Daniela who wrote to us about a challenging experience she and her husband had with a purchase she described as a "lemon."
After having bought a house and land package in Perth that delivered underwhelming capital growth performance for nine years, Daniela and her husband chose to sell the asset when moving to Melbourne for work. Sadly their timing wasn't great and they feel they missed the full cycle (home, upgrade, downsize). Now they find themselves with $110,000 in savings, a limited array of property options that appeal to them, a student son living with them, and a dilemma on their hands.
Do they buy a house in the outer suburbs or consider apartments? And if they can afford two apartments instead of a house, will this help them gain a better financial position?
Mike and Cate tackle the houses vs apartment outperformance question. Cate steps back to the heart of the listener question and suggests that finding a suitable home should be the primary focus at this stage, (as opposed to their appetite for capital growth outperformance).
Four unfortunate headwinds have compounded the issue for the couple now, namely;
* Their timing with the Perth market was unfortunate
* Markets are cyclical and managing market cycle risk is always a challenge when buy and hold timeframes are short
* House and land packages are notorious for underperformance due to the lower Land to Asset Ratio
* Melbourne's broad property value is still greater than Perth
"Over the previous ten years, Melbourne prices grew 96 percent, yet Perth prices in the same timeframe only delivered eight percent."
From managing simultaneous sales/purchases to strategising a surprise interstate move, Dave touches on some of the important elements for buyers to consider. Daniela and her husband sold the house in Perth, but could have they had a better long term outlook if they'd held onto Perth? And should they be buying in Melbourne now that they have moved there? There are a lot of questions that the Trio bring up for our listener couple to think about.
Daniela has nominated two options that she feels could be feasible, but why does Cate suggest that she could be on the wrong track? And what other options could be viable? Tune in to find out...
Stage of life is very important when it comes to determining a property plan. The Trio discuss the next items for Daniela and her husband to canvas in relation to their strategy.
"If they are focusing on Melbourne as their forever place, there is a silver lining. The market has stood still for them", says Cate.
.... and our gold nuggets!
Mike Mortlock's gold nugget: "Avoid perverting the course of what you are trying to achieve with dual ambitions." Having a clear strategy on a primary requirement can mitigate this risk.
Cate Bakos's gold nugget: Only once you trigger a sale event is when a result is crystallised. Cate recommends buyers seek professional advice before triggering a loss or a gain.
Shownotes: https://www.propertytrio.com.au/2024/06/10/recovering-from-buying-a-lemon/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Mike opens our 260th episodes, congratulating Dave and Cate on five years of podcasting. The Trio have decided to take a trip down memory lane and reflect on some of the eps, and the special bond that they all share, Pete included.
Cate gives the listeners a bit of background about what drove the market update deliveries, and how the show has evolved as a result of lockdowns and listener feedback.
Reflecting on the initial seven episodes from their pilot run has been fascinating and they share a few fun soundbites.
Why don't the Trio invite guests on the show? They actually imagined at the start that they would, but it's become a point of difference to stick to the Trio, (plus Pete for the occasional appearance). Cate expands on why the show is likely to remain as just the three hosts.
Deep-diving into the data, and in particular their chosen topics has a dual benefit for the Trio. Sometimes they select a topic that really stretches their own knowledge.
Replacing Pete was no mean feat and Cate reflects on Mike's appointment and some of his cheeky antics.
The Trio have each selected some of their favourite snippets from the early days .... we hope you enjoy!
Show Notes: https://www.propertytrio.com.au/2024/06/03/celebrating-five-years/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
This week, we unpack a fabulous listener question from Melissa. "What advice would you give to those of us who have construction loans were the build is dragging and we're being squeezed between increasing rents, increasing interest rates, and increasing construction costs?", she asks. "And what advice would you give to anyone considering a construction loan? "
Cate steps through some of the planning, building and environmental issues that can threaten a build or renovation.
Mike sheds light on the flow-on effects that are triggered by planning and building delays. From overcapitalisation to materials surcharges, council enforced orders and others, there are some serious risks that must be considered by those who decide to build or renovate.
How can renovators avoid some of the stressors? Dave has some good tips...
How many people consider the contractual details, milestone payments, additional costs and cashflow considerations? It can be tricky to navigate these points, but Mike has some great ideas he shares with the listeners who are considering embarking on a build or a renovation.
How long should people spend in the planning phase? Mike sheds light on some of the elements that get missed at the design phase. Did you know that approximately 60% of defects occur at the design phase?
The Trio share their advice for those who are thinking about a construction loan. Construction lending experience is critical, and Cate and Dave chat about the key differences between traditional, established-property lending versus construction lending.
And what is an "as-if completion valuation"? And what is the process that needs to be followed? Mike gives us some valuable insights into the role of a Quantity Surveyor.
..... and the gold nuggets!
Cate Bakos's gold nugget: There are three things that Cate thinks are really important to nail. 1. understand the budget. 2. work with someone who will work to your budget. 3. have a very good strategic finance person on your side.
Mike Mortlock's gold nugget: "Make sure the contract is reviewed!" Having an firm understanding of all of the important elements is so valuable for those who are building and renovating.
Show notes: https://www.propertytrio.com.au/2024/05/27/home-building-and-development-project-perils/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Mike kicks off this episode, and directly following Budget Night, the Trio chat all things Federal budget. From the lack of new property initiatives to questioning the impact of the Federal Rental relief, one thing is obvious. The Labour government are acutely aware of the need to see inflation rates reduce, and we are less than one year out from an election. The budget could be described as tame, but that doesn't slow the discussion at all for the Trio.
April’s increase takes the current growth cycle into its 15th month, with housing values up 11.1% since the trough in January last year. However, almost every capital city is recording stronger growth conditions across the lower value range of the market.
The shift towards stronger conditions across lower value markets can also be seen between the housing types, with growth in unit values outpacing house values over the past three months. Hobart was the only city where houses recorded a larger gain than units over the past three months.
Regional markets have shown a slightly stronger quarterly growth rate over the past five months than their capital city counterparts, following a 10-month period where the combined capitals index was outperforming. Regional Victoria (-0.1%) was the only rest of state market to record a decline in values over the rolling quarter. Nationally, rents were up 0.8% in April, a slightly lower rate of growth relative to February and March when the national rental index rose 0.9% and 1.0% respectively.
As Dave points out, Although rental growth may be tapering, supply remains extremely short and the trend towards smaller households seen through COVID has been slow to reverse, further amplifying rental demand. It is likely rental growth will remain well above average for some time yet.
In April, the national gross rental yield rose to 3.75%, the highest reading since October 2019, up from a record low of 3.16% in January 2021. Vacancies continue to remain tight, although a subtle ease is evident from last month to our current month, with more than half of the capital cities increasing slightly.
Dwelling sales look to have moved through a cyclical peak in November last year. Although the monthly trend in home sales is highly seasonal, the less seasonal six-month trend has remained relatively flat since the November rate hike. Estimated sales over the past three months are tracking 8.6% higher than at the same time last year, and about 5.1% above the previous five-year average.
Listing volumes tell an interesting story, and as Cate points out, the rate of new listings is remarkably 'normal', in fact it's slightly stronger than the past five year average. However, the total listings tell another story. Demand is exceeding supply, and older listings are now being snapped up by buyers. The trio canvas what the possible driver could be, and they determine that old stock, (in particular, units) could be the reason. Given the the relative outperformance of units in most capital cities, this possibility doesn't seem all that extreme.
In an effort to cover off the Consumer Sentiment Index, we turned to the ANZ Roy Morgan poll given Westpac's index is yet to materialise. Consumer Confidence remains very weak, sitting at its lowest level for the year.
Show Notes: https://www.propertytrio.com.au/2024/05/20/ep-258-april-market-update/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate circles on on what technically defines a townhouse. She shares an example and talks about the differences between apartments and townhouses when it comes to land on title.
Mike asks a tough question, "How do townhouses perform, as compared to houses?" but as Cate points out, it's not a hard and fast rule. There are elements that can bolster up the value (and performance) of a townhouse such as vista, prestigious locale, water views etc. Of course Land to Asset Ratio comes into play, but it isn't fair to classify all townhouses the same.
Dave talks about the complexities of buying a townhouse that is yet to have it's subdivision registered. This is technically deemed an 'off the plan purchase' and this does carry lending risk for some buyers. But what can buyers do when they need to move in to their new home by a certain date, but title registration is delayed? Cate shares an interesting possible solution .... a license agreement.
Cate runs through the various subsets of units; apartments, villa units, and townhouses. She breaks down the hierarchy of land ownership for each subset and details some of the formats of townhouses and common land versus no common land. And how do some townhouses qualify for no owner's (or strata) corporations?
"These types of townhouses are inherently more valuable".
The Trio delve into the attributes that developers look for to optimise their profits on a multi-unit development site, but Cate also talks about some of the investor mistakes associated with medium-density development activity areas.
What are some of the attributes that Cate looks for when assisting developer clients? Tune to find out...
Lending is not always straight-forward or easy for developer finance and Dave shares some of the categories of lending and LVRs, from small-time residential to larger-scale commercial. Buckle in for some valuable, technical insights and explanations, and Cate points out the risks.
And what are some of the things that developers get wrong?
..... and the gold nuggets!
Cate Bakos's gold nugget: Bedroom count can create a difficult compromise. Is the bedroom too tight? Is the proportionality of the unit not feeling right? You have to ask yourself the question; "Have you bought yourself a lemon?" Overcapitalisation risk challenges the profitability of making changes, so buyers need to search in the right area for the right townhouse.
Dave Johnston's gold nugget: If a townhouse is going to be a stepping stone home or an investment, it can be quite feasible for first time buyers. Dave implores buyers to consider buying into a great location that is close to where they would ultimately like to live in their family home.
Mike Mortlock's gold nugget: Mike likes townhouses! Provided, of course, that they are well-located. He notes the stronger rental yields, but his concern is that of scarcity.
Show notes: https://www.propertytrio.com.au/2024/05/13/all-things-townhouses/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Mike has crafted a great episode from the 2020/2021 tax year data.
The average income rose to $68,289. Surprise, surprise, Double Bay came in at first $266,000 and Dover Heights, Rose Bay and Vaucluse came in second at $230,597, and Toorak (Vic) starred, but Cottesloe and Peppermint Bay in WA came in third at $229,000.
The median is what’s interesting. Stats can be distorting. The median in the top ten suburnbs is $80,000, but the average is significantly higher”Cate sheds light on the returns lodged during the year 2020/2021 which were up 28.3% on the 2006/2007 financial year.
A large proportion of SMSF owners account for this strong differential and the Trio ponder the popularity of SMSF investment.
“If you don’t own your own home, you’re in big trouble when you retire.” How much truth to this claim is there?
The Trio unpack the history of superannuation and reflect on super from an employer’s angle too.
The big bucks earners start with Surgeons at an average income of $457,281, followed by Anaesthetists, then ‘Financial Dealers’ (whatever that means?!), and fourth with Mining Engineers.
Where does the revenue come from? Company tax and GST, followed by individual income tax, and only 15% is GST. Dave dares to raise the concept of bracket creep.
Mike shares a startling stat, “88.35% of Aussies earn less than $120K, but the remaining 11.65% pay just over half of all income tax in Australia.” The bracket that most Australians sit within is the $6001 – $37,000 income earners. Dave adds that 4% of income earners pay 35% of tax and he highlights the sensitivities of bracket creep and the required changes.
Historically we have always had net rental losses, but what happened in 2020/2021? Cate explains…tune in to find out!How many people earn six or more properties? Cate has some insightful stats to share. Check out our show notes to see an interesting breakdown.
.….. and the gold nuggets!
Mike Mortlock’s gold nugget: Things are a little bit more complex than the media would have you believe. When you slice and dice the data, you get some interesting results. But stay tuned for the battle leading up to the Federal election.
Cate Bakos’s gold nugget: The fiancial year where we saw net rental gains (2020/2021) needs to be contrasted against the following year. We’re on treacherous territory with over 90% of private investors servicing the rental market while our politicians focus on the downside of negative gearing.
Dave Johnston’s gold nugget: The word negative gearing needs to be understood better in relation to all business activities. As Dave points out, when this term is associated with property it’s portrayed as ‘the big bad wolf’, but negative gearing is widely misunderstood.
Shoe notes: https://www.propertytrio.com.au/2024/05/06/ato-insights-unveiled-what-does-the-data-tell-us-about-investor-behaviours/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate kicks off the episode and invites Dave to share a bit of information about our exciting case study couple and their quest to move to Venus Bay to enjoy a simpler life. They asked Dave's team to help them work out how they can achieve their goals, including the generation of a passive income and retaining their Melbourne home as an investment. Is it realistic? Is it achievable?
The Trio delve into the emotions that can run when setting these types of goals. They also congratulate our case study couple for having a firm goal and setting about constructing a plan.
"Not having a plan is like chipping away at a piece of marble without knowing what the statue is going to be", says Mike.
Rachel and Marcus have a very solid financial outlook. Cate gives a fiscal snapshot of their debt, income and equity position for context and Dave runs through the critical questions that are asked in order to determine their property plan.
Our case study couple rated themselves on the risk profile meter as 4-4.5 out of 5, however the Trio challenge this and discuss their rationale for down-scaling our couple to lesser risk score.
Dave steps through the assumptions and inputs, and Cate weaves through each of the three scenarios that were presented to the couple. What is a prudent capital growth forecast rate? And when should consumers be wary? Mike expands on the reasons why some claims can be dangerous and Cate warns about the risks of buying brand new.
The three scenarios show a progression of outcomes, and with small tweaks and changes, each scenario is quite different from the last option. But what are some of the most stunning outcomes, and what are the powerful tweaks that could surprise many of us? Tune in to find out....
Cate touches on the risks of buying a future home, and the Trio share some of the mitigants others who find themselves in a similar situation to consider. One of the three scenarios not only gets our hard working duo to their goals, but enables them to enjoy an even higher passive income. What are some of the tips, tricks and counter-intuitive moves that they had to consider?
We wish Rachel and Marcus a wonderful and rewarding journey, and a fabulous future in Venus Bay!
..... and the gold nuggets!
Cate Bakos's gold nugget: The tiny little decisions that can be made from one scenario to another may not seem significant, but can be very conservative in the long run. The counter-intuitive suggestions can make a huge difference.
Dave Johnston's gold nugget: This is a great example of the benefit of creating a property plan. "For anyone who's interested in creating wealth through property, setting a plan will set you a step ahead."
Mike Mortlock's gold nugget: Make sure you have income protection insurance and other risk-mitigating insurances. Congrats to our case study couple!
Shownotes: https://www.propertytrio.com.au/2024/04/29/listener-questions-moving-to-the-coast-for-a-simpler-life/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate kicks off the episode by sharing that the podcast is just a couple of recordings away from it's fifth birthday!
Kym is a single mum of two teenage kids, a business owner and her rent on her home has just gone up substantially. Kym has been yearning to get into property ownership for a few years now, but she is facing a few headwinds currently.
Dave talks our listeners through some of the hurdles that self employed borrowers face, from financials and timeframes, to heightened scrutiny. He also sheds light on some interesting small business statistics. "Small businesses comprise 97.3% of businesses in the whole nation". Dave steps through the impact that dependants (i.e. children) have on borrowing capacity with some context of a case study.
While Mike talks through the high rate of rental increase that Kym is facing. What can a renter do if their rental increase is unfair or unsubstantiated? Tune in to hear...
The Trio chat about some of the initiatives available to those who need a bit of assistance with their home buying. From National initiatives to state-based offerings, the Trio chat about each opportunity and consider those that could be helpful for Kym to explore. Shared equity schemes, deposit guarantees, regional opportunities and concessions are some of the items on the discussion table. (See these initiatives in the show notes).
We hope Kym finds some of this helpful, and we love the fact that Kym reached out with a question that applies to so many people.
For our second listener questions, Claire asks, "What do you do when your financial planner is anti-property?"
Dave breaks down some of the key differences between the role of a financial planner and a property planner. The Trio ponder some of the reasons why some financial planners are less than enthusiastic about property as an asset class. Cate has a few possible reasons on her laundry list and she chats with Mike and Dave about some of these reasons.
"You can't sell a third of a property easily."
So, how can investors get the best out of their financial planners, and how can they navigate any perceived negativity about property. The Trio have a few tips to share.
..... and the gold nuggets!
Cate Bakos's gold nugget: "To anyone who's looking to get into the property market and needs a little bit of help.... check out some of the initiatives on offer and familiarise yourself with them."
Dave Johnston's gold nugget: Dave expands on his answer for Claire about the role of a property planner versus a financial planner.
Mike Mortlock's gold nugget: Look at the 'ad-backs' and make sure your accountant is providing reliable information to your broker.
Show notes: https://www.propertytrio.com.au/2024/04/22/listener-questions-single-parent-and-financial-planners-vs-property-planners/
The March 2024 data is out, and Cate concedes she got it wrong with her March data predictions. She's considered the reasons why, and Cate sheds light on a possible reason for this, and it relates to bias.
Dave overviews the last twelve months of growth, and he points out that the last year has delivered almost 10% growth for the combined capitals; something very few would have predicted.
Cate sheds light on some of the enquiry she's getting, and some of the reasons why investors are turning away from ultra-hot markets. Perth is one example of a hot market, and the Trio explore how much steam remains in the Perth market.
Cate recalls a great article from Pete Koulizos in the recent PIPA Newsletter... he believes that Adelaide will continue to perform. Tune in to hear more...
Mike segues into rental performance. Median rents as a function of income highlight the expensive cities for tenants. Cate's insights into house versus unit rents is interesting also. Is there a correlation between increased land tax and increasing house rents? Mike explores.
Mike dares to broach the question Perth's climbing rents and tight vacancy rates; surely this signals that Perth is not at the top of the cycle.
Sales data is showing volumes above the five year average; although the Trio plead with CoreLogic to reinstate listing numbers and agent appraisal activity.
Distressed listings are showing an uptick in a few states, however. Are any jungle drums beating in Victoria? Cate delves into the data and asks the hard questions, although Dave wonders if distressed listings paint a picture of the overall health of a given market. Is there a correlation?
The Westpac consumer sentiment index isn't showing a dramatically different outlook since last month, but at a state level the indices aren't all aligned. Dave hints at the cities that are showing a more optimistic outlook.
Investment lending has increased despite headwinds such as interest rates, additional taxes and onerous rental reforms.
This state breakdown of investment activity is intriguing, particularly the disparity between Vic/Tas and the other, hotter states.
And... time for our gold nuggets...
Cate Bakos's gold nugget: Cate considers how we interpret data, and how bias can be introduced.
Dave Johnston's gold nugget: "n order to avoid FOMO, understand the right price point for yourself. Work out your strategy and match up the property location and type to your strategy. Look at the long term when you're making your property decision.
Mike Mortlock's gold nugget: "You can't buy the data, you can only buy the property."
Shownotes: https://www.propertytrio.com.au/2024/04/15/ep-253-march-market-update/
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Sally is about to purchase her first home. She has a deposit of $300K and is targeting a purchase price of $700K - $800K. Sally wants to live in the home, but is feeling that her borrowing capacity as an owner occupier is holding her back. She asks the Trio whether she should initially purchase as an investor in order to borrow more. Dave breaks down Sally's initial strategy with a few clever questions.
Sally is targeting Melbourne and she works in town. She is thinking of living in it for 5-10 years, and then upgrading to a larger family home when the time comes, keeping this initial property as an investment. Five to ten years is a long time though, and Sally is keen to find a property that will be adequate for her for a 5-10 year period. Cate has some thought-provoking ideas for Sally to consider. Cate also talks about tenure, and the importance of buyers making sure they have at least five years of tenure in their plan.
Sally has indeed stated that she has done some homework and she’s identified that 2BR townhouses and villa units might be the ideal purchase. Cate demystifies villa units and recalls the conversations she had in previous eps with Pete about dwelling description variations around the nation.
Sally has made a deliberate decision to avoid apartments. But.. not all apartments are equal.
"There's apartments, and then there are apartments".
Which are the variety that Cate thinks are absolute out-performers? Tune in to find out.
Given townhouses aren’t all equal, the Trio unpack the various types of townhouses.
Sally notes that the market conditions have changed a bit over the last couple of years in Melbourne.
How can Sally best navigate the Melbourne market over the coming months? Sally circles back to her original suggestion about getting an investment loan for a property that she wants to live in. But as Dave explains, it’s not that easy. How do the banks regulate this?
Lastly, Sally is unclear on whether she gets the stamp duty benefits if it’s an investment loan. Dave sheds light on some great tips for our loyal listener.
.....and the gold nuggets:
Cate Bakos’s gold nugget: Sally can use the ‘sold’ tab on the property search engine to get a great peg in the sand.
Dave Johnston’s gold nugget: “Make sure you can purchase a property that you can see yourself living in for 5-7, even 10 years. Can you get a better quality asset in a better location, even if it means forgoing stamp duty savings?”
Mike Mortlock’s gold nugget: Mike congratulates Sally for saving $300,000 for a deposit, and he assures Sally not to worry about Melbourne’s slow performance.
Shownotes: https://www.propertytrio.com.au/2024/04/08/listener-question-owner-occupier-versus-investor-dilemma/
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For today's episode, Dave throws it out to Mike... the paper that Mike's business has uncovered relates to growth of rents in units, contrasted to house rental price growth. Median rental growth for units have eclipsed that of houses, but why?
The Trio unpack their theories. Are investors pushing rents up or is the supply/demand equation speaking up? Mike hands the wooden spoon to the Victorian Parliament "People always want to be close to the action".
Mike ponders the pull of the city. And Cate mentions traffic congestion... is it an issue? Labour shortage is challenging our economy. As Mike and Dave point out, "Anyone who wants a job, can have one."
Cate sheds light on unit performance in Melbourne and the investors who feel disenfranchised. We now have an undersupply issue that has challenged units in Melbourne.
But what is Mike's data telling us? "How is our aging population likely to challenge this data?", asks Dave. Mike shares his thoughts. And why is WA outperforming? The Trio shed light on this outperformance.
And our gold nuggets:
Dave Johnston's gold nugget: Dave looks forward to the pub!
Mike Mortlock's gold nugget: Unit yields may outperform houses. Mike ponders affordability and concludes that units should be considered.
Cate Bakos's gold nugget: "There are markets within markets. It's pockets, it's streets, it's orientation. You have to remember to use the data wisely when you have a specific wish list."
Show notes: https://www.propertytrio.com.au/2024/04/01/median-rental-gap-between-houses-and-units-closing/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
For today's episode, the Trio are diving into the sophisticated world of investment borrowing and they'll unpack the nuances of leveraging borrowed funds to not just acquire investment properties, but also to optimise the financial structure surrounding your investment to legally optimise deductions.
Despite accountants being tax expertes, they are not mortgage strategists and so it is important that investors understand these strategies and are able to impliment them with their strategic mortgage broker.
Whether our listeners are seasoned investors or just starting out, today's masterclass with Dave will equip buyers with the insights to navigate the complex landscape of investment borrowing.
Dave launches into the ep with the first tip about investment borrowing. But he confuses Mike about good debt versus bad debt. Cate defines good debt, bad debt and terrible debt!
Should buyers try to borrow the full purchase price plus all purchase costs? Surely this could feel alarming for those who are debt averse, but the Trio shed light on when this is a great idea, and why it's so beneficial for investors.
Cate raises the concept of 106% Loan to Value Ratio and Dave distils how this works, and why it's not an uncommon LVR.
Why is 80% LVR such a well-versed figure though, and what lender benefits to some professionals get to enjoy in relation to higher LVRs? "If you read in the media, it's all about the cost you have to save for a deposit, but who really saves 20%?", asks Mike. Good question, Mike. The Trio shed light on the reality of this claim.
Is there any reason to set up the investment loan limit for more than the full purchase price plus costs? And when is this a dangerous play? Mike delves a bit deeper... From cash-out policies to drawdown processes, Dave walks our listeners through this complex question.
"The true cost of your interest rate after the tax deduction is cheaper than the cost of your interest on your home loan (as long as you're above the tax free threshold with your earnings." What does Dave mean by this, and why is this so critical to understand in relation to 'good debt'?
Which tricky scenarios might fall outside of that general rule of paying interest-only on investment, and P&I on your home loan? Dave has three scenarios, and Cate excitedly recognises that her own personal journey currently fits one of these quirks.
And lastly, Dave has some general advice for listeners who are planning to upgrade their home and retain their old home as an investment.
.... and our Gold Nuggets!
Dave Johnston's gold nugget: "If you're getting strategic mortgage advice, make notes." The retention rate of detailed information isn't often compromised, and it's important for borrowers to be clear on their mortgage strategy and set up.
Mike Mortlock's gold nugget: Number one rule - investment debt is what you want to maximise, and home loan debt should be minimised.
Cate Bakos's gold nugget: Not being afraid of good debt is important. But being aware of the worst kind of debt is also very important too. Unsecured, expensive and short-amortised debt can be problematic. "I highly recommend you talk to a strategic mortgage advisor if you have that kind of debt."
Show notes: https://www.propertytrio.com.au/2024/03/25/mortgage-masterclass/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The February 2024 data is out, and the Trio circle the headline; the ridiculously tight vacancy rates nationally. Mike compares houses and unit performance and ponders the drivers for unit purchasers. Dave delves into Perth's outperformance and notes the predictions he and Pete made eighteen months' prior.
Is buyer confidence up? Cate sheds light on her own experience at the coalface. But how does data lag impact the figures, and will Cate's prediction match the March data? Only time will tell...
What is happening with the regions? For the quarter, combined regions have outperformed the combined cities, but why? The Trio unpack this.
Mike dares to broach the question... "Where is Melbourne at?" The Novocastrian dares to challenge the proud Melburnians with this question, but they rise to the challenge and shed light on what is going on in their home city with investors. And have the regions suffered to the detriment of Melbourne's recovery? Not at all, but Cate explains the dynamics post-COVID. Cate also shares the value-proposition of houses in nearby regions versus apartments in Melbourne's inner-east.
Vacancy rates are so tough on tenants right now and the Trio note that vacancies have tightened even further. From changed planning laws to talk of investor incentives, the jungle drums are beating. But sadly the Trio concur that conditions will continue to deteriorate until governments make a different kind of change.
Listing activity is higher, yet sales volumes reflect that buyer demand is meeting supply and this coming weekend is set to be a stand-out weekend for auction numbers. But what will post Easter, and early winter look like?
"We only need to talk about rate decreases and people go crazy"
Rental values have re-accelerated in 2024. Feb recorded the highest rental reading for the last eleven months.
Will rent growth outpace capital growth? The Trio weigh in... and they don't all agree.
The three year bonds curve shows that the money markets are predicting three rate reductions as an average cash rate.
And... time for our gold nuggets...
Cate Bakos's gold nugget: For any prospective tenants out there, you have to be prepared to differentiate yourself in this tight vacancy rate environment.
Dave Johnston's gold nugget: This month suggests that so many data points are pointing towards a property price rebound this year, so if you are considering buying property, it's time to get your ducks in a row. Narrow in on your strategy, arrange your pre-approval and be clear on the plan.
Shownotes: https://www.propertytrio.com.au/2024/03/18/ep-249-february-market-update/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Dave and Cate man the fort this week while Mike does his charity ride... and the duo decided to tackle a great listener question about lending policy, loan structuring and the critical decisions that arise for many.
Jim and his partner have a very important scenario to run past the Trio. They are particularly high income earners with $500,000+ combined incomes, but there are some critical messages here that apply to all home owners and investors. The challenges they face have been exacerbated by increased interest rates, but they also have had second thoughts about the home that they selected in 2019. The dilemmas are very real... how do Cate and Dave address them?
Our listeners chose to buy a house that had less appeal than some of the others that they were missing out on in the lofty hot market of Sydney. Why do people go for the lower hanging fruit? And what are the risks? Dave and Cate share their thoughts, from fatigue to FOMO. Should they sell and rent-vest, re-purchase in another location, or hold their home? "They need to nail the big rock in the jar, which is where they'd like to live long-term to raise their kids." Dave's ever-pragmatic insights shine through... tune in to hear more.
Cate discusses the importance of partners being on the same page as each other, and this is a fantastic case in point in relation to rent-vesting. Rent-vesting is often a particularly challenging strategy for couples and Cate explains why. She also shares a personal experience dating back to 2008 that derailed hers and Ian's rent-vesting strategy.
Jim asks, "Should we purchase a B grade property in an A grade suburb, or an A grade property in a B grade suburb?" Dave and Cate don't necessarily agree, but they each share their answers openly and Cate cites a great recent example. Dave takes up the challenge to help Jim and his partner with the cashflow challenge. How can they ease the pressure, and what are some of the options? Dave and Cate enjoy a good banter about investment strategy, and in particular, retirement strategy... and this is what it's all about!
And lastly, can Jim and his partner achieve $140,000pa passive income? Dave uncovers the answer.
.... and our Gold Nuggets!
Dave Johnston's gold nugget: "If you do plan to purchase a family home, don't put off deciding what that looks like. Start planning for it!"
Cate Bakos's gold nugget: "I wish everyone could afford a property plan. If you can get that right from the start, you can establish things from the ground up". And when you're a high income earner, it really does carry some weight.
Mike Mortlock's gold nugget: Mike talks about the importance of being quite discerning when it comes to buying the family home, and not compromising on the key element.
Show notes: https://www.propertytrio.com.au/2024/03/11/listener-question-dilemma/
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Dave hosts this time. He opens the episode with the obvious question, "What is settlement?"
Did you know that settlement dates are completely negotiable? And did you know that some people conduct their own conveyancing?, (although the Trio don't recommend this, as it involves a lot of risks and responsibilities.) If you do your own conveyancing, you will need to research what is required and the relevant legislation. Like real estate licences, they are state and territory based. Cate shares some of the challenges associated with cheap, unreliable conveyancers.
Physically, how does settlement happen? Cate and Dave weigh in, and Dave explains how settlements hinge firmly around the broker and the banks. Settlement day is a bit of a magical event. Cate talks through the parties who are involved, how long the actual settlement takes, how it's facilitated and how conveyancers conducted settlements before our online portal, PEXA existed.
What is an “ideal” settlement day? What does it look like? The Trio canvas the steps and the paperwork required to get to settlement. From legal transfers to 'funds to complete', bank loan documentation certification and pre-settlement inspections. There are many steps that are important in the lead up to settlement day.
When are short settlements advantageous? And why would a buyer consider making a short settlement? Cate explains that many buyers think that a shrewd offer with a short settlement is the key to tough negotiating, but sometimes this isn't the best way to drive a good bargain.
What can go wrong at settlement? Tune in to find out!
What causes delays? Dave and Cate step through a range of issues that can threaten a smooth settlement, from finance to lost titles, to late subdivisions, caveats and lost titles. There are many elements to manage and be aware of when it comes to property settlements.
What happens if the purchaser is at fault and can’t give the vendor confidence that they can settle? The answer to this question can be quite ugly, but it's important that purchasers appreciate the gravity of the situation when it comes to obtaining finance in time.
And let's assume settlement goes to plan.... what are the next steps? Dave steps listeners through the nitty gritty that borrowers should check straight after offset to make sure they are on course with their mortgage strategy and loan facilities.
.... and our Gold Nuggets!
Mike Mortlock's gold nugget: "Don't do it yourself! And book the truck for the day after settlement!"
Cate Bakos's gold nugget: "Make sure you've got a really good checklist! Give us a yell if you'd like a checklist emailed over to you."
Shownotes: https://www.propertytrio.com.au/2024/03/04/settlement-day-what-can-go-wrong/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
In this innovative, two part series, the Trio share their own ideas and ideals to contribute to some solutions for solving the housing crisis.
Dave is clear. "It's all supply, supply, supply". But he is clear on the need to define the 'ideal' balance being agreed and struck.
Cate and Dave debate the short-stay accommodation impact on rental supply... is short-stay problematic? Mike weighs in with his thoughts. Will the day come when the government(s) decide to entice investors back? As Cate points out, limited investor participation is dangerous. But politicians need votes.
The Trio tackle consider some possibilities, but questioning the disincentives is their first stop. The Trio share their ideas, with Cate's investor-incentives, and Dave's finance considerations. Cate contemplates the role that banks could play with postcode-based information. Mike likes the idea of moving towards a more European approach; long lease terms. Tune in to hear more.
How could lending changes enhance our chances of improving the housing crisis? And what changes to some great existing government policies could make a significant difference?
"Some of this is a function of being one of the wealthiest nations in the world".
How can we provide support housing for critical workers? And how can we provide crisis accommodation? Does decentralising government services have a positive impact on housing?
Cate runs through quite a few of the Trio's ideas. There is no doubt that many solutions have unintended consequences. Political decisions aren't easy, and tax reform and legislative change are often unpopular. The Trio recognise this and reflect on the power of consultation and healthy debate.
Shownotes: https://www.propertytrio.com.au/2024/02/26/tackling-housing-affordability-part-two/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The January 2024 data is out, and the capital city league ladder has been changing. But are houses and unit imbalances across capitals skewing the data? Dave explains..
"Data does let us down like that", says Cate and she shares some another example of stock segmentation and purchaser incentives skewing data.
What's happening with the regions? The quarterly data shows that regions have outpaced the capitals. Are we seeing a recovery in some of the regions that suffered during 2023 with the reverse-COVID exodus?
Mike dares to broach the inflation data and asks his co-hosts when they think interest rates will fall. Dave suggests August/September this year, whereas Cate won't be surprised if it's even in 2025. Time will tell!
The national rental index recorded it's strongest monthly rise since April. Could things get worse before they get better? Cate shares her concern about the rate of investor sales and anecdotal evidence from agents' reporting. Cate predicts that rental hikes will eclipse 10% nationally. She also talks about the challenges being tougher for families, as opposed to singles and couples.
We have sales volumes to thank for our 2023 year holding up as it did, but now that sales numbers have increased, will the supply and demand ratio threaten capital growth? It seems not. Buyer appetite is strong and sentiment has ticked up somewhat.
The stock availability, (or lack thereof) has a direct correlation with capital growth, as shown in our charts in the shownotes.
Yet the distressed listings have The Trio intrigued. Is Victoria's data point a green shoot or an anomaly? It's one to watch....
The Westpac Consumer Sentiment data provided some good discussion; what a difference the surprise inflation figures made! But which measure still has Cate worried?
Cate draws attention to the unsecured lending figures and holds concerns about some of the items that people are financing on high-interest credit.
Dave explains how the consumer sentiment index is determined with 50+ sub-groups of people assessed. It's an interesting peek behind the curtain!
Investor activity is up and it has been steadily increasing. Despite the investor-led sales, talk of increased rents and the potential for strong capital growth surges are exciting a cohort of investors.
The three year bonds show that we could see rates drop in the near-term, yet the ten year bonds suggest that rates could sit at similar levels to where they currently are now.
And... time for our gold nuggets...
Cate Bakos's gold nugget: Stop spending on discretionary stuff! And better yet, stop using unsecured debt to do it. We need to bring down inflation.
Dave Johnston's gold nugget: An interesting fact... House values have continued rising at a faster rate relative to units. House and unit median values are at their greatest differential ever.
Mike Mortlock's gold nugget: Don't make it a holiday, make it a toy, and make it second hand.... AND use cash!
Shownotes: https://www.propertytrio.com.au/2024/02/19/ep-245-january-market-update/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
In this innovative, two part series, the Trio canvassed some measures that could be implemented to ease affordability and promote the healthy functioning of the Australian property market.
Mike took some inspiration from an industry friend's article, and Cate and Dave chimed in with their thoughts on some of the initiatives from the article.
In Part 2, the Trio will cover their own ideas and insights to foster a healthy property market.
How do the Trio define a healthy property market? Dave considers the different perspectives from all of the various stakeholders. From developers to renters, first time buyers to investors, NIMBY's, local council, retirees, ... the list is enormous. Cate weighs in with her thoughts on the multiple barriers for acquiring home ownership, in addition to the 'big three'. Our casualised work force, for one is a significant blocker for credit availability for many. Dave cites an insufficient supply of new property.
The Trio step through the six innovations in the article, namely;
* 45 year loan terms
* Phasing out stamp duty
* Balloon payments
* Separating the 'real risk' from 'robotic risk'
* Social housing accountability, and
* Superannuation, LMIU and Family Equity
Dave's insights into loan term increases is enlightening and he chats about the historic changes of loan terms over the decades, and also the impact of the scars inflicted from the GFC. He touches on the stigma of longer loan terms, and essentially, borrower mindset.
"Are all innovations stimulatory?" asks Mike, and he proceeds to cite many examples.
Cate shares some of her preferred initiatives that have been devised to assist first home owners, but she also illustrates the failings of past concessions/grants, and poorly considered incentives.
Dave boldly tackles the concept of Stamp Duty abolition and proposes some thoughtful ways that the State Governments could maintain the revenue stream. He also touches on the possibilities that superannuation offset accounts could open up.
How could balloon payments work? And what are the pitfalls? Dave expands on the possible unintended consequences.
...And our gold nuggets!
Cate Bakos's gold nugget: This is a courageous episode, and lots of people have lots of different ideas on this. What is important is that people in this industry who do care about housing feel like they are in a safe space to speak up.
Mike Mortlock's gold nugget: "We require a national debate on this." The politicians have had their opportunity and they have had quite a few fancy ideas that have exacerbated some of the issues. "Investors are part of the solution."
David Johnston's gold nugget: "Send us your thought on what you think will make a difference to creating a healthy property market for all participants.
Show notes: https://www.propertytrio.com.au/2024/02/12/tackling-housing-affordability-part-one/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
This week's episode features a two great listener questions, the first from Catherine.
"My husband (39) and I (32) are doing well financially and trying to decide our next move. Our goal is to pay off our mortgage but we feel like maybe we should be buying an investment property. In SA western suburbs, our house is worth around $900k and our mortgage is sitting at $290k. We have a spare $3000 monthly (after bills and allowances) that we are putting on our mortgage. If we buy an investment property it will be negatively geared but we aren't sure whether it is worth buying now as we will have to contribute to repayments. To buy a house with some land in a decent area is around $600-700k+. Will the tax deductions be worth it or should we wait and keep smashing our mortgage, pay it off in 5 years?"
Many people feel compelled to pay down debt, but this isn't necessarily the optimal way to build future wealth. The Trio share their individual thoughts around Catherine's dilemma, explaining leveraging, setting financial goals and discussing the positives of good debt. Dave also includes a scenario to illustrate the potential in store for Catherine and her husband.
Dave acknowledges the strain and subjectivity of such a personal decision. Debt aversion can strike many, and as he points out, understanding our surplus cash flow is a critical step to getting it right. The scenario Dave cites is modest, and the modelled outcome spells a $500,000 superior net asset position for our listener couple.
Our second listener question challenges the use of the Land to Asset Ratio as a metric. Lennard's musings are plentiful and Cate, Dave and Mike tackle each one.
If capital growth is maximised by a higher Land to Asset Ratio, why wouldn't an investor just buy land?
And is a million dollar farm in the outback a better investment than a small parcel of land in a blue chip, city suburb?
And how do you quantify the exact land to asset ratio metric? Lennard's questions are probing and they keep the trio on their toes.
They canvas the difference between capital growth returns, rental returns and tax returns. Each also offer examples to help explain the ways in which a Land to Asset Ratio metric can be a helpful measure.
Dave tackles Lennard's question about how a buyer could attribute a value to both the land and the dwelling components of a property. He points out that it's not an exacting science.
When can dwellings appreciate? Dave takes up the challenge and faces it head on, citing scarcity, inflation and maintenance. Mike chimes in with the term "functional obsolescence" and he illustrates depreciation.
Land to Asset Ratio is not static, and nor is there an optimal ratio. It's important for investors to recognise where their own tolerance comfortably sits. .
...And our gold nuggets!
Cate Bakos’s gold nugget - Due diligence counts for so much, and it goes way beyond Land to Asset Ratio calculations.
Mike Mortlock's gold nugget - Value drops and depreciation are two very different concepts.
Dave Johnston’s gold nugget - Land to asset ratio is just one factor when assessing the future capital growth prospects of a property. It is not a valuation methodology at all.
Show Notes: https://www.propertytrio.com.au/2024/02/05/building-long-term-wealth-and-mastering-land-to-asset-ratio/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The December data is out, albeit in parts after the Core Logic team put out a thinner report over the break. Dave points out that December represented the smallest gain in property growth and he ponders whether the most recent interest rate increase triggered a slowdown at year end.
Dave also draws our attention to the 'tale of two cities', and the two-speed property economy between the mining states and the non-mining states.
Cate questions the relationship between listing activity and growth rates. Is there a correlation? And are we back to the good ol' days when it comes to the summer break and the property industry shutdown?
What's happening with the regions? Dave and Cate shed light on some of the elastic behaviours in certain regions.
Mike shares his press release story about the national rental crisis with the listeners... tune in to hear more.
Was the December rental figure a data blip, or has the rental demand started to ease? Cate demystifies things for our listeners.
Gross rental yields have ticked up to new levels, but as Dave explains, "that's what they used to look like!" Like many other property-related cycles, rental yield, too is cyclic.
Are we expecting a busy listing period over the coming months? Cate shares some coal face intel and some insights into buyer activity currently.
What is the Westpac Consumer Sentiment Index telling us? Have the interest rate increases finally bitten hard? And what direction does the Trio think rate movements will take over the coming months/year?
And Mike asks Dave for some business insights into borrower activity; it's an intriguing overview and it ties in with the data.
Lastly, Cate draws attention to the construction challenges being faced now.
And... time for our gold nuggets...
Cate Bakos's gold nugget: For all those people who are planning on purchasing sub-median priced property in early 2024, stay close to the agents as ex-rental stock emerges
Dave Johnston's gold nugget: Dave emphasis the need to make your own personal decisions based on your own economy.
Show notes:https://www.propertytrio.com.au/2024/01/29/ep-242-december-market-update/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Pete joins us in the studio! Mike kicks off the Trio's predictions for 2023 and he runs through their January predictions, holding each accountable for their forecasts. What will the market do? Cate admits she was quite bullish on this question, while Dave thought prices would drop 5-8%. It was the Property Professor who got this prediction right.
Which capital cities will be the top performers? According to Mike, the Trio all got this one right in identifying Perth as a top performer. Cate concedes though that Melbourne demonstrated resilience, as opposed to a bounce-back, and she points out that none of them picked Brisbane. And Pete sheds light on some fundamental reasons why Perth was so popular for eastern states investors.
How will the regions perform? With hybrid office working environments, things are changing now, but what will the larger regions do in the short term? Who got it right? And what is in store for office spaces? ...Tune in to find out.
Investor numbers: What did the Trio underestimate? How has credit policy played a role? And how did tax legislation changes impact investor activity? The Trio ponder.
What government intervention could impact the property market? Each of the Trio had a good point, but who got it the 'most' right?
Developers and building - what did the Trio think would be in store for 2023? Why could we see private builders ease their pricing? Does Cate have a valid theory? And Mike sheds some light on the challenges today for volume builders... and it's insightful. Pete adds his insights on the current building pipeline and Dave discusses supply chain woes. Dave was determined the deserved winner of this prediction.
Where will interest rates land at the end of 2023? The Trio concede defeat!
Rents and vacancy rates - where would they end up at the end of 2023? Cate and Pete took out top marks for this prediction: "Record increase in asking rents for 2023. It will shadow 2022, we’re not getting more stock, we’re getting more people. With interest rate increases, some people who were looking at purchasing might be looking at renting instead."
Where did the Trio peg listing and sales volumes by year end 2023? Full marks to Dave! "We’ll see it around the 5 year average this year, first 6 months will be flat, but pick up in the back half of the year.
And what risks did they anticipate could impact the market? From recession to higher unemployment, war/invasion and share market corrections, the Trio canvas some of the possibilities.
Lastly....where did the Trio think inflation would head? Pete speaks candidly about the practicality of reading inflation charts. But did Dave and Cate get it right? Or were they one year too early with their predictions?
....And our gold nuggets!
Peter Koulizos's gold nugget: Borrow as much as you can to buy as much as you can, and hold on for as long as you can!
Cate Bakos's gold nugget: The differences of opinion between the Trio is what makes the show interesting, but it also sheds light on the importance of noting different economists' points of view. We pride ourselves on being fiercely independent.
Shoe notes: https://www.propertytrio.com.au/2024/01/22/2023-predictions-unpacked/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate kicks off the Trio's predictions for 2024 and reminds Mike that he will be accountable in a year's time.
Dave picks value growth of 2-7% nationally in 2024, with the market being weighed down by Melbourne and Sydney, with a comment that he feels we'll see a similar year to 2022. Cate feels that a strong supply of listings in early 2024 will dim the growth potential for the busy cities in the early months. The supply and demand ratio may lead to some great buying conditions during this period.
Cate backs Perth, Adelaide and Brisbane for outperformance growth for the year. Mike leans on Chris Gray's comment, "It will either go up, go down, or stay the same." Yep, thanks for that Mike. Mike does share some economist's updates for our listeners though and challenges Dave with a 7-9% growth estimate. Mike suggests that 2024 could be a year of two halves. Tune in to find out why.
Will 'chicken and egg' impact our markets again? And could this lead to a stock undersupply?
The top three performers.... Who will get it right? And who will be proven wrong? The Trio place their bets!
Cate challenges Dave and Mike with their insights and predictions into investor numbers and government intervention. From vacancy taxes, rent freezes, superannuation, and first home buyer initiatives, they have some fun debating the possibilities. Cate also touches on the tax opportunities that could arise as our baby-boomer generation age.
Mike's insights into developer activity and construction is intriguing. It's a must-listen! Interest rates and inflation.... where do Cate, Mike and Dave think they will land in 2024? Their responses aren't aligned either. The Trio agree that rental vacancy rates aren't likely to improve for renters and Cate gives Victoria a special mention for double digit rental growth for the year.
The Trio also contemplate listing numbers for the new year and the impact that this could have on the markets.
And lastly, Dave, Cate and Mike toy with unlikely and the unpopular as they discuss the biggest potential threats to the market.
....And our gold nuggets! While they've enjoyed putting together this episode, they remind listeners that predictions can be fickle. "Hotspotting is never as important as the planning", says Mike.
Show notes: https://www.propertytrio.com.au/2024/01/15/2024-predictions-and-insights-for-the-year/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
This week's episode features a great listener question from Ben.
"Offset account question I am grappling with. I am nearing retirement and have three investment properties in NE Melbourne, two of which are IO and fully offset. Third is IO and partially offset.
I have a PPOR P&I loan with and offset account set up.
I continually go round the conundrum of whether to park my funds offset against investment IO loans or the PPOR P&I loan.
I fully understand the extra cash flow I get by not paying interest on the IO loans, and effectively have the rent as income (taxable).
And offsetting P&I PPOR actually makes no difference to my P&L unless I do something downstream - sell or refinance. Any thoughts?" Cate offers the layman's view on Ben's predicament.
Can Ben have his cake and eat it too? Dave would suggest that Ben 100% offsets his home loan first, and then he would target placing his surplus funds into the highest interest rate investment loan offset account. Switching his home loan to Interest Only is another good option.
Mike prompts Dave with a question: "What stages of life do you typically see your clients facing this conundrum?" Cate weighs in with some insights based on recent economic and banking changes, relating Ben's conundrum to some of her client's questions. When APRA stepped in, requiring banks to set home loan rates lower than investment rates, things started to change for a few investors. Tune in to hear more...
Cate's simple solution hinges around refinancing his home loan to Interest Only, but is it that easy? Dave weighs in with some of the challenges Ben may face. Dave has a technical solution, but it's not easy and will require some intense concentration!
Mike ponders; can refinancing the existing debt to reduce the minimum loan repayment commitment help Ben's case?
Cate and Dave step through the pro's and cons of the various approaches on option to Ben, highlighting the tax benefits, interest rate differential and long-term benefits.
And the Trio shed light on the benefits of offset against Principal and Interest loans.
...And our gold nuggests!
Dave Johnston’s gold nugget - If Ben can't refinance and can't go to IO, Dave highlights the important points for Ben to consider. Sometimes going backwards from a cashflow perspective isn't always the worst case scenario. Looking forward, doing the maths and not losing sight of the bigger picture is important.
Cate Bakos’s gold nugget - Visibility is everything. If Ben has a dashboard and can get a sense of timeframes, he will get a better sense of perspective. His overall portfolio will likely hold him in good stead, but in the meantime he could do a stocktake of his current discretionary spending, and conduct a health check on his current home loans.
Mike Mortlock's gold nugget - There is no simple answer, but there are a number of ways that he can do this. Knowing what the banks will allow is important too.
Show notes: https://www.propertytrio.com.au/2024/01/08/can-we-retire-at-50-and-how-many-properties-will-we-need-2/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Happy New Year to our listeners!
Mike introduces James and Lisa's case study. They are both 36 and have a goal of attaining $80,000 of passive income per year into retirement, and scaling back work to 50% by the age of 50 remains an ideal. Their annual combined incomes are $144,000 and they have $90,000 in savings. Can it be done? And what do they need to compromise on to reach their goal?
Cate ponders their plans and discusses the cost disparity between life in the major capitals versus the regions. She also touches on 'overshooting the runway'; a common pleasant surprise for those who make firm plans early in life.
Dave explains how he and his team would typically tackle the determination of subsequent property purchases, timing, budget and buffers. How did James and Lisa's property plan compare to other plans? Tune in to find out what scenario Dave's team recommended to this duo. Do they purchase an investment first? Do they move to their ideal future home location? How many properties do they ultimately need? The alternative options for James and Lisa are an interesting surprise!
Mike and Cate tackle the investment-future use conundrum; a common investor challenge that the Trio see often. And Dave makes a valid point about the differential in post-retirement outcomes when sensible financial decisions are made at the start of an investor's journey. It's little wonder that compound interest is considered the eighth wonder of the world.
....And our gold suggests!
Cate Bakos’s gold nugget - Retirement is not what it used to be. We don't just stop. We have much longer retirements these days and we do have to think about how we wish to enjoy our segments of retirement, well before the 'golden years'.
Dave Johnston’s gold nugget - When modelling out a property plan, setting pathways and determining if a goal is achievable is critical. Decision-making often has to face adjustment as life changes.
Show Notes: https://www.propertytrio.com.au/2024/01/01/can-we-retire-at-50-and-how-many-properties-will-we-need/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Merry Christmas to our listeners!
AI's Role in Real Estate Investment...
"AI, and particularly generative AI, is a game-changer in real estate investment, even for the average Australian investor."
Mike and Dave explore some of the immediate scope that AI can offer, from generating realistic property images, to creating detailed market reports, and even forecasting future property value trends based on a range of complex factors.
Understanding Generative AI vs. Traditional Machine Learning....
Mike ponders the power of capturing a series of ‘photographic memories’, and details how AI has aided him with his quantity surveying data and identification of trends. Moving forward, can AI predict sentiment? It’s an interesting thought-experiment.
Dave contrasts the take-up of Chat GPT against other advancements such as the World Wide Web, Facebook, and the telephone.
How does AI already exist in the property world? The Trio ponder…
Mike shares some of the practical applications of generative AI for investors
“These AI tools are user-friendly and are designed with the layperson in mind. They can analyse your financial goals and suggest investment strategies, almost like having a personal investment advisor powered by AI."
But Dave reminds listeners that information found on the internet shouldn’t be blindly trusted. Cate talks about the risks to businesses when it comes to AI mistakes.
Can AI predict an outperformance property? Or is this a task that requires human touch? Tune in to find out what the Trio each think.
Cate shares the last paragraph of the episode, which was generated by AI: “AI, and specifically generative AI, is transforming how Australians invest in real estate. It's making sophisticated investment analysis more accessible to everyone."
....And our gold suggests!
Dave Johnston’s gold nugget - Dave ponders the limitations and contradictions associated with AI predicting the best property in the country.
Mike Mortlock’s gold nugget - Mike points out that many price models models and capital growth predictions are often wrong, and he wonders how AI will tackle irrational human behaviour.
Cate Bakos’s gold nugget - Cate challenges the usefulness of chat boxes and scripts when it comes to disingenuous scripting and important client communication.
Show notes: https://www.propertytrio.com.au/2023/12/24/ai-the-future-of-property-investment/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The November data is out! The headline figures prove that the 'middle sized cities' are still out-performing; Perth, Adelaide and Brisbane. And Melbourne disappointed with the first negative month in a while.
We have seen a new peak in house prices in Australia and for the combined capitals; we have seen a new record high for house prices. Cate and Mike marvel at the volatility, and in particular the disproportionate declines that our markets have experienced in recent years. And Dave pulls apart the weaknesses in median prices when it comes to data segmentation associated with houses versus units.
Have the Victorian regions bounced back? Maybe. But how does wage price index correlate? "If you want a job, work from home. if you want a career, come back to the office." Do you agree with this quote? And how has WFH impacted Australian property?
Cate delves into investor-led sales and how the segmented data is captured. And she asks when policy makers will recognise the rate of investor sales.
The Trio focus on rental increases and vacancy rates; despite the rate of growth relaxing, rental growth is still broadly in positive territory for most cities. And when we consider our new arrivals, and policy around skills, it's questionable that our services-inflation woes are being accurately addressed.
Mike asks Cate about new listings, and she points out a few points of interest in relation to the relationship between new listings and buyer demand. Cate talks about the impact of the most recent cash rate increase and the typical hallmarks of December market conditions.
Mike steers us through the Westpac Consumer Sentiment Index. There have been a few subtle changes, and the Trio attempt to understand the broad attitudes towards timing the market and economic outlook.
Personal, unsecured loans have tricked up and Cate is troubled. Tune in to hear more...
And Dave covers loan approvals, mortgages and decreasing refinancing numbers. Dave reports that this is the lowest read since May 2022.
Lastly, Cate and Dave touch on Sydney vs Melbourne price disparity and some of the reasons why Sydneysiders are taking advantage of the Melbourne market.
And... time for our gold nuggets...
Cate Bakos's gold nugget: For all of those budding purchasers who are focusing on 2024 as their year... take advantage of the buying conditions in the early part of the year. Agents are talking about increased listing volumes and the supply/demand ratio may favour buyers.
Dave Johnston's gold nugget: Dave emphasis the attractive conditions that buyers could face in Melbourne, Sydney and Darwin in the early months of 2024.
Show notes: https://www.propertytrio.com.au/2023/12/18/ep-236-november-market-update/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
A lovely listener, Zak has written in to the the Trio. He and his partner have worked hard as young professionals and have acquired two properties; each with high 80's LVRs. One is a boutique apartment in Melbourne's leafy inner south/east, and the other is a character brick house in beautiful pocket of Ballarat. But despite their strong incomes and dedication to their financial goals, their borrowing capacity has precluded them from further investing for now. The question he has is, "how is it that some individuals (often in their early to mid thirties) are able to amass large portfolios of (say) 10+ properties?"
Can it really be done, or is it a mirage?
The Trio enjoy unpacking this one. Dave starts with some possible explanations for how these young multi-property portfolio investors manage it, and he also shares some interesting data direct from the ATO about the percentage of multi-property investors. Scarce indeed!
"Let's talk about the psyche of someone who wants ten-plus properties". Cate sheds light on what drove her to pursue a quick succession of investment property purchases when she was younger. Mike leads the conversation around ego-metrics too.
The Trio challenge some of the mirages out there that investors claim as 'investments', and Cate talks about the headache factor of a large portfolio, particularly when she considers upkeep on interstate holdings.
Mike challenges Dave to share some of the alternative financing sources that our listener duo could consider to break past their borrowing capacity constraint. Dave delves into cashflow and buffers, and he talks about risk and where it is relevant when it comes to multi-property investors.
Dave and Cate agree on one key ingredient that can certainly optimise an investor's chances of attaining a multi-property portfolio... and it's time.
Lastly, our gold nuggets……
Mike Mortlock's gold nugget: Forget the white noise! Just stick to the simple stuff. There's no tricks. Set a plan based on what you want your retirement to look like.
Dave Johnston's gold nugget: Work out how much passive income you need for retirement (in rent), work out the total property value you are aiming to purchase, and consider the number of properties that this represents. Shut out the superfluous noise and don't worry about what others are investing in.
Cate Bakos's gold nugget: Time is your best ingredient, so don't sit around waiting to jump into property. When you can, you should.
Show notes: https://www.propertytrio.com.au/2023/12/11/unravelling-the-mystery-of-how-investors-amass-ten-plus-properties/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
What does it take to become a great strategic mortgage broker?
"You need to listen with intent", says Dave. There is so much more to effective mortgage broking than just having a good grasp of numbers and a sharp recall of loan products.
The most successful professional advisors ask seven times more questions than the average advisor.
Cate weighs in with a comment about how a good advisor can deliver an answer. She also talks about the privilege of being a trusted advisor. And Cate doesn't worry about scripts and dialogue. It's all about listening and asking the right questions.
The ability to notice body language and the EQ required in a role like this is intriguing. Tune in to hear more!
Why is mortgage strategy so much more important than rate? Dave runs our listeners through all of the important considerations in the mortgage strategy.
What are some of the technical skills required to be a SMB (strategic mortgage broker)?
Mike challenges Dave about the Royal Commission and the change in legislation for Responsible Lending. Dave sets the record straight! And he shares some good stats too. Cate and Dave discuss the broker commissions and the practical reasons why SMB's maintain good, ongoing relationships with their clients.
Dave and Mike discuss the processes required to mitigate the consumer's risk when it comes to deposits and settlements. Deadlines and clauses govern a lot of tasks, and attention to detail is critical. Dave shares some of the worst case scenarios.
Lastly, our gold nuggets……
Mike Mortlock's gold nugget: Mike recalls witnessing mortgage brokers and accountants arguing about add-backs and servicing calculations. This early awakening showed Mike the value of a good quality mortgage broker.
Dave Johnston's gold nugget: Dave reminds listeners that he has hardly mentioned interest rates in this episode. Strategic mortgage broking goes so much beyond rate.
Cate Bakos's gold nugget: "If you win them on rate, you'll lose them on rate". Cate relays an important message about the importance of looking beyond offering the cheapest rate.
Show notes: https://www.propertytrio.com.au/2023/12/04/unveiling-the-secrets-of-elite-strategic-mortgage-brokers/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate talks candidly about buyer's agency and how she found her way into this space. Is a university degree essential? Important? And what other past experiences help a BA on their journey? Tune in to find out.
Mike also speaks about some of the impressive BA's he's met and interviewed, and he considers the importance of analytical skills, soft-skills and diverse backgrounds.
The Trio ponder the challenges of adapting to BA-life. From long/late hours to liability, deadlines to negotiation pressure, the role is nothing short of dull. As Mike says, "It's nowhere near as glamorous as it seems."
What extra skills can give BA's an edge? Great question, Dave. The Trio move on to buyer's agency training.
"It's not the piece of paper you want, it's the knowledge." Cate shares her thoughts on some of the pathways that BA's can learn. She also talks about specific past roles that will be complementary for aspiring BA's.
The Trio tackle the training backgrounds and previous jobs that can be problematic for new BA's. Can leopards change their spots? It's an interesting debate.
Cate shares a short experience she had when she was in 'gardening leave' in a government organisation and she draws upon the disparity between that role and the world she works in.
And Mike reminds Cate that she was a rubbish dining companion when her clients called during a work dinner.
Dave dares to ask Cate about some of the short courses available that concern her. Tune in to hear more!
Lastly, our gold nuggets……
Mike Mortlock's gold nugget: Mike splits his answer into two. For aspiring BA's, they really need to take the training seriously. He cautions people to do a lot of research. And for consumers who are looking to select a buyer's agent; put a great checklist together and be prepared to quiz them hard.
Dave Johnston's gold nugget: Dave feels consumers should ask for a BA with at least two years' experience in a BA firm.
Cate Bakos's gold nugget: #askforexperience
Shownotes: https://www.propertytrio.com.au/2023/11/27/becoming-a-buyers-advocate/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Mike has prepared some industry-first data and the Trio deep-dive into it for our listeners this week.
Dave's overview of this special city spans it's impressive performance of late, and the uniqueness of Perth when it comes to the house to unit ratio. Mike also weighs in with some interesting history about WA's quest for independence.
66% of Western Australians voted to leave the commonwealth in a 1931 referendum, but for technical reasons, the vote didn't initiate change.
The mineral wealth stands WA disproportionately from other states in terms of federal funds allocated per state and territory, and Dave delves into the state budget and the revenue generated by WA. With WA accounting for half of the nation's exports, this important statistic is very telling when it comes to understanding what drivers influence markets.
Mike's data compared Q1 2022 to Q1 2023 and found that WA had moved from the 4th most popular state for investors to 2nd in that 12 months. In real terms, it was a 22.49% change in favour of WA with every state except the ACT declining in favour over that period. WA represented 9.38% of all residential investor activity in Q1 2022, and jumped to a whopping 22.49% in Q1 2023 second only to QLD at 37.97%. Despite this recent renaissance, Cate reminds listeners that for the 14-year period starting 2007 to the end of 2020, the Perth property market essentially stayed flat. At the start of 2007 Perth had the highest median house value of Australia’s eight capitals, and at the end of the next 168 months, it went nowhere, while house values actually doubled in Sydney.
Mike's insights into population changes are fascinating.. tune in to find out!
Reading the iron ore crystal ball is no mean feat, but Dave shares his outlook. The Trio share their concerns for investors who are rushing in without understanding the volatility and drivers of a market like Perth. Timing the entry and exit is never an easy thing to do. As Dave points out, an over-reliance on mining is a risk.
Lastly, our gold nuggets……
Mike Mortlock's gold nugget: It's important to be heavily researched on the location as best you can. Thinking about resale and retirement should be a key consideration also.
Dave Johnston's gold nugget: "The most important economy to be across is your own economy. Ultimately you need to make decisions that are right for you."
Cate Bakos's gold nugget: The tyranny of distance needs to be factored in to any investor's interstate purchase decisions. Long term buy and hold plans need to be consider the maintenance burden that long distance renovating can create.
Show notes: https://www.propertytrio.com.au/2023/11/20/perth-property-gold-rush/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The October data has Perth leading the chart, but as Dave reports, the mid-sized capitals are the capitals that are showing us the strongest results. There is a correlation between growth and listing rates though.
Listings have jumped in Spring for Sydney and Melbourne, supporting Dave's correlation theory. Cate identifies data integrity issues, citing Hobart's data as an example. All it would take is a disproportionate number of listings at either end of the market to skew a data set in a city as tight as Hobart.
The Trio ponder foreign buyer disincentives and taxes, in particular the impact on Australia with other countries applying new taxes and restrictions. Dave notes the rate of immigration Australia is currently experiencing and notes that it's at an all-time high, hence putting additional pressure on housing. Yet, as Cate says, we need more people in this high inflationary environment to assist with providing services. Such a difficult balance!
Are the mid-cities thriving because they are more affordable right now? And what impact is the return to the city by the tree-changers and sea-changers having on the data? Cate explains... Cate shares some insights into investor-led sales, and she also talks about which buyers are soaking up these investor sales. Check out our Resources below for more. No real respite in store for renters in most cities, unfortunately. The Trio note that the vacancy rates are as low as they've seen in their time.
At this stage, there is no real stimulus on the horizon that is likely to change this issue for renters. Dave cites some scary stats. But as Cate points out, household formation rates may return to former levels as house-sharers re-band, young adults move back 'home', and singles re-partner.
Listing activity is up nationally, but the Trio discuss the drivers for this, the differential compared to past years, and the overall resilience of the market.
Mike wonders whether the number of Perth sales could be initiated by vendors who have been practising Loss Aversion. Are they happy to sell, now that values have finally returned? And the opposite of Loss Aversion is a Distressed Sale Cate and Dave point out the fact that the states that the media report are 'in crisis' are not showing large numbers of distressed sales, relative to total listings.
In Mike's words, "Media beat-up?" Maybe.
Total housing lending fell 7.8%, but it's still 1.5% higher than a year ago. The 'mortgage wars' we saw in past months are not quite as rampant as they were. Dave proposes we'll see some competition in refinances.
Will APRA bring down the buffer? Tune in to hear Dave's thoughts....
And... time for our gold nuggets... Cate Bakos's gold nugget: New listing activity for the remainder of the year..... most markets slow down for Christmas break. So, for anyone who is thinking that 2023 has a few exciting listings to come out; we only have a couple of week's new listings remaining.
Dave Johnston's gold nugget: It's a good buying time in Melbourne and Sydney with rising stock levels. Dave feels that this 'purple patch' opportunity for buyers will continue.
Show Notes: https://www.propertytrio.com.au/2023/11/13/ep-231-october-market-update/
Got a question for the trio? https://forms.com//form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
A great listener question prompts today's show. Sam writes;
"We brought our 4 bed 2 bath mid century family in Greensborough area in mid 2021 for 1 mil approx. Since then the price has fallen then risen, and generic real estate apps pricing it at around the same value. The house is older style, has good bones but over time we would love to undertake a moderate renovation. The property is in a good family friendly/school zone, and with the right modifications there is immediate reasons to move from this property. We are getting close to 80%LVR, which I understand is a threshold for accessing finance. The original plan was to build our plan out with two more 600k investment properties."
From accessing equity to balancing investing versus renovating, Sam has a handful of great questions for The Trio.
Dave unpacks the question about unleashing equity.
"Cash-Out" loans are something they could consider, and as Dave explains, equity access isn't limited to those borrowers who need to stretch to 90% loan to value levels.
The question of mortgage insurance is an interesting one, and both Cate and Dave share some interesting insights, along with some exciting new loan products to suit today's market.
The mechanics of accessing equity can vary. Dave explains how investors can sensibly approach this task, from examples, process steps, and timeframe expectations. The important point Dave makes relates to renovations, though. And how many listeners have heard of "as-if complete" valuations? Dave and Mike share some special tips.
Investment versus lifestyle conundrum is something that strikes often, and Dave works through some of the questions that investors need to think through. Cate debates where she would invest the money.
Cash-outs versus progressive drawdowns... Dave walks our listeners through some of the options. And is there a magic number for LVR's and equity access? Tune in to find out.
Lastly, our gold nuggets……
Mike Mortlock's gold nugget: Identifying the strategy is essential. "Ruthlessly efficient decisions!" And Mike shares "SIC Building syndrome".... something to google!
Dave Johnston's gold nugget: Some situations warrant a good property plan, and Sam's questions could constitute this. Informed and educated decisions are the best decisions.
Cate Bakos's gold nugget: CMA's are just automated valuation tools that can sometimes get things horribly wrong. Algorithms can't always recognise important factors. Getting a proper appraisal with some science backing the data up is a great approach when working out what a property is genuinely worth.
Show notes: https://www.propertytrio.com.au/2023/11/06/listener-question-renovate-or-invest/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate kicks off the episode with some quirky title types that can be sometimes found for apartments. Particularly when considering an Art Deco era apartment, buyers need to brace themselves for Company Share and Stratum titles. They are generally cheaper products, but they come with danger for some borrowers. Cate explains the differences between these types and she expands on why buyers need to exercise caution when deposit funds on hand are less than 40%.
Can Stratum and Company Share be converted to Strata? Yes, indeed they can, but it's not always straight forward and it's often more than the mere cost of the legal fees and the subdivision.
Dave discusses the options that buyers have when it comes to lending policy restrictions for apartments. Small apartments can wreak havoc for some borrowers, as can apartments with commercial zoning. Dave ponders whether zoning will be altered for office spaces that are being converted to residential products.
Mike's high rise apartment case study is alarming; and it goes to show how rules can be changed within a development. Owning an apartment in a complex is nothing short of complex!
Cate talks about the elephant in the room; strata fees for off the plan apartments. It's a must-listen!
Dave opens Pandora's Box when he asks Cate about the risks of high rise, high density properties. From cladding issues to to Air BnB issues, car stackers, special levies and location woes, Cate drags out her laundry list.
Cate details what it is she loves about boutique blocks. The list is broad, but downsides do exist. Tune in to find out!
And... what do you do if pets aren't allowed in an apartment block?
Lastly, our gold nuggets……
Mike Mortlock's gold nugget: Too many investors think that low strata fees are attractive, but they need to think about their sinking fund schedule and the long term cost of ignoring important things.
Cate Bakos's gold nugget: Cate also chats about low strata fees. It's a bit of a Goldilocks conundrum. Too low, or too high... there is a sweet spot when it comes to strata fees.
Show notes: https://www.propertytrio.com.au/2023/10/30/all-things-apartments-part-2/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The Trio kick off this exciting ep by defining where apartments sit in the unit subset, and Dave shares with the listeners his favoured types of apartments. Some of Dave's criterion paves the way for a high-scoring gem... he shares some valuable must-haves and nice-to-haves. Highly sought-after, great allure, attractive land to asset ratio and unbeatable locations!
Dave shares some startling facts about the recent historical capital growth performance of apartments versus houses. Core Logic did a study in August 2022 for the last thirty years across the two data sets. While the data showed that combined capitals exhibited 450% growth for houses, while units only clocked 307%, and for regions the house data set tracked 314%, and units, 213%.
Cate discusses some of the reasons for this relative underperformance and she also chats about the mistakes that some have made in the past when they were aligned to one geographic base and ignored other gentrifying options with strong growth drivers. As Mike says, "Blue chip or bust? It doesn't make sense. Their model doesn't have flexibility."
Will the older style apartments bounce back? Only time will tell, but Cate discusses the 'apartment renaissance' that she's noticed of late, particularly with an aging population.
Mike cracks into the 1,000 Assets Study, specifically a trip down memory lane since 2016. Initially 47% of their investor study were purchasing units. Into 2018/2019, it dropped to 40%, and following this, a huge drop-off surprised Mike, with a recent figure of 18% recorded. Mike puts this down to a few factors, including the pandemic, horrific building defects and cladding issues, and the evolution of investor education. This, coupled with the increasing number of units per building has translated into heightened apartment avoidance for many investors.
Unit complexes are getting bigger and the average count of apartments per building has risen from 61 to 110 over this period. Buyers do tend to red flag huge developments, particularly of late.
"Your job is to help them grow wealth, not to save them tax" is one of Cate's sayings when it comes to accountants recommending new properties.
Cate shares some of the common reasons why buyers have been more fearful about some apartment subsets in recent years. From off the plan risks to lender appetites, there are a few alarm bells that listeners should pay attention to.
But the Trio talk about some of the positive changes they've seen across developments and designs of late. Cate talks about the elephant in the room; strata fees and expensive special levies. It's a must-listen!
And Mike treats our listeners to a chapter on the Rental Loss Index and their subsequent study. From oversupply to high vacancy rates, this insight is particularly powerful for investor insight.
And our gold nuggets……
Cate Bakos's gold nugget: Cate takes a leaf out of the Property Professor's handbook. She urges investors not to purchase off the plan, high-rise apartments.
Mike Mortlock's gold nugget: Mike reminds listeners that not all units are bad! They can also have a decent Land to Asset Ratio.
Show Notes: https://www.propertytrio.com.au/2023/10/23/all-things-apartments-part-2/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The September data throws us a few mixed bag items!
Dave shares his takeaway: listing levels and an interesting correlation. Cate identifies the eighth consecutive month of national price growth, and she draws listener attention to capital cities versus the regions. The Trio ponder the power of commuting distance to major cities.
Is there a sweet spot ratio when it comes to listing volumes and price movement? Mike ponders... tune in to find out.
What's happening with rents? And why is the pace of growth easing in so many cities? Household formation rates are changing and this is having an impact on rental growth. Cate shares a bit of insight into a recent journalist interview about this very topic. She also talks about the specific challenges within the rental market when it comes to families.
On a related topic, Dave points out the pre-COVID, post-COVID and historical average rental vacancy rates and it's a particularly telling reflection. The Trio canvas the pace of this change and contrast today's yields to past decades. Things have evolved remarkably for investors over the past decade.
"Time is your most powerful ingredient when it comes to yield", says Cate.
Cate shares a Core Logic chart with Mike and Dave; it illustrates the importance of looking longer term at any city's performance. Both Perth and Hobart demonstrate opposing performances when 12 month versus ten year charts are contrasted. Some cities and regions are particularly cyclic and investors need to be aware of this.
And finally, consumer sentiment; as Mike says "there's green shoots!" The major household item figures have notched back up above last month's dip. Have four consecutive months of holding rates contributed to a greater willingness to spend again? Dave has some great state-based figures to cite also.
Housing finance is an interesting chart to ponder. Mike and Dave debate the impact of rates on hold, and Dave points out that the mix of owner occupiers to investors remains quite the same as recent historical levels. Importantly, he points out reductions in building costs.
Related to decreasing costs, Cate includes the Freightos Baltic index in this monthly update.
Dave and Cate pick out some of their most noteworthy segments from the September data... Listen in to hear what each spotted. Dave notes core inflation was down, yet headline inflation increased. This suggests that the markets could be anticipating another rate rise. What is this attributable to? Services, insurances and transport are among a few. Services inflation remains an inflationary problem.
And... time for our gold nuggets...
Cate Bakos's gold nugget: Cate shares context around the Freightos Baltic index; a whopping 62% reduction this week, compared to the same week a year ago.
Dave Johnston's gold nugget: We're likely to hit our record market high again within a month or so based on the data and the rate of growth through 2023.
Show notes: https://www.propertytrio.com.au/2023/10/16/ep-227-september-market-update/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
The Trio enjoy fielding this second question from a loyal, long time listener, Alison. Only last year, Alison reached out to ask the Trio to weigh in on a stay/move question. Alison and her daughter were living in a recent purchase on the inner-side of Melbourne's Nepean Hwy, but missed their days by the beach in their former home. Alison had purchased a four bedroom townhouse on 'the other side', but aside from missing her beach life, she also found the home was too big for their needs.
The Trio encouraged her to make the move back to their old stomping ground, and Cate recalled some of her happy days in her old 'hood in beachside Mentone too. Alison, now 47, took the plunge this year. She rented out the four bedroom townhouse and purchased a three bedroom unit back on the beach side of Mentone.
This time, she writes to the Trio to ask about their thoughts on whether she should retain the four bedroom townhouse, or whether she should sell. With all of the changes to land tax and possible changes to planning laws, ongoing rental reforms and heftier interest rates, Alison is feeling a little bit nervous and wondering what the Trio think. She notes that her large townhouse is projected to be cashflow neutral in six years, but she is also mindful of the pressure she faces as a sole bread-winner. She is also managing a property in the Bass Coast and while her long term intention is to retain this property into retirement, Alison throws out the question to the team about her entire portfolio.
"Do I hang on to the 4 bedder and wait until it has enough value to clear my ppr mortgage? Or should I hang on to it for the longer term- past 6 years until it is earning me money? I know it won’t be for a long time."
First and foremost, the Trio congratulate Alison on her achievements and in particular, her ability to pivot quickly.
According to the Australian Landlords Association, landlords own more than 80% of rental properties. Despite this significant contribution, it often feels like landlords are somewhat overlooked (and in some cases, trampled on) in discussions focusing on the challenges facing renters.
Dave starts with Alison's property planning and shares some astounding projections. Alison currently owns $2.92 million worth of property at age 47. If Alison is able to hold onto these assets over a long term growth rate of 5% per year, by age her wealth position will be as follows:
* 60 - $5.36m
* 65 - $7m
* 70 - $8.8m
* 80 - $12.94m
This gives listeners a glimpse into the power of time. Dave also delves into debt retirement and timeframes for cashflow neutrality.... tune in to hear more.
The Trio then step into Alison's future rental returns and they also consider the necessary evils; land tax and other taxes. When it comes to property portfolio management, knowledge is power, and cashflow is king.
Dave's overview is valuable and his preference for targeting capital growth assets comes to light in this listener Q&A. Tackling interest costs, short term cash shortfalls and buffers is a popular theme for this gripping episode, but what Cate shares in relation to rental growth is important for Alison to take note of. Like a strand of DNA, the rent does broadly grow in line with the rate of capital growth, but not always in perfect synchronicity. Gross rental yields are typically elastic, and Alison can look forward to enjoying long term rental growth at the same rate as her capital growth rate.
From selling Bass Coast to selling the townhouse, holding all and working hard for more years, the Trio each share their thoughts, pro's and cons, risk mitigants, and they each give Alison some good food for thought.
No divestment decision is easy for investors, and Alison gets three points of view in this Listener Q&A ep.
And our gold nuggets....
Mike Mortlock's gold nugget: Mike shares a carrot and stick analogy. The stick is the tax, but the carrot, (the capital growth) is harder to focus on because the stick can hurt. It's important to remain objective.
Dave Johnston’s gold nugget: "The starting point for any successful property plan is understanding the numbers and the long term implications for any options and choices that you have in front of you."
Cate Bakos's gold nugget: Cate uses a real-life, personal example to share with listeners the power of time.
Show notes: https://www.propertytrio.com.au/2023/10/09/sell-or-hold-listener-question/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Mike bravely delves in to mortgages.... and dares to ask whether the mortgage cliff is a threat to our property market.
Is it a beat-up? Or is it something we should be bracing for? Dave mentions the Y2K bug and questions the power of fear.
"Miliions on Mortgage Cliff" is a headline Mike cites, and he plans to challenge the magnitude quoted.
Mortgage stress, mortgage delinquencies and timelines are on Mike's discussion list.
Firstly, Dave explains the concept of the fixed rate cliff, and sheds light on what is is that the media have many gripped with fear (or hope) about. It essentially hinges on a large volume of exceptionally cheap loans that are coming out of fixed rate and re-adjusting to today's variable rate. For many borrowers, their holding costs will be considerably higher this year. However, the Trio are determined to uncover the numbers, the percentages and the truth about the fixed rate cliff claims.
Cate ponders why more people didn't fix during the pandemic and finds a good bar-tab comparison.
"The determinants of mortgage defaults in Australia; evidence for the double-trigger hypothesis" is a paper that Mike stumbled across. Jokes aside; negative equity is strongly correlated with whether a loan is in arrears. The Trio define and unpack this for our listeners.
From high LVR loans to reducing credit, Cate and Dave ponder the impact of regulator intervention. Dave points out that global economies vary greatly, and the pair share some examples of past lending practices that are not so commonplace today.
While Mike has some fun with the special effects and the audio bleeps, Dave gets serious about shedding light on the real numbers when it comes to mortgage arrears. Rising property values and regulatory control over credit have certainly shielded our nation from broad arrears.
Mike shares some stats and it's a compelling data set. Tune in to find out more... Cate asks Dave about refinancing activity. Despite the value of new lending deteriorating, the rate of refinancing is HUGE. The value of external refinancing is up a massive 21% over the last year. What are the reasons? Dave expands... it's intriguing to hear first-hand from a business owner about the behind-the-scenes of a mortgage broking business during COVID.
"Mike, the numbers seem large..." Cate quizzes Mike about some of the stats quoted in relation to the expiry of fixed rate loans and Mike puts the numbers into perspective. It's a must-listen!
The vast majority of lending is on variable rates and Mike's numbers-brain looks over the data and contrasts it to the claims. "There's a lot more to be positive about than the media lets on".
Cate considers the plight of first home buyers who were not entirely prepped for higher interest rates, and she points out that two per cent was never sustainable.
"One third of people have a mortgage, one third of people have paid off their mortgage, and one third rent". And Dave's overview of ASIC's position and the non-bank lenders is intriguing.
We hope our listeners have gleaned some good insight from this ep.
And our gold nuggets…… Mike Mortlock's gold nugget: While some new variable rate mortgage holders will be feeling some pain, spending is moderating and Mike holds hope that the 'mortgage cliff' is a bit of a beat up. He believes that rate cuts are likely to be around the corner. "It's not a cliff... that's my summary.'
Dave Johnston’s gold nugget: Dave also feels that it's not a cliff either. It will likely have a 'slow tail' and there will be some pain, but not so much in the owner occupier residential market.
Cate Bakos's gold nugget: Overall, there will be a mortgage cliff for some individuals, but Cate doesn't think that there will be advantageous buying conditions as a result. We have to consider the other forcefields; new arrivals (skilled migrants), a rapid increase in rents, and we also have to consider the impact of inflation on property values, and lastly; confidence from high employment.
Show Notes: https://www.propertytrio.com.au/2023/10/02/breaking-into-buyers-agency-2/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Today's listener question opens up a very popular discussion topic.... buyer's agency.
James writes in to ask the Trio about a change of career... from carpentry to Buyers Agency. He's unclear of the pathway into the industry and he's keen to know how to be a great Buyers Agent.
Cate shares some information with our listeners, from state/territory based qualification requirements to online groups and portals. Firstly, Cate steps listeners through the training and licensing regimes in Victoria, separating out the formal classroom training from the 'apprenticeship'. The difference between a regular Buyers Agent and a great one comes down to dedication, mentorship and commitment to learning the technical skills required.
The Trio discuss some of the barriers to entry and the challenges that budding Buyers Agents face; from study to the difficulties of running a business, salary expectations and lack of financial safety nets. Cate talks candidly about the hardest parts of the role for those who decide to embark on Buyers Agency as a career.
"The three toughest things are.... the hours, the hours and the hours."
Dave used to run a Buyers Agency with Property Planning Australia many years ago and he draws upon some of the key attributes that the successful BA's had. He outlines five attributes and relates them to a successful client journey.
Dave asks Cate to articulate what she meant by 'responsibility and liability' that a BA carries. 'Caveat Emptor', as Cate describes it is the risk that a buyer takes on when purchasing a property. Cate also outlines some of the potential nightmares that need to be identified in the pre-purchase due diligence phase.
She describes her work tasks as 40% communication with clients, agents, legals and others, 40% due diligence, 20% actually looking at properties.
Cate wraps up the episode with some recommendations for budding BA's, along with some of the worst mistakes and poor assumptions some make.
And our gold nuggets……
Cate Bakos's gold nugget: The three ingredients for a great buyers agent are:
1. Commercial grit - be able to negotiate well and stare someone down
2. Analytical ability - you need to be great with spreadsheets and data
3. High EQ - you must be very good at putting yourself in someone else's shoes and genuinely relating to them
Dave Johnston’s gold nugget: "Expect it to be bloody hard work. Just like any profession at the high end."
Mike Mortlock's gold nugget: You can't disclaim away your area of expertise. Being cognisant of the reasons why people engage a BA is really important for every BA.
Show notes: https://www.propertytrio.com.au/2023/09/25/breaking-into-buyers-agency/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Now that our Stig (aka Sound Editor, Jamie) has sorted out our audio, we bring a new sound clarity to our listeners... we hope you enjoy!
As our residential Australian property market ticks over to a ten trillion dollar value, Cate shares the August stats with our listeners and points out that the market is doing more than just demonstrating a recovery. The market is now moving reasonably solidly, and even Hobart's rate of contraction has slowed.
While Dave is reluctant to call the bottom of the market for Hobart, he does point out the home value index, particularly for Sydney. Although he touches on the volatility of Sydney's performance over recent years.
Dave highlights the sheer weight of some of our regions such as the Gold Coast and the Sunshine Coast, however he maintains that we have an increasing disparity between capitals and regions.
Mike asks Cate about the mass exodus from city to regions, and whether there has been a reversal, but Cate clarifies her answer. "A regional city is very different to a coastal holiday hotspot." Tune in to hear more...
Mike notes the crazy pace of change for unit rents, but Cate highlights the trajectory of Melbourne house rental growth and ponders the relationship between some of the tough reforms and taxes facing the southern city.
Mike asks "How are rents still going so strong in Perth?" and Cate has a theory that links to Wage Price Growth. See our ABS chart to illustrate this.
Moving on from the perks and perils of WA, the Trio turn their gaze to the rental vacancy rates. Mike ponders whether the vacancy rate has stabilised, but as Cate suggests, it can't get much lower.
Cate shares the reality from the coal face in relation to listing volumes. "As quick as they can supply them, the buyers are grabbing them." Dave considers the impact of higher migration rates on the supply and demand ratio also.
And as for the Westpac Consumer Sentiment Index... Family finance vs a year ago; a huge change for September. Things have tightened considerably and Cate debates whether the mortgage cliff has had effect, or whether 'talk' of the mortgage cliff itself is impacting sentiment. And finally, the major household item figures are declining in response to higher interest rates.
Dave reports on the lending figures for August. Refinances hit a record high, once more and construction continues to tumble, demonstrating that we just aren't building new dwellings at enough pace. Dave note unsecured lending to find holidays is up, and this is not habit that we want to encourage. Mike shares a great saying that one of our industry friends, Pete Wargent voiced.
"Spend less than you earn and invest the difference."
Dave and Cate pick out some of their most noteworthy segments from the August data... Listen in to hear what each spotted.
And... time for our gold nuggets...
Dave Johnston's gold nugget: Time in the market versus timing the market... Dave shares what investors should be basing their decisions on.
Cate Bakos's gold nugget: Buyer sentiment, stock levels, and upgrading/downsizing... should people buy first and sell second, or vice-versa?
Show notes:https://www.propertytrio.com.au/2023/09/18/ep-218-july-market-update-rental-increases-are-slowing-2/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Today's listener question opens two fantastic conversations, each about two very differing scenarios. Nick (34) and his wife (33) have not only achieved a great start with a principle place of residence loan being fully offset, but they have other properties in their portfolio too. Cate congratulates them on this achievement, particularly given their ages and the fact that they have a baby too.
They have been cognisant of their cashflows and they have saved and managed their money superbly. One twist to the story, however is that some of the total offset funds belong to Nick's parents. While it helps with the interest repayments, the Trio talk about some of the challenges and risks that can result from arrangements like this. From personal interest repayment arrangements to obligations and burdens that can be created, Cate talks through the emotional difficulties that some can face. And if the parents decide to ask for the money back, will this negatively impact the couple's future plans. Dave points out the importance of flagging a loan from parents as a sum that could be repayable on demand. He also unpacks the way that lenders view such arrangements, and maintains a pragmatic view for our listeners.
Nick also asks the Trio about converting their principle and interest rate to interest only... a perfect segue for Dave to discuss the merits of an interest only loan arrangement for disciplined investors. Preservation of the loan balance leads to higher tax deductions, greater control of their money, cash buffers to go towards the future home, and enhanced choice going forward.
It's easy, but it's not simple and so many people miss this incredible strategy. But.... it's only for disciplined investors.
Preservation of the loan balance leads to higher tax deductions, greater control of their money, cash buffers to go towards the future home, and enhanced choice going forward.
Mike prompts a question about refinancing to increase tax deductability and Dave and Cate shed light on "The Purpose Test", and the rationale that the ATO apply when it comes to deductable debt.
The Trio's finale for Nick and his wife relates to their question about when and where they should buy. Cate says, "It's a very ambitious goal, and don't let me separate ambition from reality. I think that the two can go hand in hand when you've got a great plan." Dave reinforces Cate's point about the importance of planning and he offers some good questions for them to consider.
Mike opens our second listener question from an Adelaide family... Jess has three properties with her husband George. They have tackled moving home since having a child, and they ask the Trio whether they should consider selling down a property to renovate a property within their portfolio. They also consider two other options; one revolving around avoiding capital gains tax.
Cate speaks about the importance of happiness when it comes to the family home, whereas Dave talks about the need to consider postponing the move into their family home. He talks about setting up the goals in stages, alongside a robust financial plan, and Dave spells out each of the five important stages.
Cate shares two real life experiences for our listeners that involve a two and three step renovation that moderates the expenditure and the risk of overcapitalisation.
From investor concerns, dwelling types that investors wish to invest in, states they'd like to invest in, and investor intentions over the following year, the survey findings show some intriguing predictions. We hope you have enjoyed this episode.
And our gold nuggets……
Cate Bakos's gold nugget: Cate likens a long term debt reduction strategy to that of a Grand Prix. From coordinating break times, fueling up at pit stops, and maintaining a long term focus, it shouldn't be a short, face race.
Dave Johnston’s gold nugget: The lifestyle vs investment conundrum is such a consideration. People have to decide how much, ultimately they will put into a family home. It's unique to every family and every couple, and it takes clear communication and patience.
Mike Mortlock's gold nugget: The end goal cannot be pushed too far away. Is buying an investment property pushing the family home purchase too far down the road?
Shownotes:https://www.propertytrio.com.au/2023/09/11/futureproofing-your-home-and-investment-portfolio/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate enjoys playing host again, this time as the trio unpack the API survey, (Australian Property Investor magazine). They reminisce about the good old days, when the mag used to hit the shelves each month and they'd earmark articles, celebrate their own appearances in the magazine, and collect the publications, filled with post-it notes.
The gap in performance between houses and units has closed a little recently and Dave notes that the data doesn't really capture this in the survey. "In fact, houses are the preferred intended purchase over the next 12 months among 37 per cent of respondents, a seismic shift from the mere 21 per cent with that intention just three months ago." From land to asset ratio to cultural housing preferences, there are a few reasons why houses are still preferred dwellings.
Mike addresses the issue that developers are currently facing as they are deterred by building sector cost woes. Numbers have declined from 16.5 per cent to just 9 per cent of those planning to procure a property. Mike shares how he expects this indicator to play out in the market now that new dwellings have become a headline topic for every second political story.
Another interesting question that the survey polled related to the transacting activity in the last year. The proportion of people saying they’d made no property moves in the past year soared from 13 per cent to a remarkable 30 per cent in just three months.... not surprising given the interest rate moves, but Dave tackles this question and talks about some of the challenges buyers face beyond funding costs.
The survey also found that of the 70 per cent of respondents who transacted on property in the past 12 months, 63 per cent of those did so on more than one property. Mike discusses the obvious opportunity that many investors took advantage of during this time. Interest rates remain, together with the associated difficulties caused by a lack of finance availability, the biggest concerns confronting survey respondents.
Dave addresses this issue head on and he and Cate discuss how they have seen purchasing decisions, buyer motivation (and timing) impacted by RBA rate decisions. Their insights may surprise our listeners...
Cate shares the survey findings around decisions to buy and decisions to sell. Surprisingly, it's the buyer camp who are most impacted by rate increases. This is despite record low listing activity during this period.
Mike considers the RBA and the respondents' feelings about the performance of our Reserve bank. A troubling 47 per cent of respondents gave the RBA a fail mark for having performed to a poor or very poor level. The amount that gave the RBA a mark of average or above was 54 per cent, well down from the 61 per cent of last quarter. Tellingly, the big shift was in the proportion that rated the RBA’s efforts as very poor, which took off from 15 to 25 per cent in the past three months. The trio pick apart some of the key mistakes that our former RBA Governor made.
Rents continue to be a heady topic. Cate and Dave break down some of the findings and they ponder the negative views of investors within the community, and how investor disincentives are playing out now.
The Trio often talk about the Westpac consumer sentiment figures on property recently, but this survey highlights some different views; Respondents believed that there is plenty more upside in the property market, with 72 per cent expecting property prices to increase nationally, while 55 per cent believe regional property prices will increase. Time will tell!
From investor concerns, dwelling types that investors wish to invest in, states they'd like to invest in, and investor intentions over the following year, the survey findings show some intriguing predictions.
We hope you have enjoyed this episode... and especially with some of Mike's 'easter eggs'.
And our gold nuggets……
Dave Johnston’s gold nugget: If we look at the things that are putting people off buying, it's the external factors. "The most important economy is your own economy."
Mike Mortlock's gold nugget: Mike talks about the disparity out there right now in relation to buyer sentiment. "If you're in a position to purchase a property, now is the time to do it."
Shownotes: https://www.propertytrio.com.au/2023/09/04/analysing-market-mindset-the-api-survey/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Cate enjoys playing host again and she congrats Dave on the preparation of this challenging set of eps. Simplifying difficult concepts is one of the hardest things to do when presenting information to others.
What data does the Reserve Bank monitor when deciding whether rates should be increased?
Household consumption - from the Wealth Effect to COVID savings giving rise to YOLO, Dave suggests that this driver is only just starting to come down. Mike recalls the supply chain woes and the cash stimulus that got us to where we are today. Given that most people's wealth is tied up in property, it is of little surprise that spending went hand in hand with property value growth following the post-COVID price surge.
* Labour markets - Dave describes what this term really means, and he highlights the relationship between unit labour costs (productivity), unemployment and wages growth. "If wage growth is higher than inflation, then our spending power will increase. But we have to get a little bit better at our jobs each year for this to happen," says Dave.
* Neutral/Preferred Level of Unemployment and Cash Rate - What impact does the unemployment rate have on inflation? Tune in to find out..
* Productivity - From migrant worker initiatives to the Australian Productivity Commission, Mike and Dave cover off the importance of productivity. Mike shares an example about his widget factory with our listeners to illustrate an interesting point. "Long term productivity growth is the key driver of our living standards," points out Dave.
* Overseas Economies and Interest Rates* - From economic interdependence to the flow of capital between countries, there are plenty of factors that are important to note when it comes to overseas economies.
Rising inflation, interest rates, wage costs, and unemployment.... The trio talk about how these might negatively impact the Australian property market with regards to purchasers and renters.
Why have property prices been on the rise despite all of the negative factors weighing on the economy? Dave takes our listeners through nine reasons, (and drivers) that explain why our property markets have been so resilient during tough economic times.
What could cause prices to rise again, even if they start to plateau? The Trio ponder this together. We hope you have enjoyed this technical episode.
And our gold nuggets……
Cate Bakos's gold nugget: "For any listeners with interstate property, it pays to scout around for some good tradespeople."
Dave Johnston’s gold nugget: Prices are starting to stabilise. "Your trend is your friend" states Dave, but what happens once prices have plateaud? Dave shares his predictions for economic activity and how this will translate into property price movements.
Mike Mortlock's gold nugget: Mike reminds listeners that they don't need to master economic data, but they should at least pay attention to RBA meeting notes, what's happening with the cash rate, and what the RBA is looking at. "....but if you don't want to subscribe to the RBA, just come to the Property Trio".
We have resources available on the Resource tab of our website.
Shownotes here: https://www.propertytrio.com.au/2023/08/28/decoding-the-data-behind-rba-decisions/
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Cate hosts this this exciting second trilogy episode and the Trio enjoy working through some of the burning questions about the RBA and their responsibilities, actions and challenges.
What is the RBA’s mandate and how does it relate to inflation?
Dave kicks off with the answers. FIrst, stability of the currency keeps Australia's purchasing power optimised, and on par with other economies in the world.
Secondly, maintenance of full employment in Australia, "Everyone who wants a job, has a job," states Dave.
And third is the economic prosperity and welfare of the people of Australia.
These responsibilities are within the RBA remit:
- Monetary Policy: The RBA uses monetary policy tools, primarily through adjusting the official cash rate, which influences short-term interest rates and helps control inflation and support economic growth.
- Currency and Payments System: Issuing and managing the Australian dollar currency. It aims to maintain confidence in the currency and ensure the smooth functioning of the payments system, which involves overseeing the operation and stability of Australia's financial infrastructure.
- Financial Stability: Promote the stability and resilience of the financial system. It monitors and assesses risks to financial stability, implements policies and regulations to address those risks, and collaborates with other regulatory bodies to ensure the overall stability of the financial sector.
- Economic Research and Analysis: Conduct economic research and analysis to gain insights into the Australian and global economy. This research informs the bank's decision-making process regarding monetary policy and other areas of its mandate.
- Banking Services: Provides banking services to the Australian government, other financial institutions, and some international organisations. These services include managing the government's bank accounts, issuing government debt, and facilitating the smooth functioning of the financial system.
2. Why do we need inflation?
* Encourages Spending and Investment: Inflation can incentivise consumers and businesses to spend and invest rather than hoard cash. When people anticipate rising prices, they are more likely to make purchases and invest their money in assets or projects that have the potential to generate returns. This increased economic activity can stimulate demand, drive production, and contribute to economic growth.
* Supports Debt Repayment: Inflation can make it easier for borrowers to repay their debts. When there is inflation, the value of money decreases over time. As a result, borrowers can repay their debts with money that has less purchasing power compared to when they initially borrowed. This can provide relief to individuals and businesses burdened with debt obligations.
* Facilitates Wage Adjustments: Inflation can help in wage adjustments and maintaining labor market flexibility. As prices rise, wages tend to adjust to reflect the increased cost of living. This flexibility allows wages to respond to changes in supply and demand conditions in the labor market. It can help ensure that workers' wages keep pace with the overall price level and maintain their purchasing power.
* Encourages Long-Term Investment: Inflation can incentivise long-term investment over short-term speculation. When inflation erodes the value of cash holdings, investors are more likely to invest in productive assets such as stocks, bonds, or real estate to preserve or grow their wealth. Long-term investments contribute to capital formation and can support economic development and productivity improvements.
* Provides Monetary Policy Flexibility: Inflation allows central banks to use monetary policy tools to manage the economy. By adjusting interest rates, central banks can influence borrowing costs, control money supply, and steer the economy towards desired outcomes such as price stability and sustainable growth. Inflation provides a reference point for central banks to set their policy rates and implement appropriate measures.
3. Why the target for inflation is set at 2-3 per cent?
A target range of 2-3 percent inflation is often considered a good target for central banks for several reasons: Price Stability, Facilitates Monetary Policy, Avoids Deflationary Pressures, Supports Real Income Growth, and International Consistency.
The trio ponder these various reasons and apply some relevant examples.
4. Why do we make cash rate adjustments?
Reducing the demand of goods and services in response to the spending that has pushed prices up at a fast rate. In addition, we are controlling the supply of money via bond management are two of the reasons, according to Dave.
Dave sheds light on some of the RBA open market operations, and makes the point that fiscal policy must work in tandem with monetary policy.
Mike shares with us all his explanation of Quantitative Easing, aka "Money Printing". He demystifies this concept superbly by outlining the drivers for QE, the purpose of QE, and some of the outcomes of QE.
The unintended consequences are something we need to consider and Cate presses Mike on this.
5. Outcomes from rising rates to reduce inflation
* Reduced Consumer Spending:
Increasing interest rates make borrowing more expensive for consumers, including mortgages, auto loans, and credit cards. Higher borrowing costs can discourage consumer spending, particularly on big-ticket items, leading to a decline in consumption. This reduction in consumer spending can have a dampening effect on economic growth
* Decreased Business Investment
* Higher interest rates can also raise the cost of borrowing for businesses.
This can discourage investment in new projects, expansions, and equipment purchases.
And our gold nuggets……
Dave Johnston’s gold nugget: Through understanding the risks that sit in the economy, investors can be better placed to understand the market long term. The benefits of long term planning hinge around managing risk.
Mike Mortlock’s gold nugget: "You can see that there's a very complex interplay between things", and Mike believes that every property investor should familiarise themselves with the RBA meeting discussions. The implications discussed in the RBA meeting minutes do have a real effect on property investors. Knowledge is power when it comes to making long term property decisions.
Shownotes: https://www.propertytrio.com.au/2023/08/21/managing-inflation-through-targeting-interest-rates-and-the-necessity-of-economic-inflation/
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Cate points out that the capital cities have outperformed the regional cities of late, and Dave draws our listener's attention to the sheer performance of Brisbane, Adelaide, Perth and Sydney when contrasting the median value ladder places. Despite the upturn, many major cities are still beneath their cyclical highs.
Cate's discussions at the coal face signal that some of her listing agent friends are quite busy with their appraisal activity - always a precursor to higher listing volumes. Mike quizzes Cate on this leading indicator and it's something all buyers can take a pulse on when chatting to agents, but data is also available on CMA report generation; a great relationship to note between appraising and listing.
And Mike circles Perth as a discussion point. Dave and Cate are reluctant to suggest that Perth's outperformance will sustain longer term, but both agree that the combination of growth and yield hold Perth in a 'watch this space' category.
Mike quizzes Cate on the movement from the regions back to the city and Cate corrects Mike's assumption. The viability of country-life hasn't necessarily changed for those who moved away from the city during lockdowns, but now that bosses are calling their staff back to the office, many buyers are buying a 'second home' option as their city pad. Cate shares a recent client's purchase; a $365,000 unit in Melbourne's Footscray. With an appraised rental of $380pw, an asset like this demonstrates that 5%+ returns are possible in Melbourne.
Cate's concerns about depleting rental stock are attributed to a few factors, including higher divorce rates and city-pad, part-time dwellers.
Dave speaks about the rate of rental increases easing, but still cautions the state governments to consider the negative consequences of rent freezes. Cate discusses the need to consider each market separately, given that different drivers and threats are destabilising some markets more than others.
"If you are a tenant and you're copping a 15% rental increase each year, you'll absolutely feel it", says Cate.
The Trio discuss the fact that growth in national rents reached 35 consecutive months in July - the longest stretch since 2013.
They also chat about 'optimal' vacancy rates and all agree that 2-3% signifies a healthy rental market.
Cate threw in an Office Vacancy chart to share with Mike and Dave. The chart shows some significant vacancy rates (circa 13%) and Cate explains why office vacancies are so contrasted from residential vacancies. Tune in to hear why....
Dave and Cate discuss the Spring market and ponder whether buying conditions will improve during this season. Cate circles October/November as her ideal buying months for 2023, and notes that listing numbers have improved through the months of July and August.
As the "All listings" chart shows, however, buyers are still soaking up the listings and buyer demand still outstrips seller motivation.
The Westpac Consumer Sentiment data is out, and it's somewhat puzzling for the Trio. "Time to buy a dwelling" is slightly higher, while sentiment shows that house price expectations show that we expect house prices to go up.
"I wish I could, but I can't" suggests Mike as a good explanation for this unusual set of data. Cate's 'toys' index has still slightly gained. Trips to Europe seem to be the flavour of the day for a lot of people.
Lastly, Cate shares some extra observations for our listeners; an uptick in first home buyer activity, low dwelling approvals, reducing distressed listings, and a troubling increase in personal (unsecured lending).
These all tell an interesting story in their own right. Tune in to hear more.
And... time for our gold nuggets...
Dave Johnston's gold nugget: Dave talks about some of our two-speed markets, citing the Gold Coast, South-East Tasmania and Newcastle/Lake Macquarie as high performers, and he delves into some slow performers in Victoria. There really are markets within markets!
Cate Bakos's gold nugget: Cate anticipates higher listing figures in Spring and feels that the 2023 opportunity for buyers could match late 2022's.
Show notes here: https://www.propertytrio.com.au/2023/08/14/ep-218-july-market-update-rental-increases-are-slowing/
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Inflation... What is it, why is it a problem and what causes it?
Mike hosts this this exciting special episode and the Trio work to demystify this economic phenomenon, along with some of the terms that we often hear in the news.
Inflation is also known as the CPI, short for the Consumer Price Index, because this is the index that records the changes in pricing of all the goods and services in the economy. So, if someone says CPI they are referring to the rate of Inflation.
As Dave points out, wages growth is also a significant part of the picture and our RBA is attempting to engineer our wages growth to slightly outstrip economic growth, (aka inflation), our standard of living will then improve as our incomes outstrip the cost of goods and services that we are buying. Bringing economic growth back into the target band is a delicate balance as our RBA aim to avoid a recession and aim for a 'soft landing', as Mike puts it.
Dave steps through our listeners in a structured, easy-to-comprehend way. In General - Inflation can be caused by several factors, including these four key ways which we will place in the order of which they have occurred in current times:
1. Monetary Inflation: When there is an increase in the money supply in the economy, it can lead to inflation if the production of goods and services does not keep pace with the increased money supply. This is often influenced by central banks and their monetary policies.
Covid times this has been the massive government stimulus to infinity, money printing and reducing rates to zero or below. Historically inflation has sat at 2.5%, although our inflation levels prior to 2021 were particularly low. In fact, as Dave points out, inflation was concerning on the 'low side' at this time.
Productivity was the key concern at the time, and for six years our RBA held rates at very low levels to stimulate spending. Dave walks listeners through the hefty rate of inflation increases that we've been experiencing for the past 18 months and Cate points out some important context about other previous low interest rate periods. Mike quizzes Cate on her experience as an investor spanning more than two decades and Cate shares her teenage memories about the 1988/1989 impact on her family during a really tough economic period.
Mike tackles some of the pressures the RBA face in relation to fiscal policy (government) vs monetary policy (the bank). Dave shares with our listeners some of the ways that our government influenced the economy, particularly through the COVID period. From quantitative easing to the provision of the funding facility to the lenders, over-stimulation is now the issue that the RBA are now tackling.
Cate steps through CPI from the chart below and she sheds light on some of the non-permanent inflationary pressures, and also those that can be attributed to external factors such as the Ukraine invasion and COVID lockdowns. Mike touches on "YOLO", (you only live once) challenges following the lockdown and concedes that our appetite for lifestyle experiences such as travel are working against the RBA's actions to tame inflation. As Dave coins it, "Revenge Spending".
2. Cost-Push Inflation: This happens when the cost of production, such as wages or raw materials, rises and businesses pass on those increased costs to consumers in the form of higher prices.
Covid times this was the breakdown of supply chains due to closed borders, the lack of availability of workers and reduction in trust between many western countries and China in particular, then the Russian invasion of Ukraine all pushing up the costs of supply. The prices of goods increased strongly as retailers pass through the costs associated with supply chain disruptions and higher shipping prices which are now starting to subside.
Meanwhile, the cost of building a new house – the largest component of the CPI basket – increased at its fastest rate in more than a decade due to a boom in construction activity (due to government stimulus for building new dwelling and renovations for the first time ever) and record inflation in building material prices.
3. Demand-Pull Inflation: This occurs when the demand for goods and services exceeds the available supply, leading to an increase in prices.
In the March 2023 quarter - Services annual inflation recorded its largest annual rise since 2001 is the real worry now for the reserve bank. “This happened due to all the stimulus, increased personal savings, growth in property values and desire to travel again and revenge spend that happened in 2022 and into 2023.”
4. Expectations: If people anticipate higher future prices, they may adjust their behaviour by demanding higher wages or raising prices, thereby contributing to inflation.
“This is the final phase that the reserve bank is very wary of which leads to a wage price spiral, entrenched expectations for prices, especially for services to continue to rise at this faster rate”, says Dave.
Mike shares a frightening example of post WW1 hyper-inflation in Germany. Four to five marks to the US dollar increased to a trillion marks to the US dollar. Mike regales some other horrendous real-life stories.
Cate and Mike chat about the impact of a high-inflation environment, from stagflation to vulnerability for those who don't own assets. Cate talks about the contingent who aren't likely to be negatively impacted by inflation.
What is the negative impact inflation has on the economy and individuals?
While moderate inflation is considered a normal feature of a healthy economy, high or hyper-inflation can have adverse effects.
1. It erodes the value of your savings relative to cost of goods, services or asset prices such as housing,
2. Reduces purchasing power because every dollar you earn is reducing in value relative to the prices of goods and services,
3. Distorts economic decision-making meaning governments and individuals start to make different, unusual or abnormal decisions, and
4. This can create economic instability and lead to a reduce standard of living for the country citizens.
And our gold nuggets……
Dave Johnston’s gold nugget: we have to be prepared to deal with changing financial circumstances on our journey... from those we can control, to those we can't. Succeeding, (and thriving) all comes down to your risk mitigation strategies and buffer accounts. We need to understand these things are a possibility, and we need to plan for them.
Cate Bakos's gold nugget: We are going to share our comprehensive show notes in our Resources tab on our website here.
Show notes: https://www.propertytrio.com.au/2023/08/07/the-inflation-conundrum-unravelling-its-causes-and-consequences/
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Dave hosts this episode and opens by suggesting that appraising property requires a delicate balance of art and science.
Appraising a property: How do we discount or add on a premium when something noteworthy is impacting the property positively or negatively?
How do we apportion a premium or a discount when a feature is a stand out or a significant detractor? And how do we know how much to apply to the premium or discount? Dave quizzes both Mike and Cate how they tackle this very question.
Dave delves into positive attributes first.
* Notable designers or architects, and Cate shares a reference to Eltham's Alistair Knox
* New works/extension/renovation
Mike shares the different methods of valuing, from recent comparable sales analyses to the summation method. Cate discusses the importance of comparing apples with apples when it comes to attributes, such as isolating specific zones when selecting recent sales.
* Quiet court
* Train station within 200-500m
* Attractive zoning (ie. growth zone vs standard, residential zoning)
* North facing rear
* Great views
* Ultra wide block (from a development point of view)
* Ideal floorplan (let’s use cottages as an example)
* Heritage signfiicance
Dave then moves to the detractors.
* Properties in serious need of repair
* South facing rear
* Challenging zoning
Dave sheds light on some of the lending challenges that buyers will face with some of these negative attributes, in particular, challenging planning zones and tight internal floor areas.
* Main roads
* High voltage power lines
* Train lines
* Ugly surrounds (ie. industrial buildings)
* Tough overlays (ie flood, bushfire)
* Bank lending policy issues, ie. floor area
* Significant strata fees or high special levies
* Brick cracking
* Obvious problematic neighbours
* Flight paths
* Development sites next door/over the back fence that could threaten privacy and natural light
* Restrictive covenants
* Houses with sordid histories
* Compulsory acquisition possibility
* Easements in awkward spots
How do the Trio suggest buyers can apply a discount or a premium when a property is impacted by any of these?
Should buyers a rule of thumb percentage value-change for any of these?
Cate's answer may surprise our listeners... tune in to find out.
Mike discusses the difference between Quantity Surveyor due diligence and Buyers Agent due diligence, but he does need to take into account some attributes such as poor quality soil, flood or fire overlays, and restrictive covenants when generating reports.
And lastly, Cate shares how buyers tend to approach compromised properties and the risks of selecting bad quality off-markets. Not forgetting Pete's famous analogy, Cate cites his bad bag of apples quote.
And our gold nuggets……
Mike Mortlock’s gold nugget: Mike is struck by the exhaustive list that Cate shared in this episode and he implores buyers to catalogue the list each time they check out a property.
Cate Bakos's gold nugget: "When you buy a bargain, you sell a bargain."
Show notes: https://www.propertytrio.com.au/2023/07/31/valuing-uniqueness-appraising-property-with-special-attributes/
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The Trio decided to celebrate Bastille Day by giving this listener a pseudo name; Amelie. Our listener sent through a multitude of great questions and the trio decided to circle in on Amalie’s challenge for this episode. Amelie* is in her mid-twenties and she co-owns a property with her brother in Sydney’s west. She’s a good saver, has a good job and she is keen to purchase her second property. She has a few ideas, but her brother has very different thoughts. With such an important person in her life creating a bit of a debate, Amelie wonders if she should reconsider her original plans. From units versus houses, to market timing, first homeowner grants, alternative cities and co-ownership, she has quite a few variables that her brother has challenged her with. Amelie puts her conundrum to the Trio and asks for some help.
The Trio broke Amelie’s questions into seven main segments;
1. Timing the market vs timing the market.
Dave’s general rule is “buy when you’re ready.” It is very difficult to time the market, and lost time can be costly. The clear steps that Amalie needs to initially take hinge on getting great, specialised advice. After all, we don’t even know what Amelie’s borrowing capacity is as this stage.
Cate asks, “Where do you want to live? And how quickly do you want to get there? Are you happy renting/living at home for now?”
Mike suggests that Henri is “trying to get a bit too fancy with timing cycles.”
- House versus unit.
Although the twenty-year price history demonstrates that median house price growth has outperformed median unit price growth, Dave points out that this is general data only, and there are markets within markets. Unit buyers need to be cognisant of the negative impact of buying new, along with the associated strata costs.
Capital growth is directly linked to a high Land to Asset Ratio, and it’s integral that investors give their portfolio the best chance of high performance by noting this important ratio.
Other special attributes, particularly for units in Sydney include;
- views/vista
- quality street
- great suburb
- boutique block
- scarce, older style block
Dave also notes that Sydney in particular is quite different to other cities when it comes to apartments because Sydney offers the highest proportion of apartments and units in the nation.
Cate has concerns about Amelie’s affordability comment. She focuses on the need for thorough due diligence to avoid surprise costs and cashflow threats. Cate also sheds light on the challenges that borrowers face when co-borrowing, particularly in relation to ‘joint and several’ borrowing.
Mike shares concerns about Amelie’s safety net ideal and he discusses the risks that could impact family relationships when cashflow gets tight and parents are asked to help financially.
- Buying in the city you live in.
Dave talks about the difference between buying in a familiar city, versus buying in the city where you ultimately plan to live. Gaining a foothold in the market where you wish to live is a great risk mitigation strateg. Hedging against another location underperforming is the path that Dave is going down.
Cate needs to see Amelie’s borrowing capacity before she can agree with Dave’s approach. If Amelie’s borrowing capacity is too insufficient for a quality Sydney property, she may well be better placed to consider alternative cities.
The Trio all agree that timeline is an important consideration for Amelie.
- Outer-ring
As Cate points out, investors will get a different result in an outer ring and the negatives include; - tougher socio-economic demographics
- the threat of low scarcity and surrounding house and land package areas
And Cate suggests that contrasting an inner- or middle-ring location within a nearby regional city against the Sydney outer-ring options is a valuable exercise. Dave shares some of the merits of such an approach too. Tune in to find out why this could be a great alternative.
- Rental yield.
This consideration is driven by current cashflow requirements, future acquisition projections and Amelie’s ability to increase her income over time. Rental yield can’t be overlooked, otherwise the risk of an unplanned sale (or co-ownership) will rear it’s head. 6. First home buyer schemes.
Sometimes saving $30,000 now is very valuable for a buyer, but for someone like Amelie who has good savings on hand, the scheme may cost Amelie far more than the $30,000 of upfront savings.
The Trio talk about the false economy that is sometimes represented in the quest for pocketing the grants or discounts.
“It’s a bonus, not a driver”, says Cate about the opportunity cost.
- Buy and hold versus selling earlier.
The Trio unanimously agree that Amalie’s brother’s recommendation in relation to selling is not the best advice for her situation.
Dave talks about the importance of understanding how she can use equity to leverage and get into her next property.
And our gold nuggets……
Cate Bakos’s gold nugget: Cate draws on her client experience over the years and notes that many have ultimately unwound their co-owned property structures with family members. This is due to a combination of joint and several lending restrictions and changing personal plans.
Mike Mortlock’s gold nugget: Mike congratulates Amelie but he implores her to think about where she wants to live and to develop a good strategy that incorporates her principle place of residence.
Dave Johnston’s gold nugget: suggests that Amalie needs to figure out her price point with a strategic mortgage broker and then consider how her next purchase fits within her property plan. Show notes: https://www.propertytrio.com.au/wp-admin/post.php?post=490&action=edit
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Mike kicks off our episode with the fresh announcement of our new RBA Governor. The trio wish Michelle the very best in her new role, and they also chat about the departure of Philip Lowe and the key mistake that likely drove the change in Governor.
Mike points out that the overall national increase of 1.1% is not really a national story and Cate reinforces that the strength of the Sydney market is driving much of this positive growth data.
Dave also draws regional performance to our listeners' attention. The capital cities are outperforming the regions; a twist that we have been anticipating but haven't seen for quite some time. The pace of growth across the board has slowed down, however, and this could be apportioned to the continued rate rises through June.
Internal migration patterns have normalised; our rate of moving to the regions has certainly calmed down since COVID lockdowns. In some cities (such as Melbourne) we are seeing some elasticity and people are returning to the city.
Cate shares an interesting observation from her coalface. She is taking enquiry from quite a few Sydneysiders who are either investing in Melbourne, or moving to Melbourne. The disparity between the two biggest cities is greater how than historical ratios, and Sydneysiders are obviously seeing value in the Melbourne market now that the differential is higher.
Cate also mentions that established, boutique units in the Melbourne market seem to be demonstrating capital growth too, and this is something that Melbourne hasn't experienced for over a decade.
Mike has been chatting to many business owners and property managers about the proportion of sales that are investor-owned properties. Rent rolls are eroding as many investors opt out of property, and anecdotally this is obvious across the board in many cities, but particularly in Victoria.
"The sales department are basically setting fire to their rent rolls...maintaining rent rolls as a steady source of listings," says Mike.
The Trio look at the 'days on market' data but Cate uncovers a key reason why this data isn't neccessariliy a perfect reflection of buyer/seller demand. In auction-centric markets, agents have strong control over the type of campaign that a property can be sold by. Auction campaigns have a usual four week lead time until the sale date, and surely this data skews the data.
"It's not an organic reflection; it's deliberately controlled by agents."
Mike prompts the underquoting debate also... perhaps this is a good topic for another episode! Stay tuned.
Hobart and Canberra are the two capital cities that have bucked the trend and had strong listing activity. This supply and demand imbalance is reflected in the growth data, unsurprisingly.
Mike asks Cate and Dave about distressed listings, and despite the media suggestions that the fixed rate cliff and the increased interest rates could give rise to distressed listings, Cate points out that this is not occurring, and the data supports this.
And the CoreLogic findings for new listings vs total listings is telling. New listings are still well below the historical five year average, however the total listing figures have nose-dived. This illustrates an increased buyer appetite for old listings, (those with greater days on market than 180 days), a sure sign that buyers are outstripping sellers.
Mike asks Cate to comment on the vacancy rate data. A slight amount of easing is evident in some markets, but as Cate points out, "there are markets within markets" so the data is not entirely reliable. Melbourne is still surging with house rents, and units remain tough propositions for renters. Dave suggests that migration (both internal and overseas) are still contributing to the rental issue.
Mike does challenge the relationship between new arrivals and unit rents; it's an interesting conundrum.
The Westpac Consumer Sentiment data is out, and it's somewhat puzzling for the Trio.
Cate's 'toys' index is a concerning figure. We are still spending, and the increasing interest rates haven't curtailed our attitudes towards spending like our RBA wish they would.
As Mike says, "It's the buying-stuff activity that is keeping our inflation high."
Lastly, Dave shares some clever data about purchase activity. It might surprise our listeners! Tune in to hear more.
And... time for our recaps this time, (because Mike forgot about gold nuggets)..
Dave Johnston's gold nugget: Dave summarises the market by saying price growth is slowing down, but it's still positive. He also touches on investor-led sales and he hints at supply of new listings increasing... happy news for the buyers out there. However, upgrading remains a challenge for a large cohort of buyers.
Cate Bakos's gold nugget: We have a segmented market and the renovation projects remain a significant challenge while builders and trade materials are in limited supply.
Mike Mortlock's gold nugget: it's an uptick in sentiment, and an uptick in investors getting out of the market.
Show notes: https://www.propertytrio.com.au/2023/07/17/ep-214-june-market-update-what-is-driving-interstate-interest-to-melbourne/
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Mike's planning for this episode has Cate and Dave laughing... our newest muskateer is challenging the Trio with his cheeky script. But they won't fall prey to his tricks.
Today's episode is all about some insightful data that Mike and the team at MCG uncovered about changing investor behaviours during the Queensland land tax proposed changes of 2022.
"Anecdotally, (investors) were avoiding Queensland when they were legislating the land tax changes."
Mike's data captured three significant segments in time: pre, during and post the land tax legislation and eventual repeal.
"I was pretty unimpressed as an investor," says Cate, who considered selling her Queensland property at the time.
Cate sheds light on the attitude of investors at the time of the legislation changes. Buyer behaviour was a reflection of the concern about increased land tax obligations.
Focusing on the data - as Mike points out, 40.9% investment purchases in Australia were in Queensland prior to the legislation being enacted.
"During that 98 day period, the figure dropped to 33.6%, representing a 17.8% drop", says Mike.
Cate queries some of the other variables that may have impacted the data, including interest rate increases, COVID lockdowns.
Dave asks Cate about the impact of this legislation on the rental market. The volume of sales would have no doubt eroded the rental stock, and as Cate points out, Queensland was enormously impacted by homelessness.
Mike also sheds light on how the State Government taxes are offset by Federal Government negative gearing benefits.. Tune in to hear more...
The Trio are clearly not supportive of the Queensland Government's land tax move on land tax in 2022. Post-the repealed date, the figure only rebounded to 34.73%, a figure that still signals that investors were spooked. Combined with the Greens' policies, the investor market are cautious, particularly in Queensland.
And as Dave noted, a lag effect can last a long time. Victorian land tax changes, combined with tough rental reforms and a supply/demand imbalance will likely erode Victorian rental supply and the two resident Victorians in the trio discuss this. Household formation changes, combined with Air BnB and investor fears are playing havoc with Victoria's investor stock levels.
As Cate says, "it goes beyond assuming that it will net itself out."
Mike discusses the 'build to rent' and superfund theories that are populist decisions presently. The conundrum is that the conditions are just making things tougher for renters. From developers to local council to The Great Australian identity....
Cate sheds light on some current Victorian government established property acquisitions and the challenges that are associated with high rise social housing stock. She also chats about the current vacancy rates and how historically significant our current vacancy rates are.
As far Queensland's land tax legislated land tax changes boded; "It's misguided and it has unintended consequences", says Dave.
Cate discusses the need for continued investor participation to quench the current renter thirst. Combined with limited control over this asset class, the Trio agree that things are precarious for the current rental housing crisis.
Lastly, Mike feels that Queensland didn't acknowledge that they got it wrong with the 2022 policy.
Moving on to our gold nuggets!...
Cate Bakos's gold nugget: For our investors who are wondering how all of this legislative change impacts them. Check your legislation and find out all about market rent, how regularly you can increase rent, and what new policies impact you.
Mike Mortlock's gold nugget: It's very unpopular to discuss positive roles that investors provide in society. It's a tough juggle socially for many who are balancing the need to grow their wealth with the altruistic drive to provide housing.
Show notes:
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
This episode is all about the things that buyers should look for when inspecting property; the red flags, practical tips, seeing beyond hire furniture and fresh paint, .... and the non-negotiables.
"Before we put any inspections in the diary, we check Google Street View."
Cate talks through the things that she's looking for when selecting properties to shortlist for her clients. From electrical transformers on power poles, speed humps and roundabouts, to dodgy neighbourhoods, Street View can safe wasting time driving across town.
Technology really has revolutionised how we do business.
Cate also looks for title types and zoning before getting excited about a listing. She and Dave ponder the importance of this in relation to lender scrutiny too. As Dave points out, understanding where true value lies can save buyers from wasting time and missing out on a lot of viable opportunities.
Dave asks Cate to share some of the steps she recommends when embarking on price analysis. Starting with recently sold examples on the sold tab of the search engine is a great first step. We can't underestimate the value of talking to friendly local agents too.
Mike sheds light on how he also looks forensically at past sales of the subject property, overlaying capital growth forecasting based on sale dates. He also throws out an AI challenge to our listeners! And Mike chats about the need for buyers to dig deeper when a property listing photo is missing a facade picture. Tune in to hear more...
Checking the status of the sale is important too. Sometimes properties are under offer, withdrawn, or about to sell quickly, so it's a worthwhile phone call before you plan a drive across town.
"When you arrive, what is important to note before you even get out of the car?"
* Parking and any parking restrictions - can you get a park nearby when you visit?
* Surrounding area - does it feel safe?
* Neighbouring properties - are they well kept? Are they shadowing the property?
* Any noises or smells?
* Ease of getting in/out of the property - can you pull in and out of your own drive?
Dave quizzes Cate on what she looks for once she's inside the property. She starts with the agent conversations, and the ways that buyers can be remembered for all the right reasons. Capturing video notes is a very handy tool that Cate employs, but she always asks permission from the agent. She sheds light on the aspects of the inspection that she notes in her inspection videos, and explains the benefits of doing so.
COVID really changed things for property inspections, particularly for the lockdown cities. "If you remember back to 2021, we had just five minute inspections at one stage", says Cate.
Mike talks about the value of a virtual inspection for spacial awareness; an understanding of the flow of the property. The trio talk about the hidden things that buyers don't always capture, and how a video inspection can aid this. From subfloor to gutters, there are tips and tricks that they share to give our listeners an extra edge with their inspections. And MIke's Quantity surveyor strengths shine though in relation to understanding functionality and age of items. Functional obsolescence is a term they all have a chuckle about, but understanding ATO effective lives is a great insight for investors.
...And our gold nuggets!
Cate Bakos's gold nugget: Going in with a really clear idea of must-haves and nice-to-haves is integral. If the property has a deal-breaker, buyers need to be prepared to walk away.
Mike Mortlock's gold nugget: Imagining the property without styling and staging is a real blind spot of people and we have to remember that staging is designed to make us pay more for the property. He also notes that many investors make the mistake of looking through the wrong lens. Lastly, asking the agents the right questions is critical. Being coy won't help buyers at all, particularly in this market.
David Johnston's gold nugget: Differentiating what is 'easily changeable' from what isn't is is Dave's big tip. It's the unchangeables that make a difference in the long run.
Shownotes: https://www.propertytrio.com.au/2023/07/03/unlocking-the-secrets-of-inspecting-property-with-expert-strategies-for-assessing-properties-like-a-pro/
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The trio enjoy a catch up after Cate's visit to Adelaide and a day out with Pete and the students. Pete sends a special hello to all of our listeners!
Mike's weekly market update circles around the RBA minutes and the monetary policy paragraphs. He notes that "the case for justification is getting stronger" and he highlights the increased risk of inflation returning to the target, hence the interest rate move.
Cate's interlude into off-market transactions may surprise our listeners. "Situational" off-markets can be ideal, but "Opportunistic" off-markets are becoming problematic.
Dave weighs in with his insights also and shares Cate's concerns about buyer's agents who purport to transact a heavy weighting of off-market sales.
Our episode entails two great listener questions.
The first is intriguing: Llohyd bought a rundown house in Hillcrest, SA for $550K with $440K debt November 2022. It’s in the process of getting subdivided to build two. His broker has just conducted a CBA desktop valuation and his property has almost $120K equity, and his options are bountiful. He reaches out to the trio examine his options and it's an enthralling conversation. Does he build? Sit tight? Consider other options?
Tune in to find out what the trio discuss. From considerations around build cost to equity positions, long term land banking to selling with plans and permits, all options are on the table.
Our second listener question is always a ripper. Jasmin asks the trio, "If I have a loan for $820K with an LVR or 80%, can I use that to buy two properties worth, and should I consider that option. Or can I only buy 1 property? "
"If I had a dollar for every time I've been asked this question, I'd have a piggy bank full of dollar coins", says Cate.
Cate asks whether our listener is investing for capital growth, or for rental yield. There is no right or wrong answer, in fact it boils down to an investor's personal financial position. Mike supports this view but he also loves the idea of diversification, however he focuses on asset quality and the need for an investor to understand what it is that they are trying to achieve.
Dave sheds light on the risks associated with price point selection, the power of compounding, the perils of procrastination, and the impact on the ability to purchase their family home.
"Make sure you've got the big rock in the jar sorted out", says Dave.
A true key point for Jasmin to consider.
...And our gold nuggets!
Cate Bakos' gold nugget: The winter market can be tough on the southern states, so for people who are contemplating shopping through the winter months, perhaps thinking about gearing up for spring is a good idea. Bear in mind supply and demand during winter months and don't put pressure on yourselves.
Mike Mortlock's gold nugget, (or black opal): Mike ponders the merit of having full context of our listener's long term plan. We can't just tell Lloyhd and Jasmin to opt one way or the other... it all comes down to planning.
Shownotes: https://www.propertytrio.com.au/2023/06/26/listener-questions-june-2023-2/
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Mike kicks off our market update with Sydney - up by 5% for the quarter. While this big city does a lot of heavy lifting when it comes to median figures, Cate points out that every single capital city is recording positive median price movement for the month of May. Dave brings our attention to the pace of growth for the city markets over the short term, as we see these markets gain pace over the regional markets as they play catch up.
Dave also chats about the breakdown of the market segments, specifically pointing out the relative volatility of the top quartile of the market. As history has shown us, the highest priced properties are often the first to tumble in downturn and the fastest to rebound in a recovery.
An intriguing fact that the Trio discuss as media headlines focus on the mortgage holders' pain is the cohort who are paying cash for their purchases. Whether they be down-sizers or those who have inherited wealth, many purchases are actually settled without the need for lending.
First home buyer participation rates are another side-topic of conversation for the duo and Dave notes some of the grants, opportunities, initiatives and changes that give today's FHB's some significantly higher benefits than in previous years.
"The bank of Mum and Dad's average assistance is over $50,000 nowadays," says Dave.
Dave points out the distortion caused within the median values data when it comes to houses and units. Taking two very different cities into consideration (ie. Melbourne and Brisbane) is a case in point when we consider the ratio of units to houses. And Cate raises another data-distortion consideration; what happens when we have an overrepresentation of sales from one particular segment of the market? Mike reminds us about the impact of initiatives that favour particular price-points too. We need to remember that data analysis sometimes needs to be drilled much deeper.
Dave reports the rental movement for capital cities and regions. Capitals are still experiencing pressure and new arrivals will be amplifying this impact. Regions are slowing down, and as Dave explains, only about 15% of new arrivals head to the regions, with the vast majority heading to the capital cities.
Units rents are rising much faster than houses and an obvious reason for this is affordability; units are simply cheaper to rent.
Listings are well under the five year average. Mike questions Cate about the slight uptick in May, but Cate is quick to put it down to Easter school holidays avoidance. There are no signs of reprieve for buyers who are experiencing the impact of stock shortage, unfortunately.
House price expectations have increased; indicating that people are expecting house prices to rise. Key changes include 'time to buy a major household item', 'economic conditions over the next five years', and 'time to buy a dwelling'. Mike delves into this last one; it seems a strange contradiction, but as Cate points out, this measure wasn't much different a year ago. Even in the crazy pace of 2021, this figure still sat below 100 which suggests that the broad consensus is that it's not a good time to buy a dwelling. People are pessimists!
Dave's pet subject... lending! "But we're not lending anymore", says Mike. Dave unpacks these loan commitment figures and hints that investors may be turning a corner. Cate queries the investment loan data and whether these figures could be including vacant (or personal use) dwellings that aren't actually housing tenants.
Productivity remains a key concern and stagflation represents a threat to our economy if things don't improve. Dave details this risk for our listeners.
Lastly, our new favourite index, the Freightos Baltic Index is a revealing chart. Freight costs have returned to pre-pandemic levels and this could be a positive beacon for our inflationary problems.
And... time for our gold nuggets...
Dave Johnston's gold nugget: The breakdown of Goods and Services is an interesting dilemma. With services costs rising but goods settling down, our RBA has their work cut out for them.
Cate Bakos's gold nugget: Freightos Baltic Index! This is a compelling chart when it comes to gauging the cost of freighting goods; a significant proportion of the overall cost for imported goods.
Mike Mortlock's gold nugget: When will our spring selling season arrive? Or could listing activity remain low? Mike talks about the challenges buyers face while our supply and demand ratio sits at current levels.
Show notes: https://www.propertytrio.com.au/2023/06/19/ep-210-may-market-update-from-generational-shifts-to-the-r-word-recession/
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Mike's market update focuses on some new tax data which identifies the highest earning suburbs in Australia. WA's Cottesloe and Peppermint Grove take the lead and the range of incomes will surprise a few. Among other facts and figures, gender wage gaps, average superannuation balances and richest professions all featured in Mike's segment.
"The average Australian taxable income currently sits at $63,882." Our first listener question asked the Trio about their take on the Four Corners Episode that aired in late March 2023. The show focused on poor agent behaviours and conflicts of interest, and our lovely listener wondered what sort of controls exist around such behaviours and duty to disclose. Cate pares it back to two important things that buyers must remember.
* agent behaviours, and
* warning bells for consumers
Our listener also asks about agents' representation to buyers when it comes to asking prices and auction quotes. Cate shares her thoughts about underquoting and some of the challenges that are faced by both listing agents, vendors and consumers.
While underquoting is a horrible practise, Cate agrees with Dave's message. Buyers owe it to themselves to be familiar with resultant sales prices in their area, and applying some pricing methodology is not a difficult science for a committed buyer. Mike's reference of cognitive bias is so true for so many vendors though, and it's crucial that vendors maintain a realistic approach.
Impartiality is the key word and Cate, Dave and Mike decipher what can go wrong for consumers when their trusted professional has a conflict that undermines their fiduciary duties.
Our second listener question is a special one; a loyal listener (and property investor) is keen to help her friend get a strong foot holding on the property ladder and she asks the Trio whether her friend's Melbourne apartment is one to hold or one to sell in the quest for a strong performer longer term.
Cate, Dave and Mike rise to the challenge with their individual strengths shaping some ideas about how our listener can best help her friend. Cate focuses on another element that loving friends and family often overlook.... we can't imprint our own values and dreams on others. Property investing needs to be prompted by a fire in one's belly, and dragging a friend along for the ride is often a difficult challenge.
As Mike points out, strategy, deliberation and commitment is essential for a committed investor. And Dave discusses the need for a desired spending limit, methodical cashflow analysis, and a determination of savings on hand, LVR and borrowing capacity... and then accessing funding is another step yet again.
...And our gold nuggets!
David Johnston's gold nugget: Dave addresses both listener questions. For our first listener, Dave harks back to the most important point to retain: "Do your due diligence." And his advice for our second listener's friend is to "Do your plan!" Simple, but not easy.
Mike Mortlock's gold nugget: As much as we want to be kind and look after our friends, we can't go too far with it. "Imagine if Da Vinci was petrified of not being able to pay the rent and wasn't sketching in his notebook, what kind of world would we be living in?"
Show notes: https://www.propertytrio.com.au/2023/06/12/listener-questions-june-2023/
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This midweek updaate was too juicy to wait for, so the trio bring to light three new market updates to share with our listeners.
Mike talks about some breaking data signalling a weakening job market and he sheds light on what futher changes could mean for the economy.
Cate touches on an interesting rental story where a tenant took on the landlord at a tribunal.
And Dave discusses a new lender option for some borrowers who may be eligible for a significant buffer rate reduction; a surpring move in a sea of 3% buffer rates.
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The trio kick off this exciting episode with a discussion about the Westpac consumer sentiment index and the recent changes that our markets have been experiencing.
Dave and Mike ponder the role that the media play versus the money market commentary, and Cate highlights the shrinking confidence about the time to buy a major household item index, a positive signal that the RBA rate increases could be (slowly) taking effect.
Today’s show is all about the distance people buy their investment properties from where they live and whether that has changed over the last few years. The popular view is that people typically buy very close to where they live because they know their own backyard. However, we’re diving into some new industry research that dispenses with the stereotypes and gets down to facts with real data.
We are fortunate to have some valuable and telling data at our fingertips due to MCG Quantity Surveying's 1000 assets study; an annualised data release that Mike and Marty share with the property community and media. Mike shares with the listeners what it was that prompted this collation of information.
Mike challenges Dave and Cate to consider how far they each thought investors were generally prepared to travel. Cate also asks Mike to shed light on some of the 'accidental investment' examples, and how this data signals such a property.
Dave chats openly about the biggest risks associated with dual-purpose investing and Cate also talks about some of the emotional reasons that can lead an investor to purchase 'around the corner'.
The trio talk through the changing figures associated with this amazing measure, from pre-pandemic to pandemic, through to post-pandemic. Prior to the pandemic, the average distance that an Aussie investor's property was from their home measured 293km.
The pandemic average distance shifted to a colossal 599km, a startling change.
The trio unpacked the drivers, the changes and their thoughts on the significant jump. The intriguing question that Mike asks is, "what on earth happened post-pandemic?" ....and the answer may surprise (we won't ruin the surprise for our listeners!)
This incredible evidence supports some of the trends that we've witnessed in Australian property investing and we love that Mike and Marty's business have some clever data that is unique to what we'd typically find through the usual data channels.
The trio sift through the radii findings listed in this table, not only analysing the pre-, pandemic and post- average distance, but also the changes within the shorter-distance data findings. It's a ripping episode and one that showcases our third muscateer's appreciation for great data.
"While it appears that we’re transitioning back to a more normal reality in the post-pandemic era, there’s no doubt some needles have shifted forever. In fact, discussion about modern history will almost always be divided along pre- and post-pandemic lines."
Shownotes: https://www.propertytrio.com.au/2023/06/05/decoding-the-proximity-puzzle-for-property-investors/
Got a question for the trio? Click here
This ep is crafted around two excellent listener questions that hinge around mortgage strategy. But before the trio jump into the questions, they share their market updates.
Land tax reforms (and other 'fruity' ideas) are the topic of conversation for many Victorian investors, and Cate talks through the changes with Mike and Dave. She touches on some of the challenges that Victorian property owners have faced through the pandemic and she also considers some of the negative implications of the new changes. Cate wonders whether the direct impact on renters will result in segmentation due to the vulnerability of cash-flow neutral investors.
Dave ponders the impact of this tax change on the Victorian market, and holds concerns that the unintended consequences could the exacerbate the existing rental problems in the state. With supply issues at record lows and such tight vacancy rates, Dave fears that this will just make the problem worse.
Mike asks Dave and Cate a left-field question, "as land tax increases state revenue in one state, federal government tax revenue decreases. How does our Federal Government feel about this?"
Our first listener question is sent to us by Emily, who asks the Trio about converting her home loan to an interest only loan product once her offset account is working at full capacity. Dave's rationale for recommending interest only is intriguing, but it's important to note that this information is not designed as a 'one size fits all' solution.
Investors need to have a plan, understand their options and remain focused on the long term goals when it comes to stepping-stone properties. Accidental investing is not necessarily a great outcome if the property is not a suitable long-term asset to hold as an investment.
Some of the key benefits of an interest only loan as outlined by Dave include;
* More interest to claim once the property becomes an investment property
* Building up savings more rapidly, and in turn these savings can be used to pay more for a future home and will reduce the debt balance on the non-deductable loan.
The big unknowns, according to Dave are; "most people don't understand the strategy, and we also can't be certain that the home will eventually be an investment property down the track."
Dave's sagely explanation of this common dilemma is gold for our listeners, and many investors benefit from this approach when a stepping-stone property is no longer personally used and a future home acquisition is on the agenda.
The Trio remember the old days when lenders offered much longer interest-only periods to investors, and they compare the differences now that today's investors face, particularly when it comes to loan amortisation.
Our second question comes to us from another fabulous listener, Marco, who asks a great question about the use of equity, as opposed to applying higher loan to value ratios, (LVRs) and paying for Lender's Mortgage Insurance.
"Is LMI the devil, or should we consider holding onto that cash as a buffer?" asks Mike.
Dave distils some of the important details when it comes to mortgage insurance and LVRs, pointing out how tax deductions are optimised, and savings are maximised in tandem. Cate adds some questions that are important for investors to ask themselves; understanding how much time remains to achieve the investment goals, what incomes they'll potentially earn in the future, how long they wish to work for, what the short-term economic cost impact is, and what is in their plan.
Life throws up curveballs, but one eye-opening aspect that Dave touches on is the importance of remaining patient. Some acquisitions take many years, but the visibility that can be offered through clever modelling software can't be underestimated. Having a clear plan and a scope of timeframes is integral to a successful journey.
One of the biggest costs that Dave sees impacting property investors is selling a property that they could have otherwise kept if they'd had the right mortgage strategy.
Thank you to our listeners - we appreciate these great questions. We have more listener questions eps to come too!
And... our gold nuggets!
Mike Mortlock's gold nugget; "don't be the cleverest person in the room!" Mike supports reaching out for specialist advice - the financial difference when it comes to getting great advice can really add up. "It could be the best ROI you ever get."
Cate Bakos's gold nugget relates to the first listener question.... refinancing! Cate implores investors to stay on top of their paperwork, supporting documentation and their credit conduct so that they can ensure that refinancing isn't a nightmare.
David Johnston's gold nugget: If you get your mortgage strategy right and align it to your property plans, (particularly in relation to converting a current home to a future investment property), you can not only optimise your tax deductions and have more cash to put towards your next home, your extra property in your portfolio will make a significant difference to your retirement.
Shownotes here: https://www.propertytrio.com.au/2023/05/29/ep-207-mortgage-mastery-for-investment-borrowing-and-the-hold-or-fold-dilemma/
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This ep was about FOBBABO, an acronym Cate made up years ago.
She coined this phrase a while back when buyers started having second thoughts after an ideal property came along. This episode is dedicated to the trick buyers often play on themselves… some of the reasons why, things that amplify FOBBABO, why it can be dangerous, and ways to tackle it when it happens to you.
Dave hosts this exciting episode and explores with Mike and Cate some of the other psychological challenges buyers face, from FOMO (Fear of Missing Out), to 'the winner's curse', an segment that Dave, Cate and Pete covered back in episode 94.
Dave asks Cate to share how FOBBABO usually manifests and becomes obvious to a buyer’s agent, and Cate also sheds light on the pro's and cons of FOBBABO, which market cycles it usually strikes in, and why the media can be quite unhelpful for those who are struggling with this fear.
Dave also challenges Cate to delve into some of the painful lessons that FOBBABO can create, and the trio speak about the difference between our most recent property downturn and previous downturns.
Dave shares his insights on the impact of inflationary pressures, rising interest rates and in particular, diminished borrowing capacity for many buyers as a result of the rate hikes. This time, FOBBABO presents even more dire risks for some buyers... tune in to find out more!
The trio talk about some of the ways that buyers can limit the negative impacts FOBBABO can cause and Cate talks listeners through her 'reverse search engine' exersise. This not only helps give perspective for buyers who are feeling the threat of FOBBABO, but also enables them to construct a clear feasibility study that highlights not just the likely types of eligible properties, but their frequency of sale also; an essential element to note for anyone who is concerned about a moving market.
The trio share eight tips to ward off the chances of FOBBABO biting... check out our show notes.
And... our gold nuggets!
Mike Mortlock's gold nugget is all about buyers making sure they have their brief nailed down. The reverse search engine exercise caught Mike's attention and he encourages our listeners to utilise this tool when it comes time to circle in on their purchase plans.
Cate Bakos's gold nugget relates to the importance of taking action. Buyers have to be informed to be prepared to pull the trigger.... but once they have made the decision to buy, they just have to go for it!
Shownotes here: https://www.propertytrio.com.au/2023/05/22/ep-206-mastering-the-art-of-property-decision-making-and-conquering-the-fear-of-buying-before-a-better-option/
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Mike opens his first official Market Update episode and kicks off the conversation with the Federal Government's budget night announcements. Notably, the trio talk about the impact on the property market, in particular the measures that are proposed to ease the cost of living and the government's approach to tackle the rental crisis.
The Trio ponder the complexities of long lead time and expensive building costs when it comes to targeting the new supply side of the equation, and Cate points out the contrasts between this particular budget night and past budget nights.
Dave discusses the Build to Rent sector and the challenges that this initiative poses for the government, and he sheds light on the management trust withholding tax changes and the impact that this proposed easing will have on investment in the sector. Cate's word of caution about this type of investment category with controlled rents is an interesting one for pragmatic investors to consider.
The initiative that the Trio all agree is a good one is the First Home Buyer shared equity scheme. Opening up the offering to those who have previously owned a home more than ten years prior, and allowing siblings and friends to co-purchase is a significant change to what was already a good offering.
"It's much harder these days to buy a property as a single", says Dave, and this opportunity will make a positive difference for a lot of Australians, (including permanent residents) who are keen to get a foot on the property ladder. Cate particularly likes this initiative for several reasons, including the fact that it is less likely to segment the market and result in a dual speed rate of growth for first homebuyer stock vs all other stock.
The side impacts that could increase house prices in specific areas include parental leave changes, (as household incomes grow), and green energy infrastructure upgrades in our existing steel manufacturing locations.
Moving into our April Market Update... As Dave points out, Sydney is the "absolute standout", but other capital cities are also rebounding. Low listings, record new arrivals and a general stabilisation of rate increases are the current tailwinds behind the property market.
Cate speaks about listing volumes and the drivers that influence them. Currently, vendor participation is low, and buyers are pouncing onto 'old stock', which is in turn eroding 'all stock'. Negative media sentiment and data lag are likely drivers of the current low listing rates. "Until vendors have confidence that the market isn't horrible, vendors are going to sit on their hands", says Cate. And she also shares her concerns about a particularly quiet winter; something that will be difficult for buyers, especially in the cooler climate cities.
Dave also comments about something important: listing activity is also low because owner tenure is extended. People are holding their properties for longer.
The trio focus their attention on the Westpac Consumer Sentiment Index and debate some of the drivers and changes that are noteworthy forward indicators for our housing market. New loan commitments are interesting, and according to Mike, "the refinancing goldrush has become a hallmark of 2023". Dave discusses a rebound he's seeing; both owner-occupier financing group and the investor financing groups have grown in size. First home buyers have grown by 15%; possibly amplified by the NSW stamp duty changes.
The annual change in rents for houses continues to challenge several markets, but the change in unit rents is quite shocking for tenants in the affected cities and regions. But why is Tasmania lagging when compared to the other states? Mike asks Cate to explain and her answer may surprise listeners. And what is the story with Canberra? Dave eludes to the challenges associated with the public sector wage freezes, combined with the work from home acceptance.
Cate's curious finding about eastern seaboard capital city top rental performers is intriguing.... we won't spoil the surprise.
Distressed listings are not as 'distressed' as the media would have had us believe. The charts are not showing that the impact of interest rate increases have dismantled home ownership like the headlines suggested they would.
The trio focus their attention on the Westpac Consumer Sentiment Index and debate some of the drivers and changes that are noteworthy forward indicators for our housing market.
New loan commitments are interesting, and according to Mike, "the refinancing goldrush has become a hallmark of 2023". Dave discusses a rebound he's seeing; both owner-occupier financing group and the investor financing groups have grown in size. First home buyers have grown by 15%; possibly amplified by the NSW stamp duty changes.
And... time for our gold nuggets...
Dave Johnston's gold nugget: the separation between unit rental growth and house rental growth is a great one to watch. We saw cyclical highs in the last quarter, and Dave is tracking the relative historical differential between unit and house rents with an educated hunch that we could see units turn a corner.
Cate Bakos's gold nugget: Any prospective vendors who are wondering if/when it will be a good time to sell. Cate implores them to hit the pavement and to check out some auctions in their area. They may be pleasantly surprised.
Mike Mortlock's gold nugget: Mike points out that we've seen the data starting to turn around, and he says it's important to understand data lag. The best way to get a feel for the up-to-the-minute market conditions is to jump into the coal face and experience it in person.
Shownotes here: https://www.propertytrio.com.au/2023/05/15/ep-205-april-market-update-rising-rents-and-budget-night-how-do-we-solve-this-issue/
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Welcome to The Property Trio!
Formerly The Property Planner, Buyer and Professor, we've rebranded!
The trio ponder the RBA rate increase decision. Cate points out that while the rate of inflation is reducing, the inflation figure is still "a million miles" above the target band, (in Mike's words), and our regulators are doing what they can to slow down the rising cost of goods and services; particularly the latter, as Dave points out. Despite the fact that the decision was not what the majority of economists anticipated, we still have some short-term pain to go, in an effort to thwart long-term pain.
Will Mike's prediction be correct? A lumpy return to growth for the property market? Only time will tell. Cate harks back to the market sentiment index and the indicators that we need to look out for.
Heading into episode 204, our second instalment on the various ways that buyers can purchase.
Family loans are a common helping hand in today's market. Family assistance is not restricted to just parents, but often financial assistance comes from parent(s).
Dave digests the difference between a genuine gift vs a loan. A loan will impact the borrower's serviceability when receiving a portion of the funds from a parent in the form of a loan, and lenders usually apply a thirty year loan term to the portion that is funded by a family member. A gift, however doesn't impact borrowing capacity adversely, yet it requires a few important steps to satisfy the lender, as Dave explains. Genuine savings is a major focus for banks, and Dave sheds light on this hurdle for our listeners and has valuable advice that may come as a surprise.
Security guarantee, (also known as Family Pledge) is another common way that parents can assist their children on the property journey and Cate talks through some of the benefits and intricacies of such an arrangement. Dave talks through the pro's and con's of this interesting loan product, and shares a great example about a first home buyer client who has $200,000 saved, and is borrowing 106% of the purchase price with the assistance of a parental security guarantee.
As Cate suggests, for this particular client, their ability to preserve their cash savings for renovations will enable them to target a renovation project; something that most first homebuyers don't have a viable chance at embarking on. How can children relieve their parents of the obligation to provide security? The trio ponder the likely ways that this can occur. And how can parents help children when they have multiple kids?
Shared equity is the next topic that the trio tackle. From state-based to federal initiatives, there are a few options for buyers in today's market who are keen to get a foot on the property ladder.
Mike details the federal scheme and what it means for buyers. "Instead of buying with a friend, you're buying with the government".
Cate asks Dave how owners can get that monkey off their back, touching on the limitations to property improvement activity, buy-back rules and the income thresholds that buyers face in terms of eligibility criteria.
Cate shares her experiences with working alongside clients who have utilised the Victorian state-based shared equity scheme. While it's quite restrictive, (and not for everyone), there is no doubt that it's a special opportunity for those who would have otherwise been precluded from the property market.
Co-ops is the last conversation for this episode and Dave explains how a co-op functions. Best described as voluntary, member-led organisations. Common Equity Housing Limited, (CEHL) is the board controlling the co-op, with 25% of the tenant's income contributing to the cost of the housing co-op. As Mike and Cate point out, the arrangement is contingent on members being aligned. Mike shares the advantages and disadvantages to our co-op arrangement.
Dave chats about the history of co-ops and the benefits on offer for buyers who embark down this path.
And.... our gold nuggets....
Dave's gold nugget: If you're a parent who plans to help a child, or a child who is seeking to get some help from parents.... there is a little bit to think about, so have the conversations early. Initiate conversations well in advance... it will save a lot of time, heartache, pressure and stress. Remember .... genuine savings!
Mike's gold nugget: There are a number of ways for Aussies to get their foot on the property ladder, and taking into account our capital growth rate in our nation, getting in today could have a much greater benefit for you than getting in five or ten years later.
Shownotes here: https://www.propertytrio.com.au/2023/05/08/ownership-structures-part-2/
The trio ponder the current market and share their thoughts on the improving conditions and some of the contradicting economist and media views. Cate highlights some of the reasons why our market has been underpinned, with an uptick of buyer appetite Mike brings perspective to the Silicon Valley bank concerns, citing Peter Costello, our past-treasurer in a recent interview.
Kicking off episode 203.... What are some of the motivations for co-owning property?
Affordability is a significant reason for co-ownership, but as Cate explains, sometimes it's all about bringing someone you love onto the property ladder. Her own real life story about purchasing with her stepson is a great example of a co-ownership success story.
Debt aversion is another common reason, but as the trio uncover later in the show, co-borrowing can have an adverse impact on future borrowing capacity... something to ponder before diving in!
Dave speaks about a sobering reason for co-ownership also. More joint income purchases have made it proportionately harder for singles to enter property ownership though.
"Today, it's much harder for a single to buy a property than it was twenty, thirty, forty years ago", says Dave.
Mike asks Cate to explain the difference between joint ownership and tenants in common; an important concept when it comes to estate planning and tax. And Dave points out that too many people think about 'the now' and not the future. Jumping into a decision without planning and consulting the relevant professionals can cost owners a lot in the long term.
The trio chat about the benefits of pooling resources;
* Diversification
* Reduced cashflow commitment
* The chance to buy a better asset with a stronger budget
* Getting into the property market earlier
* Being enabled to enter the property market when you'd otherwise have been precluded. For example, complementary financial positions such as a cashflow rich, cash-poor individual combining forces with a cashflow poor, cash-rich individual
Some of the issues that are often overlooked though are plentiful too.
* When one person has a sudden need to access their capital. Reasons can range from financial distress, new relationships and a desire to buy a home, etc.
* Lack of agreement about important issues, including the agreement itself
* An inequitable set of responsibilities between each owners and a feeling of dissatisfaction
* Risks to the relationship/friendship
Prepping for the entity decision is critical, and they must be arranged long before signing a contract.
Mike asks Cate some good questions about the risks of buying at auction without a clear understanding of the entity, and Dave also sheds light on the ability of owners to switch between joint ownership and tenants in common after the property has settled.
Dave touches on just some of the less-considered details that co-owners need to delve into before they embark on the journey, including the exit-strategy, a dispute resolution clause, a financial default plan, and the distribution of profits. Are they paying down the loan with the rental proceeds once the property is cash positive, or are they distributing the funds? So much to think about....
"Once you dig under the surface, there are a lot of things to think about."
Mike quizzes Cate and Dave on the pro's and cons of corporate entities and trusts, from company tax rates on profits to the costs associated with the structuring and ongoing professional advice.
Mike opens the conversation up about asset protection and the need for some owners in high-risk roles to consider alternative ownership structures. Joint and several borrowing can unravel a co-ownership arrangement if the borrowers are unaware of the impact of the joint and several arrangement on future borrowings. What happens when a co-buyer owns 25% of a property with a friend, and then decides to purchase their own home a few years later, only to find that their bank servicing is insufficient due to the co-ownership loan? Dave gives an excellent example for buyers to consider when contemplating co-ownership.
Mike asks Cate about some of the things that people get wrong with trusts. "People try to out-sophisticate themselves", says Cate. Too much information can be a dangerous thing, as can cutting corners with budget advisors when setting up structures.
Tune in next week for part 2, where the trio will cover more about alternative entities.
And.... our gold nuggets....
Dave's gold nugget: Often people are looking for a shortcut to make money, but there is no such thing in property. Having a plan and good advice is so important
Cate's gold nugget: "Guard your relationship. Making money is great, but destroying a relationship is an enormous cost and it's the worst".
Formerly The Property Planner, Buyer and Professor.
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
For this exciting episode, some 200 eps following the original podcaster intro's, Dave and Cate introduce Mike!
They chat all things quantity surveying, but drill into the Novocastrian man behind the microphone... from his dangerous hobbies, to what it was that led him to his career as a 'construction economist'.
Mike's candid demeanour brings something special to the trio, and this particular recording sheds light on Mike's zest for trends, data and the identification of property market drivers. Cate delves into the various facets of quantity surveying that requires Mike's skillsets. This ranges from depreciation schedules, replacement cost estimates for insurance purposes, strata management schedules, among other activity.
We are thrilled to welcome Mike to the show and we look forward to scheduling some great episodes derived from his MCG Quantity Surveying 1,000 Assets Reports. Mike shares some intriguing snippets of data about lost depreciation benefits and the figure is staggering... .tune in to hear the details!
Gold Nuggets:
The Quantity Surveyor, Mike Mortlock: Journalistic bias is something that buyers should keep in perspective. Cognitive bias creeps into our thinking often, and it's important we recognise this when making property decisions.
The Property Planner, David Johnston: Dave suggests that investors who haven't actioned their depreciation schedules need to get in touch with a good Quantity Surveyor to claim their deductions. (As Mike says, "Thanks Dave... the cheque's in the mail!")
Shownotes: https://www.propertytrio.com.au/2023/04/24/ep-202-meet-the-quantity-surveyor-mike-mortlock/
Got a question for the trio? https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM
Welcome to The Property Trio!
Formally The Property Planner, Buyer and Professor, we've rebranded!
We are proud to be bringing your regular episodes to your podcast feed with our newest musketeer, Mike Mortlock. Cate and Dave decided to throw Mike in at the deep end with his first hosting gig, and he didn't disappoint. The Trio reflected on the March data and in particular, the question on everyone's minds;
Has the market turned, or is this a dead cat bounce?
Dave and Cate are both confident that our market strength is sustainable, however Mike chimes in with some context around the quantum of the rebound for the month of March. Cate makes a point about the impact of buyer confidence, (and acceptance) of the rate increases, particularly now that it's evident the rate increases are easing, inflationary pressures are reducing and skill migrant arrival numbers are climbing. "It's refinancing gold rush times at the moment", says Mike. "I think double digit growth isn't out of the question."
The Trio crack straight into the data as follows.
1. Monthly Data - Sydney rebounded strongly with 1.4% growth in one month, and Dave brings market segments and price points to light when he shares that the upper quartiles are the highest performing price segments for the eastern capitals. Dave highlights the separation between Perth, Hobart, Darwin and the other capitals. The Trio canvas the accuracy of some of the most skilled economists and the reliability of their projections and Mike touches on the difficulties of predicting price.
2. Peak to troughs - The sea change/tree change movement is obvious in this following table, and the trio but the March uptick signals a recovery in the regions also. Despite the fact that many of our cities are plagued by low stock supply, we have this to thank for placing a floor under price falls. Cate touches on the elasticity she's seeing, however when it comes to Lockdown Escapees returning to the city.
3. Sales volumes are down - Dave shares an interesting thought; the number of sales as a function of total dwellings are diminishing. From stamp duty avoidance to low confidence, and also taking into account the insufficient options for prospective vendors to choose from, our market forces are not conducive to vendor listing activity. Dave predicts a listing rebound in the Spring months of 2023.
4. Dave confirms the high demand (and activity) for refinancing is evident in the data and at his coalface - it seems refinancing activity is a hallmark of 2023.
5. Rents... Mike shares a scary news item - he read about a rental provider advertising a tent inside his living room for rent. Looking at the rate of change for rents, almost every capital city except for Canberra is exhibiting frightening rates of rental growth. Brisbane is an interesting case to ponder, particularly following the repealed land tax changes and the impact it had on investors. Mike quotes one of our Property Professor's pieces of wisdom dating back to August last year. "Rents have grown at only half the rate of inflation for the past decade. With inflation at over 25% for the decade, and yet the property rental growth average sitting at 11%, the trio ponder the concept that rents are just playing catch up.
6. Sentiment - Mike highlights bond yields and the correlation with sentiment and ponders whether the consumer sentiment figures are actually indicating a rebound. Cate suggests that a dose of YOLO (you only live once) combined with added lockdown savings have delayed the intended impact of the RBA's rate increases. Note we have since sourced an updated April Westpac Consumer Sentiment chart to overlay with the previous March chart discussed on the show.
7. And... our gold nuggets! The Property Planner: Dave feels that late last year was indeed the best time to buy and he notes the markets are broadly in recovery mode now, and Mike agrees with him. The Property Buyer: For any upgraders who are feeling disconcerted by the lack of housing options to pursue, they should consider a long, (or flexible) settlement period to give themselves time to shop.
Shownotes: https://podcasts.apple.com/au/podcast/the-property-trio/id1476039942
Dave and Cate share with the listeners the appointment of Mike Mortlock to 'Third Muscateer' status on The Property Trio.
Mike's job interview and Cate and Dave's discussion prior about the key attributes they're searching for. This little mini-ep taster provides a bit of humour and some insight into Mike's wit and charm.
We welcome our clever Quantity Surveyor to the show! Congratulations, Mike!
Formerly known as The Property Planner, Buyer and Professor, we've rebranded to The Property Trio. Our listeners who have subscribed to our show don't need to do a thing. Each week's episode will keep landing in your feed.
Got a question for the trio? http://bit.ly/3mlk8Rw
Show notes: https://propertyplanning.com.au/our-200th-ep-a-special-farewell-to-pete-and-some-wonderful-memories-to-share-of-our-journey-ep-200/
As Dave and Pete said at the start, "We made the double century". This special episode is not only our 200th, but our last as "The Property Planner, Buyer and Professor. The trio enjoyed reminiscing about the early days when the concept of the show became a reality.
Speaking openly about their hopes, fears and feelings when the pilot launch aired back at the start of 2019, this retrospective is a special one. From mapping out the first episodes to investing in the studio, Dave chats about the inspiration that led to the podcast that it's become today.
Pete recalls the turmoil that COVID caused for so many, and the ways that they worked around lockdowns with technology, enabling every episode to land in their listener's feed during tough times.
Dave explains how the show has taken shape over the years with listener questions, case studies and market updates peppered in between unique episodes, taking inspiration from listener feedback over the years.
This episode has some past sound bites from early episodes including some early calls and insights in relation to the inflation challenges the economy is grappling with today, and Cate's potty mouth during Melbourne's earthquake gets some laughs from the guys.
Cate shares some special listener reviews and our newest muscateer sends a special shout-out to Pete. While Cate and Dave are particularly sad to be saying cheerio to Pete, he's never going to be too far away and this episode was a joy for them all to produce.
Wishing our Property Professor many, happy years of semi-retirement, (because we all know he will truly never quite be able to fully retire from his love of property!).
Pete.. thank you for the memories and the fun on the show. Your clever one-liners, valuable stories and incredible ability to impart your property knowledge have been appreciated by us all.
"You don't need to be a genius to do well in property. You just need to know a bit more than the last person".
To sign off the 200th episode, we replay Pete singing us a special song.
...and in the coming days... Look out for our mini-episode launch of "The Property Trio" where Dave and Cate shad light on the interview process and the quest for the new third muscateer. Listeners who have downloaded The Property Planner, Buyer and Professor podcast in their feed don't need to do a thing. Your feed will automatically update to reflect the new name, The Property Trio.
Our new show notes will move to the new website following our 200th episode.
Formerly known as The Property Planner, Buyer and Professor, we've rebranded to The Property Trio. Our listeners who have subscribed to our show don't need to do a thing. Each week's episode will keep landing in your feed.
Got a question for the trio? https://zfrmz.com/0S6ddQ7y4WzaE3qX3xZt
Show notes: https://propertyplanning.com.au/the-property-professors-memoirs-part-3-ep-199/
This is arguably one of the trio's favourite set of episodes. Taking a trip down memory lane was not only a thrilling chat for Pete, but a wonderful way to share some very important learnings with our listeners.
Following on from last week's episode 1 where Pete got started on his property journey in 1984, this week's episode introduces listeners to Pete's learnings as he embarked on value-adding to his investments.
Episode 1 - Getting Started. It starts back in 1984 when Pete and his wife purchased their first home in High Street, Ardrossan (SA) and spans the the purchase of their first upgrader home, as well as some early value adds and long-term investments that Pete embarked on.
Episode 2 - Property Speculation. Pete branched into purchasing value add properties and wised up to other ways that investors can value add, other than gaining a DA.
Episode 3 - Property Development and Construction. Pete started building and retaining properties in this particular investment phase. In Episode Two, Dave delves into Pete's 'mid-journey' property acquisitions and upgrades.
In the last of these three special episodes, Cate hosts this episode and looks into the various ways that Pete's skillset and experience have enabled him to achieve success and to have choice as he approaches semi-retirement. Episode Three hinges on Pete's growing expertise in relation to subdivision and building.
"Two equilateral triangles make a square"... Listen in to find out how Pete optimised two sites for development.
Pete also touches on his experience post-GFC with his NRAS scheme properties, and the implication of the benefits that have spanned ten years of his investing journey.
Cate reflected with Pete about his growing national brand and his achievements over the years.
Pete appeared in almost every API magazine, contributed to journalist articles, authored two books; firstly in 2008 and then in 2013, he's continued his studies, maintained his passion in property as an active investor, and in 2013 Pete had what he describes as a 'landmark year'. His Masters of Urban Regional Planning study commenced, he was teaching full time, he managed authoring his book and he was training for a marathon. No small feat indeed.
"Knowledge is power in many different fields, and it's no different when it's in property."
Pete emphasises the need for investors to take action, because time is only a wonderful thing once you're investing. He considers some of the students he's taught and the people who have asked him for help over the years, and he touches on the sad reality that many didn't take action to actualise their goals.
Pete's saga about his daughter bidding for him while he was holidaying in Melbourne. While sitting outside a fashion shop waiting for his wife, he trawled the internet on his phone. Recognising a poor listing on the internet that had previously been incorrectly uploaded, Pete set himself the challenge and geared up for an auction (with his daughter's help) in a tiny space of time. It's a wonderful story! Tune in to hear why this particular property caught Pete's eye.
Another great project that Pete shares with our listeners relates to a quadrilateral shaped block that one of his students identified, and in fact it's one of his favourite developments. Pete built the townhouses and holds them to this day, retaining them as a key piece of his retirement plan.
"You don't need to be a genius to do well in property. You just need to know a bit more than the last person".
The trio ponder the properties they've sold, the losses they've averted and the reasons why they sold at the time. Pete's sensible words of wisdom shine through as he reminds listeners that sometimes we make decisions that were the right decisions to make at the time.
To sign off the episode, Pete happily sits in the hot seat and answers Cate and Dave's questions. From his best performer, to his tips for success, this episode can't be missed.
And... our gold nuggets!
Pete Koulizos, the Property Professor's Gold Nugget: "Surround yourself with like-minded people to help you on your property journey."
David Johnston, the Property Planner's Gold Nugget: Dave asked Pete a fantastic, burning question that he wanted to bring to light for the listeners; was Pete's property journey the right journey for him?
Cate Bakos, the Property Buyer's Gold Nugget: Pete's success can be attributed to his passion, continuous learning and his willingness to take action, but a significant ingredient that Pete had on his side was all about time. He got started early.
Got a question for the trio? https://zfmz.com/uLtjhyBskV96PYeJfal
Show notes: https://propertyplanning.com.au/the-property-professors-memoirs-part-2-ep-198/
This is arguably one of the trio's favourite set of episodes. Taking a trip down memory lane was not only a thrilling chat for Pete, but a wonderful way to share some very important learnings with our listeners. Following on from last week's episode 1 where Pete got started on his property journey in 1984, this week's episode introduces listeners to Pete's learnings as he embarked on value-adding to his investments.
Episode 1 - Getting Started. It starts back in 1984 when Pete and his wife purchased their first home in High Street, Ardrossan (SA) and spans the the purchase of their first upgrader home, as well as some early value adds and long-term investments that Pete embarked on.
Episode 2 - Property Speculation. Pete branched into purchasing value add properties and wised up to other ways that investors can value add, other than gaining a DA.
Episode 3 - Property Development and Construction. Pete started building and retaining properties in this particular investment phase.
In Episode Two, Dave delves into Pete's 'mid-journey' property acquisitions and upgrades. One of Pete's interesting achievements involved subdivision activity without building activity. In 2001, and by the time his young family were old enough to travel abroad, Pete proudly took his wife and two eldest to Greece to celebrate some of their property investing achievements. Interestingly, Pete's motivation to avoid building stemmed from a sloping block representing too many challenges for him to tackle. But block after block, Pete perfected adding value through planning approvals, although he notes that it was easier twenty years ago than it is now.
Why did Pete decide to sell his holiday house though? He offers a great explanation...
Pete's children's sporting commitments, friends, and weekend plans got in the way of he and his family being able to enjoy their holiday house. The trio have discussed holiday houses at length over past episodes, but this real-life example from our very own Property Professor sheds light on the viability of the holiday house ideal for this family.
Pete and Dave discussed debt, home renovations, personal priorities and the need to put family needs before investment desires at times. Pete's authentic personality shines through in this episode. "I'm a big believer in that your home is your castle." ....."there's no point in having a fantastic place that somebody else is living in and renting, and then you're living in a not-so-nice place."
From value-adds via clever planning insights, Pete's winning formula as his property knowledge grew became a feather in his cap and a very effective way to grow his wealth. His salient advise is peppered throughout this exciting episode, and yet another piece of advice from Pete rings true.
"Most approvals do not last forever".
Pete reminds us about recessions, the GST introduction, the GFC, first home buyer grants and all of the eternal drivers that influenced the vibrant market conditions of the late 1990's and early 2000's. It's a gripping episode, and one the trio enjoyed.
And... our Gold Nuggets!
Pete Koulizos, the 'Property Professor's Gold Nugget: "Property booms are wonderful things." Pete's tip sits outside of timing markets, but he reminds listeners that owning property during a boom period is powerful for any investor's portfolio.
Cate Bakos, the 'Property Buyer's Gold Nugget: Cate reminds investors not to take town planning advice from an agent. Independent advice is paramount. "Property purchases are BUYER BEWARE."
Got a question for the trio? https://zfmz.com/uLtjhyBskV96PYeJfal
Show notes: https://propertyplanning.com.au/the-property-professors-memoirs-part-1-the-inspiring-journey-from-family-home-to-investor-to-developer-to-helping-the-kids-enter-the-market-ep-197/
This is arguably one of the trio's favourite set of episodes. Taking a trip down memory lane was not only a thrilling chat for Pete, but a wonderful way to share some very important learnings with our listeners.
Pete has rigorously segmented his property purchase history into three components as follows;
Episode 1 - Getting Started. It starts back in 1984 when Pete and his wife purchased their first home in High Street, Ardrossan (SA) and spans the the purchase of their first upgrader home, as well as some early value adds and long-term investments that Pete embarked on.
Episode 2 - Property Speculation. Pete branched into purchasing value add properties and wised up to other ways that investors can value add, other than gaining a DA.
Episode 3 - Property Development and Construction. Pete started building and retaining properties in this particular investment phase.
For Episode One, Cate delves into Pete's early days and asks all kinds of questions about his early influencers, his savings regime and some of the significant differences that he faced as a first home buyer back in 1984 compared to today's new starters on the property ladder. Interestingly, Pete's driving force to purchase a transportable home Ardrossan related to a sensible look at the cost of ownership versus the cost of renting, particularly in a country town.
How did Pete fare with his negotiating ability with his first home? Tune in to find out what his bonus inclusions were!
The growth of Ardrossan was reasonable back in the 80's and it equipped Pete and Mrs K to be able to leap frog into an upgrader home in Torrensville, Adelaide with their firstborn child in 1991.
Cate asked Pete about how much his father helped and taught him with his property knowledge. "It was all leant by osmosis", was his telling response. But tackling how to explain investing and debt to his parents was a different type of challenge. Like many young investors, Pete had to be cognisant of his parent's fears and concerns about his appetite for risk and wealth creation.
Why does Pete pay full price for a property? He offers a great explanation... The trio chat about Pete's early investment property experiences, including;- managing cashflow,- his aversion to battle-axe blocks,- mistakes he made,- investing with business partners,- enabling a viable project with a clever JV idea, and- interest rate pressure and other financial challenges.
Pete also talks about a block of flats that he secured some forty years ago that are still in the family (...and it's a great story!) Cate probes Pete about his rationale for selling some outstanding performers and his answers are particularly grounded. Pete is generous, humble and an absolute wealth of knowledge in this gripping first episode in this special trilogy.
And... our Gold Nuggets:
Pete Koulizos, the 'Property Professor's Gold Nugget: "Buying and holding is the best strategy to make money in property, but it's not the only strategy."
David Johnston, the 'Property Planner's Gold Nugget: Dave notes that having a longer term plan, taking some risks and making firm decisions can enable investors to retire wealthy. They don't have to make many decisions, they just need to make good decisions.
Got a question for the trio? https://zfmz.com/uLtjhyBskV96PYeJfal
Show notes: https://propertyplanning.com.au/when-property-and-money-decisions-upset-relationships-part-2-ep-196/
Dave's market update is a special one - he has been in the mortgage industry for over twenty years and his mortgage intel is always exciting. One lender has re-introduced negative gearing into their serviceability calculator. This essentially means that "shading" on rental incomes enables heightened borrowing capacity for investors. While it's just one lender... these situations often mean more will follow.
Cate's market update relates to civil and infrastructure works. From a planning point of view, home owners and investors should be mindful of the impact of these works. From compulsory acquisition to road widening to zoning changes, buyers should look into these changes and consider the impact to their purchasing plans.
Following on from Episode 194, the trio uncover the common triggers for upgrader/family home buyer discord.
From provisioning cashflow to enable parents to stay at home with young children to managing thoughtful discussions about retirement plans, Dave sheds light on the benefit of having buffers and a strategy to navigate some of these often-treacherous waters.
Dave, Cate and Pete discuss some of the other tricky aspects, including;
- identifying the need for living in a show-home vs enjoying a simpler life
- debt comfort level misalignment
- investing vs nesting
- location preference disharmony
Cate reminds the listeners that having a mutually shared spot on the Venn diagram is essential to overcome couple's different preferences and clashing risk profiles.
Dave raises an interesting point about the relationship between financial focus and personality traits. Not all people are financially literate and many have to be taught about the difference between good debt/bad debt, and the merit of having financial goals.
What are some of the triggers for investor couples when it comes to upsetting a relationship?
Pete uses a great example to illustrate the importance of remaining unemotional and pragmatic decision when it comes to investment property selection. And his two 'fundamentals' questions highlight just how pragmatic the Property Professor's approach is: "Is it in a good location, and does it have a good land component?" To support Pete's philosophy, Cate's favourite saying for her investor clients is; "You don't have to love it, in fact you don't even have to like it, but I want you to be proud of it." This extends to those who also confuse investment with holiday homes and future use potential.
Sacrificing family home dreams is another common source of upset, as is impatience. Dave's example about the kids who were offered one marshmellow immediately, versus those who were rewarded with two marshmellows if they could wait for five minutes had the trio chuckling. Property investing really is a long game and it does require sacrifices at the start.
The trio also chat about misalignment of preferences for asset classes, and bad previous experiences with property investing tarnishing enthusiasm.
Cate Bakos, the Property Buyer's Gold Nugget: Cate shares some good tips based on personal experience. To get yourself in the best position to present to a financial advisor, Cate recommends couples take the time to understand each other's positions on wealth creation and debt aversion, and she encourages couples to be prepared to talk to each other about their sensitivities.
David Johnston, the 'Property Planner's Gold Nugget: Dave notes that the crucial conversations are the hardest ones to have, but to push past the discomfort, remain open-minded, and to chat consistently is critical for couples who want to be on the same page.
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
Show notes: https://propertyplanning.com.au/market-update-feb-2023-ep-195/
1. Price falls are substantially lower this month, compared to last month
February saw even more of a slowdown in the rate of price decline, and interestingly, Sydney's positive price movement of +0.3% in February carried the national and combined capitals/regions average to almost negligible price movement at -0.1. Cate sheds light on why 2023 is quite different to past years. COVID lockdowns impacted agent activity significantly in the lockdown cities and and agents took the chance to take a holiday this summer after two consecutive, challenging summers.
And what's behind Hobart's recent under-performance?
2. New listings and total listing figures are still substantially under the previous five year average, but the discrepancy is slightly smaller than last month.
Much like Cate and Dave's point for February sales, it's likely that the listing activity was lower than typical January/February periods due to agents and vendors taking advantage of a summer break.
3. Unit rents are looking dire for renters in most cities, but what is going on with Canberra?
Dave has an ear to the ground with some of his family in our nation's capital and his late night text to Pete and Cate sheds some light on the issue. Namely, three forces are at play for Canberra right now; Public service wages were frozen. Lots of interstate people can work from home doing jobs based in Canberra. And the cost of living is very high Canberra relative to it size.
4. Tighter rental vacancy rates – as rents continue to climb, some of our capital cities (for both houses and units) are exhibiting further tightening rental yields.
The falling rents during COVID are a stark contrast to the rate of rental increase today.
5. Sales activity is still low despite an expectation that our emerging autumn markets usually start to demonstrate a peak of activity at this time.
The volume of sales currently, when contrasted against the higher number of houses and increased population count within our capitals, presents quite a surprise. Pete discusses the decreased consumer sentiment and the correlation this has with listing and selling activity.
6. Consumer sentiment has continued to wane, although the trio point out some interesting indices on the latest Westpac Consumer Sentiment chart.
Pete refers to current consumer sentiment at the start of the episode and makes a point that the sentiment levels today are among some of the lowest we've had in recent times, despite the fact that our interest rates are still comparatively low compared to historical rates.
7. Our bond yields continue to tell us that interest rate equilibrium is getting closer, although money markets indicate that we may have more rate rises than earlier expected.
8. Unemployment continues to stay at historically low levels.
As Pete says, "Ahhh, but some good news!"
Gold Nuggets
Cate Bakos – The Property Buyer: Cate reminds listeners to factor in the impact of COVID on our markets, and in particular, the ongoing effects that have continued to shape our data.
David Johnston - The Property Planner: Dave has some sagely advice for our governments when tackling the number of available properties for sale. Without policy intervention and changes to stamp duty, he feels the issue is not likely to go away.
Got a question for the trio? https://zfmz.com/uLtjhyBskV96PYeJfal
Show notes: https://propertyplanning.com.au/when-property-and-money-decisions-upset-relationships-part-1-ep-194/
The trio make a bitter-sweet announcement at the beginning of the show. Pete is leaving the podcast to enjoy his semi-retirement, and while Dave and Cate are excited for Pete, they are pretty sad to be saying goodbye to Pete. He's not leaving quite yet - they have the 200th episode coming up in April and they have a special three-part series with Pete coming up.
They also share they will be announcing Pete’s replacement in the coming weeks…..stay tuned!
In this week’s episode, Dave, Cate and Pete cover some of their best tips for navigating tough property decisions as a couple, particularly when risk profiles, preferred locations and priorities for home versus investment differ.
1. What are some of the triggers for first home buyers when it comes to potentially upsetting a relationship?
From separate savings to differing salaries, parental support and pre-nuptial agreements, the trio canvas some of these sensitivities. Pete talks about some of his experiences with these situations and Dave points out that it's not uncommon for couples to have different feelings and views about things and shares some interesting examples for you to be aware of.
2. How do couples broach pre-nuptial agreements or substantial cash contributions?
Dave's experience with past clients precipitate some great questions that first home buyer couples can discuss at the onset of their journey, and he also shares a great podcast with our listeners that tackles pre-nuptial agreements.
3. What do you do if your partner enjoys 'living in the moment' financially more than you?
Cate mentions a reasonably common issue that sometimes creates tension in first home buyer relationships; a different approach to saving and spending. YOLO, (you only live once) is a fun way to look at life, but it has it's place. Unfortunately YOLO doesn't have such a great place when it falls within a dedicated first-home savings regime.
In addition to investment appetites and debt aversion, many couples face differences of opinion when it comes to location. Proximity to work, family, friends, schools and community can sometimes clash.
4. What is a common trigger than can be avoided?
Dave notes that a significant stressor relates to the overall plan; home or investment. Plenty of couples and individuals blur the lines or lose track of the primary reason for a purchase. Whether it be a stepping stone property or a fully-fledged home, a future-use investment or a rent-vest approach, so many start the process without thoroughly canvasing what they should be focusing on.
The trio talk about their various approaches to 'getting two people on the same page'. Cate refers to Venn Diagrams and the shaded, overlapping part. Dave discusses the need for a firm plan well before specific locations and dwelling types are up for consideration.
Approaching cashflow, cash buffers and deposits is an important part of the pre-planning and Dave sheds light on some of the clever questions couples can answer together before embarking on the property criteria phase.
Gold Nuggets
Cate Bakos, the 'Property Buyer's Gold Nugget: Cate shares some good tips for first home buyers who are navigating the process with parental input, (solicited and unsolicited) in their ear. Ultimately it's an important decision that is made by the couple, not parents.
David Johnston, the 'Property Planner's Gold Nugget: Dave encourages property buyers to plan early. It's all about investing more time in the planning up-front, as opposed to during the search phase.
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
In this week’s episode, Dave, Cate and Pete answer two great listener questions; one is as the title describes, and the trio address growth drivers, assumptions and some of the things that don't always correlate with property price growth in the way that people expect them to.
1. A great question from Phil about historical average capital appreciation in capital cities.
Hello gang! When you quote property appreciation estimates, you usually say something like 7%, based upon the historical average appreciation of the capital cities. That 7% has been made up of a number of factors:
-population growth
-increases in general wealth
-increase in dual income
-foreign investment
-government positive incentives (first homebuyer schemes)
-government mismanagement (not building enough housing, or a mismatch between where the housing is built and where people want to live)
-falling interest rates, (since ~ 1990: 17% to 0%, then bouncing back up recently)
So my question is: How much of the 7% return we have seen would be due to falling interest rates, and how should we alter our expectations of returns going forward?
Dave answers this compelling question with the aid of some charts. Looking at what happened prior to 1990 is a telling example of interest rate rises not necessarily correlating with price declines.
From foreign investment to government mismanagement, Pete and Dave touch on some of Phil's points, and they maintain that "government not building enough" is not the root cause of heightened property price growth at all. As Pete states, it's generally the private sector that builds most of the housing because government (or community housing) is represented by only about 10% of housing.
Pete also notes that property price growth is not directly related to interest rate movements, and he cites some specific periods that prove that more elements influence property price growth than just interest rates.
2. And a fabulous question from an anonymous listener who asks the trio about open home etiquette. To leave your name and number? Or to seek a different approach? Tune in to hear some valuable insights...
A neighbour attends an Open House but complains to your assistant at the door that they do not wish to give their details to be logged on to the Register as they do not wish the vendors to be told of their interest. You need to address their concerns and advise them of their rights and your obligations. How would you address their concern, whilst trying to build rapport with the potential buyer?
The trio have fun with this question and Cate sheds light on some exciting undercover jobs she's had in her career when it comes to working with clients who wish to remain anonymous.
8. And ..... our gold nuggets!
Cate Bakos, the 'Property Buyer's Gold Nugget: If a buyer has a decent relationship with the agent, they should be prepared to politely ask the agent not to call them about a particular property. Aside from saving the agent time, it will demonstrate to the agent why it's not the right property for them.
David Johnson, the 'Property Planner's Gold Nugget: Dave talks about long term capital growth and the need for investors to be invested in an asset class that outperforms inflation. Regardless of short reduced overall yields, Dave firmly believes that investors are better off to invest long-term, than to risk inflation eroding their future wealth by waiting it out.
Show notes - https://propertyplanning.com.au/listener-questions-will-property-continue-growing-at-7-pa-on-average/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
1. Nationally a 1% median price reduction was our smallest rate of decline since June last year
All falls for capital cities were also less than their falls last year – an interesting observation considering the unwelcome December rate increase.
2. Melbourne’s median value may fall to below the pre-pandemic level in the coming month – an interesting one to watch! But many of the other capital cities seem likely to remain above their last pre-COVID peaks.
3. Unit rents are still climbing in many cities, and while house asking rents have slowed their pace of growth somewhat, the rate of growth is still positive across the board. Units asking rents in every state remain problematic for renters.
Combined with net overseas migration reaching a record high, the threat to the rental market undersupply issue is further amplified by the announcement from the Chinese Government for overseas students to return to their place of study.
4. Tighter rental vacancy rates – the majority of our capital cities (for both houses and units) are exhibiting further tightening rental yields.
The heightening asking rents correlate with the tightening vacancy rates and also the increasing rental yield figures across our various capital city and regional markets. As Cate points out “We’re still seeing a sea of green!”
5. New listings are still low after a particularly quiet spring season nationally - what is causing this though?
Our new listing activity is 24.5% lower than the five year national average and buyers at the coalface are experiencing this first hand.
6. Sales activity – people are still buying, but sales volumes are low. Pete explores what factors lead vendors to make the decision to sell in this climate.
While we had a little bit of a late flurry of purchasing activity leading up to Christmas, the sales number across combined capitals still remains lower than the previous five year average.
7. What’s changed since our last rate increase? Things aren’t quite as dire as some may have guessed they’d be… tune in to hear more.
Dave segues perfectly into our economic conditions and consumer sentiment changes.
8. Thirty percent less people are borrowing for housing – no wonder the banks are being so competitive!
Unsurprisingly, refinance activity is very strong in response to three things; increasing interest rates, and hungry banks as a result of this lending reduction.
9. Our bond yields tell a compelling story – and Dave points out the visibility that these yield overviews enable us.
The three year bond yield remains sub 3.2 still; and digesting this in tandem with longer term bond yields shows us that we’re reasonably close to the likely cash rate equilibrium.
10. Inflation continues to plague us; particularly house prices.
Although Cate notes that recreation and culture haven’t really diminished.
11. And... our gold nuggets!
Cate Bakos – The Property Buyer’s Golden nugget: Cate raises an important lender offering that some buyers may wish to know more about.
David Johnston – The Property Planner’s Golden nugget: One for our maths brains…. Dave reminds us that a ten percent rise is not the same as a ten percent reduction!
Show notes: https://propertyplanning.com.au/market-update-jan-2023-tight-listing-supply-is-creating-a-few-buyer-challenges-ep-192/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week’s episode, Dave, Cate and Pete cover some of their best tips for managing risk. Tune in to hear why mortgage strategy underpins this, and what can go wrong when mortgage strategy is ineffective ...
1. Seeking the help of a strategic mortgage broker. Dave takes our listeners through some of the key things that can go wrong when a mortgage strategy is ineffective and he differentiates a strategic mortgage broker from a transactional mortgage broker. Dave's 'six areas' of strategic mortgage broker are fascinating - tune in to hear them all.
2. Tax deductions. From negative gearing to depreciation, offset account facilitation to tailored advice, tax concepts are crucial to a successful portfolio.
3. Being forced to sell is a sad outcome that can stem from ineffective mortgage strategy. But there are clever ways to mitigate this risk. Buffers are integral for any property investor to implement, but interest only and cashflow optimisation should be considerations too ... it's all about clever mortgage strategy.
4. LVR and equity management - Loan to value ratio can be varied to suit an investor's risk profile, and this aspect of risk management is particularly important for those with properties in more volatile growth locations.
5. Buffers - what is the difference between a cash savings buffer and a cashflow buffer? Cash on hand, cash that can result from liquidation of shares and offset savings are all considered cash savings. Cashflow buffer simply relates to the amount of money that is left at the end of the month after living expenses and other commitments. Cate asks Pete to share some of the effective ways he's been able to manage tight situations in the past. Listen in to hear more about Pete's celebration budget!
6. To fix or to leave variable - which is best? Dave explains that there is no right or wrong answer. This decision is entirely contingent on the individual's own timeframe and risk profile. He reminds listeners to allocate ample variable rate for early repayments and/or offsetting though, as most fixed rates don't enable either of these.
7. One lender or multiple lenders? - Cate raises the question to both Dave and Pete. It is interesting to hear how each of the trio approach this so differently. Dave discusses the pros and cons of each outcome and he also discusses cross-securitisation.... an often misunderstood borrowing option, and not always the ogre it's made out to be.
8. And ..... our gold nuggets!
Gold Nuggets
Pete Koulizos, the 'Property Professor's Gold Nugget: "When you're looking at risk, consider the possibility of something happening, and consider the consequences if this something happens." Pete's matrix model allows us to consider risk in perspective.
David Johnson, the 'Property Planner's Gold Nugget: Dave encourages borrowers not to do themselves a disservice by overlooking the importance of mortgage strategy. Selecting a strategic mortgage broker is an important step when it comes to setting up the right foundations early on in the investment journey.
Visit the show notes: https://propertyplanning.com.au/risk-management-and-the-things-that-can-go-wrong-when-mortgage-strategy-is-ineffective-ep-191/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
1. Pete and Cate shed some light on how they each manage the administrative tasks for their retrospective portfolios. And listeners may get some good ideas when they hear how these two investors segment the tasks.
2. Each share the tools and programs they use. Nothing beats Pete's excel spreadsheets! From hardcopy folders to cloud based files, the trio all have their own systems to share with listeners. No amount of record keeping can substitute for a great property manager though.
3. How do they track their deductions? This is potentially one of the most important questions for the episode. Getting it wrong can be costly in so many ways, and Dave details some of the critical things that investors need to keep top of mind. Some might surprise you... it's all about clever mortgage strategy.
4. Working in sync with accountants - What do investors provide each year to their accountant? What's on them to manage? What record keeping is mandatory for investors? And what are the timelines of importance? Tune in to find out.
5. Managing property managers - what's OK, and what's not? The trio talk about some of the things that they've clearly marked as property manager tasks, and why it's so crucial to select a great one. From insurance to financial statements, Pete talks about his own revered property manager as a great example of an A-grade professional.
6. Due diligence applied when choosing between rental applications - how do Pete and Cate manage this? What attributes do they look for, and how can they glean this information? Pete and Cate have slightly differing approaches, but each share their best findings. Pete's hot tip is for investors to pay careful attention to the condition reports each time they are issued. Cate's two top priority issues include managing any water related issues, and people discord issues. Both can start small and end up big when ignored.
7. Ownership structuring is a critical aspect to investment administration - Cate raises the importance of understanding tax implications and also the impact of ownership on borrowing capacity. Both require a clear channel of communication to a good accountant and/or financial planner. Dave encourages listeners to focus on what's best for the whole journey, not just today.
8. And do the trio go back to their forecasts over time? Their answers may surprise you!
9. And our gold nuggets!
Cate Bakos, the 'Property Buyer's Gold Nugget: Short and sweet... Never underestimate a good property manager!
Pete Koulizos, the 'Property Professor's Gold Nugget: To manage a portfolio yourself requires great organisation. Unless you can apply the skills and time to the task, Pete recommends investors appoint a good property manager instead.
Visit the show notes: https://propertyplanning.com.au/the-admin-paperwork-and-responsibility-of-running-an-investment-portfolio-ep-190/
In this week’s episode, Dave, Cate and Pete take you through their 2023 predictions, but they also review their 2022 forecasts. Tune in to find out...
1. What will the market do? It seems the trio were optimistic in their predictions for 2023, but Cate did add a little disclaimer stating "providing no shocks to the market". It appears that imminent interest rate rises were not easily predicted by the trio at the start of 2022.
2. Capital city top performers - Pete's predictions for capital city performers landed closest to the pin, however Dave did have some interesting insights into Melbourne and Perth's growth and the impact of COVID on each city.
3. Regional locations - Pete tipped that regional cities within a reasonable distance of the capital city would continue to outperform, while Cate pointed out the risk for holiday house and coastal market buyers as the heat comes out of the COVID escape locations.
4. Investor numbers - Funnily enough, the trio's mention of APRA restrictions or regulator intervention underpinned their reservations about investor participation in 2022.
5. Government intervention in the property market - Pete and Cate did not see interest rate increases coming, but Dave did think that APRIL would step in to restrict lending to some degree. As Pete points out though, there didn't need to be any intervention. The RBA took care of that issue for us!
6. Developers and building - Our trio got a lot of these predictions right. Into 2023, Cate thinks that private builders will start to free up and Pete supports a slow recovery as the supply chain woes subside. Dave is still fearful for building activity due to materials costs remaining high and trade labour shortages.
7. Interest rates - what do the trio think will happen this year? Pete thinks that the cash rate will be slightly lower at end-2023 than it is today, and Cate broadly agrees, but predicts some different increase increments to Pete's. Dave feels our rate at year end will be the same as today's. Time will tell!...
8. Rents and vacancy rates - The trio each saw some difficult writing on the wall as stock tightened in 2022. Dave feels the vacancy rates will remain static (historically low) while Cate feels things will get much worse for renters into 2023.
9. Sales volumes - Pete felt that sales volumes would remain high, and Cate's prediction was not correct at all. Surprisingly for the trio, vendor listing and selling activity was lower than previous years. In hindsight this is easily explained by sentiment dropping in response to rapidly increasing interest rates.
10. Risks which could impact the market - This time, Cate did get some of her past predictions correct, and it was Dave who predicted that Russia could invade Ukraine.
11. Inflation - Dave identified rising inflation in his prediction, and the trio pondered the inflation outlook for 2023. Listen in to hear what they each predict for 2023.
Cate Bakos, the 'Property Buyer's Gold Nugget: Buyers who are prepared to bid at auction will have favourable conditions because many are anxious. about bidding unconditionally, and are sitting it out.
David Johnston, the 'Property Planner's Gold Nugget: Dave believes that 2023 is going to prove to be a great time to buy and current market conditions will represent the low water mark.
Show notes here: https://propertyplanning.com.au/2022-review-and-2023-predictions-what-did-we-get-right-and-what-did-we-not-predict-ep-189/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
1. Continued positive signs as home value index results show rate of decline slows
Like November data exhibited, dwelling values’ rate of decline is still slowing in all cities except Brisbane and Hobart, but our national decline is not as severe as the media would have us all believe.
As the heights of last year's market fade away from the rolling average data set our annualised losses continue to climb.
2. Rents are still climbing in many cities, and while house asking rents have slowed somewhat, the rate of growth is still very tough on tenants. Units in almost every city are still climbing at a strong rate, particularly for Sydney, Brisbane, Melbourne, Adelaide and Perth.
Vacancy rates remain tight, particularly in Hobart, Brisbane, Perth and Adelaide.
Now that net overseas migration has reached a record high, the threat to the rental market undersupply issue is amplified. These heightening asking rents correlate with the tightening vacancy rates and also the increasing rental yield figures across our various capital city and regional markets.
3. New listings are still low after a particularly quiet spring season nationally
Despite low new stock, Cate discusses the impact of this on price movement. It's fair to say that our December price falls were somewhat insulated due to low stock levels and a healthier supply:demand ratio than feared.
4. What’s changed since our last rate increase?
Consumer confidence tells a couple of interesting stories this month. While confidence is still low, the two metrics of interest are; a) house price expectations index, and b) family finances next twelve months.
5. External refinancing continues to climb!
Unsurprisingly, refinance activity is very strong in response to three things; increasing interest rates, hungry banks, and larger lender margins. As consumers look elsewhere for more competitive lending, banks too are taking the opportunity to market hard for new business. The trio talk about the impact of refinancing and delve into the dreaded 'clawback' scenario... something every strategic mortgage broker loathes.
6. Much like the November data showed, the bond yield remains static
The three year bond yield remains sub 3.3% still; reminding us that long term sentiment is reasonably positive for our cash rate.
7. Unemployment remains low.
Pete reminds us how pleased he is for his students who are finding work more easily than past years.
8. And our gold nuggets!
Cate Bakos – The Property Buyer’s Golden nugget: Cate encourages those who are reading dire economist predictions and feeling fearful, to delve into the economist's rationale and assumptions. Understand the variables and conditions that some of these articles are basing frightening headlines on and qualify the information you are reading.
David Johnston – The Property Planner’s Golden nugget: Dave puts the value losses into perspective; from peak to trough across our combined capitals our value losses are single digit, and he reminds listeners that our gains in 2020 and 2021 were significant. Dave feels that 2023 is a good time to get into the market if you have a long term plan.
Visit the show notes: https://propertyplanning.com.au/market-update-dec-2022-rents-are-still-climbing-and-increased-net-migration-now-poses-a-new-threat-to-rental-supply-ep-188/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week’s episode, Dave, Cate and Pete return to deliver part two of acronyms and terms. They will take you through:
- Standard variable rate (SVR), Rate lock fees, P&I, I/O, Owner-occupier lending and EFT. Dave talks us through these terms and highlights a few key points of interest.
- Expressions of interest (EOI), ECOS, and period homes - Cate and Pete delve into these terms - Pete compares the differences between private treaty, EOI and auction campaigns. Cate sheds light on what an executed contract of sale really means. Pete details the different period and character homes and leans on Cate for some Victorian styles that are still prominent in the inner ring suburbs of Melbourne and some of our provincial regions.
- OTP.... not the trio's favourite type of property, but Cate shares a surprising twist - Off the plan doesn't just refer to a brand new dwelling. For a subdivided older house, an 'off the plan' contract can still apply. How?... tune in to find out.
- FHOG... not what you suffer after a big night. Dave shares with our listeners a fantastic offering posed by our States and Territories. The first home owner's grant varies from state to state and any eligible purchasers owe it to themselves to research this valuable opportunity.
- FHLDS. This great initiative supports those with insufficient deposit savings on hand, and Dave and his team have been able to assist many clients over recent years due to the first home owner's low deposit scheme.
- DHA and NRAS: Pete doesn't listen too hard to the negative rhetoric about defence housing. He emphasises that it's important to focus on the location, the returns and the term of the arrangement.
- OFI's, cooling off periods: Cate talks about cooling off periods, the ramifications of doing so, and the financial cost of deciding to cool off. Not for the feint-hearted.
- Auction quotes - how do buyers approach it? is there a 'rule of thumb' way of deciphering the real price? or is there another method? Cate explains. Pete throws cat among the pigeons when he asks about rental price quoting also, and Cate talks about the occasions when cooling off in the state of Victoria is not an option.
- Rental yield and terms contract - Cate talks through what these both mean, and how rental yield is calculated.
- Deposit bonds... not common and often misunderstood. What are they? When are they often used and how do they work? Cate and Dave canvas this unusual deposit method.
- EBITDA... earnings before interest, taxes, depreciation and amortisation. Dave walks our listeners through how this measure is calculated.
- ...and our gold nuggets!
Peter Koulizos, the 'Property Professor's Gold Nugget: Pete recommends that buyers get some good advice on what all of these acronyms mean before they sign a contract.
David Johnston, the 'Property Planner's Gold Nugget: And Dave implores borrowers to challenge their strategic mortgage brokers and advisors to explain any unknown acronyms. While they are exciting to ponder, these are industry terms that shouldn't be used for clients.
https://propertyplanning.com.au/common-terms-and-acronyms-part-2-from-eois-to-deposit-bonds-we-unpack-them-all-ep-187-2/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week’s episode, Dave, Cate and Pete take you through:
- The difference between ROI (return on investment) and ROE (return on equity). Pete explains this critical differential and he and Dave highlight the sheer power of leveraging with a simple example. Our Property Professor shares some valuable formulae to consider in relation to the time value of money, including net present value (NPV).
- Gross lease vs net lease. Pete compares the differences and explains the critical things that commercial property landlords need to be familiar with when it comes to calculating and forecasting their rental returns.
- Finance terms: LVR, LMI, AML, VOI, valuation types (short form, long form, desktop, curbside, AVM, as if complete). Dave takes our listeners through each of these terms, some of which may be very familiar for our listeners but he has some twists and turns to shed light on for some of the lesser known acronyms and he expands on some of the detail behind many of these concepts.
- Valuation vs appraisal: why is this critical to understand? Even if the techniques are the the same, one is libel and one is just an opinion. Pete explores this important discretion.
- AIP (approval in principle), partial and full drawdowns, LOO. Dave covers these acronyms for our listeners and shares some great detail on construction lending; something particularly detailed for strategic mortgage brokers and banks, but a concept that many wouldn't necessarily know.
- COC and FTC : A certificate of currency (COC) is a requirement for every newly purchased property, and it's easy to arrange but often prompts a lot of questions. Funds to complete (FTC) is one of the most stressful last minute conversations when it's unexpected and raising a question around shortfall funds. Cate and Dave shed light on some of the causes of this so that our listeners can provision for the unexpected headache at settlement time.
- ...and our gold nuggets! "Don't change your job while you're going for a loan or awaiting settlement!"
Peter Koulizos, the 'Property Professor's Gold Nugget: Pete suggests that any borrowers who find themselves confused about acronyms in their loan documentation or correspondence, they should ask their strategic mortgage broker or banker to explain it all.
The team wish our listeners a happy 2023 with a special message each from the Property Planner, the Property Buyer and the Property Professor.
Visit the show notes: https://propertyplanning.com.au/common-terms-and-acronyms-part-1-from-roi-to-voi-we-unpack-them-all-ep-186/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week’s episode, Dave, Cate and Pete take you through:
-
Our first listener question is a bit of a terrifying one. Charlotte is looking to buy her first home next year and asked the trio if it is normal for a selling agent to offer a 'free' buyer's agent who receives substantial commission fees from the seller. Charlotte felt it doesn't seem right.... and the trio agree with her.
-
Matt is keen to access his available equity in his current investment property and asks the trio for some tips
"Instead of having one six hundred thousand dollar property going up in value, you could have two six hundred thousand dollar properties, and in theory you're effectively doubling your net wealth in the future", says Pete
- Shashank raises the question of how to manage building insurance with the rapid increase we're seeing in construction costs and the trio discuss the importance of understanding total rebuild costs, as opposed to relying on an online insurance estimate.
"Did you know that 83% of Australians are under-insured on their properties?" (MCG Quantity Surveying)
- Sarah, a Bayside resident of Melbourne asks the trio for some help with her scenario options. She and her children moved from 'beachside' Mentone to the other side of Mentone, yet she's missing her old neighbourhood and wonders what guidance the trio could offer. Should she rent-vest, buy/sell, or buy/invest.
Cate says, "Follow your heart, and go back to the beachside. Buy there if you can, don't rent there. Your capital growth prospects based on the scarcity and desirability of the area will outperform non-beachside."
And our gold nuggets....
David Johnston, the 'Property Planner's Gold Nugget: Dave’s gold nugget relates to thinking through the various options before you jump in to make your next purchase. Trying to find experts who can give you the numbers to enable us each to make an informed decision. "Our next purchase is always the most important one."
Cate Bakos, the 'Property Buyer's Gold Nugget: Cate’s gold nugget is all about taking the opportunity to set your plan and arrange your finance over the holiday break so that you can hit the ground running in 2023 and make the most of the market when it reopens.
MERRY CHRISTMAS EVERYONE! Wishing our listeners a safe and happy festive season.
Visit the show notes: https://propertyplanning.com.au/listener-questions-and-a-great-dilemma-ep-185/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
Pete kicks off this week’s market update circles in on the fact that the 'top end of the market' is the fastest falling segment. As he points out, it's the highest 25% of property that is dropping in value the most. Generally in a downturn, it's led by the more expensive properties.
Dave tackles the cyclical nature of all markets, specifically the lending markets. Banks are coming up with more creative ways to get loans approved for people. Policies enabling low documentation are starting to appear, and it proves that when it comes to lending policy, every lender is different.
Cate shares with the listeners the power of FOMO at the end of the year; even in a tougher market. The dwindling supply of stock is having an impact on the supply:demand ratio for buyers in the run-up to Christmas closure.
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Why is repayment strategy so important?
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Is it a good idea to pay down all of your debt?
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Hold while you accumulate!
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How do we optimise investment deductions?
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The amount of money we have in our offset/savings account is one of quite a few benefits of having a war chest.
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Which repayment strategy is RIGHT?
And our gold nuggets....
David Johnston, the 'Property Planner's Gold Nugget: Dave shares two valuable key things for our listeners to take away;
- Getting the repayment strategy right can help us retain property that may otherwise have required us to divest.
- Getting the repayment strategy right can also maximise our deductible debt long term, and in particular, for property that may not have originally served as an investment property.
Cate Bakos, the 'Property Buyer's Gold Nugget: Cate reminds listeners that sleeping well at night is most important. If an investor is so stressed that they chose to divest a good property, this outcome is worse than losing on tax deductions and savings flexibility.
Visit the show notes:https://propertyplanning.com.au/184-mortgage-repayment-strategy/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week’s market update episode, Dave, Cate and Pete take you through:
- Continued positive signs as home value index results show rate of decline slows
- Rents are still climbing in many cities, and while house asking rents have slowed somewhat, the rate of growth is still very tough on tenants. Units in almost every city are still climbing at a strong rate, particularly for Sydney, Brisbane, Melbourne and Adelaide.
- New listings are the lowest in years and Pete shares a frightening chart that shows our winter volumes exceeded our spring volumes.
- What’s the correlation between dwelling sales and consumer confidence? Consumer confidence continues to fall and house price expectations have had a significant fall.
- A lot less people are borrowing money for property and investors' new loan weighting is declining. The uptake of finance continues to move into negative territory and the percentage of owner occupiers vs investors is still favouring owner occupiers
- Amidst the bleak news, there is a sign of welcome change! The bond traders are demonstrating that they feel we're getting close to the peak for interest rate movements. The three year bond yield has declined over this past month and Dave shares the correlation between the bond yield and the cash rate.
- Unemployment remains low and Pete notes that it's so much easier to find a job today than in previous years.
- The headline inflation rate has come down! While we were all disappointed to see the cash rate move 0.25% again in December, we are relieved to see signs of easing in our inflation figures.
Gold Nuggets
David Johnston – The Property Planner’s Golden nugget: Dave’s gold nugget involves looking back in the rear view mirror... for those fortuitous property owners who fixed their interest rate back in 2021, they were able to lock in a rate of 2.1% in Jan for three years, and then again in June at 2.15%, only a small increase. Five year fixed rates for the same months sat at 2.69% and 2.84% respectively compared to an astonishing 6.2% today for three years and 6.59% for five year fixed rates. What a change in a short space of time!
Cate Bakos – The Property Buyer’s Golden nugget: Cate’s gold nugget aims to give listeners who are out there still searching a hot little tip. Given the stock levels for 2022 are now eroding as the trading year comes to a close, active buyers can ask their favourite agents for any insights (or early access) into some 2023 listings.
Visit the show notes: https://propertyplanning.com.au/market-update-nov-2022-rents-are-still-climbing-stock-supply-is-tight-and-bond-yields-have-softened-ep-183/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week’s episode, Dave, Cate and Pete take you through:
- Pet stats!
- Legislation confusion? The trio uncover legislation around pets and rental properties, and just how dramatically the states and territories differ.
- What is our biggest fear? Pete leads the taskforce with an overview of the top reasons why so many landlords fear pets in rental properties.
- Illegal dog training
- When saying yes to pets presents an advantage to a landlord
- Pet rental application cover letters? You bet!
- “Ohhh, THIS cat? It’s my friends cat and it’s just staying this weekend”. The trio talk about this old chestnut and focus on why some renters adopt this ploy
- How expensive is it to clean up after a bad pet-experience?
- What pet situations ring alarm bells? Pets pose a grave concern for a landlord, (or worse still, some pets and activities are illegal).
- How do property owners tackle a surprise pet in an investment property? Cate and Pete share their best tips
Cate Bakos, the ‘Property Buyer’s Gold Nugget: Cate reminds listeners that the risks of scaring a tenant into driving pet ownership underground can end in tears. Cate’s approach is to be open about being open to pets so that pets are actually disclosed on the application. She also recommends capturing the age, breed and behaviours of a pet when asking tenants for pet bio’s.
Peter Koulizos, the ‘Property Professor’s’ Gold Nugget: Pete adds that by encouraging pet owners, landlords also widen their market.
Dave also asks for some good advice on managing an unwelcome neighbour’s cat….
Visit the show notes:
https://propertyplanning.com.au/182-pets-and-rentals/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
1. Market updates – comparing Australian property and Abu Dhabi’s property differences, NSW first home buyer optional stamp duty is now live! And Crypto currency risk bounces back onto the market update playlist.
2. This may surprise our listeners, but the first home should be selected with investment potential in mind.
3. Bigger is better when it comes to land size for the first timer, but location counts for everything.
4. Oldie, but a goodie! How old is too old? Cate and Pete dare to disagree… but the most important tip for listeners is to remember the importance of “land to asset ratio”, the trio’s golden rule.
5. Leave the luxe listings off the list!Grand kitchens, bespoke bathrooms… Pete takes us through all of the reasons why ‘luxing up’ an investment property is a terrible idea.
6. Dream home versus investment property – why we need to look at each with such different lenses. “Would I live in this place?” is usually the wrong question for an investor to ask, unless they are representative of the target tenant.
7. The best pool is someone else’s pool! As Cate often says to her clients, pools come with all kinds of responsibility and maintenance/safety issues.
8. Are larger dwellings the holy grail for capital growth?
9. Is it ok to luxe-up your dream home? Expensive and delicate features should be left for your dream home, not your investment property.
10. … And our gold nuggets! Pete shares his well-loved pearl of wisdom, “If you’re looking to make money, it’s about location, land and looks!”
Dave also share a have a plan for the big rock in the jar, (i.e. the family home). This can help investors finding themselves feeling financial pain or scrambling to divest their acquisitions down the track. “If you fail to plan, you plan to fail.”
Visit the show notes: https://propertyplanning.com.au/181-first-home-vs-forever-home-dream-home-vs-investment-what-are-the-trade-offs-and-key-considerations/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
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Our first listener question, which is an intriguing one. Our seasoned investor lifts the lid on some of the aspects of asset selection in relation to pinpointing outperformance capital growth.
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Blue chip suburbs do in fact outperform over a longer period of time, but it’s all about the time horizon
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Money grows where money goes
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Show me the money
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Data is King
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Timing the market versus time IN the market
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Should I stay or should I go now?
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Why have units in Melbourne been so disappointing? And will they spring back?
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Target tenants
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Talk to your planner!
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And… the gold nuggets
Dave’s gold nugget relates to our second listener question, and the old chestnut, “should I hold or should I sell?”. He reiterates the importance of questioning “what else could I do with the money?”, and while it’s a huge decision for so many, Dave reminds us that we should be clear once the decision is made, and JUST DO IT.
Cate’s gold nugget circles back to the COVID woes, and the impact of reduced rent and/or rental eviction moratoriums and she recommends that investors refer back to their property manager to get a clear understanding of the current market rental expectation so that they are in sync and commending the correct rental amount.
Visit the show notes: https://propertyplanning.com.au/listener-questions-is-electing-a-higher-priced-a-grade-property-a-formula-for-disappointment-long-term-what-do-you-do-with-an-underperforming-asset-that-promised/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
- Positive signs as home value index results show rate of decline slows
- Rental market continues to struggle as increasing rents continue, particularly for units
- Spring listings still slow, bucking typical seasonal trends
- What’s the correlation between dwelling sales and consumer confidence?
- How savings and YOLO factor into inflation
- How job security is impacting consumer sentiment
- New lending continues downward trend, however personal loans on the rise
- What does the bond yield say about where interest rates will end up?
- RBA revises inflation cap
And of course, our gold nuggets!
Cate’s gold nugget relates to the buyers out there who could apply market segmentation to the options out there, and she suggests how some of these segments could be bought advantageously, namely first home buyer stock and land-banking sites. Both of these opportunities have presented as these two buyer contingents have reduced their appetite in the current environment.
Dave’s gold nugget hinges around his sense that the property market is becoming a leading indicator, and he shares some great examples of how buyers can be savvy when it comes to taking advantage of the conditions we’re navigating.
Visit the show notes: https://propertyplanning.com.au/market-update-oct-2022-regions-fall-faster-than-capitals-more-pain-for-renters-as-yields-catch-up-construction-finance-drops-off-a-cliff-yolo-hampers-rba-inflation-tactics-more-ep-17/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
1. The conundrum– Can we purchase the long-term home without selling any of our properties and retire in 20 years relying on passive income?
This case study follows the journey of Andrew and Bec, podcast listeners in their early to mid-thirties who submitted their scenario to the team to unpack via the Property Planning platform. They started their property journey early and each own a property, one of which they currently live in. On the horizon, they would like to purchase their long-term home, start a family, and retire comfortably in 20 years. Would they be able to do all of that without selling a property?
2. Their portfolio and goals
The trio discuss Andrew and Bec’s goals and their current property portfolio, one ofwhich is undergoing a construction. They have worked hard to get themselves in a great spot, and after the construction is complete, their portfolio will be worth $2M and they currently have $300,000 in savings. Not bad for a couple in their 30’s. Ideally, they would like to be earning $150,000 in passive income from their investment properties ($75,000 in today’s dollars). The key questions to unravel were: when do Andrew and Bec purchase their future home? Do they need to sell any properties to do so? When can they reach their passive income target of $150,000. Can they retire in 20 years time? Can they do all of this AND start a family as well?
3. Modelling the scenarios
Five scenarios were modelled for Andrew and Bec, showing the sequential progression and timeline of decisions to be made and actions to take in order to reach their goals. The trio sink their teeth into the financial outcomes. Spoiler alert! Their passive income goal is reached but 1 year late. Given the laundry list of goals, we think this is a great outcome. Tune in to find out the threekey steps that Andrew and Bec need to take to get there, plus how having children willimpact their financial goals~~.~~
4. So you’re thinking of starting a family, who is going to scale back work?
There’s no doubt that having children is an important life goal for many Australians. But let’s be real, along with that bundle of joy come cash flow implications as kids are expensive and one partner normally scales back work for a period of time. In this particular scenario, Bec would like to scale back work permanently to 2 days a week in the first 6 years and 3 days a week thereafter. But that’s not the case for all families. The trio discuss how different scenarios can be modelled to make key decisions around employment when starting a family: which partner will scale back work, by how much and for how long?
Visit the show notes - https://propertyplanning.com.au/property-planning-case-study-7-can-we-keep-our-two-existing-properties-purchase-our-long-term-home-start-a-family-and-still-retire-on-150k-p-a-passive-income-ep-178/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market update
1. Beware of changing borrowing capacity when on the property huntWith monthly cash rate increases, borrowing capacity has been slowly dwindling as lenders update their affordability calculators. However, the ‘Household Expenditure Measure’, a measurement for scrutinising living expenses, is also increasing to reflect the higher cost of living due to inflation. For those who are hoping to purchase at the limit of their borrowing capacity, it is imperative that you are checking in with your strategic mortgage broker to confirm affordability before you sign any contracts.
2. Shared equity scheme for Victorian’s announcedThe Labor party in Victoria have announced a shared equity scheme to help buyers get into the market. Interestingly, it is not limited to first time buyers. The scheme allows for purchases in metro Melbourne and Geelong up to $950,000 and up to $600,000 in regional Victoria, with the government assisting in purchasing up to 25% of the property. But take note, they will also expect 25% of the gain when you sell! We recommend to those who are interested to understand all of the requirements and fine print.
3. Auction clearances indicate further green shootsThe latest auction clearance rates show some positive signs, which for the third week in a row have been holding steady above 60%. With volumes continuing to rise and the recent rate increase representingonly 25 bps, the market is showing resilience with buyers trickling back in.
Our best advice from our own journeys
1. Reflecting on our own purchasing journeys, what is our most solid-gold nugget of wisdom that we’ve gained and feel compelled to share with others?The trio share the most important lesson they’ve learnt from buying and investing in property. Although Cate, Dave and Pete have followed vastly different paths on their property journey, the advice is very similar – get a foot in the property door as early as you can and hold on to property as long as you can. The trio discuss the circumstances and key events that led them towards this realisation.
2. What surprised the trio about the simplicity of their retrospective gold nugget?Get in early and hold as long as you can. Simple, right? Whilst it might seem obvious now, there are many circumstances across a lifetime that can challenge this simple proposition and test your nerves. The trio share hot tips on how to keep it simple and stick to your guns. Action and patience is key!
3. What positive role models did the trio learn from in their earlier years?The trio discuss the investors that they consulted and learnt from at the start of their property journeys. The key is to mix with people who have had success, ask questions, absorb the lessons and work out what is the right strategy for you.
4. Has the evolution of market conditions, lending conditions and social pressures changed how this gold nugget could work in today’s climate?The trio look in the rear view mirror at the property landscape, how it was back then vs how it is now. Does the change in market, lending and social conditions change the advice? Tune in to find out.
Visit the show notes - https://propertyplanning.com.au/the-best-advice-from-our-own-journeys-ep-177/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market updates
1. Correlating listings and property prices – watch this space
The Property Professor shares research that he will be conducting on the relationship between listings and property prices. From a supply and demand perspective, whenthere is an increase in listings for sale, there should be a corresponding drop in prices. Are listing numbersa leading indicator? We’ll be watching keenly for the results in January
2. The market picks up – more green shoots emerge
The Property Buyer shares her experience on the ground, hitting the pavement and talking to real estate agents. What can be seen is an increase in late spring listings, buyers attending inspections and competition levels in general. With the 0.25% increase in rates, somebuyers have decided that the slow down in the rate of increase may signal a turning point.
3. Clouds on the horizon? US rate movement
The Property Planner shares news from the world economy, where inflation in the US continues to grow, with many expecting the US to raise the cash rate by 70 bps. This could potentiallybe bad news as other nations try to stay inline with US rate movements to ensure their currencies don’t weaken against the US dollar. Here’s hoping that Australia can hold the line on 25 bps increases, as Australia’s economy is much more sensitive to rate increases due to the majority of variable rate loans.
Amenities
1. How far is "walking distance?"
There is no hard and fast rule and it differs from person to person. But when assessing the quality of a location, some boundaries and measurements need to be put in place. The trio discuss the ideal walking time and distance for amenities.
2. Walk score – what is it and how to use it
Walk score is a great resource to measure the walkability of an address. You simply type in the property address and get a score out of 100. Points are awarded based on distance to amenities in various categories such as dining, shopping, errands, parks, schools and more. Visit our show notes for the link to this free resource.
3. The amenities that you don’t want to be too close to
While being close to some amenities can be really valuable, there are others that you want to be a reasonable distance away from. The trio discuss which amenities to distance from and by how much.
4. What to target as an investor – don’t let personal preference get in the way
Valuing amenities can be a very subjective task, as each person has their own personal preferences. For some, a school nearby can be a useful amenity and for others, it can be a nuisance. It’s important to target properties near amenities that at least 8 out of 10 people will be happy with.
5. Which amenities are most important to the trio, personally and from a professional perspective?
Cate, Dave and Pete share the amenities that they value the most from a lifestyle and professional perspective.
6. Which amenities are the most important in the cities around Australia?
The trio discuss the critical amenities to target in Adelaide, Melbourne and Sydney. Knowing your market is important, as desire for access to an amenity can vary from city to city. It is also imperative to think about the target tenant and what they would desire from a location.
Visit the show notes: https://propertyplanning.com.au/amenities-which-are-important/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
1 Property market falls decelerate over SeptemberFor the first month, the rate of price decline has decelerated, which may be an early sign that the market has passed through the worst of monthly falls. Other early indicators are auction clearance rates picking up and stock levels remaining low. With the RBA putting the breaks on rate increases, the trio discuss what’s likely on the horizon.
2 Peak to trough declineThe current peak to trough decline nationally sits at -4.8% since the peak of April 2022. The trio discuss the peak to trough falls for the capital cities and state regions. Note that regional WA is still below it’s peak 14 years ago, a good reminder to be sceptical of property spruikers and do your research prior to entering any investment decisions.
3 Brisbane land tax has been repealed, but has the damage already been done?Rents for houses in Brisbane are up 14% over the year and vacancy rates are sitting at a low of 0.7%. On a positive move, the land tax proposal was scrapped, (thanks to our friends at PIPA, PICA and REIQ). However, Brisbane has already sustained some pain, with many investors selling up or in the throws of doing so.
4 Where is the big picture on housing?The trio discuss government and regulator decisions that have made it harder for landlords and investors. Without the big picture of understanding and deciding what is an appropriate mix of ownership between owner occupiers and investors, and how many investors should be private investors, the approach to housing reform is like throwing darts blindfolded. In positive news, the rate of increase in rents was the lowest it’s been in 10 months, which signals that rental growth is tapering.
5 Listings languishSpring is typically the time of the year that an increase in stock occurs, but the level of listings has actually dropped and is close to the 5 year average. With interest rates on the rise and prices declining, vendors are holding off thinking that now is not a good time to sell. Hobart and Canberra are bucking the trend, with listings at 71% and 41% higher than this time last year. The trio discuss what this means for value growth and dive into distressed listings.
6 House price expectations turns aroundIn an interesting turn of events, the house price expectations index has ticked over 100, after dropping below 100 for the first time since September 2020 last month. Victoria and Western Australia are most positive, with readings of 108 and 106 respectively. This should improve further due to the RBA slowing down cash rate rises and is another positive green shoot in the month of September.
7 Investors continue to bow out while first home buyers jump inOver the month of August, investor lending fell by 4.8%, while owner occupiers remained resilient. First home buyers increased by 7%. Personal loans also increased by 9.5%, which is a concern that people are funding something that they don’t have the money for. David shares what bond markets are saying about where the cash rate is likely to end up too.
8 Unemployment remains steadyThe trio discuss the unemployment rate and what is on the horizon with new migrants and the scrapping of mandatory isolation for Covid-19.
Visit the show notes: https://propertyplanning.com.au/market-update-sep-2022-green-shoots-emerging-price-falls-decelerate-auction-clearances-up-consumer-sentiment-improves-solving-housing-policy-and-more-ep-175/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
1. Listener questions
This episode is dedicated to answering questions we’ve received from our listeners. If you’ve got a burning question that you’d like to ask the trio, submit your question online here. (AML to add in the link)
2. Can I access the First Home Owner Grant if my partner has already accessed government assistance?
My question is, if I'm buying a property on my own but am living with my partner who has bought a property and received the First Home Buyer Assistance Scheme (transfer duty reduction) already, can I also still qualify for a first home owner grant myself?
3. How do partners and de facto relationships impact eligibility requirements?
The trio discuss the Victorian SRO criteria for receiving the First Home Owners Grant and how partners must be disclosed on applications, even if they will not be on the property title. But what if your finances are separate, can a government still find out? Tune in for the answer
4. Is there a way you can get around it?
The trio discuss a potential pathway to explore in order to receive the grant. However, take note! It’s best to run the scenario by the SRO or a professional for their advice and don’t forget to get it in writing.
5. Is now a good time to subdivide and build our dream home?
We owned a unit in Thornbury and purchased an entry point house in Reservoir during the pandemic. The block is 536m2 and we are looking at subdividing the block and building a 3br townhouse at the back to live in as our family home (2 young daughters). I would like to explore whether the next 12 months would be a good time to commence the planning and building process for the back town house or whether the current climate with building materials and inflation mean it’s a bad time to subdivide and build?
6. As with any major decision, ensure that you are thinking about the longer-term
In true Property Planner style, David poses some key questions to our listeners about their long-term lifestyle plans and understanding how a subdivision and family home fits into the overall plan. “How long will this home meet your lifestyle needs? “, “Are you sure you will be happy living in the back property for 5 to 10 years if that is required from a financial standpoint? “, and “Will you enjoy living next to your tenants?“ are just to name a few questions to ask.
7. What are your thoughts on Point Cook as a location?
I'm curious about the neighbourhood Point Cook in Melbourne. It seems to have plenty of amenity and has been suggested as a future 2nd CBD hub for Melbourne in some articles I came across. I also think it's great that it's one of the most multicultural neighbourhoods in Australia. What are your thoughts on it as a neighbourhood to live in. Are there any areas you find better than others?
8. Investment and lifestyle analysis for Point Cook
If our listener loves Point Cook as a home and community, then that’s enough reason to purchase a home there. However, Cate shares some key points for Point Cook which could make it a problematic investment.
Visit the show notes - https://propertyplanning.com.au/listener-questions-bought-off-the-plan-my-situation-rates-the-market-is-worse-i-need-the-fhog-but-moved-in-with-my-partner-help-is-it-a-good-time-to-subdivide-suburb-analysis-and-mo/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
1. The conundrum – can we stop work and live off our portfolio before we reach preservation age?
This case study follows the journey of Craig and Jane, podcast listeners in their mid-forties who submitted their scenario to the team to unpeel via the Property Planning platform. They have already made some fantastic decisions on their investment journey, such as almost fully paying off their home, and purchasing three investment properties. They were wondering whether they would be able to scale back work or stop completely in 8 years time, which is 7 years before reaching preservation age and live off their passive rental income before they can access their superannuation. Or would they need to sell a property to live comfortably?
2. Their portfolio and goals
The property trio discuss Craig and Jane’s goals and their investment portfolio that they’ve worked hard to build - consisting of 4 properties, super and shares. Ideally they would like to be earning $100,000 passive income from their investment properties, to have enough room in the budget for annual family holidays with their two (currently teenage) kids.
3. Modelling the scenarios
Four scenarios were modelled for Craig and Jane which is how many each Property Planning platform allows per user, to illustrate their varying options and provide contrasting pathways forward. The trio sink their teeth into the financial outcomes, how scaling back at different ages, working less hours, selling or holding and other factors impact the ultimate financial outcomes in to their retirement years.
4. The power of mortgage strategy
The trio highlight the importance of mortgage strategy, as demonstrated in the modelling. A simple change shaves 7 years off of reaching passive income of $100,000 from property. Tune in to find out how.
5. Should I work longer, scale back sooner but work more days, or just stop all together and everything in between?
The trio discuss how various pathways for the couples timeframe and amount of working hours can make a significant difference to your bottom line, retirement age, or flexibility age for when you start to scale back your working hours. Learn how these tweaks inside of the Property Planning software can help inform and educate your decisions rather than flying blindly! The surprise twist to make a significant positive change to this exciting, real life case study might surprise our listeners.
Visit the show notes - https://propertyplanning.com.au/property-planning-case-study-6-listener-scenario-on-the-property-planning-platform-can-we-retire-in-8-years-live-off-our-portfolio-until-we-hit-preservation-age-ep-173/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market update
1. How the different sectors of the market react to price movements
Pete shares with you how the most expensive, middle and lowest sectors of the market in both capitals and regional centres react to market movements. Check out our show notes for an interesting graph that shows it all.
2. The lure of off-markets
Cate shares a conversation that she had with an agent who is very experienced about her take on off-market properties. While 95% of them are disappointing, there is the odd gem to be found. Tune in to find out how you can capitalise on these opportunities. n.
3. The Property Planner updates his predictions for the next RBA rate movement
Due to further inflationary developments in the US, money markets have changed their predictions for the next rate increase to be 50 basis points, rather than 25.
The top 7 things that buyers get wrong – Part 2
#3. Mixing emotion with pragmatism when it comes to investing
The trio discuss some of the biggest mistakes that can lead you astray when you listen to your heart instead of your head when investing. What are the causes of emotional decision making and how can you detach yourself to make pragmatic decisions? Tune in to find out.
#4. Low ball offers and a quest for a bargain (instead of a quality property)
One of the critical mistakes is chasing the property bargain unicorn. The reality is that if a property is heavily discounted, there are some issues that the purchaser has to deal with.
#5. Being impatient with time
The trio discuss why property is a get rich slow scheme and the errors that buyers fall into when they start to feel impatience creeping in.
#6. Counting cents instead of dollars
When does scrimping and saving lead to mistakes? The trio discuss the items that you should dig into your wallet to address.
#7. DIY’ing the things that you shouldn’t
Renovations are tricky to get right and some work even requires permits and certificates. Before you role up your sleeves and get out the paint brush, take a listen to the things that potentially you should be getting a professional to do.
Visit the show notes - https://propertyplanning.com.au/the-top-7-things-property-buyers-get-wrong-part-2-ep-172/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market update
1. Rate of decline speeds up in most capitals
Over the month of August, the rate of decline has increased, while in a surprise move, Melbourne’s decline has slowed. Shockingly, Brisbane has jumped from –0.8% in July to –1.8% in August. No doubt due to proposed changes to land tax, flooding and the previous heat in the market. The trio discuss the trough to peak for the capitals and what’s likely to happen next.
2. Rental market - Brisbane land tax is likely to make the rental situation worse
The trio canvas the proposed changes to land tax in Queensland which will likely cause more than a few investors to abandon the Queensland property market and sell up to first home owners, hence intensifying the rental shortage. The greatest risk is that other states will jump onboard and aggregate land tax.
3. The outlook for vacancy rates
Supply remains limited for rentals, with the tap of overseas migration just starting to be turned on. With new dwelling constructions starting to fall, the outlook is fairly grim, particularly given the Australian Government has increased the target figure for new arrivals.
4. Listings to increase over spring
Supply of stock on the market is set to increase, with covid in the rear-view mirror and spring time on our doorstep. Old (180 day+) listing numbers have started to climb, showing that buyer FOMO and desperation have calmed. Total listings are tracking above the 5-year average, a sign that vendors want to sell before the market drops further. The trio discuss how listings and monthly growth our closely interrelated.
5. Consumer sentiment
The house price expectations index has dropped for the first time below 100 as consumer sentiment overall takes a hit. Victoria remains the most pessimistic, with a 17.7% drop over August from 99 to 81.6. The trio discuss what this could mean for inflation.
6. Finance continues to fall over July
Lending activity continues to slow and mostly investors and business construction has been impacted. The bond yield spiked after the US Federal Reserve Chairman spoke and indicated that the US will do whatever it takes to curb inflation. However, expectations have settled again at 3.1% for the cash rate and we are on our way to hit a 3% cash rate towards the end of the year.
7. Victoria leads the unemployment decline but wages are not taking flight
Unemployment drops again to 3.40%, while Victoria leads the pack with the lowest unemployment on record at 3.10%. With the low level of unemployment, it is interesting that wages are not skyrocketing. The trio discuss the delicate tight rope walk of increasing wages, as wage growth must stay under control to tame inflation. Wages should increase, but not at the same rate.
Visit the show notes - https://propertyplanning.com.au/market-update-aug-22-why-spring-may-provide-the-best-buying-window-of-the-cycle-why-brisbanes-decline-increased-dramatically-melbournes-slowed-despite-leading-negative-s/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market update
1. Is the RBA oversteering the inflation ship?
The RBA yet again ups the cash rate by another 50 bps, but how effective will it be at tackling inflation when non-discretionary items continue to increase in price. While interest rates don’t have a direct correlation to property prices consumer sentiment certainly does and it’s a scary time for many, now that the cash rate is over 2% above it’s lowest point. Dave shares some learnings from our first cash rate cycle in a decade.
The 7 things buyers get wrong
1. What are the tell-tale signs of insufficient planning?
Cate shares with our listeners the alarm bells that ring when insufficient planning is in the air. Are you short-cutting your plans?
2. What is an appropriate amount of planning time a buyer should invest in their search?
Buckle up, it’s not going to be a walk in the park (if you do it properly). The trio discuss the time and energy that goes into a property search. Think about how much time goes into planning a wedding or a holiday and the relative cost compared with purchasing a house.
3. What are the consequences of insufficient planning?
The trio dive into some of the worst outcomes that can arise from failing to plan.
4. What are the big ticket issues with overconfidence in your ability to renovate
TV is partly to blame, renovations look so simple when you’re comfortable on the couch with a glass of wine. But don’t be fooled, it is not easy. The trio discuss the reluctance to pay for services like painting that you feel like you could do yourself. But, in the end, it may be worth the cost.
5. What happens when renovations go wrong, what are the options?
The trio discuss how to plan for renovations to ensure the funds don’t run out in the middle of the project and what happens when the renovation pool runs dry.
Visit the show notes - https://propertyplanning.com.au/the-top-7-things-property-buyers-get-wrong-part-1-ep-170/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market update
1. US not slowing down with rate rises
In the US, the Fed Chairman spoke with some strong words about not making the same mistakes as in the 70’s, with taming inflation and will go as hard as they need to with rate increases. There was some talk bubbling that the US will slow down with rate rises, but that’s been sidelined and the share markets have responded. Other Western nations tend to follow the US fed, so there could be more pain ahead in terms of rate rises than markets had expected in the last month or two.
2. Auction volumes – Melbourne
As we come close to the grand final public holiday, auction volumes are tending to slow down as vendors don’t like to sell on the long-weekend. Activity is expected to ramp up and get hefty in October. But watch this space, we may be in for a super Saturday on the 17th of September.
3. All major capitals are heading in the same direction (down)
Looking at day on day change, all capitals are now on the downward swing. But this is normal for the property market. Looking back over the last 30 years, ups and downs are par for the course.
Houses vs units
1. Regional areas vs capital cities
Generally speaking, houses have outperformed units and capital cities have outperformed regional loctions. However this is not the end of the story. Capital cities suffer from greater fluctuation in prices. Which is an important reminder not to get too caught up in the short term. Will regional houses catch up with capital city units? Watch this space
2. Houses vs unit growth in our capital cities from March 2002 to December 2021
Which cities have been the winners and which city bucks the trend of houses outperforming units? Why is unit growth extremely low in Brisbane and Canberra? The trio sink their teeth into the data.
3. How have the Property Professor’s top suburbs performed?
Peter revisits the suburbs that he tipped to be top performers. Which ones have outpaced the growth of their city and how have units fared compared with houses?
Visit the show notes - https://propertyplanning.com.au/houses-vs-units-capital-growth-performance-in-capital-cities-and-regions-over-the-last-20-years-and-which-locations-have-units-outperformed-houses-and-why-ep-169/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market update
1. A warning to investors intending a demolition
For those investors who are looking at run-down properties with plans for a future development, it is important to consider the minimum standard of living legislation. If you purposefully purchase a home that needs a lot of work to make it liveable for tenants, you may be over capitalising when the long-term intention is to put a bull-dozer through it.
2. Smoke signals from China
Unlike the rest of the world, China has just reduced interest rates to try and stimulate the economy. This is due to some prevalent risks building in the Chinese economy, such as developers going under, Chinese citizens who have refused to pay mortgages because their property has not yet been built and further covid lockdowns. This will have a big impact on Australia and the rest of the world economy. To top it off, China is heading towards their next election... watch this space.
Listener questions
1. To buy or not to buy? Properties with a history of murder
I’ve recently came across with a property which has history of murder. 2017. As I keep hearing property is about numbers. And the numbers are good as less buyers want it. My question is would you buy this kind of property where they have “dark history” which will eventually fade in the long run? Any Thoughts on this?
2. What kind of asset mix is best for boosting serviceability & why this may not be the first question to answer
Love the podcast! Thank you for taking the time out of your busy lives and putting the show together. My question is related to financing property acquisition. Capital growth is the holy grail for property investing but it is only one side of the equation. Serviceability is the other. If you can’t service your debt, all the equity from capital growth is inaccessible. What kind of residential property asset mix should an PAYG investor consider in their property planning to boost serviceability to continue their investment journey? Does a happy intersection of capital growth and rental yield exist?
3. How will the changes to QLD land tax impact investors?
What do you think will be the effect of the new changes to Qld land tax. Effectively, you will now be penalised on your Qld land tax if you own properties outside Qld. My own calculation due to my extensive holdings in all states is that this has a horrendous impact on large investors. I now will consider selling some Qld properties. I believe it will have flow on effects, where there will be less investors in Queensland, and rents will rise even more dramatically again (lower vacancy rates). how long do you think it will take for this impact to flow through and the Queensland government will be forced to look at this? The unintended consequences, I believe will be severe.
Visit the show notes - https://propertyplanning.com.au/listener-questions-property-with-a-dark-history-to-buy-or-not-to-buy-what-kind-of-asset-mix-is-best-for-boosting-serviceability-why-this-may-not-be-the-first-question-to-answer-and-more/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
Market update
1. How to keep an open mind when it comes to shortlisted properties
Cate shares with our listeners her hot tips for shortlisting properties to inspect. The favourites at the top of your list may not be the ones that make the short list. It is critical to see the properties in person.
2. Government opens the gates on overseas migration
Pete shares that the government’s reported figures for overseas migration to Australia are about to increase significantly. This will likely put a pricing floor under the property market, as all the new entrants will need a place to live, putting pressure on rents also. Those who can obtain permanent residency quickly will be looking to buy. Watch this space...
3. Some exciting news from the Property Planning Australia team – introducing the Property Planning software tool
Property Planning Australia have thrown away the excels and word documents and now have the ability to provide a tool we can put into the hands of our clients and other Property, Mortgage and Financial professionals. The tool allows you to model up to 4 different Property Plan pathways factoring in all your existing cash flow, income, expenses and future goals right through to retirement, then measure the financial outcomes against your goals. For our listeners who would like to be able to build their own Property Plan with the support and guidance of a property or financial specialist and then be able to then take the reins to tweak or update your plan ongoing, we encourage you to reach out to Property Planning Australia via our website enquiry page.
Case study
1. The conundrum
This case study follows the journey of Nick and Rachel, who wanted assistance determining their property pathway and how best to use the cash from the business they have just sold. They wanted to purchase an investment property right away but also want to spend around $400,000 on renovations to evolve their home into one they can enjoy and that will meet their needs in the long-term.
2. Introducing Nick and Rachel
David shares Nick and Rachel’s key circumstances and of course, their lifestyle and property goals which are driving their decision. Nick and Rachel are a couple in their early 30’s, with two young children, living in one of Australia’s major capital cities. The recent sale of a business has presented some exciting options, and they also expect to receive an inheritance in of around $1,000,000 in around another 10 years which they want to factor into their long-term plan. Finally, they both enjoy working, but they also want to create further flexibility for themselves so they can scale back their employment to 4 and 3 days per week well before retirement.
3. Modelling the scenarios
Three scenarios were modelled for Nick and Rachel, to provide clarity on their key questions. When do they purchase their investment property? What should the strategy be in terms of price point and location? When could they complete the renovations on their home? Can they achieve their retirement income goal~~s~~ of $100,000 passive income through property? Can they scale back work earlier? The trio unpack the scenarios.
4. So, what did they choose to do (and what was the compromise)?
Tune in to find out which scenario Nick and Rachel went for. Were they successful and what was the compromise?
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI
https://propertyplanning.com.au/propertyplannerbuyerprofessor/
In this week's episode Dave, Cate and Pete take you through:
1. The latest home value index results
The housing market is now in its third month of decline, nationally dropping by 1.3%, which is comparable to the onset of the GFC in 2008 and downturn in the early 1980s. Sydney is now showing the sharpest value falls in almost 30 years, while Brisbane moves into negative territory for the first time since August 2020.
2. Median values are not all what they seem
David shares some interesting facts about capital city housing markets, which means that listeners should be cautious when looking at median dwelling values between capital cities. It’s much more reliable to look at the median value for houses and units separately, but even then, the data can be skewed. The trio explain why.
3. Rental markets remain extremely tight
Historically, capital growth and rental growth would stay relatively aligned. However, the property boom in 2021 has meant that capital growth has significantly outstripped rental growth and is now going through a period of correction. Rents are likely to continue to run for some period of time, while our property values are still exhibiting a decrease, which in turn, is increasing rental yields.
4. Distressed listings on the rise
Vendors in distress have increased in seven out of eight states over July. Over the year, the biggest change can be seen in Hobart with a 50% increase in distressed listings, however they are rising from a very low base.
5. Consumer sentiment continues to dive, but is now the best time to buy a dwelling?
The trio discuss the latest consumer sentiment data, which as expected is reducing towards 100 for ‘house price expectations’ and is expected to go below 100 in the next month or so. However, the time to buy a dwelling index is showing the early signs of an upswing as home values become more affordable.
6. Lending falls at the fastest rate since May 2020
Total lending fell by 4.4% over June, with first home buyers taking the biggest hit, declining by 10%, the largest decline in 3.5 years. Owner occupiers remained the most resilient, falling by only 3.3%. In other news, certain banks have lowered their 3 and 4 year fixed offerings, as bond yields have peaked and now show a decline, indicating that the expectations for where the equilibrium cash rate will sit has reduced.
7. Unemployment reduces again
The jobless rate has reduced to 3.5%, as businesses desperately look for new employees. There is a growing push to enable retirees to return to work without impacting their pension entitlements to alleviate the pressure ... watch this space. Turning the tap on for immigration is also expected to have an impact. In June, the largest amount of student visa applications ever on record was processed.
8. Are we done with 0.5% monthly rate increases?
As the cash rate moves towards 2%, we’d hope that as the rate reaches closer to equilibrium, the RBA will slow down on the magnitude of rate increases so as not to over-steer. The trio are hopeful that the we’ve had the last 50 basis point increase, but only time will tell. David shares the news from New Zealand, which was the first nation to increase the cash rate in October 2021 and NZ’s cash rate currently sits at 2.50%
Visit the show notes - https://propertyplanning.com.au/market-update-july-22-are-we-entering-into-the-best-buying-conditions-in-this-cycle-have-we-seen-the-last-0-5-rate-increase-why-rents-are-playing-catch-up-how-median-values-can-be-distort/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. How do rents stack up against inflationPeter shares his research on rental returns over the last 10 years, which increased nationally by 11% for all dwellings. Compared with inflation, which increased by 25.6%, it’s a good reminder of the benefits of capital growth focused investment properties. Check out our show notes for the growth rates of rents for each capital city.2. Closing in on the neutral cash rateWhilst opinions on where the neutral cash rate sits are many and varied, Cate reminds our listeners that we must be getting pretty close. Although economists don’t have a crystal ball, no one is expecting the cash rate to reach 5% and the RBA is trying to reach the point of equilibrium quickly. Once the RBA slows down on rate movements, it’s like that buyers and particularly those who have put their purchasing plans on hold to wait out the uncertainty, will jump back into the fray. Nothing encourages opportunistic buyers like a slow-down in rate increases.3. Economists revise down their predictions on the neutral cash rateDavid shares the early signs of economic inflection which could suggest that the neutral cash rate is may likely eventuate at 2-2.5%. As little as two months ago, money markets were predicting the cash rate would reach as high as 4.5%, however most bank economists now think that it will rise to 3%, with CBA being the most conservative at 2.6%. Money markets have also spiked in July by 5-6%, which brings positive news. Whilst the US is in a technical recession, an argument could be made that they are not actually in a recession due to the very low unemployment rate and other factors. It is also important to note that our technical definition of what constitutes a recession varies from that of the US.The extra mile buyers should go when shortlisting a property1. Listener Question: “A glass half full question … as we transition into a Buyer’s market, what steps can investors take to be positioned to take advantage of an opportunity that might present itself”The trio start the episode by answering a question from a podcast listener and share their tips on how to get purchase ready, to strike when the iron is hot! Property is a long game and we do need to sometimes remind ourselves of this.2. What are some of the things we can check online before we even book an inspection?The trio share their hot tips on how to make the most of your internet searches when doing your online research.3. What things should you be looking out for immediately when inspecting in person?Cate shares with our listeners what to look out for when you visit an open house. Take note, listeners should use more than just their eyes when inspecting the dwelling! Pete shares the aspects of the land to keep an eye out for and why you should stick around for the whole inspection.4. How to assess a ‘workable’ floorplan vs a complete overhaul floorplanAn illogical floorplan can be a huge pain, not to mention the financial commitment if you want to make adjustments. The trio discuss how to assess the floorplan, which could save you thousands on a planned renovation. However, the floorplan is not everything. For listeners who want to get into a particular location, especially first-time buyers, dealing with a less than ideal floorplan or a more run-down house could be the trade off to get into the best location.5. What kind of renovation are you planning? What is the difference between cosmetic work, work that requires tradies and work that needs a planning permit? It’s important to be clear on what type of renovation you’re going to be doing. And just as importantly, when you are inspecting a property, what work has been done? …and should there be certificates of compliance included in the contract of sale? If you do notice that renovations have been completed, bring them to the attention of your solicitor or conveyancer as they may have been done illegally!6. What you can find out from council about the land or dwellingThe trio discuss the information that you can find out from the council, and the encumbrances that could have a significant impact on your intended use of the land. Pete shares a hot tip on how you can stay abreast of any planned development in the area.7. Obtaining insurance quotesDo a quote online on the property you intend to purchase. Although it’s not considered to be thorough research, the quote will give you a good indication of whether there could be a problem with the location in terms of flood or fire if the quote comes back higher than normal.Visit the show notes - https://propertyplanning.com.au/the-extra-mile-buyers-should-go-when-shortlisting-a-property-inspecting-like-an-expert-how-to-spot-red-flags-all-you-can-discover-for-free-online-assessing-a-floorplan-finding-nearby-de/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Weekly Market Updates1. Adelaide market losing steamPete reports that there are not as many people at auction and less offers coming in prior to auction. Whilst the Adelaide market is still on the rise, it isn’t increasing at the same rate as a month and a year ago. CoreLogic figures released this week show 0.4% increase over July.2. Rental squeezeCate shares an interesting article that she read on the weekend, highlighting the Victorian rental reforms to be a failure and go too far. With the pool of rentals eroding, vacancy rates reducing and rents on the upward trend, are the reforms pushing investors out of the market with their onerous requirements?3. Where is the neutral cash rate?Dave shares his updated predictions on where the neutral cash rate could lie (2-2.5%). The current cash rate of 1.35% is above the level of June 2019 and almost double the pre-pandemic level. With a 0.5% rise expected today, the new 1.85% cash rate will be the highest since July 2016. This sparks concern that the RBA is going too hard and too fast. Inflation is a concern, but not at the expense of household wealth and jobs. Figures from Westpac show that while 29% of borrowers are a year ahead of repayments, 50% are less than one month ahead.Visit the show notes - https://propertyplanning.com.au/analysing-regional-locations-what-investment-principles-can-be-gleaned-from-the-highest-performing-regions-in-each-state-comparing-capital-city-vs-regional-performance-from-2003-b/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Pick your advisors wisely!Cate shares a recent experience of working as a Buyer’s Advocate for a friend. The moral of the story? When you’re working with a professional, if you know their work and you trust them, you can get a great outcome, because speed and swift decision making is everything.2. How will the unemployment rate impact rate rises?The latest figures from the ABS show that unemployment has dropped to 3.5%. This has caused quite the stir, with economists now expecting rates to rise by 0.50% next month, maybe even 0.75%. David cautions that the RBA shouldn’t move too hard too fast on rate increases, but it is looking increasingly unlikely that the RBA will move by 25 basis points only. It will be interesting to see what actually occurs next week…3. Rents playing catch upIncreasing rents have been the talk of the town, with rents recently going up significantly. Pete shares some interesting data which highlights that in the last 10 years, rents have not kept up with inflation despite the dramatic increases. How will this inform future policy decisions from the Minister for Housing? We will have to wait and see.Updated predictions for 20221. A look in the rear view mirror at the first half of 2022The trio revisit the predictions they made at the beginning of the year. Were they on the money or did they miss the mark? Tune in to find out!2. What will the property market do in 2022?What capital growth rates can we expect around the nation this year? The trio review their predictions and lay their predictions down for the rest of 2022.3. Which capital cities will be the top performers?The trio look into the crystal ball, pour over the data and explain which capitals are expected to top the charts this year. But remember, property is not an asset class that lends itself to short-term investing. The important thing is to plan and strategise for the long-term.4. How will regional locations fare?Regional locations have again outperformed capital cities in the first half of 2022. But will that continue?5. Will investors jump back into the marketInvestors have shown strong increases in activity over 2021 but only a slight increase in the first 5 months of 2022. Is this trend likely to continue? The trio share their insights.6. Will APRA intervene in the property market?The RBA has done all the heavy lifting with increasing interest rates, meaning that APRA hasn’t had to intervene to temper the market. But will the government search for ways to intervene to keep rental prices lower and tempt first home buyers back into the market?7. Developers and buildingResidential construction costs continue to climb and builders are flat out with projects, exacerbated by labour shortages, materials shortage and supply chain delays. How long will costs continue to remain high and what impact will this have on the property market?8. The outlook for interest rates?The trio share their predictions for future cash rate rises by the RBA and at what point they each think will the rate rises end.9. Rental market forecastsRents have continued to climb and vacancy rates have tightened. The trio discuss the outlook for rental markets for the rest of 2022.10. Sales volumesAfter a record breaking year in 2021, sales volumes have lost pace and have trended back towards the five-year average. What does the future have in store? Tune in to find out!11. Risks which could impact the property marketThe trio discuss potential risks on the horizon which could impact the property market this year.12. Where is inflation heading?When will inflation peak and what will cause the slow down? The trio discuss and lay their predictions down.Visit the show notes - https://propertyplanning.com.au/predictions-for-2022-revisited-which-predictions-are-on-track-where-we-went-wrong-revised-expectations-forecasts-half-yearly-report-on-capital-cities-regional-locations-the/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. Markets across Australia dip further over JuneFor capital cities already in retraction, the rate of decline has increased over June, while those still experiencing value growth have seen a definitive slow-down in the rate of price increases. Sydney in particular has made the headlines, with a median dwelling price drop of 1.6% over June, the largest monthly fall since 1989. The trio discuss the fact that these circumstances are not unusual after a period of rapid price growth.2. Upper quartile feeling the pinchAs is typical of rising and falling markets, the upper quartile is leading the price declines and feeling the pinch more than the lower quartile. This has a significant impact on median values, as statistically, the bigger numbers are removed from the data pool. However, it’s important to note that quality property is still in high demand, particularly if it sits within the median price range and buyers should not expect a bargain. A key example is entry level family homes where there is simplynot enough stock to cover the demand.3. How capital cities have fared over the last 40 yearsCate shares some interesting data collected from the REIA showing annual value growth for each capital city since 1980. Whilst a 1% differential in annual growth compounded over 40 years will make a significant difference to the end result, it’s important to remember that there are many facets to consider when investing, such as vacancy rates, insurances, maintenance costs and rental returns. Although one capital city may have performed better than another over the long-term, price points are significant and could mean that it’s better to purchase a high-quality asset in a lower performing city vs a low-quality asset in a high-performing city.4. Market cycle trendsThe trio discuss the trends in market peaks, which cities were the first to move and how these moves correlate with population size for the corresponding cities.5. Taking a critical eye to data and median valuesThe trio discuss data and differences between the nation’s data houses: REIA, ABS and CoreLogic. As an interesting note, Brisbane is gaining on Melbourne in median values for all dwellings, but a closer look at the data shows that it’s not all that it seems...6. Rollercoaster rentsThe trio discuss the case of Darwin which has had large swings in annualised rents over the last year, resembling one of the scariest roller coasters in the theme park. Melbourne units lead the charge for rental increases, which suggests that people are migrating back to the city and a supply-side issue could be brewing. To add to the pressure cooker, vacancy rates tighten further across most capitals. How will this impact the property market and who are the buyers likely to jump into the fray? Stay tuned to find out.7. Listings follow the annual trend and dwelling sales return to normalcyFollowing the usual seasonal winter trajectory, listings have dropped in Melbourne, Sydney, Adelaide and Canberra. The trio discuss the curious case of Hobart, which has seen a very large increase in listings year on year. Although being a smaller city, it doesn’t take many transactions to register some serious numbers. In terms of dwelling sales, the figures are tracking back towards the 5-year average, after a spike in activity last year following an uptake in lifestyle decisions that were put on hold during covid.8. Consumer sentiment bodes well for inflationThe trio discuss the latest data on consumer sentiment, which shows a reluctance on the part of consumers to buy major household items. This indicates that the RBA 125 basis point rate movement is taking effect and consumers are now watching the hip-pocket and cutting back on spending. Could this also be attributed to the increased cost of living though? The time to buy a dwelling index has reached a new low post the GFC and the trio discuss an increasing chasm in sentiment between male and female purchasers.9. Will the RBA oversteer the ship again on inflation?David explains why the Australian economy is particularly sensitive to interest rate changes, compared with other countries. This means that any rate changes are likely to have a big and fast impact, as is already showing in the consumer sentiment data, with willingness to spend dropping significantly. Ideally the RBA will not raise rates more than 0.25% next month or even, dare we say it, take a break. The trio discuss a significant hurdle and structural weakness with inflation data, it is simply too old! By the time the RBA knows what’s happening with inflation, it’s too late.10. Lending indicators and the three-year bond yieldNot much has changed over May, although we expect to see a shift towards investors in the coming months as home purchasers elect to wait and see. The three-year bond yield peaked on 20th of June and has started to drop slightly since, which indicates that the market is starting to draw back predictions on how high rates will rise.Visit the show notes - https://propertyplanning.com.au/market-update-june-22-why-the-rba-needs-to-be-mindful-of-going-too-hard-too-fast-on-rate-increases-top-capital-city-performers-over-the-last-40-years-why-median-values-cant-be-tru/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Investors making a come backCate discusses the return of the investor. Enticed by less competition, higher rental returns, tight vacancies and longer tenures, investors are coming back into the market and taking advantage of the opportunities.2. RBA lifts ratesDave shares with our listeners that once again the RBA has lifted the cash rate by 50 basis point to a target of 1.35%. This will flow through to the lending market variable rates. Many economists are tipping that the cash rate could climb to as high as 2.0% or possibly more. The move is largely to tackle the current inflationary environment, with inflation forecast to peak later this year and then decline back towards the 2-2% range in 2023.3. Understanding vendor motivationCate shares some hot tips for prospective purchasers on whether you should put in a pre-auction offer and why entry level family homes are still going strong despite the softening market conditions.4. Adelaide is at the top of the charts over the financial yearPete shares some exciting news for his home town Adelaide which has snuck into the top position over the last financial year with 25.7% annual growth over Brisbane’s 25.6% annual growth. Can Adelaide do it again over the calendar year? Interestingly, Brisbane may overtake Melbourne in median house price. Watch this space!Case study #41. The conundrumThis case study follows the journey of Jason and Amy, who wanted assistance deciding whether they should purchase a home or investment, before or after they have kids, how their cash flow would change as they start their family, what cash savings buffers they should have in place, and how much they should spend and which location.2. Introducing Jason and AmyDavid shares Jason and Amy’s key circumstances and of course, their lifestyle and property goals which are driving their decision. Jason and Amy are a couple in their early 30’s, yet to start a family, living in one of Australia’s major capital cities. Their long-term plan was to continue living in a capital city, but thought they may move to a regional area in the short-term to be close to family and have some additional support as they start having children.3. Starting a family with your eyes wide openThe trio discuss the importance of understanding (and being comfortable) with the impact that starting a family will have on your cash flow. This could be the difference between holding on to a property and panic selling when savings start to go backwards.4. Modelling the scenarios Two scenarios were modelled for Jason and Amy, one to purchase their home now for $1.1M or an investment that could become the long-term home for $1.5M. The trio discuss the pros and cons of each scenario.5. So, what did they choose to do (and what was the compromise)?Tune in to find out which scenario Jason and Amy went for. Were they successful and what was the compromise?6. The risks of rent-vestingThe trio discuss the dangers of rent-vesting when the desire to get into the long-term family home takes over and some clever ways to work around this proactively.Visit the show notes - https://propertyplanning.com.au/property-planning-case-study-4-do-we-buy-in-the-capital-city-or-regional-centre-we-plan-to-live-in-both-before-or-after-we-have-kids-how-will-parental-leave-impact-our-price-range-should-it-be/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. NSW land tax to put a floor under property pricesLooking at quarterly results, the two major cities with the biggest price falls have been Melbourne with 1.4% decline and Sydney with 2.1%. However, NSW will soon be implementing an optional land tax over stamp duty for first time buyers entering the market, which is likely to encourage some first home purchasers to dip their toe in the water and this in turn could increase demand.2. Pre-auction offersCate shares some hot tips for our listeners in preparation for today’s episode on how to manage pre-auction offers in a cooling market and sometimes a better outcome will be achieved if you wait until the auction.3. Inflation may take longer than usual to come back downDavid shares an interesting theory on why rising rates may not be enough to curb inflation. Our lost life experiences over the last two years means that not even rising rates and increased mortgage repayments can curb our desires to go on holidays, see friends and spend extra money on getting social.How to tackle cooling markets1. A question from our listenerSome questions for the pod about how to approach a flat/cooling market.Cate what should you do when you are the only one to show up to an auction and or bid?Peter, how do you approach comparables when prices are falling?How do you take advantage of seller FOMO?I also think a whole pod on climate risk (BAL levels, flooding, future temperatures in capitals) would be good. Keep up the great podcast.2. When you are the only one at the auction, what are the risks that buyer psychology can pose? The trio discuss how buyer psychology can get in the way and cause obstacles for an opportunistic purchase. If the research has been done and the property is a winner, then ignore the white noise in your head that’s saying there’s something wrong with the property. It may just be your lucky day.3. How to value properties in a cooling marketPete explains how valuers actually assess the market value of a property and how comparable sales are used. More importantly, what adjustments valuers make in a rising market vs a falling one.You might apply some decreased percentage overlays to the historical sale prices. The same applies in a rising market, if dealing with a property that had 1% month on month growth, you will need to overlay this growth.4. Why falling markets are the best time to buyDave touches on market cycles and why in a falling market, you’re likely never to get such a good price on a property ever again.5. The fear of over-payingWe can tie ourselves in knots over paying too much for a property. However, if you hold the property for the long-term, this amount will appear to be comparatively miniscule in the end. A reminder to our listeners, to purchase a property, you have to be willing to pay more than anyone else for it!6. Why research is the cure allThe trio discuss the worst-case scenario of purchasing a property and paying more than what a lender thinks it’s worth. Cate explains why this is very rare and quite mitigated if the homework and due diligence is done. Now is not the time to cut corners. Roll up the sleeves and get through as many properties as you can.7. What do you do if the vendor’s expectation is sky high?Cate shares her best tips on how to manage vendor expectations and how to negotiate in a falling market.8. Where can buyers get good information about current climate change risks associated with their property in question?Although we can’t solve climate change in 5 minutes, there are some key considerations and signs to look out for that will indicate whether a property is at risk of fire or flooding. The trio discuss the steps to take and resources to consult to determine the risks associated with the property in question.Visit the show notes - https://propertyplanning.com.au/160-top-tips-for-purchasing-in-a-cooling-market-listener-question-ep-160/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. NSW state budget announces introduction of annual land tax to replace stamp dutyStamp duty has already been abolished in Canberra, but Canberra only has one hundred thousand homes. It will be interesting to see how Sydney fares on a much larger scale with one million dwellings. The introductory measures will be in place for first time buyers only, who can opt to pay land tax annually of $400 + 0.3% of the property value.2. Attitudes towards the property market divergeThe reality is that there is a segmentation in the market currently between those who haven’t ever experienced interest rate increases vs those who have. Cate explains how this affords great opportunity for anyone who is willing to take the plunge in certain segments of our market.3. Crypto currencies take a diveIncreasing inflation has led towards large rate hikes in the US, with the most recent 75 basis point increase announced this month, which is the highest rate increase in 29 years. This in turn puts pressure on shares and crypto currencies. Bitcoin has fallen by 70%, whilst some crypto exchanges have ceased the ability for people to access funds and make redemptions, almost like a bank denying withdrawal of funds. This is a sure sign that the crypto currency market is facing some serious headwinds. Dave shares the potential upside that these falls represent for those who own property.The various types of sale methods and reasons why each are adopted1. A question from our listenerHi guys, thank you for such an informative, but entertaining podcast. I’ve just listened to the episode on “off markets”. I am just wondering if you can offer some insights into how to navigate when a property is “on market” but is listed as EOI (expression of interest), rather than a price range? Why might a vendor do this? Do you put your best price forward and declare all your cards, or is there still an opportunity to negotiate? Is it a case of Pete’s rotten apples potentially? Thanks team2. What are the typical methods of sale around our nation?Cate takes our listeners through a brief recap of the various different sale methods used and what factors impact the choice of sale method.3. Best and highest offer - should you show all of your cards or go for baby steps? The trio discuss what happens when the highest offer is actually really low and the vendor isn’t happy with the outcome and Cate shares her tips on when you should actually submit your best and highest.4. Why wouldn’t you auction a property?The trio discuss the market conditions and reasons why a property is selected to be sold via auction. More importantly, when you should not sell a property via auction.6. As a vendor, what sort of guidance and rationale should you be looking for with your agent when you are considering the various methods of selling?The trio discuss how to field real estate agents and the key questions to ask.7. What does it mean if the price guide changes?Listeners beware! Cate reveals what a reduced price actually means (and it’s not more dollars in your pocket).Visit the show notes - https://propertyplanning.com.au/methods-of-sale-and-what-do-they-say-about-the-property-and-or-the-state-of-the-market-ep-159/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Comparing the history of Australia’s property market downturns and increasesPete shares a sneak peak of data that he has collated detailing the extent of Australia’s three strongest years of property value growth and declines. Without giving too much away, prices are likely to drop, but there is no need to panic.2. What are the capital growth drivers when interest rates increase?Cate shares her Sunday blog detailing the drivers of capital growth when interest rates are on the rise and predictions for the property market. Check out our show notes to read the blog!3. NSW stamp duty abolition in limboDavid shares news from NSW, where the State Government is looking to abolish stamp duty and transition to land tax. Plans will be announced in the State budget next week, however the Federal Treasurer has confirmed that there are unlikely to be any handouts for tax reform. Watch this space...Interest rate movements and property values1. Do interest rate movements impact the property market?In this episode, the trio sink their teeth into data going back to 1990 to answer the question whether increases or decreases in interest rates have an impact on the property market.2. Floating the Aussie dollar and targeting the cash rateDavid sets the scene with a brief history of why the Australian dollar was floated in 1983 and the benefits this brought to our economy. Seven years later in 1990, the RBA started targeting the cash rate of overnight loans between the banks, which has a powerful influence on other rates in our economy, ie: mortgages.3. Cash rate cycles since 1990Since the RBA began targeting the cash rate, Australian’s have lived through five rate lowering cycles, four increasing cycles and we’ve just started rate increasing cycle five. What can be gleaned from history to inform the future? The trio unpack each cycle and most importantly, what happened to property values and the broader economy.4. Property predictionsDave and Pete stick their neck out and make predictions for the property market: how low will values drop and how long will the current rate increasing cycle last?Visit the show notes - https://propertyplanning.com.au/how-interest-rate-cycles-have-impacted-the-property-market-since-1990-when-the-rba-first-started-targeting-the-cash-rate-and-some-predictions-on-what-will-happen-this-time-ep-158/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Cash rate rises by 50 basis points, but the sky’s not falling inThe RBA raises the cash rate by 50 basis points to 0.85%, with an expectation that rates will increase by the same amount next month as well. However, this is no reason to panic. The cash rate was at 1.50% pre-covid, so there is still some room to move and the reality is that the cash rate was never meant to be as low as 0.10%. This was an extraordinary measure put in place to tackle the challenges that global pandemic brought.2. The wage price spiralThe trio discuss the possibility of a wage price spiral caused by high inflation. If wages increase in line with inflation (5-6%), it embeds inflation further and that’s when the probability of job losses is increased, which is a worse outcome than slightly lower wage growth. This is an increased risk if minimum wages are increased, as employment awards and enterprise agreements are raised by the same percentage, effecting a vast amount of wage growth.3. The current state of the economyWhilst many home owners may not like the prospect of increasing interest rates, however the economy is a strong position, which is why the cash rate has been increased. As stated by the RBA, the Australian economy is resilient, growing by 0.8 per cent in the March quarter and 3.3 per cent over the year. Australians are well ahead on their mortgage repayments, with a median of 21 months of repayments in savings, even with a 2% rise in mortgage rates, this would only reduce to 19 months. There is an upswing in business investment underway and a large pipeline of construction work to be completed. The terms of trade are at record highs, the lowest unemployment rate in almost 50 years and jab vacancies at high levels.4. The latest home value index resultsThe trio discuss the index results for May, which show Sydney and Melbourne on the decline, while Canberra went slightly backwards but a negligible amount. Astoundingly, Adelaide is still going strong with 1.8% increase over May. The market is well and truly slowing down for the other capitals and regions alike. As they say, all good things must come to an end, as we enter a period of 6 to 18 months of excellent buying opportunity.5. Rentals and vacanciesRental markets continue to remain tight, with each capital city under 2% for vacancy rates. Those are expected to get tighter with the flow of new migrants to Australia. Builders will not be able to pick up the slack and increase supply to meet the demand, with fixed priced contracts in precarious positions as a few major builders go under. Now that prices are flattening, yields are growing even faster, with Melbourne now leading the charge for units, adding on 10% in the last year for asking prices.6. Listing numbers on the declineTotal listings are down for every capital city and in a change of gear, old listings (listings on the market for longer than 180 days) are increasing. This means that the up-take of the less desirable stock has slowed down for much of the nation, only in Brisbane are buyers still snatching up whatever they can. The upshot is that buyers are taking their time, FOMO has lessened and there is not as much pressure from other competing buyers.7. Consumer sentiment continues to diveThe house price expectations index, which typically lags behind market movements, is catching up with the market and starting to reduce. The time to buy a dwelling index, which peaked in November 2020, is now the lowest it’s been since the GFC.8. What do lending indicators tell us about the property marketIn April, the amount of finance fell by 6.4%, coming off a big high. The hardest hit were owner occupiers, which fell 7.3% from the previous month with investors showing more resilience with a drop of 4.8%. This move is largely correlated with property values, which have also seen a decline.Visit the show notes - https://propertyplanning.com.au/market-update-may-22-rba-increases-the-cash-rate-but-its-no-reason-to-panic-what-is-the-wage-price-spiral-why-australians-are-well-ahead-of-their-mortgage-repayments-the/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. First signs appear of inflation slowing down in the USDave shares some promising news from the US about the rate of inflation starting to cool, with the core index rising by only 0.3%. Share markets have picked up the pace with this positive development. Australia is well behind the US inflation cycle, but is also lower on the inflation scale. Watch this space.2. Caution for landlords thinking about rent increasesVacancies have been tightening across Australia and rents have been rapidly increasing, with many cities under stress with tenants scrambling to find a home. Cate shares a hot tip for the nation’s rental providers looking to increase their rent. This is an important balancing act for our landlord listeners, as asking rents should be in line with the market rate, but hitting tenants with a substantial increase can cause problems as well. This point is particularly for those who have good tenants and have kept rents below market, but applying fair and consistent increases that don’t shock our tenants is really important.Case study #3: Do we purchase a holiday home or an investment property?1. The conundrumThis case study follows the journey of Tom and Linda, who wanted assistance with working through the various pros and cons on how to best achieve their long-term financial and lifestyle goals. In terms of their next purchase, they weren’t sure whether they should start building their investment portfolio or purchase a holiday home as they are satisfied that they are living in their long-term home.2. Introducing Tom and LindaDave shares Tom and Linda’s key circumstances and of course, their lifestyle and property goals which are driving their decision. Tom and Linda are a couple in their late 30’s with two children under 4 years old, living in one of Australia’s major capital cities. Their initial plan was to purchase an investment property now, another investment in two years and a holiday home two years after that – very ambitious! However, the desire for a holiday home now to create life-long memories with their two children were holding them back and delaying their decision.3. Modelling the scenariosTwo scenarios were modelled for Tom and Linda, one to purchase their holiday house now at their preferred price-point of $800,000 and the second for one or two investment purchases for a total of $1.8 million. Yes, you read that right, $1.8 million. Can it be done? The trio discuss the pros and cons of each scenario.4. So, what did they choose to do (and what was the compromise)?Tune in to find out which scenario Tom and Linda went for, were they successful and what was the compromise?5. Critical considerations for wistful holiday home purchasersThe trio discuss the pull and longing for many Australian’s to have a holiday home all of their own. But before taking the plunge, it’s imperative to crunch the numbers and understand the compromises to your bottom line, so you can make the decision with absolute clarity. For further insights, take a listen to episode #81 “Holiday houses – delirium or dream?”Visit the show notes - https://propertyplanning.com.au/property-planning-case-study-3-should-our-next-purchase-be-the-holiday-home-or-an-investment-and-how-do-the-financial-outcomes-marry-up-with-our-short-and-long-term-goals/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updateMarket update1. Quality properties garner competition despite market cyclesCate shares her experience of bidding on election weekend, which as expected, was quieter than usual as prospective buyers took to the polls and enjoyed a democracy sausage. However, one property in particular which ticked many boxes saw a very competitive auction, which reinforces the basic principle that quality properties will garner interest and competition whether the market is rising or experiencing a lull.2. The results of US cash rate increasesDave shares some surprising data from the US which has gone through 14 cycles of cash rate increases and 11 recessions. Stay tuned for next week’s episode, for a comparison with Australia’s history of rate increases and how they have impacted the economy.3. Government shared equity schemePete encourages our listeners, whether first time buyers or parents with adult kids, to check out the government’s shared equity scheme which is set to be introduced on the 1st of July this year. There will be income caps and property value limits, but for anyone looking to get a foot in the property door, this could be a good initiative.Plotting Australian property market movements1. A look at Australia’s price spikesSince the 1950’s, Australia has seen 3 periods of stellar growth. The most mind-boggling being 1950, where prices grew 111%! What were the drivers of growth and how have these forces changed over time?2. Disrupting the property marketFast-forward to today’s drivers of capital growth, it seems that proximity to the city will continue to be a key factor for desirability, competition and property price growth. With more households sustained by double incomes, convenience and being close to amenities has been more important than ever. The trio discuss what could shake up the status quo.3. Diving into Australia’s recessionsThe trio discuss the recessions from 1970’s to now, what caused them, what were interest rates doing at this time and how these features compare with our nation’s situation today.4. How financial deregulation has impacted the property marketThe trio look back to 1980’s which saw an upheaval in banking regulation and how this impacted the economy and property market. After all, Australia held the mantel for the country with the longest period of time without a recession.5. How has population growth impacted capital city prices?Does population growth have a direct correlation to capital growth? The trio dive into the data to answer this question.6. How have capital city prices on the ladder changed over time and which cities displayed more volatility than others?The trio discuss the movements of capital cities from 1970 and how each have performed. Interestingly, Perth has been near the top of the ladder a few times, highlighting the power of employment, natural resources and availability of high-paying jobs. Check out our show notes for a great infographic that shows the growth of capital cities in inflation adjusted dollars.7. Why property is a great asset class to invest inThe trio discuss the history of property prices in relation to inflation and why investing in property is a solid move and a great hedge against inflation.Visit the show notes - https://propertyplanning.com.au/plotting-australian-property-market-movements-from-1970-to-now-the-impacts-of-recessions-inflation-financial-deregulation-population-growth-unemployment-rates-and-analysing-what-could-disrupt-th/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Properties still hotly contestedCate shares her weekend auction experience at a trendy inner-northern suburb in Melbourne. Despite the looming election, competition was strong and felt like we were back in the throws of September 2021 when the property market was going gangbusters. It goes to show that quality properties are still attracting competition.2. Rents on the riseCapital cities have been posting mammoth increases in rents, with the trend now that rental growth is outpacing the rate of capital growth. High capital growth performing assets may have lower yields, but it’s likely that rental growth will outperform in the long-run.3. How do rising interest rates affect the property market?With many prospective investors nervous about investing with interest rate rises on the horizon, Cate shares data on historical property downturns and increases and how this has correlated with interest rate rises and falls. Check out our show notes for the link to Cate’s blog.4. Perth recoveryFor the first time in 8 years, the median value of Perth has finally reached a new record price. It’s been a long recovery with many investors and owner occupiers wallowing in negative equity, but following the relaxing of covid restrictions, Perth has recovered from previous downturns.Show notes – Listener questions1. A question from our listener - Should I invest in property now or wait until after we have kids?My partner and I are in our late 20s, work full-time and plan on starting a family in the next 3-4 years. We bought our first home in 2019 (Woodcroft Adelaide) which we plan on staying in long term. Since then, with extra repayments and the market we have built up equity (~200k useable). As our incomes will be changing with time off for kids, what advice would you have when weighing up the pros and cons of investing now compared with waiting until our incomes are more more steady (ie kids starting school) and we have paid off more of our mortgage.2. Crunching the numbersThe key question to answer is whether our listener will be financially secure if they purchase an investment property now and then go on to start a family, which comes with reduced incomes and additional living expenses. The trio crunch the numbers and discuss what price point would be viable.3. Buffers and risk toleranceA fundamental point to consider when planning for an investment is risk management and whether the available funds buffer will allow our listeners to have a good night’s sleep. Risk tolerance is key here, ask yourself, “would I be comfortable if my net monthly cash flow was very limited, neutral or even going backwards?”. If cash flow will be negative during the period of having children, then maintaining a buffer large enough to support a growing family will be a critical consideration.4. How does the family home fit into your investment decision?Our listener has done well for himself to purchase the long-term family home, which is large enough for a family with 2 children. Staying in the current home makes it much easier to build an investment portfolio. However, those who are considering embarking on the journey of having children and also purchasing an investment property must consider how their needs from a family home may change in the future once the kids come into the picture. If upgrading is on the agenda, this may mean selling an investment to achieve lifestyle goals.5. A question from our listener – How to recover from early investment decisions that were made without a plan?I made a mistake when I began my investing journey in that I did little to no research, had no idea about investing yet decided to jump in head first and buy a couple of properties. I soon learnt there was a touch more to it than just putting your name on a title.I'm wondering if this a common occurrence in your experience, in that people jump into an investment without really having a strategy at all? While they haven't been a disaster, they had no strategy behind them and I'm wondering if they can make a good fit for the portfolio, or if it's better to move them on and target something that's more suited. I suppose my question is something like: How do you recover from early purchases like this, where there is little to no strategy? (Does one 'need' to recover?) Or do you just hang on and wait?6. Assessing the investmentsThe trio analyse the listener’s two investment properties for capital growth, yield and quality of investment.7. How does gearing fit into the picture?No doubt having a plan in advance of a purchase and understanding what drives outperformance makes a difference, but (and there is a but), even if the property is not outperforming, there is less of a case to sell once it is positively geared. At this point, the properties are very close to becoming cash flow positive and become a set and forget property.8. Property is a forgiving assetUnless the investment is a total dud, property mistakes are rarely catastrophic. Cate explains the key elements our listener has going for them for a very bright property journey in the future.9. We’re all geniuses in hindsightHalf the battle is just getting in and making a decision. Could the property decisions have been better? Yes. But it’s not all bad news. For a young couple in their 20’s with already two properties under the belt, they are already underway to having a comfortable retirement, far ahead of most people.10. A question from our listener - Capital growth calculations and suburb growth rateIs there a way to calculate the 3 month, 6 month, 1 year and 2 year growth of a Suburb using excel (2007)? I know you can probably "google" the growth rate of a suburb, but I am keen on working all this out. And are there any hard and fast rules regarding the growth rate of a suburb? I often hear some commentators say short term growth should ideally be this and long term growth should be that too?11. Dealing with dataThe trio share with our listeners how they can do their own capital growth calculations, but issue an important warning for calculating capital growth over shorter periods of time as there are many factors which may skew data.Visit the show notes - https://propertyplanning.com.au/listener-questions-how-do-i-recover-from-early-investment-decisions-that-were-made-without-a-plan-we-have-our-home-and-plan-to-start-a-family-should-we-buy-an-investment-property-now-or-wa/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. Adelaide top of the popsFor the first time in a long time Adelaide is the highest performing capital city for the quarter, topping the charts with 5.7% growth. Adelaide just surpasses Brisbane’s 5.6% recorded quarterly growth.2. Capital city market cycles divergeDue to governemnt stimulus during covid lockdowns, all capital cities were simultaneously growing in value. In a return to normality, capital city property growth trajectories have diverged, with cities now at different phases of the property cycle. Sydney is in slightly negative territory, Melbourne plateauing and Hobart now on a downward trend, the worst performing over the month of April. On the other end of the scale, Adelaide and Brisbane are still flying, while Perth has rebounded and is starting to rise.3. Combined regions continue delivering strong growthRegional areas have continued the run of solid growth, returning (a combined regions measure) of 1.4% value growth over April while capital cities combined only raised by 0.3%. Over the last 12 months, the regions have returned a whopping 28.5% total return. The trio discuss the peak rate of growth, working from home, migration trends and the insights that can be gleaned. But is this a permanent attraction by home buyers towards the regions?4. Rents and vacancy rates likely to entice investors back into the marketNationally, vacancy rates have hit 1%, which represents a very tight rental market considering 2% is the norm. Even the poorest performing cities, Sydney and Melbourne, are below 2%, with all other capitals posting below 1%. This is good news for investors, because rental yields, (which have been at an all-time low for a while), are now expected to move back to historical norms.5. Melbourne and Sydney unit market recoveringA year ago, the Sydney and Melbourne unit market hit rock bottom. In a stellar recovery, unit rents are up by 8% for Melbourne and 9% for Sydney over the last year. This is likely to lead to value growth for units, as investors catch wind of rising rentals, tight vacancy rates and higher rental yields, and jump on the bandwagon.6. Interest rates rise but the sky is not fallingA deterrent for budding investors is the strong likelihood of rising interest rates over the next year. However, market conditions are still incredibly positive. Property values are up, rents are up and interest rates are still historically very low, even if they do rise by 1%. Don’t forget, lenders factor in rising interest rates and changing market conditions and they add in a buffer to their affordability assessment accordingly.7. Listings drop, is the election to blame?Nationally, listings volumes have dropped over the last 3 months. People do get nervous with a pending election, even though there are no big ticket property items on the agenda this time around. The trio will be watching this space closely to see what happens with listings post the election and how this imbalance will affect property values.8. Key insights from lending indicatorsThe level of investors entering the market has started to plateau, while first home buyers are on a slight uptick. Comparing with historical figures, the level of investors and first-time buyers are in a balanced position. The trio discuss the private rental market and the key role it plays in housing those who are not able or not ready to purchase.9. What does the 3 year bond yield say about where the cash rate is heading?From 0.1% a year ago, the 3 year bond yield has flown to 3%. Regarding the cash rate, there is much debate about whether 1.5% or 2.5% will be the point of equilibrium in the economy. So, what do bond traders think about where rates are going and how challenging is this to pinpoint?10. Unemployment at a significant long-term lowAlthough not receiving much attention in the election campaign, almost everyone who wants a job, has a job. The unemployment rate has been rounded at 4% and another reason why rates have increased. Rates go up when the economy is strong and people are spending, and the economy is strong because more people are in jobs than the nation has seen in a long time.11. Inflation 101Inflation is the talk of the town and the Property Planner gives our listeners a crash course in why prices are going up. Supply chain difficulties and the war in Ukraine are clear external factors that have caused soaring inflation. But to some extent, inflation has been exacerbated by our government and policy makers. The trio discuss how this has happened and the dangers of stagflation.Visit the show notes - https://propertyplanning.com.au/market-update-april-22-whats-the-story-with-inflation-will-rents-and-vacancy-rates-prop-up-the-market-what-does-the-3-year-bond-yield-say-about-where-interest-rates-are-heading-w/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. RBA lifts the cash rateBreaking news! The cash rate was lifted last week by 0.25%, taking the cash rate to 0.35%. This is a change of tune for the RBA governor, who was predicting that rates wouldn’t rise until 2024. The move came as a result of rising inflation pressures, but the inflation Genie might not be that easy to put back in the bottle. Stay tuned to next week’s market update episode for more on inflation.2. Riding the market cycle waveProperty prices are certainly slowing and may well start to decline, but this is no cause for panic. Pete shares his research on the property downturns over the last 25 years and in the end, you need to be prepared to take the good with the bad. If you’re in it for the long-term, just sit tight and ride out the wave.3. Late bids and auction rulesCate shares a recent auction experience that had hearts stopping and blood pressure rising. It was bad luck for a bidder that jumped in too late, because when the hammer falls, the game is over.Top 10 tips for first time buyers and investors1. Educate yourselfA sure fire way to get started on the property journey is to take the time to educate yourself. The trio take our listeners through the wealth of resources that are available to build a solid foundation of property knowledge.2. Mix with like-minded peopleOr should we say, avoid naysayers? Negative Nancy’s can quickly unravel a smart strategy and plant seeds of doubt, causing inaction, which can often be worse than taking half-good action. Mixing with like-minded people provides an environment where ideas are exchanged and much needed support is provided for what can be a stressful decision.3. Set your goalsDave shares with our listeners 10 tips on how to create goals and stick to them. For further insights, take a listen to episode 82, “Goal Setting fundamentals for property success”.4. Select where and what to buyThe trio discuss the critical elements of selecting a location and property to purchase. But don’t forget to look ahead and think how the first property could impact future long-term plans.5. Visit your areas and do your researchThe trio share the best data sources for doing research from the comfort of a laptop at home or in the office. However, that does not negate the need to get out and about and take a stroll through the area you’re interested in purchasing in, particularly if you haven’t lived there before. Yes, property investors, this applies to you too!6. Find out how much you can borrow & if there is any assistanceA critical step here is sorting out a budget, taking into account existing cash flow, desired cash flow and available funds post-purchase. Dave shares with our listeners why the lowest interest rate is in fact not the key to success. Ask yourself – is the property or the rate more important?7. Save money for a deposit, consider shared equity, joint ownershipMoney management! It may seem easy to a first home buyer as often they don’t have children, and/or might not be partnered yet with mortgages and credit cards to juggle. But the sooner you can set up an effective money management system, (and get your partner on the same page) the better! The trio discuss the basics of shared equity schemes and joint ownership.8. Crunch the numbersThe trio discuss the fundamentals to factor in when crunching the numbers and how our listeners can shape up to present themselves well to the bank when it’s time to apply for the mortgage. Hot tip – you may have to go without Uber Eats for a while.9. Get professional adviceWhy is professional advice so important? The trio discuss their strategies when looking for independent advice and who to trust. If the advice is free, get ready to ask some probing questions.10. Just do it!Much easier said than done. However, procrastination and the search for perfection can derail the best laid plans. Cate shares with our listeners her hot tip on how to overcome inaction.Visit the show notes - https://propertyplanning.com.au/top-10-tips-for-first-time-buyers-and-investors-how-to-get-it-right-first-time-ep-152/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Thank you for the review!Cate shares a lovely review that we received in the apple podcast app. Not everyone is able to access expert advice, which is why we love putting these episodes together for our listeners. But more so, we really feel a spring in our step when we know we’ve helped a listener, so please keep them coming. They mean a lot to all three of us.2. Clean energy to bolster national defenceAn interesting article in the Australian Financial Review has shed light on Australia’s reserves, with only 18 days of petrol supplies and 22 days of diesel supplies in stock. Part of the reason why the Ukrainian’s have been so successful in resisting Russian attacks, is the need for Russians to retreat to re-stock. The low reserves for Australia highlights a weakness in defence and puts the nation at risk is different ways. The good news is that this could be the push and driving force needed for Australia to become self-sufficient and transition towards green energy. We’re hoping!3. A round of applause for Adelaide is dueRecent reports from CoreLogic show that Brisbane and Adelaide continue to shine as Australia’s best performing capital cities. It's not often that Pete gets to brag about Adelaide, so we’ll let him have this one.Property Planning Case Study1. A mixed bag – investment, holiday house and future long-term home. Can we have it all?This case study follows the journey of James and Amanda who had a number of boxes to tick for their next property. They weren’t sure if they should purchase a straight-forward investment property or if they could achieve an investment property purchase in a beachside location which could double as a holiday house and maybe even eventually become their long-term future home when it comes time to downsize. Another ingredient to add to the pot was that they didn’t want to compromise their current lifestyle and for extra spice, ideally this property would work towards achieving their income goals for retirement.2. Introducing James and Amanda – financial overview and goalsDave shares James and Amanda’s key circumstances and of course, their lifestyle and property goals which are driving their decision. With two teenagers in private school and very little surplus cash flow, the key conundrum to unravel was how to complete the next purchase without compromising their current lifestyle and saving enough cash to have family adventures. Their initial preferred price point was initially determined to sit around $1.2M, however James and Amanda realised that they would be hard-pressed to find a property they would enjoy as a holiday house and a long-term future home.3. Modelling the scenariosTwo scenarios were modelled for James and Amanda, one at their preferred purchase price-point of $1.2M and the second for their revised, (and more realistic) price point of $1.4M. Dave explains how, (with some clever mortgage strategy and borrowing capacity finesse), the $1.4M price point was achievable, despite their tight cash flow.4. So, what did they choose to do, (and what was the compromise)?Tune in to find out which scenario James and Amanda went for, were they successful and what was the compromise?5. How will James and Amanda reach their retirement income goal?James and Amanda had a retirement income goal of $60,000 p/a through property rents. With their preferred scenario chosen, Dave explains the next steps and viable options available to James and Amanda to achieve their retirement income goal.6. How to give your kids a leg upLike many parents, James and Amanda were keen to help their children purchase property when the time is right. The trio discuss the methods they could use and for further insights, take a listen to episode #95 “Security guarantees, co-borrowing, gifts and more - Helping your kids buy their first property”Visit the show notes - https://propertyplanning.com.au/property-planning-case-study-2-can-we-have-it-all-purchase-a-part-time-investment-airbnb-to-use-as-a-holiday-home-and-be-our-downsizing-home-oh-and-without-any-impact-on-our-already-str/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Victorian’s snubbed by the Federal Government BudgetLooking at the Federal Budget infrastructure spend, it appears that Victoria has been overlooked to some degree. The budget set aside $208.4 million in new money for Victorian infrastructure which amounts to 5.9% of the Federal Government spending on infrastructure projects, while the percentage of the Australian population living in Victoria is 25.8%. Interestingly, money has been earmarked for the East-West link project that was booted by the Andrews government.2. A closer look at capital cities that have pulled back on capital growthMelbourne and Sydney experienced slightly negative capital growth in the month of March. This is expected to continue into April, with two long weekends and a disproportionate increase in listings. Segmenting the market further, it’s evident that the higher end properties in the inner ring and inner east of both cities has taken the hardest hit of late. This is consistent with previous market trends, where the top quartile is often the first to move in a changing market.3. Foreign investment in residential property drops from $10 billion to $6 billionCritical information left out of this headline is that foreign investment in commercial property has doubled from $39 billion to $82 billion, which in part explains why yields for commercial property have lowered. The Australian property market has been seen by foreign investors as a safe haven and yields may very well drop further if commercial property continues to attract interest from overseas buyers. In light of looming interest rate hikes, diminishing yields could be a major concern. The trio discuss the factors and measures which could dampen foreign investment.Migration1. How has COVID affected population growth?For the last 20 years the Australian population has grown consistently at 1-2.2% year on year. However since the beginning of COVID, this figure has plummeted close to 0% due to international border closures. There is more to the data than migrants and new arrivals, however. Overall population figures also include returning expats, births and deaths. The trio discuss how this has impacted employment, universities and capital city markets.2. Melbourne and Sydney the biggest losers in flight to the regionsThere are no surprises that the nations’ largest capitals of Sydney and Melbourne were hit the hardest in the great tree and sea change. There are many and varying reasons aside from COVID lockdowns and working from home to explain why this would be the case. A major factor is runaway house prices, which naturally causes migration and investment when housing affordability bites and regional opportunity presents itself as a more cost effective way of life for some households.3. The outlook for MelbourneMelbourne sustained the biggest population losses in 2021, where a total of 32,000 people left for the regions and interstate, while Sydney lost almost 20,000. Prior to this, Melbourne was on the road to overtaking Sydney to be the most populated city in Australia. Dave shares insights from the Centre of Population on the trajectory for Melbourne’s population recovery.4. Job vacancies jump in regional AustraliaCate shares the top 5 regions with the biggest increases in job vacancies over the 12 months from February 2022. Job vacancies are putting pressure on businesses in locations and regions that have seen an influx of new arrivals. Interestingly, occupations with the highest demand are professional roles, technicians and trade roles and also clerical and administrative. The trio discuss how this is likely to play out once hybrid work from home models flourish and international migration resumes to pre-COVID levels.5. Our ageing population and high-risk regionsCate shares the regions that have a large population of their work force represented by those aged between 55 and 64. The impending problem for these regions is a decrease in workers as this segment moves into retirement or scaled-back hours. The trio discuss why retiring in a regional location is so attractive, and why state and local governments will have a challenge on their hands to try to encourage mature-aged workers to remain in the workforce for longer.6. Each region is an individual marketFor the last two years, growth in Australia’s regions have been the headline story, outstripping capital growth in the nation’s capital cities. But is the move to the regions sustainable? As the case of the Gold Coast shows us, regions have a tendency to experience a flatter period of growth after a prolonged period of migration. However, it’s evident that some locations will continue to thrive and grow. For any listeners pondering whether to invest in a regional area, it’s critical to do your research and home work before taking the plunge.Visit the show notes - https://propertyplanning.com.au/migration-trends-outlook-for-population-growth-will-melbourne-recover-from-population-losses-interstate-and-intrastate-trends-which-regions-face-ageing-population-risks-and-high-job-vacancies-th/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Could now be the time to buy?Today’s market is still a seller’s market, although not as crazy as last year. In our two capital cities, many properties are passing in but selling immediately afterwards, and auction clearances rates have lowered but still in the 70’s. With global unrest in Ukraine, the federal election looming and chatter of interest rate rises, this might just be the window that you’ve been waiting for if you’re looking to purchase.2. Turning the tables on fixed ratesThe Covid induced measures targeting the 3 year bond yield meant that for much of 2020 and the first half of 2021, fixed rates were the lowest we’ve ever seen and even lower than variable rates. However, the last 10 or so months have seen fixed rates rise and the lending market switched back to the normal status quo of variable rates being lower than 3 year fixed rates.3. Check out the new CoreLogic websiteCoreLogic have made some improvements to their site, which is a huge positive as it gives the average punter an excellent idea of what’s happening in the market.Vendor advocacy and borderless buyer’s agents1. Call out to our listeners for questionsIn this week’s episode, the trio tackle questions from our listeners on vendor advocates and borderless buyer’s agents. Got a burning question? Submit your question to the trio here: https://zfrmz.com/uLtjhyBskV96PY6eJfaI2.Should I use a vendor’s advocate?The question from our listener: I am interested to know about vendor advocacy. We are selling a property and have been approached by a known buyer’s advocate in our area who has offered to act as our vendor advocate. This isn’t the first time we have sold, it’s our fourth time and our most important. We haven’t been overly happy with our agents in the past and could see the value this person could bring. The thing I can’t reconcile is why an agent would do more for us at the request of our advocate when they are getting less commission (advocate getting their share). We are open to a new experience and after two discussions with the advocate we can see the knowledge base is high. We just don’t know what to be careful of and if we end up paying a higher commission will it be worth it?3. What is a vendors advocate and can they add value?The trio unpack the difference between a vendor’s advocate and a selling agent, plus the benefits and risks of using a vendor’s advocate. Cate shares her expertise on working alongside vendors advocates and Dave shares his thoughts based on when his company had buyer’s agents and vendor advocates in-house. When done well, vendor advocacy can certainly add value, but there are critical considerations in vendor advocate selection to be aware of.4.When is engaging a vendor’s advocate the right move?The trio discuss the circumstances that lend well to using a vendor advocate and Cate shares some critical questions that our listeners should ask vendor advocates when choosing one to work with, and in particular, the experience and the credentials they should have.5. Borderless vs local buyers agents – the pros and consThe question(s) from our listener: How important is it for a BA to have local area expertise? Can a “borderless” BA, overcome lack of localised knowledge with data / analytics? Can you trust borderless BAs to recommend different locations to invest and also have them do the buying? Or should you first know where to invest, and then pick a BA that works in the area? If it's the latter, how would you know where to invest in the first place?6. Can local expertise be overcome by data and analytics?The emphatic consensus from the trio is that local knowledge is critical to a successful purchase. But can a lack of locational expertise be counteracted by diligently trawling through the data and ‘doing your homework’?7. How do you select a city/region to invest in? Dave shares with our listeners his methodology on how to work out which city or region to target for the next purchase.8. Critical considerations around licensingCate reminds our listeners that there is more to being an excellent BA than knowing what makes a top quality investment. There is also the painstaking detail of being across the legislation, which is different across each state and can have negative impacts if a BA is not well versed in the laws (and local planning elements) that impact the purchase.Visit the show notes - https://propertyplanning.com.au/listener-questions-is-it-critical-for-a-ba-to-have-local-expertise-and-can-a-borderless-ba-overcome-this-with-data-should-you-first-know-where-to-invest-then-pick-a-ba-t/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. SA council takes matters into its own handsPete shares the measures that the Karoonda East Murray Council in SA are trialing to grow their population. Kudos to them! Rather than waiting for the federal or state governments to come to the party, they are implementing some great initiatives themselves.2. How long does it take each capital city to double in value?Pete shares with our listeners his research for each capital city, starting from March 2022 and working backwards, to distill how long it has taken for property values to double in each capital city. The winner may be a surprise, however the trio warn that some of the performances can be unpredictable. Trying to pick the next hot location is fraught with danger and our listeners are better off sticking to the tried and true principles of selecting quality investments.3. Sydney and Melbourne flatlining while Brisbane and Adelaide continue to shineThe trio take our listeners through the highlights in the March home value index results and the reasons behind the numbers. Plus, not all the numbers can be relied upon. Hobart is such a small market that there may be some anomalies skewing the results.4. Rents turning the tideFor the first time in a long time, national rents are outgrowing housing values. Which also means that yields are increasing, particularly in Melbourne and Sydney which have each had a small degree of negative capital growth. Interestingly, it appears that there is a flock back towards units and inner city living. Sydney now records the strongest lift in unit rents with Melbourne not far behind. How the opening up of borders will impact this further is a story that is still unfolding. Vacancies have also dropped to a fresh 16-year low, putting immense pressure on rental markets.5. How do current listings compare with the 5 year average?Nationally, “total” listings are 30% below the 5 year average. The trio have been saying for months now that there is a deep correlation between the level of listings and capital growth. An example is Brisbane and Adelaide, both of which have experienced the strongest capital growth outcomes in March and also have total listing numbers that remain 40% below the 5 year average. The story is similar for regions, as there are 22% less sales in combined regional areas for this current year so far.6. Consumer sentiment takes a diveThe house price expectations index has fallen by 10.8% to 139 points. This index tends to lag behind actual market movements and the writing has been on the wall in 2022 that growth in the housing market is well and truly slowing down, (for most states). Interestingly, the time to buy a dwelling index has also dropped to 78.3 points, after hovering in the low 80’s to high 90’s since July 2021. This index is now at its lowest level since February 2008, during the GFC and well below levels seen in the 2017-18 housing market decline. This is not a good harbinger for what’s to come, as this index tends to be a forward indicator. The trio discuss the reasons behind the drop in sentiment.7. Turning the tables on fixed ratesWith fixed rates on the rise due to increasing bond yields and swap rates, lenders have started to compete on variable rates. Now that the tide is turning, many variable rates are lower than the fixed rate offering. Pre-covid, this status quo was the norm and it was the RBA measures which drove fixed rates to the lowest they’d ever been.8. Investors back at equilibriumLatest ABS figures for February show that investors now make up 33% of new lending, which is in line with the historical split between owner occupiers and investors. First time buyers have declined to 22% of new owner occupied lending over the last year, which was expected as government initiatives came to a close. However, total borrower numbers are up on previous years and we do need to keep this in perspective when we consider percentages.9. RBA bites back – the forecast for interest ratesThe trio discuss the likelihood of a cash rate rise by the RBA and how soon they each believe it will happen. Although in some argy-bargy between the RBA and economists, the RBA has stated that it will be raising the cash rate based on evidence, not on forecasts... watch this space.10. Federal election jittersA warning to our listeners, the next few months of data may not be a good indicator of what’s to come, as many prospective purchasers will sit on their hands until there is certainty around an election date and more clarity on policies to see through the haze. Often the 2 months prior to an election can produce some unreliable data points when it comes to trend-spotting. After all, sentiment counts for a lot, even if it’s short-term.Visit the show notes - https://propertyplanning.com.au/market-update-march-22-how-long-does-it-take-each-capital-city-to-double-in-value-which-cities-are-flatlining-vs-flying-and-which-have-changed-trajectory-rental-growth-is-outstripping-capi/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updates1. Auctioneers call the shotsCate shares her experience attending an online auction where bids whittled down to one dollar increments. After a tense game of property ping pong where 256 one dollar bids were made, the auctioneer called an end to the pain and declared that only bids of $500 or more would be accepted. This serves as a good reminder that the auctioneer has the capacity to change the rules mid-auction and refuse bids as well.2. Smoke signals rising from China Evergrande developmentsProperty development firms in China are experiencing a major delay in auditing, with an increase of 75% in delayed results. Five Chinese auditors have resigned in the last three months, and combined with the delayed results, there are the concerns of what the audits may disclose. This could have an impact on broader money markets, flowing into Australia and around the world. The number of property sales in China has dropped drastically, as well as a raised threat of hidden debts. Chinese companies are due to report their December year-end results in April. Watch this space...Federal budget update1. How does this budget compare with previous budgets?With the federal election looming, no one was expecting to see huge dollars being thrown around in this years’ budget, particularly with the large amounts spent on emergency pandemic measures in the last two years. The trio discuss some key points that were missing, namely: housing affordability, the ongoing rental crisis and returning Australia to surplus.2. First Home Guarantee, (formerly known as the First Home Deposit Scheme)Also known as the ‘New Home Guarantee’, the First Home Guarantee allows first home buyers to build or purchase a newly built home with a deposit as low as 5%, without having to pay Lenders Mortgage Insurance (LMI), as the government will guarantee the remaining 15% deposit required to avoid LMI. The scheme has been extended from the 10,000 places promised to 35,000 places per annum. The trio discuss the price caps which apply and eligibility requirements. They also ponder the alternatives for first home buyers who are sensitive to the concept of lenders mortgage insurance.3. Family Home Guarantee Like the First Home Guarantee, this scheme allows single parents with dependents to purchase a property with an even lower deposit without paying LMI. However, there are some key differences which make it a great initiative. Single parents need only a 2% deposit, (not 5%) and they are also able to purchase established as well as new properties under the scheme. Places in the scheme have been doubled from 2,500 to 5,000 guarantees per year. The trio discuss the benefits of this initiative for single parents who have little cash on hand, which is common when going through a divorce or separation as well as competing with other households that have double incomes.4. Regional Home GuaranteeThis guarantee is a new initiative introduced, with 10,000 guarantees on offer over the next 3 years. Similar to the First Home Guarantee, the required deposit is as low as 5% and the guarantee is offered for newly built homes only. A key difference is that this scheme is offered to permanent residents, as well as Australian citizens, which the other guarantees are not. Reading between the lines, it seems that the government is attempting to encourage migrants to move to the regions. However, the trio question whether this level of pressure is appropriate for regions already struggling with stock shortages and whether the hardest hit regions will benefit. Another question posed is whether the scheme could be better targeted to the smaller regional towns, with a population of 5,000 or less that have struggled with migration, although the cost of construction and availability of tradespersons is a key question to ask, also.5. First Home Super Saver SchemeThe existing scheme which allowed first home owners to make voluntary contributions to their Superannuation of $30,000 for the purpose of saving a deposit for their first property has now been increased to $50,000. This is a great initiative, as the voluntary contributions will be taxed at 15% rather than the marginal tax rate. However, those looking to take advantage of the scheme can only withdraw the funds to purchase a property, which means that if they don’t purchase, the funds will be inaccessible.6. Crystal balling interest ratesThe forecast for inflation is that it will be under control within the next 12 months. What that means for the fate of interest rates, is that we can expect rates to rise within the next 12 months, but likely not beyond that. The trio discuss their thoughts and predictions on the future of inflation and interest rates. For those listeners concerned about future rate increases, remember that lenders use a bench mark assessment rate to stress test your loan, so there is a buffer there to absorb the impact of rising rates.7. How long has it taken property prices to double Pete shares his research on national property prices and how long it has taken them to double. Tune in to find out!Visit the show notes - https://propertyplanning.com.au/how-the-federal-budget-will-impact-the-australian-property-market-who-it-targets-and-benefits-and-why-ep-147/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updates1. The 20 most unaffordable cities in the worldPete shares with our listeners a report that states Adelaide and Brisbane are more unaffordable than New York. How can that be? The devil is in the detail when it comes to how affordability is calculated, which in this case, did not take into account interest rates and repayments. The trio discuss how reports can be skewed by the methodology used and the angle that the journalist is instructed to pursue. The trio point out that the debt-to-income ratio is a commonly used measure, however it is fundamentally flawed because interest rate (and cost of servicing the debt) is not always taken into account. They all concur that debt to repayment ratio is a more prudent measure to follow when assessing affordability.2. Number of sales shows long-term trend of declineContinuing on the data theme, Dave shares sales data which indicates that 2021 had the highest number of sales on record with 650,000 property sales recorded. However, upon further examination, this made up just 6% of all properties in Australia. In 2003, although there was a lower volume of sales recorded, the sales for the year accounted for 7.8% of all properties in Australia. The population has been growing since, but the number of people selling has been declining and reached as low as 3.7% in 2018 and 2019, before being bumped up in 2021. This is another reminder that if there are less properties being sold, relative to the total number of properties and population growth, supply is reduced and prices will go up.3. Underquoting - but what are we going to do about it?Cate shares her weekend auction experience, where the agent price guide was set at $800,000-$880,000 and the property sold (as Cate expected), at $1.351M. This was a clear case where the agent underquoted the property despite recent sales supporting a likely selling figure closer to the actual result than the documented quote range suggested. Underquoting reforms are being considered by Victorian Consumer Affairs, and everybody has an opportunity to submit their thoughts.U to Z of Property SuccessU – Unconditional: what does it mean for offers, contracts and mortgage applications?The trio discuss unconditional contracts, when is it appropriate to add conditions and share their hot tips on how to manage the vendor in the event of looming deadlines that are likely to be missed. Dave takes our listeners through the necessary steps before a lender will unconditionally approve a loan application.V – Valuations: how can you get the best outcome?The trio discuss the difference between valuations conducted by a licensed valuer, appraisals conducted by real estate agents and lender valuations arranged as part of the finance approval process. Listen in for the trio’s expert insights on how to prepare for a valuation in order to get the best results. For further education on valuations, listen to episode #17 “Valuations 101”.W – Waiver: cooling off periodWhen purchasing a property, the most common right waived by purchasers is the right to a cooling off period. Buyers who are purchasing interstate, beware! Legislation on cooling off differs from state to state and in many states, cooling off does not apply for auctions. For further insights on cooling off periods, listen to episode #132 “Purchasing laws in each state – Part 1”.X – eXtra Careful: when to slow down and take the time to avoid critical mistakesCate takes our listeners through what they should be extra careful about when reading a contract and the other paperwork associated with buying a property. The key is to have an understanding of what you’re on the hook for. For lending and pre-approvals, Dave shares the key points that purchasers need to be aware of and why it is imperative to speak with your strategic mortgage broker before bidding at auction or putting in an offer on a property, (even with a valid pre-approval in place). For our listener’s who are eyeing off a potential development, Pete outlines the importance of going through zoning restrictions with a fine tooth comb.Y – Yield: how it’s calculated and how it can changePete shares with our listeners how yield is calculated and the important differences when calculating yield on a residential vs commercial property. Dave explains how yield changes over time and why growth in yield is largely aligned with capital growth.Z – Zoning: why zoning should not be skipped overThe trio discuss the importance of zoning and how zoning restrictions can rapidly change and how lenders mortgage insurance could throw a spanner in the works.Visit the show notes - https://propertyplanning.com.au/the-u-to-z-of-property-success-unconditional-offers-contracts-finance-applications-obtaining-a-positive-valuation-outcome-waivers-when-to/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updatesVictor Harbor vs PortseaAs promised, the Property Professor presents his research on why regional towns in South Australia such as Victor Harbor are so much cheaper than regional towns in Victoria, such as Portsea. Pete shares with listeners the key data sets and demographics that, in tandem he believes are determinants for determining the drivers for values and price growth rates in these two holiday destinations.Off markets1. Why do vendors sell off-market?Cate gives a quick summary of the top reasons why a vendor might choose to sell off-market. For further insights listen to episode 85 “Off market properties – everything you need to know”.2. What has made off-market opportunities more mainstream?Off-market sales have become more trendy and sought-after because of the perception that buyers will be getting a great deal with some heavy discounting. But is that actually the case? The trio discuss the role that off-market opportunities play in the real estate game.3. How do market movements impact the quality and number of off-market opportunities?The trio discuss the ebbs and flows of off-market sales during a seller’s and buyer’s market and what you can expect from a discounting and abundance perspective.4. Why you have to do your researchMany prospective purchasers get excited by an off-market opportunity and the assumption that they’ll be taking home a winner at an excellent price. However, that doesn’t mean that buyers can take their foot off the comparable sales pedal. Buyers still need to understand the market and the quality of the property to ensure that they are getting a fair price.5. How do you identify a bad off market?Cate takes our listeners through the tell-tale signs of a bad off-market property.6. How can you tell if the off-market is genuine, or is it really a pre-market in disguise?A pre-market is a property which is not yet advertised on the market, but the agents are preparing for a sale campaign and are testing the waters before the property is advertised for sale. This can be really frustrating for buyers if they think they’ve come across a fantastic off-market opportunity, with the ability to make an offer without stiff competition from other purchasers. Cate gives some hot tips on how to deal with the selling agents to find out if the off-market is genuine.7. How does seasonality change off-market supply?The best off-markets are from vendors who are motivated to sell as they have made a financial commitment (eg: purchased a new home and need to sell) or a distressed landlord with an uncooperative tenant. So, when are these people likely to sell?8. Why are buyers so keen to field off-markets?When listings are thin on the ground, an off-market opportunity can be the break that a buyer has been waiting for. However, there are some misconceptions about off-markets which can steer buyers in the wrong direction.Visit the show notes - https://propertyplanning.com.au/off-market-properties-part-2-how-to-tell-if-the-off-market-is-genuine-identifying-a-bad-off-market-how-market-movements-impact-the-number-and-quality-of-off-market-opportunities-and-more/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updates1. Declining rate of growth for housing values is proving to be the long-term trendWhile housing values are generally rising, the pace of growth in the national index has trended downwards since April 2021. This is not to say that housing values are going backwards, they are still increasing but have lost steam. Housing values increased 0.6% nationally over the month of February, although the effects on each state have varied greatly. Brisbane continues to perform strongly with 1.8% growth over the month and 29.7% over the year, which could well be a record for the city. However the floods in Brisbane are likely to dampen the property market, at least for the short term.2. Is the property market at an inflection point?With recent events in Ukraine, speculation over rising interest rates, combined with inflation pressures and yields increasing for the first time, we may very well be at a turning point in the property market. …Or are we? Media and speculation count for only so much and we have navigated global challenges before and fared better than predicted.3. Regions continue to perform stronglyTotal return for combined regions is at a whopping 30.5%! ‘Combined regions’ is a very vague term and there will be some regions that perform more strongly than others, with annual growth and yields topping this figure. According to CoreLogic, Regional SA is actually the best performing regional market over the last 3 months, which is probably very closely tied to the fact that proportionally it has the lowest number of total listings of any regional area or capital city in the country.The trio ponder why investment in Adelaide’s regions lag behind the nation’s eastern states, among other data findings. Stay tuned for next week when Pete to shares his research and insights in his market update, where he will try to determine why regional towns in SA such as Victor Harbor are so much cheaper than regional towns in Victoria, such as Portsea.4. Rents and vacancy rates will be the story of the yearCate shares her insights on the rental market in Ballarat, (as one example of a vibrant and changing regional city), and why rents have tightened again in this market. With the opening up of international boarders, vacancy rates are expected to be put under more pressure for capital city and university towns that will see an influx of international students. Vacancy rates are under 1% in every capital city except Melbourne, Sydney and Brisbane, although these cities have seen a significant reduction in vacancies over the last month.5. Rental yields on the rise?Average rental yield in Melbourne and Sydney is as low as it’s ever been. But this is likely to be the bottom of the curve. Melbourne unit growth has now recovered and Melbourne is largely on par with other capital cities in terms of annual change in rents. Increases of 20% in yields with the arrival of a new tenant is not uncommon, where previously landlords would be lucky to see a $10 per week increase in rent. As yields come down in Brisbane and Adelaide due to the stellar capital growth, this may bring investors back to Melbourne and Sydney. But are the Victorian landlord reforms with heightened landlord obligations turning investors away? And Victoria isn’t the only state to roll out rental reforms. We are watching this space…6. How listings impact housing value growthThe clear picture from the data that we’re studying is that Brisbane, Adelaide, Hobart and combined regions continue to exhibit recent monthly growth of over 1%, while the other capitals are recording less than 0.5% growth. It is no coincidence that they have also seen the biggest annual reduction in total property advertised for sale. We come back to economics 101 to reiterate that price is often a function of demand vs supply, and supply is continuing to be very low for these locations.7. Insights from consumer sentiment and the impact on supplyThe house price expectations index has risen again over 150, but this indicator seems to lag behind what’s actually occurring in the market. The time to buy a dwelling index is expected to pick up as people start to feel that it’s a good time to purchase, and this may coincide with signs that growth wanes. The trio discuss the connection between consumer sentiment and supply. If values are increasing, then why aren’t more people putting their homes up for sale?8. Lending indicators and risks for those looking to purchaseOwner occupiers contributed to an uplift over November and December but is this an ongoing trend? On the ground, the number of purchases and pre-approvals is declining. A major concern for anyone looking to purchase is that borrowing capacities are reducing, with increases to fixed rates and assessment rates. Dave shares a real client example of how borrowing capacity for a client has been impacted over the last two months.9. The latest unemployment stats with a pinch of saltNationally, unemployment did not change from December 2021 to January 2022, remaining at 4.2%. However, the city of Adelaide, (which was under 4% for unemployment in December) has now jumped to 4.8%. It is inconceivable that unemployment would fluctuate so much in a month, which does indicate that perhaps the data is not so reliable for our smaller states.10. Wage growth, GDP and government stimulusThe trio share a brief update on what’s happening in the world with regards to wage growth, and why our regulator wouldn’t poke a stick at GDP and government stimulus to make it easier for first time buyers to get into the market.Visit the show notes - https://propertyplanning.com.au/market-update-february-22-has-the-market-reached-at-a-turning-point-are-yields-in-melbourne-and-sydney-about-to-rise-why-rents-and-vacancies-are-the-talk-of-the-town-lending-risks-for-pro/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updatesMarket conditions changing as more stock comes onlineWith Easter just around the corner, greater stock on the market is giving buyers more choice and the rate of pass-ins continues to shine a spotlight on slightly eased conditions for buyers. The last weekend of February saw the highest number of auctions ever, since CoreLogic first started recording this data. With a number of public holidays drawing near, we can expect the lead up to April to be just as busy. We’ve seen significant shifts in the market, but you’ll have to tune in to next week’s episode to get the full picture.Case study - Do we renovate and invest, sell and upgrade, or keep and upgrade!1. Meet Neil and Amy – the conundrumThis case study revolves around clients Neil and Amy (names have been changed), a professional middle-aged couple who live in one of Australia’s major capital cities. Their goal is to achieve a good quality standard of living, both now and into the future. Neil and Amy were stuck on deciding their next move. Do they:1. Sell the existing home and buy a new home; or 2. Keep the existing home as an investment and purchase a new home; or 3. Keep the existing home, undertake renovations, and purchase an investment?
2. Unpacking their goals and financial overviewThe trio discuss Amy and Neil’s lifestyle and investment goals, their financial circumstances, the level of funds they have to play with for their next decision and Dave explains how he navigated them through their money goals and he asked questions such as; what available funds did they want up their sleave after the purchase?, and how much can they save each month with their surplus cash flow? Setting smart ‘Money Goals’ is a foundational element of effective Property Planning. Money goals are the limit that allows you their clients to rest comfortably at night and these goals are linked heavily to a particular client’s appetite for Risk.3. Getting on the same page – risk profile analysisNeil and Amy both shared a conservative attitude toward risk, however with different approaches on how best to manage their risk. Attitude towards risk is a significant piece of the property strategy puzzle. Inaction or delaying decisions between couples is typically due to the inability of the couple to get on the same page. The trio share how to bridge the divide that holds couples back from making successful decisions.4. Reviewing the existing homeIf you are thinking about retaining the current PPOR, there are important questions to ask yourself. If your plan is to turn it into an accidental investment property – have you considered whether the property has investment grade qualities, and are you able to optimise your tax deductions? Or if you think you would be happy living in it for the long-term – are you happy with the location and does the dwelling suit your future needs? Or does it need some work? Being honest about your property is critical to seeing clearly.5. Modelling the scenariosThe trio unpack the pros and cons of the three scenarios that were presented to Neil and Amy for their next decision and each outlines their preferred scenario. Scenario 1 – purchase the long-term home for $1,600,000 and sell the existing home. Scenario 2 – Purchase the long-term home for $1,300,000 using equity in the existing property which is retained as an investment. Scenario 3 – Keep living in the current home and purchase an investment for $800,000. Which would you pick?6. The importance of revising your planSometimes the best laid plans get thrown overboard when there is an unexpected spanner in the works. This is why risk management is critical, via your mortgage strategies, available funds buffer and surplus cash flow. We’re often great at thinking about the worst that could happen and having a plan for that. But risk management is also about giving yourself the ability to say yes to the exciting opportunities that come your way. This could range from acquisition opportunities within a business, taking the opportunity to buy a great asset, being able to take time off work to study, extra parental leave, going on holidays or taking a secondment, (to name a few).Visit the show notes - https://propertyplanning.com.au/listener-case-study-whats-our-next-move-renovate-our-home-and-invest-sell-the-home-and-upgrade-or-upgrade-and-convert-the-home-into-an-investment-ep-143/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updatesThe power of compound growthDave highlights why time in the market is such a key to success. It seems crazy that it took NSW almost 100 years to reach a total value of $1 trillion and only 7 years to then reach $2 trillion. But if you look at the numbers, the compound growth has actually remained fairly consistent.Why you should be prepared to put your hand up at auctionCate takes you through the current sentiment at the coal face which is causing many nervous buyers to avoid bidding for a property they really want and subsequently missing out. Many properties that have been passed in have been sold within minutes, so make sure you throw your hat in the ring to get first dibs on negotiating with the vendor.Listener questionsWhy has my dwelling gone up in value when the building is a depreciating asset?The trio sink their teeth into this interesting case study posed by one of our listeners who purchased a house and land package in 2020 and was surprised to find that the value of his dwelling had increased in value since then. How is that possible when the land is the appreciating asset and the dwelling is depreciating? Have we been wrong all this time?When should you purchase property in a trust?Trusts can be confusing and complex structures to set up and you may get conflicting advice from various professionals on the matter. So, what should you do? The trio discuss the pros and cons of purchasing property within a trust and how to source the advice you receive from your lawyers, accountants and financial planners. Don’t forget to check out our show notes for some more educational material on trusts and property ownership.The impact of the media on the property marketOne of our listeners was keen to open a can of worms and asked the trio “do you think the media is culpable in how they report these days because they impact sentiment, and do you see it as an opportunity to invest because you know your fundamentals and are happy to take advantage of a jittery market?” The trio talk through this ripper of a question and how to vet the media noise that we are bombarded with daily.Visit the show notes - https://propertyplanning.com.au/listener-questions-i-bought-a-house-and-land-package-the-dwelling-has-increased-in-value-ep-142/
Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updates1. Similarities between the car market and property marketThe trio discuss their experiences of trying to purchase a car in the last 12 months and how this closely follows the experience of many budding property purchasers. Cate shares a sneak peak of our next episode, which will be addressing a question from our listener, whose brand-new dwelling has gone up in value. They all share one key theme, can you guess what it is?2. Return to the CBDCate shares that for the first time in her career as a buyer’s agent, she has a significant number of clients that are looking to purchase inner city property. There has certainly been a shift back to apartment living in the CBD, particularly for those who chose to live regionally during covid lockdowns and wish to retain a city ‘pad’, but there are limited quality apartments blocks.3. How does consumer sentiment relate to property price growthDave shares his research on the consumer sentiment index and how the sentiment statistics correlate to national property value growth. Can they give an insight into the future? The results are fascinating. Check out the show notes to take a look at the graphs.The Q to T of Property successQ – Qualifications that property professionals (should) haveThe trio discuss the qualifications required to become a property investment advisor (you may be surprised at the answer!) and how mandatory qualifications apply to other professionals such as buyer’s agents, real estate agents, financial planners, mortgage brokers and building and pest inspectors. As a consumer it’s important that you choose your trusted advisors wisely and ask them their level of experience before you make a decision on who to partner with. Cate shares a hot tip for our listeners on how to spot the red flags.R – Refinance, when and why should you do itDave shares with you the 12 benefits to refinancing and why you should consider reviewing your mortgage strategy. But refinancing is not the best option for everyone, and the trio discuss when refinancing is a bad idea.S – Sale to Settlement, and everything in betweenSo, you’ve just purchased, what happens next? Cate takes us through the various moving pieces that need to be organised prior to settlement. A word of warning, if your legal representative or mortgage broker asks you to do something, put that at the top of your priority list. The trio discuss what not to do and why you should always clarify the status of your pre-approval and expected settlement timeframe with your mortgage broker before putting in an offer.T – Tax and why you need a great accountantThe trio discuss how capital gains tax is calculated, land tax, GST and margin schemes. Do any of these apply to you? Some are only related to property development and if you’d like to dip your toe into the development pond, finding a good accountant who knows their way around property tax is step number one. Visit the show notes to access our other episodes where the trio dive into tax in more detail.Visit the show notes - https://propertyplanning.com.au/the-q-to-t-of-property-success-ep-141/
Ask the trio a question - https://zfrmz.com/uLtjhyBskV96PY6eJfaIhttps://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. Brisbane and Adelaide show no signs of slowingThe trio discuss the home value index results for January, with Brisbane and Adelaide continuing the trend of above 2% monthly growth, while other capitals are slowing down. January tends to be a distorted month as many agents and vendors shut up shop for the holidays. We await the February results to get a better gauge on the market.2. Rental conditions easingRents have been flying along for the last year, although the quarterly pace of growth has been easing from 3.2% increases in March 2021 quarter to 2% over the three months ending in January 2022. Unsurprisingly, Sydney and Melbourne remain the only capitals in which rental yields are averaged at below 3%. Cate shares some insights on why available rental stock listings in the Melbourne CBD market have plummeted over the last 9 months.3. Listings and the correlation between property growth ratesThe trio discuss the level of old listings, new listings and total listings and how this has a direct correlation with value growth in our capital cities.4. Consumer sentimentConsumer sentiment continues to remain negative when considering whether now is a good time to buy a dwelling. However the house price expectations index fell below 150 points for the first time since January 2021. While expectations on the East Coast dropped, house price expectations took a big upwards swing in Western Australia. The trio discuss the potential drivers of this shift in sentiment.5. Lending indicatorsWhile 2021 was largely the year of the returning investor, lending indicators for December show an increase in owner occupiers greater than that of the measured increase in investors. The trio discuss whether this is an early indicator of the turning of the tide.6. Unemployment drops againKudos to South Australia for achieving the lowest unemployment rate ever recorded at 3.9%. However, the trio note that being one of the smaller states in terms of per capita, the data can be more volatile. Nationally unemployment decreased from 4.6% to 4.3%, which is a good news story for the government heading into an election.7. RBA announcementGovernor Lowe has softened his stance on cash rate increases, saying now that it could be ‘plausible’ for cash rates to rise this year. While inflation certainly has picked up, it’s too early to conclude that inflation is sustainably within the target band to increase the cash rate and wages growth remains an issue. Most economists expect that any rate rises on the horizon will not come before August.8. InflationThe latest data from the ABS shows CPI has increased 1.3% over the December quarter and 3.5% over the year. However, when making monetary policy decisions, the RBA looks at the trimmed mean, which excludes any outliers that can skew the data, which has increased to 2.6%, the highest since June 2014. The trio discuss the contributing factors driving inflation.9. Will the election announcement have an impact on property prices?The trio discuss the forthcoming federal election and whether we’ll see a slow-down in market activity and property price growth in the lead up.Visit the show notes - https://propertyplanning.com.au/market-update-january-22-why-are-brisbane-and-adelaide-flying-election-impact-on-property-prices-are-investors-on-the-way-out-evidence-of-how-listings-numbers-is-driving-capital-growth-is-inflat/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market updates1. Two speed market emergesThe latest data for January discloses a two-speed market emerging within our capital cities. Adelaide and Brisbane have continued their outstanding growth, demonstrating 7% and 8% respectively. The other capital cities, while not going backwards in value, are showing a significant slow-down in growth. The trio discuss whether this is transitory and whether can the data be relied upon for determining a trend in to 2022?2. Will interest rates rise?The RBA’s stance on the cash rate not seeing a rate hike this year is slowly softening, with Governor Lowe stating that it’s plausible we will see a cash rate rise this year. Most economists are forecasting that an interest rate move is unlikely until at least August, when we will have two data sets of quarterly statistics for 2022 for the RBA to use to make a decision. Watch this space.Buying your dream home1. The starting point - how viable is your plan?The trio discuss the two key elements for determining whether your dream is feasible and how to work through these two elements: budget and tenure. If feasibility is an issue, then be prepared with a Plan B, which could require getting clear on compromises or purchasing a stepping-stone home.2. How frequently does your dream-home come up for sale?The trio discuss how to find out if your dream home is a needle in a haystack or a more frequently listed proposition. Understanding this is critical, as it will determine your purchasing and negotiation strategy and how quickly, (and strongly) you will need to act if your dream home has just come on the market.3. Sometimes you don’t know what your dream home is until you walk into it. If you have so many intricate things that determine up your dream home, then just build it. You will get exactly what you want, as opposed to searching for a product in a moving market that doesn’t exist. We note, however that this is not our advice for investment.4. How fussy is too fussy?If you have a long wish list of intricate things that make up your dream home, then you need to ask yourself how viable and realistic your search actually is. However, when considering buying an established property, you may be chasing a mirage if you can’t see any similar properties that have been sold in the last 6 months.5. The risks of chasing a lofty or infrequent dreamThe trio discuss the risks of searching for a unique property and the implication of delayed decisions. It’s important to remember that properties are like people, they are never perfect, but you should be able to find one that scores high on your wish list.6. What is it ok to compromise on and what isn’t?Compromise, that ugly word! The reality is that you’re unlikely to find a home that ticks every single box, so what are you willing to compromise on and is your significant other on the same page? Pete shares a valuable tip on the element that he never suggests compromising on…. Location.7. How do you start documenting your wish list and action plan?Determining your must haves and nice to haves is a great place to start. Removing all properties from your search that don’t include your must haves will stop you from wasting precious time. If after searching for comparable sales you find that your brief is not feasible, it may be time to revisit your compromises.8. How do you future-proof a purchase?The trio discuss the critical considerations for ensuring that you live happily for a long time in your home, as the costs of purchasing and selling a property can significantly eat into your wealth over your lifetime.Visit the show notes - https://propertyplanning.com.au/buying-your-dream-home-how-viable-is-your-plan-documenting-your-wish-list-how-fussy-is-too-fussy-the-art-of-compromise-the-risks-of-chasing-a-lofty-dream-and-more-ep-139/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. A question from our listenerIn this week’s episode we dive into a question received from one of our listeners who was concerned that he may have made an investment mistake and purchased the wrong property. The key question as posed by the listener was “is this a situation we can even recover from?”. In this interesting and insightful case study, the trio unpack the listener’s scenario and discuss possible options for his next steps.2. Analysing the investmentThe trio apply a critical eye to the property in question and they also assess the other properties owned by the listener to determine the future growth prospects, projected outgoings and anticipated rental yield.3. Why did the property seem like a good investment?The bells and whistles attached to a property may make it appear to be a good investment that will likely attract tenants. But often these shiny elements can catch your eye and blind you to what’s important, like the land to asset ratio, which is the primary driver of capital growth. These bells and whistles can also be a drainer on your cash flow and yield in the long-term. The trio discuss some clever marketing tricks that can deceive investors into going down the wrong path.4. Peeling back the onion and working on long-term goalsWhere many investors trip on their property portfolio journey, is failing to think about their lifestyle goals and long-term home. For most people, getting into the dream home is one of the big rocks that you want to fit in the jar, and this may mean selling one or a number of investment properties to achieve this goal. The trio discuss planning for your home and how this fits into your portfolio strategy, including retirement planning.5. Running the numbersA key component of any investment decision, whether it’s to buy or sell, is to get a clear idea on the different paths you can take and whether you can make that step now. This involves doing the maths and modelling scenarios to make an informed decision. The trio crunch the numbers in this listener scenario – can they get into their long-term home now? Or soon?6. Making peace with selling at a lossMany property owners will need to consider selling a property, whether due to upgrading, offloading a poor performing asset or as part of a debt retirement strategy. With the large in and out costs associated with property transactions, this decision can be an emotional challenge, particularly where a property is sold at a loss. The decision to sell a property should be a serious consideration, if it makes financial sense when considering your long-term goals and opportunity cost.Visit the show notes - https://propertyplanning.com.au/listener-questions-i-bought-a-dud-property-can-we-recover-why-rushing-into-an-investment-can-mask-other-problems-is-lack-of-clarity-on-the-future-home-the-true-cause-being-clea/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. A look in the rear view mirror at 2021The trio revisit the predictions they made for 2021. Were they on the money or did they miss the mark? Tune in to find out!2. What will the property market do in 2022?What capital growth rates can we expect around the nation this year? The trio lay their predictions down for 2022 and how that compares with other forecaster’s.3. Which capital cities will be the top performers?The trio look into the crystal ball and explain which capitals are expected to top the charts this year. But remember, property is not an asset class that lends itself to short-term investing. The important thing is to plan and strategise for the long-term.4. How will regional locations fare?Will regional locations outperform capital cities again or will capital cities continue to reign?5. Investor participationInvestors have shown strong increases in activity over 2021, but is this trend likely to continue? The trio share their insights.6. Will APRA intervene in the property market?The trio discuss their predictions for the regulator’s level of intervention and whether or not they feel government policy changes will be prescribed temper the market in 2022.7. The outlook for developers and building startsResidential construction costs have jumped by 7.1% in 2021and builders are flat out with projects, exacerbated by labour shortages. Will this trend continue and what impact will it have on the property market?8. Can we expect a rate increase in 2022?The trio share their predictions for a cash rate rise by the RBA and where fixed rates will go this year.9. Rental market forecasts2021 has been a story of increasing rents and decreasing vacancy rates. The trio discuss the outlook for rental markets in 2022.10. Sales volumes2021 was a record breaking year for sales volumes, but will 2022 keep pace? Tune in to find out!11. Risks which could impact the property marketThe trio discuss potential risks on the horizon which could impact the property market this year.Visit the show notes - https://propertyplanning.com.au/predictions-for-2022-and-a-look-in-the-rear-view-mirror-at-2021-ep-137/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. Value growth continues to lose steamValues increased nationally 1% over December, which is the lowest level of monthly growth since January 2021. The trio share a sneak peak of some of their predictions for 2022.2. A look at our capital citiesBrisbane and Adelaide were the outperformers for the final month, and each have been gaining pace since October. While Melbourne had a slightly negative month, Sydney growth reduced from prior months to 0.3%, proving again that December can be one of the best times to buy in our two biggest cities.3. How regions have performedFor 2 years in a row, regions have outperformed capital cities, reaching a whopping 25.9% growth over 2021. But is this trend here to stay? The trio share their insights.4. Rental marketsWith vacancy rates continuing to tighten, rental markets in just about every city (metro and regional) will become increasingly competitive. This will place pressure on governments to address rental stock shortage, although investor activity may provide some respite as investor numbers have been steadily increasing over 2021.5. Investors gain foothold in the marketInvestor lending is now up to 32.1% in November, climbing steadily from 29.11% in July. With an election looming, it will be interesting to see what policies the incumbent government proposes to walk the tight rope between supporting mum and dad investors and championing for first home buyers. The trio watch this space with keen interest.6. New listings flood the marketNew stock on the market was the highest since 2016, however the total listings in December were still significantly lower than the five-year average. This indicates that buyers are still heavily active in the market, snapping up new and old stock. Will these competitive conditions continue 2022?7. Consumer sentiment on purchasing a property continue to languish?The ‘Time to Buy a Dwelling Index’ shows consumer sentiment dropping to the lowest point at 81.9 over December. However, the house price expectations index is up at 150, indicating that the majority of Australians are optimistic about property prices increasing. This general trend reflects the current state of play, that it’s a bad time to purchase a home because prices are soaring. However, buyers will need to harness their reluctance to compete hard, and balance this with the fear of a market outpacing them.8. Unemployment improves but is inflation here to stay?The unemployment rate has decreased back to 4.6%, back in line with September after increasing to 5.2% in October and is expected to keep reducing. Will the Australian story follow the US, (which is now down to 3.9% unemployment with inflation hitting 5.5%) or is our inflation transitory? The trio discuss the early signs of expected US rate increases and how this could impact the property market.Visit the show notes - https://propertyplanning.com.au/top-capital-cities-of-2021-will-the-stellar-rate-of-growth-continue-in-2022-is-interest-in-regions-here-to-stay-how-rents-and-vacancy-rates-continue-to-entice-investors-the-outlook-for-unemploymen/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:L – Lenders Mortgage Insurance (LMI)LMI is a type of insurance you can expect to pay if you borrow more than 80% of the property value. Although you pay for it, it protects the lender, not the borrower as above 80% lending is seen as higher risk for the lender in the event of mortgage default and subsequent mortgagee sale. The trio discuss how the insurance premium is calculated, what kind of borrower is likely to have to pay this fee and how you can reduce LMI surcharges.M – the critical components of your MortgageThe Property Planner takes you through the top 6 mortgage strategies that can greatly impact your wealth and ability to hold property as you grow your portfolioN - Negative and neutral gearingNegative cashflow simply means that your investment is running at a loss from a cash flow perspective. This is because the rent earnt doesn’t cover property costs, such as interest paid and maintenance. Negative gearing relates to the tax benefit applied to reflect the investor’s cashflow losses. Although you get a tax deduction, negative gearing is not necessarily a positive thing. It should be considered merely a benefit, as opposed to a reason to invest. Negative gearing means you pay a dollar to get 30 cents or slightly more back from the tax man. The trio discuss the dangers of selecting a property based on tax benefits alone.O - Offset accounts, God’s gift to mortgage strategy!The offset account is arguably the banks’ greatest invention. Effective use of offset accounts forms the basis of many of the mortgage strategies that can enhance your wealth creation such as money management, optimising tax deductions, risk management and the ability to hold onto your home when you upgrade. Take a listen to episode #48, a whole episode dedicated to the effective use of offset accounts.P - Positive gearingPositive gearing is essentially the opposite of negative gearing. It is where income earnt from your property covers more than the expenses. A positively geared investor will pay additional tax; a nice problem to have. The trio discuss how gearing is not static and can change over time. It is normal for a property to become neutrally and then positively geared over time. Take a listen to find out why.Visit the show notes: https://propertyplanning.com.au/the-l-to-p-of-property-success-lmi-what-is-it-and-how-to-reduce-it-critical-mortgage-strategies-negative-gearing-and-making-it-work-for-you-ef/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:How does bias impact our financial decisions?Behavioural biases are defined as unconscious beliefs that influence our decisions. In the field of finance, behavioural bias is a study that focuses on psychological factors that influence the decisions of investors. There are some 180 recognised biases and unfortunately we can’t unpack them all, however the trio have picked the top 6 biases to investigate.Bias 1 - Mental accountingMental accounting refers to the concept where people treat money differently depending on where it came from and what we think it should be used for. The trio discuss the varying ways that this bias can manifest in our financial lives.Bias 2 – Loss aversionThis bias refers to a higher sensitivity to incurring losses than making gains. It impacts investors when the fear of loss is disproportionate to the risk itself, and fear stalls their ability to make a decision. The trio delve into how this bias can hamper investors and how to mitigate the influence of this bias if you are conservative in nature.Bias 3 – Overconfidence biasThis bias is the tendency to see ourselves as better than we are and is common in investing. Overconfident investors generally do not manage and control risk properly; they engage in active investing, (instead of passive investing) and adopt a DIY philosophy. In the property space, we see it most commonly when people assume they can carry out a major renovation or development, when ordinarily this activity should be carried out by a skilled/experienced renovator or builder.Bias 4 – Anchoring biasAnchoring is a phenomenon where someone values an initial piece of information too much to make subsequent judgments. In investing, this can influence decision-making regarding a security, such as when to sell or buy an investment. The trio discuss how this bias can come about: either through a negative or positive personal experience, (or third party experience). Anchoring bias can also be passed on through generations. The trio discuss how you can effectively tackle this bias and carry out your own assessments.Bias 5 – Familiarity biasThis bias is characterised by investors preferring familiar investments, despite the advantages of diversification. This can manifest itself in people wanting to purchase investments in their own state, region, city or suburb. To counteract this bias, you need to be prepared to do comprehensive assessments to look at a broad array of options.Bias 6 – Herd behaviour biasHerd behaviour occurs when investors follow others rather than making their own decisions based on financial data. People follow the herd because it feels safer, which is the opposite of contrarian investing. The trio discuss examples of herd behaviour in property.How can buyers think more rationally and independently?The trio share their insights on how to make informed and successful property decisions, and specifically; to mitigate any biases that may be in play.Visit the show notes: https://propertyplanning.com.au/behavioural-economics-101-tackling-the-biases-that-impact-our-property-and-investment-decisions-ep-134/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update 1. Proposed land tax changes in QueenslandIn a surprise move, the Queensland government has put forward in their mid-year budget update plans to change the calculation of land tax so that an investor’s entire investment portfolio is taken into account, (not only the land owned in Queensland). The trio discuss the probable impacts for demand for Queensland property, property values and also rents. Not to mention the potential that other states will possibly follow suit.2. Regionals outstripping the capitals in unit growthWhen looking at property growth over the last 12 months, units in combined capitals have increased by 12.6%, while units in combined regions have increased a whopping 23.1%. The trio discuss the possible reasons behind this perplexing bit of data.3. Auction volumes still strong despite Christmas only days awayLast weekend (ending Sunday 19th) was the second busiest auction week, (in terms of stock volumes) since CoreLogic began tracking in 2008. The week beforehand was the biggest stock volume week on record and we are now in the fourth consecutive week where more than 4,000 capital city homes have gone under the hammer. What it means is that supply and demand ratios are slightly closer to equilibrium, and in contrast to the difficult buying conditions that have been a hallmark of 2021, it’s now a (comparatively) great time to buy, with more properties for sale than ever before and many buyers giving up the search and packing up for Christmas already. Keep your eyes open over January, as there is likely to be more stock hanging around than normal as clearance rates have eased somewhat for the short term.Purchasing laws - Part 21. What is underquoting?Sometimes known as ‘bait pricing’, underquoting is the practice applied by agents knowingly advertising the price of a property for sale on the market at a price lower than the true value of the home, (or worse still, at an advertised price that is lower than the vendor’s asking price). The Property Buyer sheds light on why this practice occurs in Victoria, (and other states).2. What is the danger to the buyer of underquotingBuyers will waste money and time carrying out due diligence and building inspections on a property, only to find out that the property is not within their actual budget and out of reach. Buyers who have been in the market long enough and those who have been burnt enough times will start to cotton on that the quoted range is not representative of the realistic price that the property will go for. So now, there is an expectation that a property will sell for more than the quoted range.3. How Queensland has tackled this issueAgents in the Sunshine state are prohibited from representing a property for sale at a specified price while being aware the vendor will not accept that price. In addition, if a property is going to auction, agents are banned from making any price guide representations at all. While this does effectively deal with the problem of underquoting, it does raise other challenges for buyers. In this case, buyers must carry out the hard task of working out for themselves what a property is worth, when many are not experts in property. Is it better to have no guidance at all on price?... or some (mis)guidance that’s inaccurate? The trio ponder this question.4. How Victoria's underquoting regime misses the markThe Property Buyer explains the ‘Statement of Information’ that Victorian agents are required to display at all open homes and online listings, and more importantly, how agents are able to avoid accurate price representations despite their obligations.5. Striking the right balanceThe trio discuss the different underquoting regimes in each state and the ideal outcome for underquoting laws. There are two sides to the coin and the solution must take into account both the vendor’s and buyer’s point of view.6. Vendor disclosure obligationsBe careful not to get stung! Some states place no obligations on the vendor to disclose certain details about the property and the purchaser is required to complete all the due diligence and searches. The trio walk through the disclosure obligations, and in particular they circle in on WA and NT’s disclosure legislation.7. Vendor bidsThe trio outline the differences between each state of vendor bids, why they are used by the auctioneer and when they shouldn’t be used.8. Auctions vs private salesWhile auctions are most prevalent in NSW and Vic, they remain in the minority for other states. The trio discuss when is a property more likely to go to auction vs private sale.Visit the show notes - https://propertyplanning.com.au/purchasing-laws-in-each-state-part-2-the-problems-with-underquoting-and-how-to-solve-it-when-and-why-vendor-bids-are-made-do-vendor-disclosure-obligations-cover-you-why-some-properties-g/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update 1. Highest annual sales since December 2003Over the last 12 months, national dwelling values have risen 25.2% across regional Australia and 21.3% in capital cities. An incredible story for the regions that we are excited to keep watching closely. In the same period, ~614,000 homes were sold, which is the highest annual sales volume reached since December 2003. However, buyer demand is so great at the moment, that stock on the market is simply being soaked up at a rapid rate.2. Fixed rates on the rise, and here’s whyLender fixed rate offerings have risen sharply since June, when the Property Planner made his prediction that fixed rate hikes were likely to occur. Three year fixed rates have taken the biggest hit, with some lenders increasing the rate by as much as 0.95%. The trio discuss the reasons why fixed rates have experienced a sharp incline in recent months. Those who took advantage of the low fixed rates will be laughing all the way to the bank now!Property purchasing laws1. Check out our show notes for a detailed breakdown on the differences in purchasing laws between each stateIn this week’s episode, the trio discuss the differences, advantages, disadvantages and quirks of property laws in each state. It is critical to familiarise yourself with the laws and processes that apply to your purchase, particularly if this is your first purchase or you are interested in purchasing interstate. There is a vast amount of information to get acquainted with, (enough to do one episode on each state!) and unfortunately we can’t cover it all. Visit the show notes for further information and detail on each state.2. The starting point - what constitutes a legally binding contract?The commonality between all states and territories in Australia, is that no legally binding contract exists until the contract is signed by both parties. However, some states also hinge on the concept and requirement that contracts must be ‘exchanged’ as well before they are binding. The different approaches here can cause confusion and also leave the door open for gazumping, (which we will explain shortly). The trio discuss the different requirements in each state and how that impacts the purchasing process.3. Cooling off periodsThe trio discuss the varying statutory cooling off periods in each state, (or absence of cooling off periods in the case of some states), when a cooling off period does not apply and can the cooling off period be waived as a negotiation tactic?4. Negotiating ‘subject to’ clauses and contract conditionsWhile all states allow for ‘subject to’ clauses to be entered into contracts, interestingly, this is not common practice in the states of NSW and ACT. The trio discuss the common conditions that are negotiated between the buyer and the vendor and also why NSW and ACT don’t take this approach.5. Gazumping – what is it and why is it legal?Gazumping occurs when an agent or vendor accepts an offer made on a property, but before the contract is signed to formalise the deal, another buyer swoops in with a higher offer or better conditions and the vendor sells to them, leaving the first buyer out in the cold. This occurs because in most states, the buyer and vendor do not sign legally binding contracts at the time of the sale agreement. Before the contract is signed, the agent is legally oblgiated to present to the vendor any further offers received for the property.6. Why is gazumping most prevalent in NSW and how do you minimise the risk of being gazumped?The trio discuss why gazumping is most commonly seen in NSW, which no doubt feeds into their reluctance to enter ‘subject to’ clauses in the contract of sale. Although NSW is the king of gazumping, it can occur in most Australian states. The trio explain what you can do to minimise the risk of being gazumped!7. Settlement periodsThe trio share with you the common settlement periods for each state, most of which range between 30 and 90 days. Speak to your strategic mortgage broker to understand how quickly you can have your finance approved, particularly if your financial situation is complex.Visit the show notes - https://propertyplanning.com.au/purchasing-laws-in-each-state-part-1-when-is-a-sale-legally-binding-cooling-off-periods-contract-conditions-and-when-to-use-them-what-is-gazumping-and-how-do-you-avoid-it-ep-132/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:1. A look into recent market cyclesThe Property Professor shares some research from ABS home value index data on property market movements over the last 5 years. Cycles are a key component of the property market and they are difficult to predict. However, when property prices do drop, the declines are generally not as large in magnitude as the increases.2. Consumer spending and impact on the property marketThe household savings ratio is now up to 19.8% from 11.8% last quarter due to the Sydney and Melbourne lockdowns. Inflation is starting to increase, but this may only be transitory, as spending increases once lockdowns are lifted, but as savings decrease, people will tighten their belts once again. If listings decline in the new year, we may see buyer conditions stiffen and prices increase if consumer confidence remains high. Supply and demand ratios are anticipated to tighten if listings decline.3. Property market further softens over NovemberAustralian housing values increased a further 1.3% in November, gradually losing steam from March’s high. With the exception of Brisbane and Adelaide, monthly growth for each capital city has declined to 1.1% or less. Perhaps with growing unaffordability, investors are turning to Brisbane and Adelaide, both of which are the star performers currently.4. Rents and vacancy ratesDarwin and Hobart are still rocketing along, but the rate of growth in rents is starting to come down. Investors have flocked to these markets, meaning that rental stock is increasing, and this has consequently taken some of the heat out of the growth. A 2% vacancy rate is considered equilibrium, while Perth, Adelaide, Canberra, Darwin, Hobart are all below 1% vacancies, (indicative of a tight rental market) hence causing pressure in these markets.5. Houses vs unitsThe median price gap between houses and units is the highest on record. Based on median values, capital city houses are now 37.9% more expensive than capital city units. However, the difference in the quarterly rate of growth between houses and units is now the narrowest it has been since October 2020, with only 1.6 percentage points between the two broad housing types. If you’re looking to purchase a quality unit, now is probably as good a time as any to buy, considering the gap is likely to shorten in the future. However, the trio warn against buying “any” unit. There are good units and, well... not so good units. It’s imperative to know the difference.6. New listings rise but total stock remains lowA rise in the number of homes available for sale is a key factor driving the slowdown in capital growth. New listings are up 34% from the same time last year and 15.7% above the 5 year average. However, total listings are still 15.4% below this time last year and 24% below the 5 year average, indicating that buyer demand is soaking up the new stock on the market as well as the old. Listings that have been on the market for over 180 days have dropped a drastic 51% from this time last year.7. Growth in regions continues to burgeon onOver the month of November combined regions achieved 2.2% growth and this is not just because of the COVID-induced escape from the city. Now affordability issues are forcing people to consider and aim for regional property, with the support of infrastructure upgrades and lifestyle factors that attract newcomers. It will be interesting to watch this space over the next few years.8. People are still pessimistic about now being a good time to buy a dwellingThe ‘time to buy a dwelling index’ has bounced back to 91.1 points over November from 83.3 in October, although still in negative territory. The trio discuss the reasons why confidence has remained lower around purchasing property in the current market. One reason is that there is always a percentage of buyers who drop out of the property search over this time to take part in holiday preparations and social gatherings, perhaps even more so this year due to the freedom of being released from lockdowns. This is one of the reasons why December is a great time to buy, as other buyers put their property plans on hold for various reasons.9. Investor numbers continue their steady creep higherInvestors now represent 32.9% of new lending, which has been slowly increasing, month on month. The ratio of investors to owner occupiers now is on par with the general split of property ownership in Australia, (which is split 66% owner occupiers and 34% investors.) However, investor levels are still below 46%, which is when APRA stepped in to cool the market in 2015.10. Unemployment increases but expected to be temporaryThe unemployment rate increased to 5.2% in October from 4.6% in September. However, this increase is not expected to last long-term, as the increase was caused in large part due to Melbourne, Canberra and Sydney lockdowns. Job adverts are up significantly, which is a positive sign.11. The latest update from the RBAThe Property Planner shares the key decisions from the latest board meeting of the nations’ Reserve Bank. Will we see a rate rise in 2022? We think that’s highly unlikely.12. Predictions for 2022The Property Planner, Buyer and Professor share some early predictions for where they think the market will head in 2022. The trio will record a whole episode on their predictions in the new year, stay tuned!Visit the show notes - https://propertyplanning.com.au/has-the-influx-of-listings-dampened-the-market-why-december-is-a-great-time-to-buy-early-predictions-for-2022-will-hobart-and-regions-continue-to-grow-is-it-the-best-time-to-buy-a-unit-how-vacanc/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Only a few weekends left to capitalise on a pre-Christmas purchaseAuctions have been booked for each weekend all the way up to the 18th of December and mid-week auctions scheduled as well, as vendors look to sell prior to Christmas. Although some buyers may drop out of the race to purchase due to property search fatigue and holiday planning distraction, while others may suddenly pivot from one property to another. Agents are finding the task of predicting buyer numbers quite challenging at present. Stock on the market will take a seasonal dip in January, meaning that buyers who have missed out will most likely need to wait till February to purchase, amplifying the mad dash to secure a property prior to Christmas.2. Interest only loans will get more expensive in the wake of APRA announcementsIn the last week, APRA has announced that banks need to hold more in cash reserves for every dollar loaned on an interest only loan. This means that lending interest only loans to consumers will become more expensive for the banks and the cost is expected to be passed on to consumers. APRA’s direction to the banks will come into force from January 2023 and we are likely to see the margin between interest only rates and principal and interest rates increase as that happens. APRA’s requirements were more stringent than expected, perhaps being employed as a tool to take the heat out of the market.3. Queensland and regions benefit from population movementsThe REA Group has published a report revealing the interstate and intrastate population movements in the 12 months leading up to March 2021. Queensland is the biggest benefactor of this period, with some 30,000 people moving to the sunshine state. Over the same period, Sydney has lost 31,000 and Melbourne 32,000 people, but not all have moved to Queensland. Regional New South Wales saw an increase of 13,000 and regional Victoria a similar increase of 14,000. Considering that the population of both Melbourne and Sydney is over five million, it seems a wonder that a few thousand people can make a big impact. The trio discuss the significance of these population movements and their impact on regional price growth.The F to K of property successF - First Home Buyers and what do they need to do to be organisedPurchasing your first home can be a daunting task, as you’ve never done it before. Whether you should purchase a home or an investment can be a bigger conundrum as first home buyers are often in an earlier stage of life, where they may not be established or settled yet. The trio discuss arranging and understanding finance, government and parental assistance, what first home buyers often overlook and what can trip up a good strategy.G - Goal SettingTaking time out to set goals will help you immensely, not only on your property journey but in your life journey as well. Determining goals will help you gain clarity on your property strategy and selection, whether you want to: retire richer, retire earlier, make a little bit more money right now, or make regular extra money so you can scale back work or give up your day job. The trio discuss how to approach goal setting and some common mistakes to avoid.H – Houses (not apartments)If capital growth is your aim, buying a property with a good land to asset ratio is essential. The trio discuss what denotes the difference between houses and units, and how the lack of uniformity can cause great confusion. Plus, buyers beware! Houses are not always a superior asset to units. Tune in to find out why.I – Why mortgage strategy is more important than interest rateThe trio discuss how people can get sucked into focusing on rates, as it’s the easiest aspect of mortgages to understand. There will always be a lower interest rate somewhere in the next week, month or year and you can tie yourself in knots on focusing on the rate. First and foremost, you need to decide on your mortgage strategy. The Property Planner explains how this can make a significant impact to your bottom line at retirement.J - “Just do it”What causes analysis paralysis? Inaction can mean that you start your property journey five years later than you could have, making a massive impact to your nest egg due to the power of compound growth. The trio discuss the personality types that are more prone to inaction for fear of making a wrong decision and how to overcome this.K – Knowledge and where to acquire itThe trio share their gold nuggets on how you can acquire great advice that will help you sleep well knowing that you are on the right path.Visit the show notes - https://propertyplanning.com.au/the-f-to-k-of-property-success-first-home-buyers-and-how-to-get-your-ducks-in-a-row-how-to-approach-goal-setting-houses-vs-apartments-why-mort/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Expected end of year activityIf you’re committed to purchasing a property, now is not the time to take your foot off the pedal. There is a distinct determination of buyers, vendors and agents to get deals done prior to Christmas and with other buyers getting distracted with Christmas preparations and other plans, now may be an opportune time to purchase. Unlike last year, where many agents worked through January after the desperation caused by lockdowns, agents want to take a break and are motivated to wrap up sales before the holidays.2. Melbournians and Sydneysiders are moving back to the CBDToday’s episode is about the contrarian approach to investing and one potential opportunity, (although the horse may have bolted) is purchasing a quality unit in the inner-ring or CBD that has unique attributes to provide long-term growth. Rental stock on the market for apartments in inner Melbourne have plummeted by 76% since February and this same count is down 56% in inner Sydney, showing that buyer demand for city units is now starting to pick up.3. How COVID has impacted overseas property marketsThe Property Professor outlines the striking similarities between Portuguese and Australian property markets and the impact that covid has had in relation to commercial and residential property.Contrarian investing1. What is contrarian investing?Contrarian investing is an investment style in which investors purposefully go against prevailing market trends by selling when others are buying, and buying when most investors are selling. Contrarians may be seen as courageous, unconventional, counterintuitive thinkers, able to withstand herding pressures from crowd-following conformists. As Warren Buffet has said “"Be fearful when others are greedy, and greedy when others are fearful." Contrarian investing is often discussed within share trading circles, but it is entirely relevant in property too.2. Real examples of contrarian investing in propertyThe Property Buyer talks through her own personal experience of purchasing property during the GFC, when buying conditions changed dramatically and many were fearful. Also more recently, a client who purchased four properties at the beginning of covid, who saw the opportunity, while others put their purchasing plans on hold.3. What would happen if you purchased half-way through a market fall?The Property Planner shares his research on how your assets would have performed if you purchased shares mid-way through the GFC and 2020 covid crash and purchased property during the APRA driven downturn in 2018. When a market is falling, it can be one of the best times to buy. But it is scary, due to the uncertainty of how far the market will drop or how long the decline will last before it swings back up.4. Property market downturnsCheck out our show notes to see a graph of the last few decades of downturns. The downturns look like blips in the long run. When the market declines, the magnitude is not as great and the length not as long as when the market is on the rise. The most recent downturn lasted 18 months, which felt like a long time when you’re living it, but in the scheme of our lives, is not very long.5. Segmenting markets – contrarian investing is not just about market timingWhilst buying when others are fearful of buying is an obviously contrarian approach, there are also other strategies to within contrarian investing. This could mean purchasing a less popular dwelling type, (such as an inner-city apartment), selling a property in a coastal or holiday hot spot or purchasing in a less popular area. The Property Buyer shares her tips on purchasing an inner-city apartment, which she just assisted some clients with.6. The risks of being a contrarianGoing against market sentiment does carry great risk and simply going against the grain without doing the research and understanding the market will not necessarily yield you good results. The dangers of contrarian investing, if you get it wrong, is difficulty in selling if you’ve chosen an unpopular property or extended days on market when it’s time to sell. We also can’t underestimate the opportunity cost of investing in an underperforming asset versus putting your money in a well-performing asset instead.7. Considering commercial propertyWith the onset of COVID, commercial property has taken a hit and could present an opportunity to catch the market while it’s falling.Visit the show notes - https://propertyplanning.com.au/what-is-contrarian-investing-and-how-can-you-make-it-work-for-you-market-updates-melbourne-and-sydney-move-into-cbd-covids-global-impact-on-property-and-december-is-a-good-time-to-buy-ep/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode, Dave, Cate and Pete take you through:Market update1. Thank you for your feedbackWe’ve received a number of listener reviews that are insightful and also gave us honest feedback, which we really appreciate. One was in relation to past performance bias, specifically whether past performance reliably predicts future performance and also the impact of our own personal biases. The Property Buyer acknowledges this feedback and hints at a future episode that will address human biases.2. The state of retail propertyIn the most recent JLL quarterly retail market report, the CBD retail vacancy rate in Adelaide is the highest it’s ever been since 1993 at 16.8%. Regional retail has only a 3% vacancy rate. However, ‘regional’ in the retail sense has a different meaning to residential property. The Property Professor explains all in his market update.3. Inflation is the talk of the town, but is it here to stay?Increasing inflation should lead to increasing wages, but most people assume that it equates to increased interest rates, making many nervous. Underlying inflation in Australia jumped to a six-year high of 2.1% in the September quarter, which is still well below the 4.6% experienced in the US. This level of inflation is only at the lower end of what the RBA targets, (being between 2% to 3%). The Property Planner talks through the factors that create upwards pressure on inflation, the RBA’s response and whether inflation at this level is sustainable.Considerations for upgraders1. How does upgrading fit into your property plan?The earlier you can start planning for your long-term home, the better. However this does come down to stage of life, and often people are not able to picture their future home until they’ve reached a certain level of stability or decided on the location that they want to live in. Understanding how your investment decisions and other lifestyle purchases fit in with your decision to upgrade is also key to making successful long-term purchases. For some, the long-term home may be out of reach due to stage of life or circumstances. For some who aren’t ready to upgrade, rent-vesting or a stepping stone home may be the right choice for you.2. Mapping out your future homeMany buyers get hamstrung when it comes to the critical decision making because their search criteria is unreasonable. Having a clear plan on which suburbs to target, property types, architectural styles, land size, bedrooms and living spaces, (to name a few) is key to narrow in your search. Then, to ensure that you don’t get bogged down and spin your wheels while the market continues to run away from you, have a plan of what you will be willing to compromise on if your dream home is out of reach.3. Purchasing a property that you can grow intoThe holy grail of property ownership is only ever owning the one home, because each purchase and sale of a property eats into your wealth. Due to changing commitments and affordability, not many are able to achieve their dream home on the first go. However, you may consider buying a home with a larger block size with a smaller dwelling, where you could extend the home as your family grows, to avoid needing to sell.4. Why are money goals so important?Finding a property that you want to live in for the rest of your life can be like finding a needle in a haystack and many are willing to pay an emotional premium to get into their dream home. In this situation, we’re more likely to be stretching ourselves to the largest level of debt that we’ll ever take on. This is why understanding your cash flow and available funds after purchase is critical, so that you remain within your financial comfort zone and risk profile.5. The age old question - should you buy first or sell first?The trio discuss whether you should sell your existing home first or purchase your upgraded home and then sell. The scarcity of the property you are looking for, the market conditions and the settlement period are critical considerations. The trio share their tips on how to navigate the transactions simultaneously.6. How to keep your current home when you upgradeThe Property Planner explains how mortgage strategy can be utilised so that you are in the best financial position to be able to keep your current home as an investment property when you upgrade. However, you need to get your mortgage strategy right today, or it could be costing you the ability to hold on to that property.7. When is the best time to upgrade?The trio discuss when you should look to upgrade and the dangers of trying to time the market.8. Arranging license agreementsThe Property Buyer shares a hot tip on how you can arrange a licence agreement to occupy the property you’ve purchased prior to settlement, which can make the moving process smoother and less stressful. Similarly, if you’re selling and you’ve already vacated, you can arrange a licence agreement with the vendor and charge either nominal or market rent during this period.Visit the show notes - https://propertyplanning.com.au/upgrading-and-planning-for-the-long-term-home-how-to-keep-a-home-as-an-investment-buying-or-selling-first-and-more-market-updates-inflation-101-and-the-state-of-commercial-property-ep-128/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode Dave, Cate and Pete take you through:Market update1. Handicaps for ‘subject’ to clausesThe Property Buyer shares how agents are getting creative when dealing with a pool of buyers who don’t want to submit unconditional offers. One particular agent is sharing a ‘handicap list’ for ‘subject to’ clauses. For example, his agency could factor in an additional $5,000 on top of the purchase price for a building and pest inspection, $10,000 for an extra 60 days before settlement, etc. The trio discuss the merits of this approach.2. House prices have fallen in 7% of Australian suburbsDuring the March peak rate of growth, only 1.4% of suburbs posted a decline in values. This has sharply risen to 7%. Mining towns and some regional markets have reflected some of the largest drops. However, markets at the higher end have also weakened. During the three months ending in October, house prices in some unexpected prestigious Melbourne suburbs of Armadale, Mont Albert and Blackburn posted declines of 0.5%, 0.4% and 0.1% respectively. The trio discuss whether this may be due to high rise building releases or lack of attention from foreign buyers while overseas travel and international migration is on hold.The A to E of Property SuccessA – Area (location is key)Picking a great location is critical! You can change the size of the block and the dwelling on top of it, but you cannot change the location. The trio discuss the features to target if capital growth is your aim. Although the pandemic has changed the way we do business, the CBD will offer the much-desired amenity and being close to a source of water and having a nice view can also increase capital growth prospects. We can’t under-estimate people’s love affair with their city reigniting as things open back up either.B - Bungalows (and other period styles)The trio discuss the pre-war properties that Australian’s love and can’t get enough of. They are in limited supply and have highly desirable features such as high ceilings, big rooms, timber floors and are solidly built. The scarcity factor drives competition and growth for these properties, and also makes them very difficult to place a ceiling value on. It is for this reason that many of these period stunners fetch record high prices under competition.C – Capital growth is King (or Queen)When it comes to residential property, most people make more money from capital growth than from yield. The power of compound growth means that a difference in 2% capital growth could equate to a $3M differential over the course of a full working lifetime for your retirement kitty. If you are looking for rental return, commercial property could be an attractive option. However commercial property is not as resilient to economic shocks as residential property, this is because people always need somewhere to live. We may see a shift, particularly in the CBD and other centres where commercial will convert to residential.D – Dirt (the value is in the land)The appreciating component of the property is in the land and as the trio discussed in episode 125, it's not about the size of the land but the value of the land. If you’re looking at a development, you need to consider features other than size, like frontage and heritage overlays, (among many other facets).E – Equity (use it!)The power of capital growth is that the equity built up in your asset can then be used to leverage into further investments, whether that be purchasing another property or shares. Unlike rental return, which could be squandered with bad spending habits, capital growth cannot be spent!Visit the show notes - https://propertyplanning.com.au/the-a-to-e-of-property-success-area-and-how-location-is-key-bungalows-and-other-period-styles-that-australians-love-capital-growth-is-key/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:1. Do cash rate rises slow down house prices?The Property Professor shares his recent research covering the last 30 years of cash rate rises and the effect on property prices. Is there a correlation? Listen to find out and visit the show notes to see the data!2. Housing growth consistent over the last 3 monthsNationally housing values increased a further 1.5% in October, which is in line with growth over September and August. Although slowing down from March’s peak, 1.5% monthly growth annualised is still a whopping 18%. For most capitals, growth has slowed down since March, except for Adelaide and Brisbane, which have both increased. This is possibly because median values are lower in these cities, while other capital cities become less affordable.3. Brisbane takes the mantle for highest month on month growth, but Hobart is still going strongHousing values grew 2.54% in Brisbane, while Hobart is coming down from extreme highs, posting a very strong 2%. Interestingly, property prices in Hobart are quite high relative to the rest of the nation, yet average incomes are 15% lower than national incomes. This points to money from the mainland being invested in Hobart and also indicates retirees and remote working sea-changers embracing the apple isle.4. Regionals still outperforming capitalsGrowth in our regions has consistently been higher than capitals, which is shown in annual, quarterly and monthly growth figures. This indicates there is a still a drive to escape to the regions, but we wish there was more data! Where is the money coming from? The Property Buyer shares her purchasing experiences in Geelong, where three quarters of buyers in the current market are Melbournian.5. Holiday locations and the great escapeInterest in Queensland and key holiday destinations such as Noosa has continued burgeoning ahead. However, the trio warn that historically holidays locations have big runs of growth and then harsh corrections.6. Will we see a rush of money to the property market?The trio discuss the March peak rate of growth and at the time, we were feeling secure and believing covid was behind us. Then comes the delta strain and further lockdowns dampening growth. With vaccination rates picking up, boarders re-opening and holidays around the corner, it seems like we’re heading into another period of optimism that covid is in the rear view mirror.7. Rental yields reducing as housing values soarMelbourne unit rental growth, (which reached as low as negative 13%), have finally recovered and is now in positive territory. However, even though rental growth is increasing, this has not kept pace with housing values, so rental yield as a percentage of the value of the property is actually decreasing. The average yield for houses in Sydney and Melbourne is likely as low as it’s ever been, with rental yields at 2.20% and 2.40% respectively. This is one, (of many possible) indicators that the market is heated.8. Listings on the rise but still at extremely low levelsCompared with the last 6 years, total listings in 2021 are the lowest in number. Old listings (properties that have been on the market for over 180 days) have halved year on year for most capital cities, as old stock is snapped up. Thankfully, new listings have seen an uptick over October with the end of Melbourne and Sydney lockdowns and vendor confidence in the spring market conditions increasing.9. Consumer sentiment in the property market dipsThe Westpac-Melbourne Institute ‘time to buy a dwelling index’ has fallen to 83.3 points, down from 96 points in September. This indicates many are feeling more apprehensive about now being a good time to purchase property. But this doesn’t mean that people will stop buying. Fear of missing out continues and it could be 6 months or so before we see the negative sentiment play out. On the other hand, the house price expectations index is at a whopping 156, showing that people think house prices are very high.10. Investors on the riseLending indicators from the ABS show that owner occupied loans have fallen by 2.7%, while investors have increased 1.4%. This takes total investor lending to 31.74%, which has been creeping up consistently over the past few months. However, investor lending is still below 2015 levels, a point in time when APRA intervened and lending for investors reached 46%.11. Inflation targets met, will interest rates rise sooner?Inflation reached 2.1%, which is within the RBA’s target band of 2-3%. In the latest RBA meeting, the board has decided to cease targeting the 3-year bond yield, which essentially keeps 3 year fixed rates lower. This measure has come earlier than expected. The RBA has adjusted it’s position on maintaining a low cash rate until 2024, saying that it’s now plausible that the cash rate could increase in the back half of 2023. However, money markets and economists think it could be as early as the second half of 2022.Visit the show notes: https://propertyplanning.com.au/analysing-30-years-of-cash-rate-rises-and-the-impact-on-property-prices-why-rents-are-increasing-but-yields-reducing-whats-happening-with-brisbane-adelaide-impact-of-listings-on-supply/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/Market update1. Spotting the suburbs across Australia that are suffering rental lossesOur good friend Mike Mortlock from MCG Quantity Surveyors has instituted a rental losses index, which is a direct reflection of vacancy rates. A fantastic tool for any investor to add to their toolkit for identifying whether a location is a good area to invest in. The rental losses index has put a spotlight on university precincts in Melbourne in particular, but also Tarneit where brand new house and land packages dominate. Check out Cate’s article in our show notes for more insights.2. Lowest performing suburbs were on the fringe CoreLogic data reveals that the lowest performing suburbs in terms of capital growth were on the outskirts of capital cities. The largest declines in unit values have been in the outer fringe locations, rather than inner city high rise precincts, where higher density housing has historically been less common and therefore in is less demand. The oversupply of house and land packages has also dampened growth for detached houses.3. The gap between houses and units is the greatest it’s ever beenHouse prices have surged by 28.9% in the 12 months to September 2021, which is more than double the 11.6% gain in unit values for the same period. CoreLogic data reveals the gap in Sydney to be 59% between median house price compared with median apartments, while in Melbourne the gap is 55.3%. These kind of stats would often scare people off, but there is a rising opportunity here in the unit market, as growth is likely to catch up to houses mainly because of affordability.4. Is now a good time to sell?There is so much exuberance in the market, that now could be a great time to offload B-grade properties, which will have subdued capital growth in softer markets.Bigger is not necessarily better1. The trap of bigger equals betterIn this week’s episode the trio tackle the misconception that when it comes to capital growth, bigger land size is better. Where you consider properties on the same street with the same orientation, the bigger block of land will be valued higher (provided there are no encumbrances or other physical detractors). But where you are making a decision between a bigger block of land in one location and smaller block of land in a different location, people can make a lot of mistakes by chasing the bigger land.2. Where did the idea of bigger is better originate?The great Australian dream of having a quarter acre block, with a hills hoist in the backyard and mowing the lawn on Sundays was the aspirational model for family living. That is not necessarily the case now, where suburbs close to the city where the not-so wealthy historically lived in closer confines are now highly sought after. Magazines and seminars have also created hype around bigger land and development potential, creating the misconception that people can get rich if they subdivide the land.3. Land value not land sizeThe trio discuss the importance of considering the land value, rather than the land size. Location is particularly important here and will have a significant impact on the land value. A smaller block of land in a location closer to the city with have a higher land value than a bigger block of land on the fringes. Think back to Christmas day with the kids, who would much prefer a giant Santa sack filled with gifts from the reject shop because there’s more of it, but the smaller Tiffany box is much more valuable!4. When is the land size too small?If the size of the land is too unworkable or quirky, then it may not have the same capital growth prospects or value as the land around it. If you are planning a development or renovation, then the land size does matter and should be considered carefully along with other planning regulations. The trio discuss the dangers of targeting blocks with future development potential if you are not serious about completing a development now.5. Orientation can impact land valueThe Property Buyer shares her tips on what orientation to target to have optimised sunlight throughout the day. However, a clever dwelling design can maximise sunlight, even if the property doesn’t have the ideal orientation.6. Corner blocks – blessing or curse?Depending on your plans for the property, a corner block can be a positive or a negative. The feeling of exposure and bedrooms against footpaths are generally a reason why people will give corner blocks a wide birth when purchasing, but they can be great development opportunities (if you are serious about being a developer).7. How the land to asset ratio drives capital growthMany people get themselves into trouble when they are looking for capital growth and buy brand new. In this scenario, the majority of the price tag is often in the dwelling component of the property, (which is depreciating) and not the land, (which is appreciating). Similarly, you can go too far in the opposite direction and purchase a property where the land to asset ratio is really high, but because the dwelling is uninhabitable or compromised, the costs of rectifying the dwelling will eat into your yield. Understanding the land value per square metre is important here to work out the land to asset ratio. Once you have that, you can focus on properties with an optimal land to asset ratio rather than land size.Visit the show notes - https://propertyplanning.com.au/does-size-matter-should-you-buy-a-small-block-of-land-in-a-great-location-or-a-bigger-block-further-out-ep-125/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode Dave, Cate and Pete take you through:Weekly market updates 1. Investor activity and the impact on our rental marketsCoreLogic data shows that from early 2017 through to 2019, investor lending started to drop away due to APRA intervention. That means that less investors have been buying rentals property since pre-2017, resulting in less rental properties on the market. This has created a tight rental market with vacancy rates going down and rents increasing. A lot of investors are happy that rents and prices are going up, but this spells some challenges now for the community of renters, which will only increase when international migration picks up again. Supply is inelastic, so the government needs to consider how we’re going to increase the supply of property to cater for new entrants to Australia.2. Predictions on APRA measuresThe measures instituted by APRA from 2017 to 2019 ground investment lending to a halt. The Property Buyer predicts that we may see a change in policy, where higher buffer rates may only apply to the asset being purchased and not to existing debt, as significant issues will be faced if investors are chased away from the market. The Property Planner predicts that the current APRA measure of raising buffer rate by 0.5% is unlikely to have a large impact and the regulatory body will need to consider other measures to put in place.3. Parity between median house price and median unit price per suburbRecent data from CoreLogic compares the value of units against houses from 2016 to now for each suburb. There is an emerging opportunity for buyers who are looking at units, where you can identify a sweet spot for advantageous purchasing in a particular area. Older style apartments in the east have taken a hit over the last 10 years, due to gentrification of inner-ring markets in the northern and western parts of Melbourne. This shift saw an outperformance of houses, which were at one stage priced the same as eastern units, as people wanting to buy something for the longer-term and closer to the city and looked to the North and the West.4. Australia in pole position in the transition to renewable energiesOver the next two decades, the IMF expects a sixfold increase in demand for critical minerals worth $17.6 trillion, driven by the race to hit net zero emissions. The IMF has singled Australia to be in the top position to benefit in this transition, as nickel, copper, lithium and cobalt are key components in batteries and renewable energies and crucial in the transition away from fossil fuels. Australia is among the top three for global reserves for each of the four critical minerals, leaving us in a prime position to benefit from the new electricity storage and generation shift.Top investment tips #21. Which state or city should you invest in?The trio discuss the considerations of selecting which state or city to invest in, including diversification, market cycles, land tax that eats into your yield, the plans around your future home purchase and the dangers of hot-spotting.2. Your budget should drive the choiceData confirms that Melbourne and Sydney have outperformed other capital cities over the decades. Selecting an outperforming suburb can make a reasonable difference to your end position over a long period of time. However, it’s critical to select a quality asset and if your price range means that you are purchasing a compromised asset, it may pay to look at investing in a different capital city that better aligns with your budget.3. Buying within the bell curveThe Property Buyer shares a hot tip for selecting a state or city, and that’s to look at the median values and compare it with your budget. Staying within 20 to 30% of the median is often a good way to go, as this is where the majority of people can afford to buy and where most of the demand will be. If your aim is to target the lowest quartile and buy a bargain, you are introducing all sorts of risks into your investment strategy.4. Selecting a location and how that impacts asset selection - houses vs unitsThe trio get into the nuts and bolts of selecting a location, and depending on your budget, location choice could impact whether you’re able to purchase a free-standing house or a unit. For example, do you purchase a townhouse closer to the city or a house further away? You must go through this process to work out what you can afford and what is the best choice for your investment strategy. Generally speaking, if your aim is capital growth, the data is clear that houses are generally the way to go.5. How the yield, cash flow and your debt retirement strategy feeds into the dwelling selectionEven though interest rates are at all time lows, yield is still important. If your retirement strategy is to hold onto your properties and live off the rent, then a yield that allows you to pay down the debt is a critical consideration. On the other hand, if you plan to sell some of your portfolio to pay off the debt on the rest of your portfolio, then capital growth could be a key factor for you. Generally speaking, houses will have a lower rental yield than units and apartments.6. Different strokes for different folks – get the right advice for youEveryone’s goals and circumstances are different. The right strategy for person A may not be the right strategy for person B. Educating yourself with general information is a great way to go to increase your knowledge, but it’s certainly worthwhile to get qualified property investment advice that is tailored to you.7. Strategies for engaging with agents to improve the property buying experienceThe Property Buyer shares her top tactics for how to get information from agents and when is the best time to do so. Making yourself memorable for the right reasons is key, as agents can provide a wealth of information to help you on the journey.8. Finding a property managerA quality property manager will have deep knowledge of the area that you are purchasing in and can give you key intel, such as what kind of tenant you are likely to get, what will the likely rent will be, and what tenant tenure you can anticipate for the property in question.Visit the show notes - https://propertyplanning.com.au/listener-questions-top-investment-tips-2-selecting-a-state-city-suburb-dwelling-buying-within-the-bell-curve-the-role-yield-plays-debt-retirement-strategies-median-alignment-and-more-ep/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:Weekly market updates 1. Labour shortage predictionsAs ABC News shared, Australia is looking at having over 100,000 vacant jobs in the construction sector, including builders, tradies and project managers. This is likely to have a big impact on the state and federal government planned projects as well as residential builds. This will most likely influence purchasing decisions as well, as people looking to extend or remodel may opt to purchase instead of waiting it out on a long construction waiting list.2. Vacancy rates In the latest vacancy rates released by SQM research, 5five of our capital cities have vacancy rates below 1%, Brisbane at 1.4%, Sydney at 2.7% and Melbourne at 3.5%. Melbourne and Sydney have the highest vacancies, due to the languishing CBD rentals, which currently sit at 8.4% and 8.2% respectively. For the rest of Australia, the rental market is extremely tight, based on an industry accepted rate of 2% being seen as the equilibrium. Future overseas migration is expected to add further pressure to the rental market, creating a need for investors, (or government to apply considerable funding to public housing.)Top investment tips #1 1. How does your future home fit with your investment strategy?One of the biggest pieces of the puzzle, which is often forgotten about, is how your future home plans will fit into your investment pathway. Having a clear understanding of how your investment purchase could impact your ability to purchase your future home is critical. Many end up having to sell properties to secure their dream home and this is one of the biggest killers of wealth that we come across. Happily, this can all be avoided with some planning.2. Removing shades of grey – home vs investmentWhen purchasing a property, it’s important to be clear on whether it’s a home or a an investment. You will make it really hard for yourself and risk missing the mark if you conflate the two. When trying to overlay investment principles on a home, you may end up with something that you don’t love and life is too short!3. Set your money goals for surplus cash flow and available funds buffersTo work out what is an ideal price range for a comfortable purchase that won’t break the bank, you need a clear understanding of your cash flow and expenses. This is a difficult exercise in and of itself, however covid has added an extra layer of complexity as people aren’t spending as much as what they typically would have. Go through your expenses and determine what your living expenses are likely to be post-purchase, you may even discover areas in your spending that you can improve on. Set money goals of what you would like your surplus cash flow and available funds buffer to be after the purchase, and this will help you determine what price point you can afford.4. The traps of looking for a bargainHunting for a bargain at the expense of quality is one of the biggest mistakes that you can make and finding a bargain on an A-grade property is a rarity. If you find that a property is priced on the lower end, you need to ask yourself why? Is the property compromised and how? In a strong market, don’t expect to buy a bargain and remember, to secure a property, you need to be willing to pay more than anyone else!5. What is your financial goal for the property?Determining whether you are targeting capital growth, yield or a balance of the two will feed into the location and dwelling type selection. This is not a black and white option, it is a scale with many shades of grey in between. Picking the right shade of grey will depend on your debt retirement strategy and the end game. Do you plan to sell at retirement or pay down the debt and live off the rental income?6. Putting in place your mortgage strategy and pre-approvalThe Property Planner shares some tips on how you can optimise your tax deductions through your mortgage strategy and reduce your non-deductible debt!Visit the show notes – https://propertyplanning.com.au/top-investment-tips-part-1-how-price-point-drives-strategy-optimising-deductions-financial-goal-how-the-future-home-factors-in-the-dangers-of-buying-a-bargain-and-more-listene/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/1. How long has it taken property prices to double?After last week’s show when The Property Buyer prodded for more retrospective data, the Property Professor shares his research in Part B of how long it’s taken property prices to double for the previous decade, starting from March 2002. While Sydney took first place for the most recent 10 years, they are dead last for the previous 10, while Hobart takes the cake and required only 3 years to double in value during this particular decade.2. September growth posts solid results amid an easing growth rateAustralian housing values increased a further 1.5% in September, after 1.5% in August and 1.6% in July. Annual housing growth has finally cracked the 20% mark, with September’s results pushing the annual figure to 20.3%, which is now the fastest pace since June 1989.3. Perth and Hobart surpriseAstonishingly, the Hobart unit market continues to surprise. Values in Hobart have risen 26.8% over the last year, while the unit segment has risen 31%. Perth has reappeared in CoreLogic data after a short hiatus while CoreLogic investigated some inconsistencies. Annual figures for Perth show 18% growth at the end of September, which is a large jump from the 10.8% noted in July’s index results.4. Rents continue to rise towards rental crisisThe lowest performer in the rental market is Melbourne, which is up 4.1% for houses and still in negative territory for units at - 1.6%. Other capital cities record results of rental increases between 4% and 15%, while Darwin is at 21.2% increase in rents for houses and 20.3% for units. Some people may argue that we have a housing crisis on our hands.5. The best cure for rising housing prices is rising housing pricesThe more house prices increase, the more unaffordable they become. By this fact alone, the rate of growth will slow down and we’re already starting to see that. It’s also another reason why we’re seeing the value of unit growth converge again in line with house price growth, as people who are priced out of the housing market, turn to units. Other factors include the cost of funding for lenders increasing, which we will start to see through rising interest rates and also APRA intervention to slow down lending. If the RBA don’t increase rates until the start of 2024, these factors will make it harder to borrow money and the property market will likely demonstrate an ease in the pace of growth in 2022.6. Consumer confidence – time to buy a dwellingOverall, people still think that it’s slightly a negative time to buy a dwelling, as the index reached 96.7 points in September, recovering from 88.9 in August. The Index is still 26.8% below its November peak of 132, but it is closer to the 100 mark, which suggests a more balanced view. WA is a stand out at 118.8, they are very optimistic about it being a good time to buy a property. Queensland is at 105, but Victoria is the lowest and the most pessimistic about the property market at 87.3.7. Growing gap between Melbourne and Sydney mediansMelbourne’s median is only 73% of Sydney’s. Melbourne didn’t trade at all during lockdowns, except for those who were willing to purchase sight unseen. This disparity is likely to condense over time and we wouldn’t be surprised if we saw this discrepancy tighten towards the end of the year and in the years to come.8. Listings – new listings, total listings and monthly salesNew listings and total listings have taken a dive. On the other hand, monthly sales relative to previous years is really strong, which is telling a story of enormous buyer appetite, with very limited levels of stock remaining. As Melbourne and Sydney come out of lockdown, you will see more listings in the market, but also more buyers will come back into the property market.9. Predictions for the rest of the yearThe Property Professor puts the Property Buyer and Property Planner on the spot, for their predictions for the rest of 2021. Tune in for their forecasts.Visit the show notes - https://propertyplanning.com.au/the-latest-property-forecast-and-overview-rental-shortages-housing-growth-and-market-trends-in-australia-apra-steps-in-and-more-market-update-ep-122/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:1. Heritage listing and heritage overlayThe trio discuss the impact of heritage listings, which protect a particular property. Although the supply of heritage property is relatively limited, so is the demand, due to the restrictions in being able to renovate and update the look of the property. Heritage overlay on the other hand protects the consistency of the properties on a street, normally to preserve the charm and architectural appeal of a property in a place of historical significance. Heritage overlays are varied and the types of heritage overlays range from façade appearance to paint colours to specific attributes of heritage significance, such as chimneys and windows. Many heritage overlays are specific to particular streets and precincts too.2. Council zoning and regulationsIf you’re purchasing in a developer friendly zone and the houses in the street are 40 years old or more, then you need to consider the future impact this will have on the street scape. Council regulations can limit the amount of property that can be built on a block of land by setting a minimum site area. If the minimum site area is quite large, it will be very difficult to subdivide the land and there is little chance of developments in this area.3. NIMBY suburbs – not in my backyard!The state government will give local governments targets on increasing population density. The approach taken by NIMBY suburbs will be to allow for high density dwellings on main roads and near transport hubs, rather than medium density in the streets. The drawcard of these suburbs is not to live in an apartment on the main road, but in a beautiful character home in the side streets. As character or period homes are no longer being built, they are in limited supply and, conversely high demand. OECD data has shown that Australian house values have experienced the fourth highest house price growth over the last 20 years because of development laws.4. Purchasing a block with subdivision capabilityIf you are not set on doing a subdivision, but would like the option to do it at some undefined time down the track, question whether this is the right strategy for you. If your block has the ability to subdivide, then the chances are that the rest of the houses on the street also do. This means that your street can turn into a medium density hot spot of renters and first time buyers, with lots of cars in the street and cheap built decaying units. If you are thinking of subdividing, then it’s better to be the first on the street and not the 20th! And in a gentrifying area, a capital growth, buy and hold strategy can be optimized if you can pick the A grade street and watch it beautify over the years.5. The population paradoxOn the macro or city level, you want to look at purchasing in a city that is attracting more people and experiencing population growth. On the suburb level, look for a stable population, because that implies that there isn’t a high supply of new property. In NIMBY suburbs, there is a high level of demand, but supply remains the same. This is in contrast with new Greenfield estates, where the supply is great, and demand raises to meet the supply before more are built. This is also a skewed sector of the market, where demand could be artificially created by governemnt incentives and grants to purchase new property. And don’t forget to consider the land to asset ratio!6. Rural towns and infrastructureWhen comparing country towns, mains electricity, water and sewerage can be a key factor. The comforts of city living vs relying on rain water and septic tank maintenance can have a big impact on demand.7. Superstar cities – employment, job availability and industriesSuperstar cities such as New York, London, Paris, San Francisco, Hong Kong, Melbourne, Sydney and Auckland have a wildly disproportionate share of the world’s leading high-value industries, high tech innovation, start-ups and top talent. For example, London accounts for around 25% of all economic value in the UK. Even more strikingly, when it comes to high tech start ups, globally just 6 city regions of London, San Francisco, New York, Boston, Washington DC and San Diego attracted nearly half of all the high tech venture capital investment across the entire world in 2016. These factors can create an increasing inequality between some cities and others, and within different parts of these cities, which is most obviously reflected in property values.8. Rental returns and vacancy rates In a climate where rents are increasing and vacancy rates are decreasing, there will be more demand for investment properties. If you have a township or a city that is plagued by high vacancy rates, that will have an impact on the desirability of that area as an investment. Especially in smaller towns where there is a limited number of major employers who then leave the market.Visit the show notes - https://propertyplanning.com.au/how-supply-and-demand-dictate-market-movements-part-3-locational-drivers-superstar-cities-population-paradox-nimbyism-zoning-development-yields-vacancy-rates-heritage-overlays-reg/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode, Dave, Cate and Pete take you through:Weekly market updates1. APRA concerned over high debt-to-income lending, but no intervention for nowOutstanding housing credit hit $1.9 trillion in June, which is 4.7% higher than 12 months ago. Compared with how the property market has moved in the last year, it doesn’t seem too high. However, the June quarter saw a rise of high debt-to-income lending which is now at 21.9%, up from 15% two years ago. At the same time, lending with high loan to value ratios fell and interest only loans are the least in number they’ve been in the last two years. This indicates that we may be borrowing more, but not leveraging as hard and APRA doesn’t believe lending standards are deteriorating.2. Latest ABS stats on capital city property pricesThe ABS has released figures for the June quarter for the Residential Property Price Index, showing price increases of 6.7% over the last quarter for the combined capitals. This is the fastest rate of growth in any quarter since 2003. Over the last 12 months, values rose by 16.8%. Interestingly, capital city figures did not match CoreLogic’s analysis in all cases which highlights discrepancies between data houses and the challenges of relying on data from one source.3. The dangers of data delayEach capital city is exhibiting enormous growth runs, despite the pandemic. In Melbourne and Canberra, our ability to trade has been so restricted, that the only purchasers left in the market are those who are willing to purchase sight unseen or do video walk throughs of a property. This is a perfect illustration of data lag, as this won’t flow through in the numbers until later.Location based factors that impact supply and demand1. Access to public transport and shopsAccess to public transport is a key driver for demand and is increasingly important in larger cities. Access to shops is another key driver, although retail trade analysis shows that the larger the shopping centre, the further people are willing to travel to reach there. What we see now is that the desire to be close to shopping centres has been replaced with a desire to access local shops and nice cafes. Being within walking distance to your transport hub or local shopping precinct is a major draw card.2. Quality schoolsProximity to quality schools, particularly prestigious public schools where the perception is that your child will get a private school education at public school prices, is a major driver for many parents when picking a location. This greatly increases demand for properties that are within the zone of a public school or properties within 30 minutes commute of private schools. The Property Buyer shares a tip to do a cost benefit analysis, as many parents will pay extra to get in the zone of a public school, but maybe you’d be better off paying the private school fees and saving on the elevated purchase costs?3. How close is too close?Being nearby to great amenities and services can greatly impact the desirability of a location, but being too close can be problematic. Train lines, rubbish tips, industrial areas, petrol stations and shopping precincts are just a few of the things that you need to be mindful of being too close to. Think about the noise, the people and the smells. Is the property too close for comfort?4. Proximity to the CBD, are we at the beginning of a new era?The CBD apartment market has been one of the worst hit during covid, but will we see a permanent exodus from the CBD? The trio discuss the elements which still make the CBD or living close to the CBD an attractive prospect. Although the office market may never be the same post-covid, the CBD is still a hub for transport, shopping, sports, social gatherings and a number of prestigious private schools.5. Recreation, sports, leisure and the outdoorsAccess to sporting fields, clubs, pools, parks and the outdoors play a big part in determining the desirability of a location. Arguably they are appreciated now more than ever because of covid lockdowns. When it comes to the great outdoors, the biggest impact will be proximity to the beach, where it will be more expensive but also have higher prospects for capital growth.6. Prestige of the areaA name and post code can make a lot of difference. Prestige is something that matters more to some than others, but it is a real thing. It’s the same reason why some people drive a Mercedes and others are happy to drive a Nissan. The Property Professor shares the example of Angwin Avenue in Adelaide, which divides the suburbs of Prospect and Blair Athol. The Prospect side of the street is valued higher, and it’s all because of the post code.7. Visual aspects, geography and climateThe Property Professor compares two regions in Adelaide, both 40km away from the city, but with very different price tags. What sets these locations apart? It comes down to the views, geography and climate. As a general rule, if your location is closer to sea level, there is greater risk of flooding, and the higher you are, the more chance you’ll get a nice view.8. Looking for a beautiful streetscapeThe trio discuss the four elements that make a desirable streetscape, with the reminder that the best approach is to buy on the best street. Counterintuitively, a lot of people look for sub-division capability to drive capital growth in the future, however in a few years time, your beautiful street may not be so beautiful anymore. It could be lined with new townhouses in a higher density area.9. Conducting your reconnaissance missionsWhen scoping out whether a street is classed as A-Grade or B-Grade, one valuable hint is for buyers to get there at school pick up time or at peak hour and see what’s happening. Do people park on this street because it’s within walking distance of the nearest shopping precinct or train station? Is it a cut through street between two main roads that receives a lot of commuting traffic? This all goes into what makes an A-Grade street and translates into a huge difference to capital growth performance.Visit the show notes - https://propertyplanning.com.au/how-supply-and-demand-dictate-market-movements-part-2-streetscapes-schools-transport-prestige-shops-cbd-access-recreation-entertainment-and-more-ep-120/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/Weekly market updates1. How have two-bedroom, single fronters been impacted through covid?Cate shares an article she has recently written analysing the performance of 6 two bedroom, single front cottages across Melbourne. A lot of people have expounded the popularity of 3 bedroom houses in the wake of covid lockdowns (including us), however the demand for these smaller dwellings has been strong. Why is that? Visit the show notes to read the article.2. Dangers of online mortgage calculatorsDave shares the real-life examples that unsuspecting consumers have come across when using unreliable online mortgage calculators. In one particular example, a couple saw a differential of $160,000 between the online calculator and their credit assessed borrowing capacity, all because the online calculator didn’t ask how many dependents they had. Other traps include not differentiating between variable incomes and purchasing in high-density post codes were income could be shaded to as low as 65%. The devil is in the detail when determining your borrowing capacity.Macro-economic factors that impact supply and demand1. Why is supply and demand important?The Property Professor takes us through Economics 101 principles of supply and demand. These forces determine the price of any commodity. That is true of bananas impacted by cyclones, steel, cars, and of course, property!2. Consumer confidence and the self-fulfilling prophecy of market sentimentA great influence on consumer confidence is security of employment. We are more likely to commit to a mortgage when we feel safe in our jobs, which results in more demand and property prices increasing. There was a big dip in consumer confidence from March to June in 2020, largely due to the uncertainty of covid and the economic impact. But when we saw that the sky was not going to fall in (thanks to Government stimulus and lenders offering repayment holidays), consumer confidence lifted and property prices started to increase again. If enough people believe that property prices will rise quickly, more people will jump into the market due to fear of missing out, thus increasing demand and therefore property prices – the self-fulfilling prophecy.3. State of the economy, foreign investment and developmentWhen consumer confidence is high and jobs are secure, you get extra foreign investment pouring into the country when the economy is doing well. This goes towards development, whether commercial or residential, and drives business investment. This creates more jobs, lower unemployment and more money in the economy to go towards investing in assets. Employment and unemployment is a major consideration, with Melbourne now in it’s 6th lockdown, the economy is impacted. But this will create opportunity on the other side, when life returns (somewhat) back to normal. So far, we are yet to see property prices negatively impacted by such concerns but we don’t make assumptions in this unprecedented environment we’re navigating.4. The Wealth Effect driving spendingWhen property values have increased, jobs are secure and confidence is high, people feel wealthier. The more wealthier you feel, the more you spend, which makes you happy and then you spend more! Government stimulus, cash flow boosts, lower interest rates and higher savings booming across businesses and consumers suggests that many people are feeling wealthier and are itching to spend.5. Government assistance and stimulusThe trio discuss the impact of government assistance and stimulus, which is often very targeted towards certain buyers or segments of the market. This has a profound influence on demand in those segments. First home buyers are usually prioritised by the government, but these people are not buying $2M homes; they typically buy apartments and villa units, which impacts a particular segment of the market. Similarly with stamp duty concessions, there was a recent rush to the sub-$1M Victorian market to meet the eligibility requirements of the discount.6. Cost and availability of finance, interest rates are not everything!The Property Professor takes us through the last 30 years of property price increases and how they relate to interest rates. Lower interest rates do not necessarily equate to more demand, however access to finance has a huge impact. From 2017 to 2019, we had our biggest property dip on record, which was driven by access to finance, government policy and APRA regulation. Coupled with the Banking Royal Commission, lenders were shaking in their boots, afraid that their skeletons would be revealed, and loan assessments turned into a forensic exercise which still remains today. We saw non-bank lenders flourish during this period and gain market share, as they weren’t regulated by APRA in quite the same way and weren’t required to comply with the same stringent measures set on banks.7. Existing supply and demand for housingDevelopers take into account the existing supply of new apartments. If the market is saturated, why build more? Often developers need to forecast for demand in 2 or 3 years’ time, but if they need to borrow the money, a certain percentage of these must be sold before the lender approves the finance, which confirms the demand, (even before the developer starts building). The percentage is calculated as a function of the developer’s financial position, the risk assessment conducted by the lender and the timeframe required. In many cases this figure is well above 60%, and often 80%. These off the plan sales requirements enforced by the lender are known as “pre-sales”.8. Tax and SuperannuationGovernment policies impacting tax and Superannuation have a great influence in the property market. The trio discuss the Labor party’s proposed changes to negative gearing for our 2019 Federal Election which loomed heavy over investors, causing many to take a back seat to purchasing before the outcome of the election was known. Once the Liberal party was confirmed to have won the election, the investors came rushing back to the market like the boxing day sales and values started to boom again. SMSF is another key area, where changes to SMS funds being able to own property saw billions of dollars, which were previously untapped, flow through to the market.Visit the show notes - https://propertyplanning.com.au/how-supply-and-demand-dictates-property-market-movements-part-1-the-macro-economic-forces-at-play-ep-119/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:1. Victoria still trading despite lockdownNon-auction sales have risen to 1,028 over the week. Since listings have gone down, this indicates that older stock on the market is clearing and sales, (including online auctions) are going ahead in full force. Virtual open for inspections are occurring, where the vendor gives you a tour of their house and is actively involved in the selling process. Cate shares her tips on how to navigate this innovative way of inspecting property.2. PIPA investor survey – where do you get your property investment education from?The #1 source for property investment education was from professional advisors, which is great news for all the Australian’s who have been able to make smart property decisions. Second on the ladder was podcasts. Traditionally webinars and seminars were at the top of the list, now only making up 2% each, showing the extent of market disruption. The Property Professor was sad to say that only 4.5% of people get their education from books.3. Value growth in August continues to lose steam, but still going strongAustralian housing values increased a further 1.5% in August, showcasing an annualised rate of +18% pa which is still very high. But we’ve now had a five month trend of slowing growth, peaking in March at +2.8% and then easing month on month. We think this growth trend will continue. Over the last 12 months, we’ve seen +18.4% growth in property values and that will soon reach above 20%.4. Stand outs for the monthThere is no end in sight for Hobart’s growth, increasing in August by 2.3%, with Canberra hot on its heals with 2.2% growth. Over the year, Hobart has grown by 24.5% and boasting total returns of 30% when you factor in rent. In the above 20% club for annual growth is also Darwin 22%, Canberra 22.5% and Sydney who has just joined the party with 20.9%. Brisbane is not far behind on 18.3% and Adelaide at 17.9%. Stay tuned for next week’s episode where Pete will reveal how long it’s taken for each city to double in price.5. What happened to Perth?It seems CoreLogic have been listening to our podcast, and is now trying to figure out why Perth growth has been lagging and have actually removed Perth from their daily and monthly indices. CoreLogic is now investigating a divergence in housing market measurements for Perth. Watch this space...6. Rental growth drives forward with all capitals on an incline, except Darwin and PerthDarwin and Perth have led the capital cities in rental growth over the last 12 months, Darwin in particular increasing by 23% for houses and 21% for units. Melbourne is still in negative territory for units, however a sharp turn-around is visible from when the market bottomed out. The trio ponder the reasons behind the trending rise in unit rents.7. New listings take a dive, should you hold off on making a purchase?Overall, listings fell nationally by 7.8%, largely due to the two biggest markets of Sydney and Melbourne taking a dive in listing volumes of –10.7% and –31.2% respectively. The Melbourne market has been largely affected by lockdowns and vendors electing not to sell, (or to delay their campaigns). But demand remains strong, largely driven by FOMO. We think the ratio of buyers to sellers will stay largely the same, even when more vendors come onto the market, as there are plenty of buyers who are also electing to wait it out. Waiting it out could be a good idea if you’re not desperate to purchase immediately, where there will be more choice available later down the track. It’s unlikely that there will be any bargains available, so if you’re waiting for a bargain, you’ll be waiting a long time. The risks of waiting it out, is that the market will move between now and then, and your dream property will become financially further away.8. The latest on our wagesNationally wages rose 0.4% in the June quarter and 1.7% over the last 12 months. This is below the rate the RBA is targeting, they want to see wage growth ideally in between 3-4% before they start lifting the cash rate, (still not expected until 2024). The Australian Capital Territory recorded the highest quarterly rise of 0.6%, where unemployment is very low and jobs are very stable, which has also flows into their property price growth. The Northern Territory recorded the lowest quarterly wage index rise of 0.1%. Interestingly, Tasmania maintains the highest through the year rise of all the states and territories for the third consecutive quarter at 2.2%. South Australia and Western Australia recorded the lowest through the year rise of 1.6%.9. July lending indicatorsLeading indicators for July increased for housing overall by 0.2%, after a fall of 1.6% in June, indicating a plateau in the market. Owner occupiers fell by 0.4%, with first time buyers dropping off a cliff with 7.6% reduction month on month. Investor loan commitments continue to increase, with growth of 1.8% over July, meaning that investors are now make up 29.11% of new finance. This is still below the levels where APRA intervened in 2015 where investors made up 46% of new lending.10. Household savings ratio sees an uptick over JulySavings rates are increasing once again and household savings are expected to hit at least $200 billion this year, with $25 billion added in July as lockdowns in Sydney and Melbourne kept people indoors and spending less. The increase was the second-largest on record, topped only by July last year, as tax returns and government COVID-19 stimulus and supports helped push savings to $167 billion above pre-pandemic levels.Visit the show notes - https://propertyplanning.com.au/property-values-and-rents-continue-to-rise-in-august-as-four-capitals-reach-above-20-annual-capital-growth-new-listings-take-a-dive-investor-numbers-on-the-rise-and-household-savings-again-on-the-u/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/Weekly market updates1. Cate and Pete's exciting auction weekendTune in to hear Cate and Pete’s thrilling experiences of each successfully securing a property over the weekend, despite the lockdown challenges and last minute changes of plans.2. Tight rental vacancy ratesThe national monthly vacancy rate holds steady at 1.7%, from June to July. Not surprisingly, the Sydney and Melbourne CBD markets continue to experience higher vacancies, with Sydney increasing up to 6.1%, now higher than Melbourne’s 5.7%. Brisbane is the only other capital city with vacancies above 1%. The tight vacancy rates have meant that rents have increased 13.7% over the last 12 months. The trio discuss why this is happening, given that international borders are closed and we’re not seeing any population increases.Agent behaviours that buyer’s don’t like1. Extending the negotiation or offer acceptance periodThe agent has given you a deadline to submit your offer, you wait with bated breath... Then the acceptance period gets extended. The reality is that there is no obligation for the agent to stick by a specific timeframe and the agent has full control of the process; they call shots. While buyers will be doing their best to shut down competition, it’s the agent’s job to bring extra players to the fold and create competition to bolster prices to great a great result for the vendor. The Property Buyer gives her tips and key questions to explore before you put pen to paper and submit your offer.2. Asking if your best offer is actually thatThe Property Buyer estimates that 70% of the time when an agent asks you for your best offer, they will come back to you asking if that’s your best. This is common practice. The trio discuss how to navigate this situation.3. Not offering private inspectionsThere may be many reasons why an agent declines a private inspection. They may be related to the vendor’s circumstances or the agent could just be busy, (or lazy). Some reasons may be related to you! The agent may believe that your budget is nowhere close to where it needs to be or that you’re not serious about the property. Strong conditions in a seller’s market, where there is lots of interest in the property may mean that the agent doesn’t have to go the extra mile and give prospective purchasers private inspections. In Victoria, if the property is tenanted, the tenants are entitled to rebates for every open and agents don’t want to rack up a huge bill!4. Not returning your phone callsIn this market, agents are being inundated with enquiries and properties are selling in days, not weeks. The trio discuss the fundamentals of providing good service and getting back to people in a timely manner. Those that prosper are the ones that provide good service consistently.5. Insisting on a signed contract and a deposit paymentAgency practices can differ widely. One may be ok with an offer submitted via email, while another may insist on a signed contract with deposit. Agents and vendors no doubt have been burned in the past by receiving verbal offers from buyers that have then disappeared over night. The trio talk about the agent obligations in running a trust account, and recommend that buyers always ask for a receipt. Remember, an agent is only legally required to present your offer to a vendor if you’ve submitted a signed contract with a consideration.6. Not disclosing sold prices on the internetThis is a huge frustration for buyers and businesses in the property industry. It means that the quality of the data on hand may not be accurate or to the highest standard. However there are no legal requirements for the agents to disclose. The trio discuss the reasons why a sale price may be withheld from public record . They also discuss the side issue of the dangers of purchasing in medium to high density apartment blocks, where the data can be skewed by a number of factors.7. Over-quoting the rental potential for a propertyAgents are not all on the money with their rental appraisals, particularly if you’ve put them on the spot. This can be a nasty shock when you’ve modelled your cash flows, only to find out that the rental return is far from what was quoted. Some agents will feel a vested interest to over-state the likely rental return in an effort to drum up interest and competition. Always get a second opinion from an independent local property manager or valuer.Visit the show notes - https://propertyplanning.com.au/understanding-the-real-estate-agent-behaviours-that-buyers-dont-like-part-2-ep-117/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#116, Dave, Cate and Pete take you through:Weekly market updates1. The price of iron ore has dropped by 30% since the end of July and property growth in Perth wanesLooking at the daily CoreLogic index, Perth is the only city exhibiting negative growth this month. Although we don’t place as much trust in the daily index, Perth has shown, (over 2021) to have the least growth of all capital cities, at 11%. The declining price of iron ore hasn’t helped Perth as far as the economy and property market is concerned. It looks as if the Perth property market is flattening out.2. Latest unemployment data for JulyABS unemployment data has shown the unemployment rate drop to 4.6% from 4.9% in June, which is the lowest rate since 2008, (post the GFC). However, in the wake of lockdowns, the participation rate has fallen by 1.3 points over the year, which indicates that people leaving the job search yet not being picked up in unemployment statistics. This could be due to retirees hitting the go button or casual workers holding off on finding employment to take the opportunity to upskill. The effective unemployment rate could be actually 6%.3. The lay of the land post lockdownAs vendors put their plans to sell on hold, post-lockdown campaigns are going to bank up. It’s likely that auction campaigns could be reduced to run for only two weeks, to accommodate for the back log and desire to sell prior to Christmas. This could be a good opportunity for purchasers to take advantage of. It is critical to be prepared and ready, have your finance approved so you can pivot quickly leading into the spring market.How much can I borrow?1. Assessment of variable and rental incomeEight out of ten people have some form of variable income, whether that’s overtime, commissions, bonuses, sub-contracting or self-employed income. This is a key component for lender policy, as lenders have different methods of assessing and more importantly, shading, (moderating) variable income. However, there are second tier lenders who will consider 100% of your variable income, having significant impact on your purchase price, strategy and portfolio planning. Real estate agents are a perfect example, where they are typically on a modest salary and the majority of income earnt is in commission payments.2. Rental incomesMuch like variable incomes, lenders will usually shade rental income to 70-80% when assessing your borrowing power. This is to make allowances for rental vacancies and property maintenance. Similarly, to variable there are second tier lenders who will not shade rental income.3. Vanilla or rainbow dealsPAYG applicants, with no variations in income are referred to as ‘vanilla deals’ - plain, delicious and easy to get approved. However, if you have variable income, rental income, credit issues or you’re an expat living overseas, (or any other challenging aspects to your application), it pays to have a strategic mortgage broker in your corner, who is an expert in the market and can find you the most favourable lender and product offering to maximise your borrowing power.4. Interest only vs principle and interestWhen APRA implemented caps to interest only and investment lending, the way interest only loans were assessed also changed. If you elect to have an interest only period, the lender will assess your capacity to repay the loan based on the remaining P&I term. This means that if you have chosen 5 years interest only, you will be assessed based on your ability to repay the loan over a 25 year period, rather than 30 years, having the effect of reducing your borrowing capacity. However, choosing a smaller interest only period of 1 or 2 years, rather than 5, will also increase your borrowing power.5. Interest only and future changes in borrowing capacityMany investors will elect to have interest only periods, with the view to refinancing at the end of the period to secure a further interest only term. However, if your borrowing capacity changes during this time and you cannot refinance, you may be stuck with the principal and interest payments. This is something that all borrowers should consider. Ask yourself if it will be affordable for you to pay principal and interest if you can’t roll over the interest only period or refinance.6. Repayment type, strategy and loan to value ratiosWhen choosing an interest only period, it’s also important to understand how that will interact with your loan to value ratio (LVR). Most of the major lenders will not allow you to borrow higher than 90% LVR on an investment loan, while some non-majors will only allow interest only repayments if the LVR is 80% or under. Other lenders don’t allow interest only repayments on owner occupier debt. These three key factors will either limit or increase the number of lenders that you have access to:1. Repayment type – interest only or principal and interest2. Strategy – investment or owner occupier3. LVR7. Lenders mortgage insurance, hurdle or enabler?Lenders mortgage insurance (LMI) is payable on loans with an LVR above 80%. Simply, it allows you to get into the property market with savings of as little as 5%, plus stamp duty costs. For most first time buyers, unless they are getting significant support from parents, LMI is the leg up they need to get into their first property. It’s also helpful for those who have an aggressive property portfolio strategy to accumulate property quickly. For someone who has savings of $100,000, LMI can be the difference between purchasing a property of $500,000 or $1M. For those not wanting to pay LMI, and preferring to save the money for a deposit, ask yourself whether you can save at the same or higher rate than the rate at which property market is moving? There are tips and tricks to use for reducing your LMI bill, but don’t let that get in the way of making a great property decision.8. Core difference between banks and non-banksFor those wanting to maximise borrowing capacity, especially property owners with multiple properties in their portfolio or investors with significant debt, non-bank solutions will often provide a superior outcome. They have a certain policy niches that make non-banks more attractive (subject to the complexity of your situation). Non-banks can cater to those who have credit problems, shorter-term employed and larger non-base incomes (bonus, commission, overtime, allowances). The important thing to remember is not to get too caught up if the rate is a bit higher, if it means that it’s costing you achieving your dream home. Be conscious of the lender choices you’re making and how that’s impacting your property strategy and property plan.Visit the show notes - https://propertyplanning.com.au/how-to-increase-your-borrowing-power-learn-how-investors-first-home-buyers-and-upgraders-increase-capacity-ep-116/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:Weekly market updates1. Sales outweigh listingsData from Domain shows that for every new listing, there are 1.4 sales. In simple terms, more properties are being sold than put on the market for sale. This spells a challenging buyer-seller imbalance and one that we can anticipate will be exacerbated by the impacts of lockdowns across our nation.2. Correlating covid cases with housing salesInteresting data tracking the number of daily covid cases and the number of housing sales in the Northern beaches of Sydney shows that the higher case numbers, the higher the sales volume. Ability to trade during the pandemic is one key factor, but what is causing this buyer demand? The trio question whether it is happening across broader Sydney and whether it is a correlation or merely a coincidence.3. Sharp decline in ‘Time to buy a dwelling’ indexThe Westpac-Melbourne Institute’s “Time to buy a dwelling index” has posted a sharp decline of 8 points from July, down to 88.9 in August. This is the second lowest reading in the last 10 years. The index is a good forward leading indicator of what is likely to happen in the market and suggests owner occupiers are feeling the heat and the market is getting too heady for first time buyers and upgraders. Remember! When the rest of the pack are fearful can be a very good time to buy.How much can I borrow?1. The age-old question - how much can I borrow?Often the first question our strategic mortgage brokers get from eager clients is ‘how much can I borrow?”. Rarely straight forward, it’s a vexed question with various nuances to be worked through. Each lender has their own set of rates and policies, and mind you, there are about 60 lenders out there, all with varying products on offer! Which lender will treat your scenario the most favourably can be broken down into four key factors:1. assessment rates.2. variable incomes.3. interest only vs principal and interest4. how lenders mortgage insurance impacts purchase price.In this episode, the trio tackle the ins and outs of assessment rates.2. What are assessment rates?The assessment rate is the rate that lenders use to assess your borrowing capacity and this rate is always higher than the rate you are actually going to pay on your mortgage. The purpose of the assessment rate is to stress test your ability to make repayments to account for future uncertainties such as: future rate rises, reductions in income, unemployment, change of employment, illness, divorce, expected events (having children) or other unexpected events that may happen during the loan term (which is often 30 years).3. The floor assessment rateFloor assessment rates are mandated by APRA for the banks and also one of the tools that APRA used when trying to slow down interest only and investment loans. The floor assessment rate is the lowest rate that a bank will use to assess borrowing power. As an example, Westpac’s floor assessment rate is 5.05%. When assessing borrowing power, most lenders will use the higher of your actual rate + 2.5% OR the floor assessment rate.4. Why using online calculators is fraught with dangerThere are many different considerations which go into answering the question ‘How much can I borrow?’ Loan to value ratios, lenders mortgage insurance, investment vs owner occupied purpose, fixed vs variable, principle and interest vs interest only are just a few of the considerations which can impact the answer. And that’s just scratching the surface!5. Loan to value ratiosOften referred to as LVR, the loan to value ratio is the proportion of the loan against the value of your property. For example, if your property value is $1,000,000 and the loan value is $800,000 – the LVR is 80%. The LVR is a fundamental component of borrowing to purchase property and lenders use this as a key measure to assess risk, when deciding whether to or not to approve a home loan. The general principal is that the higher the LVR the more risk there is to the lender in the event of market fluctuations and in particular, market declines. Each lender is different in their treatment of LVR and the correlation between LVR and assessment rates is an important one to understand.6. How will risk be factored in the future?Banks have started to price loans based on risk: the riskier the loan, the higher the rate. With open banking and credit scoring, moving to a system where the products and pricing available are based on your loan to value ratio and credit score will only become more prevalent in the coming years.7. The interaction of variable and fixed ratesLenders often base their assessment rate on the rate that you’re actually going to be paying on the loan. But what happens if a portion of your loan is fixed? Will they take the lower or the higher rate? Will each loan have a different assessment rate? Or the rate that you will pay at the end of the fixed rate period?8. How times have changedTake a stroll with the Property Planner and Professor down the memory lane of how mortgages were approved in the 80’s and 90’s. Much has happened since then, the advent of digitisation and growth of lenders has turned getting a mortgage into a far more complex exercise. Luckily, thanks to Aussie John, you have mortgage brokers that do all the hard work for you!9. Stay tuned for part 2 next week!In next week’s episode, the trio will cover variable incomes (which impacts 8 out of 10 people), interest only vs principal and interest and lenders mortgage insurance!Visit the show notes - https://propertyplanning.com.au/how-much-can-i-borrow-how-borrowing-capacity-can-be-impacted-massaged-and-manipulated-without-breaking-the-rules-of-course-ep-115/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this episode Dave, Cate and Pete take you through:Weekly market updates1. Rise of the regionsThe growth experienced over the last 12 months in our regional cities has taken the nation by storm. But is this driven by an escape from the cities or the prospect of buying bigger homes? There is certainly a correlation between larger housing/land and regional moves, particularly for those regional cities which are within commuting distance to the capital.2. The experiment in New ZealandOver the last few months we’ve seen our friends in New Zealand abolish negative gearing, introduce macro prudential measures on loan to value ratios and more recently, there are talks of giving the RBNZ more power to restrict lending based on debt to income ratios. Quarterly value growth has more than halved since April as a result of these measures, rising 4.3% in the three months ending in July, down from 8.9% in the previous quarter. The New Zealand market is a good barometer for where Australia is heading, with unemployment down to 4.0% in NZ and inflation hitting 3.3%. Interest rates are almost certainly going to rise next month. We continue to watch the story unfold in New Zealand with keen interest.Olympic Games’ impact on property values 1. Property price performance and major sporting eventsThe trio discuss studies conducted on how major sporting events impact property price performance in host cities. The evidence shows that results are not uniform, and largely depend on the coordination and planning of developments and the scale of total investments. In other words, the development of infrastructure built for the purpose of the event and the longevity and repurposed use post the event.2. When can you expect an uplift in prices?The Property Professor shares research conducted on the Sydney Olympics, which revealed that host suburbs experienced substantially higher growth during the bidding and pre-Olympic periods, but not after the Olympics were held in 2000.3. Athlete villages across the world and post-Olympic planningThe trio discuss the athlete villages built for London, Rio, Munich, Turin and Tokyo. Athlete accommodation in these cities has been repurposed with varying degrees of success, from selling to private owners, public and refugee housing and student accommodation. The key to understanding whether these dwellings will be a good investment, will largely depend on the post-event plan, execution and desirability.4. The story of West Heidelberg and Wendouree after the Melbourne 1956 gamesWest Heidelberg is on the fringes of Melbourne’s affluent eastern suburbs, yet struggles with considerably higher levels of crime and poverty. Post the Olympic Games, the athletes village was converted to public housing, with 2,000 public housing residents living in the Olympic village today. It continues to be a low socio-economic area, similar to Wendouree West in Ballarat which hosted the rowing events.5. Longevity of stadiumsNations hosting major sporting events are getting creative with their building of infrastructure, in particular, building temporary structures which will be demolished after use. For the Winter Olympics, South Korea built a temporary stadium which was used 4 times and immediately torn down. A stadium built out of shipping containers is being built for the Qatar 2022 World Cup. If you are going to invest, be sure that the infrastructure that lures you in the first place is going to stay on!6. Infrastructure upgrades that drive valuesThe trio discuss which infrastructure upgrades will provide the best long-term capital growth prospects for host suburbs. Those which improve transport are the best, (eg. road and rail), and will be there for a long time. For our nation’s largest capitals (Melbourne, Sydney and Brisbane), access to public transport is a key driver of capital growth. The key for investment in Brisbane will be the infrastructure upgrades to better connect the Sunshine Coast with the capital city.7. Back to basics – the fundamentals of property investmentAlthough hosting a major sporting event is an exciting novelty, the tried and true principles of property investment still apply. New developments to house athletes are most likely going to be built on land or locations that typically hasn’t been highly sought-after, which is why there is space available. This lends to properties with low land to asset ratios and brand new dwellings that will depreciate rapidly. At the end of the day, property prices are driven by desirability and competition – how many people want to live there? Which in turn is driven by lifestyle and liveability factors. If those factors will improve, then there will be a flow-on effect on prices. The trio recommend that for long-term growth, buyers should invest in existing locations that will benefit from an infrastructure upgrade, rather than new locations on the fringes of the city.8. High risk of vacanciesWhere there is an influx of supply, in the case of athlete villages being sold to private owners post the event, there is a risk of high vacancies. This is more likely to occur for the new properties that are built for athletes, in high density living areas. The trio question the likelihood of the number of people who want to move there matching the number of available houses.9. The Olympics is not the only factor at playIt’s important to remember that the property market has many inputs and outputs which determine value movements. An area could be experiencing gentrification for reasons other than the Olympics and there may just be a correlation between the two, rather than a causation. We know that newly erected dwellings are sold for a premium, often above market value. This could be skewing median values in that area and giving the impression of capital growth, that’s actually not present.Visit show notes - https://propertyplanning.com.au/brisbane-olympics-2032-is-now-the-time-to-buy-an-investment-property-in-brisbane-infrastructure-upgrades-re-purposed-athlete-villages-new-developments-and-more-ep-114/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:1. Value growth tapers over JulyNational housing values increased a further +1.6% in July. Although still a strong result, value growth has been tapering from the recent peak in March 2021, where value growth reached +2.8% for the month. The trio explore the drivers contributing to the dissipating steam in the market, from affordability, seasonal factors and recent lockdowns in major capital cities.2. Annual growth rates inch closer record highsCoreLogic annual growth rates report +16.1% growth for the national market over the last 12 months. This is not far off the standout year of 2003, where growth reached +19.3%. The trio discuss the likelihood of 2021 topping this record high, where already for the months of January through to July this year, growth has achieved +14%. Annualised, a forecasted figure of +21% results, but what impact will the lockdowns have?3. Hobart, Darwin and Canberra over 20%The nation’s smallest capital cities of Hobart, Darwin and Canberra are leading the pack for annual growth. Interestingly, Darwin is at the top of the ladder recording a whopping +23.4% annual growth, but is also the cheapest capital city with a median price of $486,054. Darwin’s history has been volatile in terms of property price increases and decreases, so no one is suggesting to jump on board the Darwin bandwagon. The trio wonder whether the large increase in property listings for Darwin, (which is up +39% from last year), indicates that Darwin property owners are taking advantage of the growth spurt to jump ship.4. Housing boom takes on the worldOf the 40 countries covered by the OECD, only 3 have experienced declining house prices in the first three months of 2021. This is the smallest proportion since the OECD began tracking this data in 2000. This global phenomena can be put down to all the stimulus money floating around, as countries fight off the economic impacts of the pandemic. Despite our friends in New Zealand abolishing negative gearing and implementing macro prudential measures to take the heat out of the market, prices continue to rise. This indicates that it’s not investors who are driving up prices.5. Lending indicators continue to show increased activity from investorsRecent ABS data shows that new loan commitments relating to housing fell overall -1.6% in June. First home buyers took the biggest hit, falling -7.8%, while investors showed a modest increase of +0.7%. The trio discuss buyer fatigue, increasing unaffordability and the end of government incentives which mark the shift. However, investors make up 28.7% of the current residential property lending market, which is still a way off 2015 levels of 45% which sparked APRA intervention.6. Regionals continue steady growthRegional cities continue their strong growth run, posting +1.7% growth vs capital cities +1.6%. Whilst covid certainly sparked an ‘escape from the city attitude’, the trio pose the question whether the increased dwelling sizes and affordability to purchase larger homes are actually what’s driving regional interest.7. Property listings tell the story of demand far outstripping supplyThe number of listings that have been on the market for over 6 months has reduced drastically, down 49.8% from the last year. This indicates that demand is so strong, less desirable properties are being snapped up due to the current level of competition in the market. The past 12 months has seen nearly 600,000 dwellings sold across the country, which is about 31% (140,500) more than the decade average. This is coming close to the record high annual sales EVER recorded, which reached 622,000 in 2003. The recent lockdowns may have an impact on annual sales, however it’s looking likely that 2021 will set new records.8. CPI at strong levels but not tipped to lastABS data reveals over the June 2021 quarter, annual CPI rose to 3.8%. This is above the RBA target level, however the central bank expects that this won’t last. The June quarter saw an increase of 0.8%, up from the 0.6% reached in the March quarter. With Sydney lockdowns, the next quarter could potentially be negative, but the RBA has confidence in post lockdown rebounds, which Melbourne has evidenced over the last 12 months.9. RBA minutesIn it’s latest statement of monetary policy, the RBA has reiterated its stance that interest rates will stay at the same level until 2024. In more positive news, the outlook for unemployment has improved, with expectations that unemployment will reach 4.25% by the end of 2022 and 4% at the end of 2023. The central scenario from the RBA expects he majority of the population to be vaccinated by the end of this year, meaning that lockdowns will become rarer and allow for international borders to open up from the middle of 2022. Coincidentally, this aligns with the period after the next election, presumably when politicians will be less nervous about making this move.10. Borders tipped to open mid-2022With borders expected to open towards the middle of next year, our education exports, (which are the top export for South Australia and Victoria) are expected to take a hit. This is because other major education exporting nations of US, UK and Canada are tipped to open the gates before Australia. This is likely to have a flow on effect for four years, (the length of most university degrees) and will pose a continuing issue for rental vacancies, particularly for student accommodation. However, property prices are on the up, despite the lack of international migration, which will only add further fuel to fire once up and running again.11. Perth – a riddle, wrapped in a mystery, inside an enigmaPerth was the only capital city that didn’t exhibit growth over +1% for the month of July. The trio ponder the story behind Perth’s +0.3% growth in housing values. Yet, rental markets for Perth have shown the second highest increase behind Darwin, with houses increasing +16.6% over the last year and units +14.6%.Visit the show notes - https://propertyplanning.com.au/property-demand-continues-to-outstrip-supply-the-global-housing-boom-international-borders-how-darwin-has-taken-australia-by-storm-and-whats-the-story-with-perth-market-update-ep-113/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/Weekly market updates1. NAB late to the property party – bumps up property forecast for 2021In its quarterly report, NAB has recently adjusted its property forecast for national price growth to now hit 19% in 2021. This is bumped up from its prediction 3 months ago of 14%, (and 6 months ago of 8%). Just goes to show, that if you’re not a specialist in the market, you tend to lag behind the data and we’re seeing that consistently across banks and investment firm economists. And of course, being bold is not how many economists like to express themselves.2. Labor reveals plans for property in the run up to the next electionA collective sigh of relief was audible all over the nation, after Labor announced that it would not be pursuing changes to negative gearing and capital gains tax. This is an encouraging result, as we are currently facing a housing crisis in our country, and the most vulnerable are experiencing challenges in the rental market. It may come as a surprise, but more than 90% of property investment only own one or two properties. Signalling that it is mum and dad investors that make up the majority of these investors, and while some could say that they are and simply looking to better their retirement, the reality is that they are providing shelter to a significant percentage of our nation’s population, and unlike many other nations, Australia doesn’t have a social housing policy that provisions for shelter for the majority of renters.How our ageing population drives Australian property markets1. Ikigai and retirement planning, what is your reason for being?The trio discuss the importance of retirement planning, which for our younger generations, may seem too far into the future to imagine. However, the proliferation of the FIRE movement (financial independence, retire early), has started to permeate and evolve traditional thinking around retirement ages. There are other options that investors can take to retire early, but this takes planning and sacrifice to make happen. Of course, a big part of retirement planning is ensuring that you have a reason for being (or getting out of bed each day), which the Japanese call ‘Ikigai’. So much of our identity can be connected to what we do for work, and it is important in retirement planning to ensure that you have the ability to fund your interests once work slows down or stops.2. Explaining our population pyramidOver time, the percentage of our ageing population has increased. In 1927 our population aged 65 and over was 5%, which moved to 9% by 1977 and is now 15% as at 2017. ABS Projections expect that this will have reached 22% by 2057 and 25% by 2097.3. Global impacts of an ageing populationAustralia is not the only nation facing the challenges of an ageing population. Across the globe, Japan’s economy has been stagnating for decades, due to increased costs for health and retirement funding. With it’s one child policy, China was heading this way too, but have since evolved their policy to mitigate the effects. If China’s economy stagnates, this could have international impacts. Thankfully, Australia has one of the best retirement funding schemes in the world, but many who are currently retiring didn’t have access to Superannuation for their entire working life.4. Historical and social factors that have contributed to our increasing elderly populationThe trio discuss the key changes in our society and economy that are driving our ever-increasing elderly population. From life expectancy, waves of migration activity, women in the work force, slower birth rates and families having less children.5. Changes in the workforce in relation to our older generationsOver time, we have seen huge shifts in people working longer, whether by choice or due to older age limits on pension entitlements, enforced superannuation and less reliance on welfare, kids living at home longer, and percentages of older women in the workforce double in the last 20 years, not to mention the impact of no-fault divorce and heightened divorce numbers since the 1970’s… The trio discuss how these key changes have impacted the property market.6. Underemployment is becoming a major issue for over 55’sUnderemployment tracked by the ABS include the number of people who want to work more, but are unable to. Whether due to discrimination or other factors, 6.1% of our older population are underemployed, which is a big issue for many households.7. Dropping rates of home ownershipThe trio discuss the changes in our younger demographics which contribute to falling rates of home ownership. Home ownership is no longer the major aspiration that it used to be, with many more young adults choosing to study and for longer (not to mention a great holiday or two travelling the world). This delay in earning a full time income, coupled with the choice of many to start a family and get married later in life, means that home ownership rates for our younger generation are significantly lower.8. The impact on our economic outlook as our aged population increasesDue to underemployment and divorce rates, many of our ageing population are choosing to work longer, but many will need some social support when they retire. Australia will face challenges in funding aged care homes, as less of our population will be working, which means there will be less money to fund these things. Eight out of ten people who are retirement age are ‘stayers’ and will elect not to downsize, which will have impacts on the supply of property and pressure for those who rent. The trio discuss some macro economic measures which could be introduced, particularly those that encourage downsizing.9. How to retire wealthyInterestingly the split of debt for households aged above 54 exhibit a relatively even division between owner occupied debt and investment debt. The main increase in investment ownership over the last two decades has been in the 50+ age group. This is not surprising as those who are further in their life’s journey would be in a better financial position, they have been working for longer and may not have children to support anymore. However, it is a good reminder to our listeners that you don’t need to do everything immediately, and you don’t need to own many properties to supplement your superannuation. The trio give their advice to our younger generations who are looking to make smart investment decisions.Visit the show notes - https://propertyplanning.com.au/property-boom-and-price-drops-in-australia-from-2003-to-2021-ep-111/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#111, Dave, Cate and Pete take you through:1. Booms and bustsThe trio discuss the booms and busts from the years of 2003 to 2020. For each capital city and nationally, they cover the top performing 3 years and also the bottom 3 years during this time. Check out our show notes for a special excel visual with all of the key data.2. 2003 the star performer2003 was the best year nationally and made it in the top 3 for each capital city, except Darwin. Although not in the top 3 for Darwin, this capital city still clocked double digit growth for the year. Nationally, price growth for 2003 reached a whopping 19.3%. The trio explore the various reasons why 2003 recorded top results, from availability of finance, movements of baby boomers and first time buyers, the advent of mortgage brokers, introduction of government stimulus and property price stagnation in the years leading up to this boom.3. 2018 the worst yearNationally, 2018 was the worst year during this period, recording home value declines of 5.5%. Interestingly, this was also the worst year for Melbourne and Sydney, and third worst year for Brisbane, but not for any other capital city. This speaks to the weight of the Sydney and Melbourne market, and their influence on national prices. The trio were happy to blame credit policy as one of the key ingredients for this particular year’s woes in the residential housing market.4. The astounding story of Hobart in 2003Amazingly, Hobart exhibited median house price growth of 55.3% in 2003. How can that be? The trio discuss the pre-2003 environment on mainland Australia which saw Hobart quickly become a magnet for investors and retirees. As the population of Hobart is so low, any peaks or troughs in interest can have a great impact on property values.5. Resource marketsThe early noughties saw the resources sector start to boom, which correlates to double digit increases for Perth from 2003 to 2006 and Darwin to 2007. These cities are greatly impacted by the health of their leading industries, which meant that unfortunately, prices have decreased since, and are yet to reach their previous peak.6. Adelaide going slow and steadyAs a capital city, Adelaide doesn’t have major economic drivers like resources, which can do wonders for property. It also lacks the overseas interest that Melbourne and Sydney are fortunate to have. Furthermore, if a property investor decides to purchase outside of their own capital city, they generally look to Queensland. The result is that price fluctuations in Adelaide are less severe, and there are only two years where Adelaide has experienced double digit growth. However, in its third worst year, Adelaide still experienced positive growth.7. The property market is like a gardenJust like a garden, there are many factors which determine the health and prosperity of the property market – location, sun, soil, water, plants, environment and the bugs! The property market is multifaceted market, and a micro version of the broader economy with so many inputs and outputs that determine the outcomes. The trio discuss the difficulties in being able to point to one factor which ultimately drives price increases and declines. It’s important to remember that the market is not driven by investors, but majority owner occupiers, who are driven by personal factors and emotion.8. The impact of government policyArguably, the politicians are the bugs in the garden – which either pollinate to promote growth or eat away at the crop. One factor which always has a hand in influencing price movements is government policy and stimulus. The trio discuss the various initiatives which led towards the booms and busts over this period. From first home owner grants, economic stimulus, imposts of foreign investors, macro prudential regulation, restrictions on greenfield developments to encourage ‘urban densification’, schemes for first time buyers and builder, and financial deregulation and credit tightening. The national busts of 2008, 2011 and 2018 which resulted in value decline of 4.1% to 5.5%, all had an element of government policy which influenced the market.9. Booms outweigh the bustsWhat’s evident from looking at the data, is that the magnitude of booms are much bigger than the magnitude of busts. What we see is that booms are often coupled with double digit growth, while busts produce single digit declines. Over the period of 2003 to 2020, the best year for each capital city except two was in excess of 20% increase.10. National busts – 2008, 2011, 2018These years were the worst for property price nationally, resulting in value decline of 4.1% to 5.5%. The trio explore the reasons behind these busts.11. Will the 2021 boom surpass the 2003 boom?The trio discuss the likelihood of performance for 2021, as June results show annual price growth of 13.5% nationally. Whether we will reach the 2003 level of 19.3% is likely to depend on the current and possible future lockdowns in Melbourne and Sydney.Visit the show notes - https://propertyplanning.com.au/property-boom-and-price-drops-in-australia-from-2003-to-2021-ep-111/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode, Dave, Cate and Pete take you through:Market insights1. Latest unemployment figures exceeds expectationsIn the latest figures released by the ABS, the unemployment rate has come down to 4.9% in June from 5.1%. The last time we saw unemployment this low was in June 2011. On the other hand, underemployment has increased to 7.9% in June (from 7.4% in May). It’s probable this was caused by the extended lockdown at this time in Vic. Notably, Vic has the lowest unemployment rate of all the states and territories, with unemployment at 4.40%.2. Time to buy a dwelling index shows slight improvementThe ‘Time to buy a dwelling’ index produced by the Westpac Melbourne Institute has shown an increase of 0.8 points to 96.9 from June to July. Although an improvement, it is still in negative territory, with the index down substantially from its peak in November 2020 of 132 points. The consistently weaker trends likely reflect concerns about the impact of sharp price increases on affordability, especially amongst prospective first home buyers and owner occupiers.3. Lowest vacancy rates nationally since May 2011National vacancy rates recorded by SQM research show the economy continues to move in a very positive direction. The vacancy rate fell from 1.8% in May to 1.7% in June, which is the lowest vacancy rate since May 2011. The Sydney and Melbourne CBD apartment market also shows positive steps to recovery, with Sydney falling 0.5 to 6.3% and Melbourne falling 0.3 to 5.8%. It is fair to mention that despite the oversupply of CBD apartments in our two capital cities, the overall vacancy rate is extremely tight and is illustrating a growing concern for the plight of renters.4. NSW relief packages for residential landlordsIn an effort to assist NSW residential landlords, a grant of $1,500 or land tax reductions are available for landlords who come to an agreement with their tenants to decrease rent, to assist with reduced incomes due to Covid. The trio discuss the merits of this policy, which is able to offset some of the loss that generous landlords are shouldering.Rightsizing1. Who are the baby boomers?The baby boomer generation were born between 1946 and 1964 and would be currently be aged between the ages of 57 to 75 years. Baby boomers make up 25% of the population, but own more than half of Australia’s national wealth (53%). Given the baby boomer generation have the highest home ownership rate of all cohorts (above 80%), a lot of their wealth would be tied to property. Their economic footprint is twice as large as their demographic footprint, however, due to compound growth over time, it makes perfect sense that the older cohort should have proportionately more wealth than younger ones.2. Effects on Australian residential propertyUnlocking the baby boomer’s wealth in property (which could be around two trillion dollars), could be critical to the future of home ownership rates, and potentially also to the creation of seniors’ accommodation, and to aged care policy. As our population is aging, there will be added costs associated with supporting the older generations, plus more demand for suitable property for our older generations (including aged care). Lower home ownership rates have been recorded in younger generations, no doubt due to other social reasons, including people choosing to get married and start a family later in life. A study by the productivity commission concluded that 60 per cent of people born between 1942 and 1951 (early baby boomers), owned homes by age 25-34. This dropped by 15 percentage points to 45 per cent for those born 1982 to 1991. Technology, affordable travel, less social pressure to marry and have children, and the proliferation of casualised and contract employment have all, no doubt, played a part in this changed trend.3. Rightsizing vs downsizingThe term rightsizing has gained popular use, as many people may choose to downsize their yard or internal floor area, but not necessarily downsize their budget. This include those who choose to have a second dwelling – a tree or sea change home, plus an inner city pad to stay close to the action, friends and family. City living offers many benefits, including proximity to the airport and hospital/care facilities. Now we are seeing many choose to take a side-step, rather than a downsize. Some even enjoy an upgrade option into a smaller and more optimally located dwelling.4. What causes people to stay in their long-term home and what are the effects?There are many reasons, lifestyle related and financial which cause people to choose to stay in their home rather than downsize. 8 out of 10 people want to ‘age in place’, meaning that they don’t want to downsize. They are comfortable, close to their friends and family, their current home suits them best, plus the logistics of having to organise a move feel like a burden. In addition, if a downsizer has retired but hasn’t paid off their mortgage, obtaining another mortgage becomes increasingly difficult. This causes the problem of ‘underutilisation’ in the property market, which is where people own a home with more bedrooms or more yard space than they need. The trio discuss what that means for younger families looking to upgrade.5. Government incentives to downsize miss the markA number of initiatives have been introduced by State and Federal Government to encourage older generations to downsize, including: state stamp duty relief, NSW abolishing stamp duty and Super contributions beyond the current concessional limits. However, none of these initiatives deals with one of the critical financial obstacles to downsizing, which is that selling the home and converting it into a financial asset could reduce the age pension and increase contribution to aged care. They also do not address the abundance of non-financial considerations which drive the decision to rightsize or stay in place.6. Righsizing traps to avoidThose who are approaching the flexibility stage of life or currently transitioning to retirement need to think about what they want in a home. A maintenance or a renovation project is most likely not on the cards for those who are ready to start relaxing. Many get excited by buying brand new, off the plan, properties. For those wanting to pass property to their kids, these properties often have limited prospects of capital growth, or at the very least they underperform due to insufficient “land to asset ratio”. They also risk a long wait time from signing the contract to moving in, which can be frustrating for anyone who is excited about the prospect of moving into their new home.7. The greatest intergenerational transfer of wealth is yet to be seen85% of Australians who do rightsize, plan to do so before age 70. With the current cohort of baby boomers, between the ages of 57 to 75 years old, we have 13 more years of baby boomers expecting to sell up. The rest are likely to stay in place until they must move or will pass property on in their inheritance. What this means is that we’re likely to see the greatest intergenerational transfer of wealth over the next 20 years or so.Visit the show notes - https://propertyplanning.com.au/rightsizing-the-new-downsizing-the-effect-on-australian-property-market-ep-110/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#109, Dave, Cate and Pete take you through:1. Property market acceleration is reducing, but still going strongJune’s growth rate of 1.9% is down 30 basis points from May 2021 2.2%, and 90 basis points from a recent peak in March 2021 2.9%. All capital cities except Canberra have posted weaker results than in May. Most notably Perth and Darwin are trailing, where they fell to 0.2% growth and 0.8% growth respectively. The trio discuss the reasons for reasons for deceleration, given that Perth was predicted to be on the top of the property ladder for 2021.2. Upper quartile shows the largest decelerationAcross the top 25% of dwelling values in the combined capital cities market, growth in dwelling values in the June quarter was 8.0%, down from 9.2% in the three months to May. While this 8.0% uplift was still the highest seen among the value tiers analysed, the growth rate also had the largest month-on-month deceleration. It’s likely that we’ve hit the peak rate of growth and values will continue to decelerate.3. Capitals vs regionalsCombined capital cities are neck and neck with regionals since February 2021 this year. However, over the last year, capitals up 12.4% and regionals 17.7%. It’s likely that we’ll see some regions that will continue to flourish, particularly those that were on the rise pre-covid and that are within commuting distance to a capital city.4. The emerging rental crisisAll capital cities have seen an increase in house rents over the last year, with Darwin leading the pack with 23.6% growth. The story is similar for units, bar Melbourne and Sydney where the CBD apartment market has been most affected due to covid. The trio discuss the emerging rental crisis, where the most vulnerable will find it very difficult to get a roof over their head. A possible answer is increasing investor incentives, to get mum and dad investors into the market to share some of the housing load with the government. However, the government hasn’t rolled out the welcome mat for investors and tax continues to be a hurdle, but possibly an area that could be re-evaluated.5. Investor activity continues to increaseABS data shows that for 5 out of the last 6 months (Dec 2020 to May 2021) – investor activity has outstripped owner occupied activity for new lending. This could signal we’re headed in the trajectory for more stock to be on the market for renters, which would increase rental affordability.6. Profit making resales trending upCoreLogic data shows 9 out of every 10 properties are being re-sold for a profit, up from 89.1% in the previous quarter and the covid-induced low of 86.0% in the three months to June 2020. What can be seen is a large discrepancy between units and houses, with 16.8% of units selling for a loss vs 6.8% of houses selling for a loss in the March quarter. This is reflected in current growth rates as well, where all capital cities except Hobart showing houses increasing at a faster rate than units. The trio discuss how land to asset ratio will be a driving factor of this discrepancy.7. Listings take a diveThe number of new and total listings are looking pretty grim, with each capital city posting decreases except Darwin. Canberra and Melbourne have the biggest drop in new listings, with 10.1% and 21.7% respectively. These markets are more impacted by the colder months of winter, were stock on the market declines, due to the misconception that winter is not a good time to sell. The trio give an important tip to those looking to make great property decision, which is to sell during winter. There are less properties on the market and more competition for each property.8. The latest from the RBAThe Property Planner gives an update from the latest RBA meeting in early July. Government bond buying will taper from $5m per week to $4m until mid-November, while the April 2024 bond will be retained at a target of 10 basis points. The target cash rate at 10 basis points will be maintained until inflation and wage growth hits the target rates and noted that although other central banks are lifting rates, Australia’s inflation and wage growth is behind other first world and OECD countries.Visit the show notes - https://propertyplanning.com.au/property-value-growth-tapers-investor-activity-picks-up-emerging-rental-crisis-property-listings-take-a-dive-and-more-market-update-ep-109/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#108, Dave, Cate and Pete take you through:Market insights1. Race to the finish – Vic stamp duty concession is overThe Victorian stamp duty concession for properties purchased under $1million ended on the 30th of June. This produced some last-minute scrambling for those trying to get the 25% discount for established property and 50% discount for new property. In Victoria, many auctions were brought forward and offers submitted, as the concession has greatly improved borrowing power for many, particularly first home buyers. This initiative was offered shortly after Melbourne’s long lock-downs in 2020 in an effort to stimulate the property market. Little did our bureaucrats know that our market didn’t really need external stimulus. Low interest rates would have been more than enough.2. Latest unemployment figures exceeds expectationsThe ABS has recorded a drop in unemployment from 5.5% in April to 5.1% in May. Thankfully, Australia is one of only two nations that has more people employed now, than prior to when covid took hold. The lowest unemployment level reached in the last decade is 4.9% and we’re not far away! Interestingly, despite Victoria’s extended lockdowns, the unemployment rate in Victoria is 4.8%, while NSW sits at 5%. South Australia has the highest unemployment rate at 5.8% and ACT, the lowest rate at 3.6%. No surprises here, as the public service is less affected by downturns. The trio discuss the reasons behind the stellar unemployment result.Land tax1. Land tax basicsLand tax is an annual cost that is determined on the total value of the land you own, (with the exception of a principle place of residence). Unlike Capital Gains Tax, Land Tax is a state tax, with differing thresholds, tiers, rates and methods of calculation between each state. Another layer of complexity are the differing rates and thresholds for owning property in trusts or in a company. As you acquire property, you need to be mindful of your ever-growing land tax bill, and this is often not factored into cash flow costs when people make property decisions. The trio also discuss and explain how land values are calculated for tax purposes.2. Tax on unimproved valueEach year the Valuer-General evaluates the ‘unimproved value’ of the property, meaning the land portion without the dwelling. Funnily enough, the only time you want a conservative estimate of value is on your land tax bill and council rates notice. If you disagree with an estimate, you normally have 30 to 90 days to challenge it, and if found in your favour, this could save you thousands of dollars. More often than not, the value that the government apportions for your land is not what the market would give you. Where this will hurt, is in a falling market. Although you’re more likely to be eligible for a re-assessment in this case.3. The friendliest land tax statesThe trio outline the differences in land tax for each state. Which states have the lowest tax-free threshold? And which states offer the friendliest environment for building a property portfolio. Before you purchase your next property, you should be broadly aware of the land value component, and you should try to determine many properties you will accumulate over your life-time in each state. Having a plan that factors in land tax, helps an investor provision for cash flow obligations.4. Tax decisions drive investment choicesPolitical, financial and economic discussion is often centred around tax and it’s implications. States may increase taxes, and this has potential to impact the level of investment, (both private and consumer-based investment), and in turn this can create a flow-on effect on unemployment, property value growth and wage growth.5. The pitfalls of land taxThe Property Buyer explains two of the ways that the operation of land tax can be unfair, particularly towards home buyers and absentee owners. If you’re purchasing a home or planning to live overseas for a period of time, ensure that you understand the potential land tax implications.6. DiversificationAs well as land tax benefits, purchasing property in another state can provide you some much needed diversification in your property portfolio. This will mitigate the risks associated with property cycles and can also counter-balance the risk when one property market is going through a downturn or period of stagnation. Right now, we’re in an atypical situation where all markets are increasing at the same time, and while it’s extremely positive, it doesn’t happen often.7. Developing your property strategyLand tax is important to understand and take into account, as your net income position and retirement nest egg can be greatly impacted by your decisions. If your cash flow is tight, a big land tax bill could send you over the edge of affordability. However, your decision shouldn’t be solely based on tax considerations alone. Tax is just one of the plethora of puzzle pieces and moving parts to understand before making a decision. The Property Planner takes you through some scenarios to better understand your cash flow and income position.8. The land tax bombThe Property Professor goes through the last 10 years of property market data and illustrates how selecting the states with the low-tax environments may not be the best choice for capital growth. Depending on your strategy, it may pay in the long-term to purchase property in a state with higher land tax and foot the bill.Visit the show notes - https://propertyplanning.com.au/understanding-my-land-tax-cash-flow-and-diversification-overview-ep-108/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/Watch our special recording for a masterclass on valuations!Weekly market update1. Victoria the host of another Super SaturdayThis past weekend, Victoria hosted more than 1,000 auctions, which is referred to as a ‘Super Saturday’, with a whopping 1,414 homes going under the hammer. This time of year, going into winter, this number is unprecedented for a Saturday of auctions. The influx of stock can be put down to the most recent Covid lockdown and also school holidays starting. We could possibly see more Super Saturdays in July once school resumes.2. CBA the first lender to raise assessment ratesAfter APRA wrote to 14 of the biggest banks in the business, asking them to provide more data on their prudential practices, CBA was the first lender to raise their assessment rate from 5.1% to 5.25%. This is the first trickle of macro prudential regulation and APRA’s light touch, which is likely to increase over the coming months as the next dominos (lenders) start to fall in line.3. Adelaide crowned the 3rd most liveable city in the whole worldThe Economist Intelligence Unit's latest Global Liveability Index, which considered factors including healthcare, education and infrastructure across 140 cities around the world, has named Adelaide as the third most liveable city in the world. Perth, Melbourne and Brisbane also made the top 10, while six of the top ten cities are in New Zealand or Australia, where tight border controls have allowed residents to live relatively normal lives (through COVID), the report states.How to determine property value for your home1. Using comparable sales refresherThe Property Professor takes you through how to select comparable sales and the elements of the property to rate for valuation purposes. Plus, important details on which properties are NOT comparable and should be removed from your analysis.2. How old is too old?The trio discuss when it’s appropriate to use data from a year or more ago. While it may not be helpful in terms of a bank valuation, it can be useful for your own valuation purposes.3. Twice the size doesn’t equal twice the valueThe Property Professor explains the law of diminishing returns and why land size isn’t always proportionate to the cost per square metre. In essence, the price per square metre reduces, the bigger the land size. These reductions are not linear and are determined by what the market desires, specific to a suburb or micro location.4. The art and science of valuingWhile comparing apples with apples would make valuation a lot easier, it’s nearly impossible to do. Every property is unique, after all. A great example of this is how street frontage and ‘best and highest use’ could turn two seemingly identical properties, into distant cousins. Overlay subjective perceptions, the psychology of missing out and the mathematical science of valuation quickly turns to a fine art of nuances and finesse.5. Live example of valuationThe Property Professor shares his methodology and reasoning behind valuing 20 Allen Avenue in Brooklyn Park which is going to auction the weekend after recording. The trio place their bets on the auction outcome. Stay tuned for our next episode to find out the result!Visit the show notes and watch our special recording - https://propertyplanning.com.au/how-to-determine-property-value-for-your-home-ep-107/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#84, Dave, Cate and Pete take you through an episode dedicated to this question posed from one of our listeners:“Australia’s economy is highly dependent on China, do you see immediate risk in the housing market should China reduce dependency on Australia’s supply chain?”Market insightsHousing market consumer sentiment moves into negative territoryFor the first time in a year, the Westpac Melbourne Institute Consumer Sentiment index on whether now is a good ‘Time to buy a dwelling’ has dropped below 100 and is now in pessimistic territory. This is the fifth monthly decline in a row, dropping 7.1% from May to June and the index is now 27% below its November high of 132. The shift in sentiment is mainly caused by rapid price rises over the last 6-9 months, supported by fringe factors including: increased fixed rates from lenders, with speculation of more increases to come and various government incentives coming to an end. This index generally is a forward indicator of markets, however it could be 3 to 6 months before we see any impact on the housing market, if not longer. The hope is that this signals the possibility of more sanguine value growth without the requirement of intervention from APRA placing extra limitations on borrowers. The property buyer isn’t upset at the prospect of slightly relaxed competition levels either.Australia & China relations1. Update from the G7 summitThe Property Planner takes you through some of the communiques and resolutions formed in the 47th G7 summit, held on 11-13 June. The G7 is a meeting of the 7 largest Western democratic economies, including Canada, France, Germany, Italy, Japan, UK and the US. Australia and three other nations of Japan, South Korea and South Africa were invited to attend. The G7 pledged to tackle China’s market-distorting economic practices which are currently affecting Australia’s exports, as well as authoritarian actions in relation to Hong Kong.2. Foreign investment and Australian propertyAustralia is the fourth most popular residential property market after the US, UK and Singapore with ultra-high net worth Asian cross-border property investors. The Property Buyer shares key data showing that the overall market share of foreign buyers fell to 4% in the fourth quarter of 2020 in relation to new property. This is the lowest result since NAB started tracking the data in 2010. Harsh taxes were introduced in 2015-2017 for foreign investors, and for some local markets, this had a severe impact on asset prices. However, the taxes haven’t had the devastating impact that many people feared would happen.3. Why is Australian residential property so attractive to foreign investors?The Property Professor shares key insights from a special dissertation written by one of his students on the appeal of Australian property for Chinese investors, who sheds light on some of the key aspirational, social and financial motivations held by Chinese buyers.4. Cultural based dwelling preferencesThe trio discuss how current dwelling preferences have been shaped by Australia’s European heritage and discuss the expected changes from the current and future generation of Asian migrants to Australia. The Property Buyer shares some of the key preferences from Asian buyers, some of the positive influences on Australian housing design and layouts to modern day, and offers a hot tip on how you can gain an edge if you’re finding that you’re missing out at auction.5. Iron ore - mutual dependence on trade between China and AustraliaWhilst the political environment between China and Australia may be tense at the moment, it is irrefutable that both nations depend on each other for their economic well-being. The Property Planner shares critical insights into Australia’s exports of iron ore to China, and why it’s unlikely that any other competitor could fill Autralia’s place in the next 5 years, and possibly 10 years.6. Transitioning to clean energy sourcesAustralia’s dependence on wool exports up to 1965 show that our nation is no stranger to re-invention. In the 1970’s we moved to wheat production as our main source of exporting revenue, later followed by coal and only recently has iron ore become our greatest export. There is plenty of opportunity to produce clean energy from mining metals used for batteries and the production of hydrogen for fuel. As an example, the most important use of lithium is in rechargeable batteries, which will only increase in demand and Australia is already the world’s top producer of lithium. Did you know that Australia produces the 5th most nickel in the world and 6th most copper in the world, but has the second largest reserves? We certainly back Australians and their ingenuity to make this transition and continue to be a prosperous nation into the future and lead the transition to clean green energy and reducing our reliance on any one particular trading partner. Australia’s land-to-asset ratio as a country proportionately to our population is clearly a significant advantage that we should not take for granted!Visit the show notes - https://propertyplanning.com.au/australia-china-relations-what-is-the-risk-to-the-australian-housing-market-ep-84/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/Market insights 1. Regulation on the horizon as the property market continues to surgeNew data shows that property buyers are stretching towards their maximum borrowing capacity to compete in this hot market. Investors have been quiet in this market so far, but they are making a come-back, as first home buyer numbers start to taper. As we expect annualised growth to hit 15% for some of our capitals and regions in the coming months, the jungle drums will beat louder for regulator intervention to slow down the velocity of the growth.2. Australia’s AAA credit ratingAustralia is now one of only 9 economies to have a pristine AAA balance sheet recognised by all three of the world’s largest credit rating agencies. This is great news for us, as it keeps our interest rates slightly lower, which we do enjoy as a capital importing nation. The AAA rating means that our interest rates are 0.15% lower than they otherwise would have been.Listener questions answered 1. The market seems to be at the top of its cycle. Is it a good time to invest in property or should we be waiting for the demand to subside or the chance that govt regulators will step in to curb prices?Whilst prices are undeniably on the rise, the trio firmly believe that we are certainly not yet at the top of the market. Any regulation introduced will be carefully planned so as not to de-stablise the market or cause a downturn, but simply to slow the acceleration of property price growth. The focus for regulators is optimising GDP and bringing unemployment down. The government will be loathe to introduce any measures that could hamper our economic recovery, particularly before the election.2. What are the implications of waiting it out?If you would like to purchase property and are waiting for demand to subside or property prices to stop rising, it’s likely that the market will move further away from you. There is great fear in purchasing at the top of a market cycle, however this only poses an issue if you crystalise losses by selling or if you have purchased a poor-quality asset in the first place. If your strategy is to purchase and hold for the long term, you will most likely be able to ride through any downturns.3. Is now a good time to refinance? If so, why?The trio discuss the current conditions for refinance, which are fantastic. Property prices have gone up, so it’s likely that property owners have more equity that can be tapped into and interest rates are the lowest they’ve ever been. This environment provides great opportunity to get on to a sharper rate and release some equity to protect and/or build your wealth.4. What’s your opinion on where interest rates will go over the next 12-18 months? Should I be fixing some of my debt now while fixed rates are low?The trio discuss the outlook for variable rates, which are linked to the RBA cash rate, while fixed rates which are connected to bond yields. Fixed rates are expected to rise, and even since recording, one major bank has increased their fixed rates by 0.25% and 0.45% for two of their fixed rate terms. This is likely to be the trend in the coming months as the $200B term funding facility that the Government has provided to banks is coming to an end in June. For reasons relating to our economic recovery, the variable rate is expected to remain nailed to the floor for some time to come, as consistently communicated by the RBA.5. Considerations for fixing some of your debtThe Property Planner explains why it’s almost always a good idea to have some portion of your debt variable, due to the ability to use offset accounts and make additional repayments. Remember to speak to your strategic mortgage broker to ensure you have the best strategy possible and to avoid making decisions you may later regret!6. I’m a first-time buyer, and I’m not sure whether I should buy a stepping stone home, investment or long-term home how do I decide?The trio provide their insights and tips for this nebulous question. Being able to long-term and stretch your thinking to 10 years in the future can be a difficult task, but will help immeasurably to make successful property decisions.Visit the show notes: https://propertyplanning.com.au/property-investors-and-first-time-buyers-fixed-and-variable-interest-rates-market-cycles-and-more-listener-questions-answered-3-ep-83/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's market update Dave, Cate and Pete take you through:1. Impact of lockdown #4 in MelbourneWhilst there may be a small lull, we expect activities to pick up where they left off after this small blip. Many auctions have been brought forward or held over zoom. We’re seeing a bit of vendor discomfort in response to the COVID lockdown, but no buyer panic. If anything, buyers seem even more spurred on to compete hard for property.2. Internal migrationsThe bigger picture is that internal migration to Melbourne could be impacted as there is now stigma around the ability to manage Covid and future outbreaks. This will have a lag effect for a period of time, but will most likely dissipate in the next 1 to 3 years. Development of quarantine facilities outside of the CBD is on the cards and this could have some positive implications for the Melbourne market.3. The return of international studentsSA and NSW are making efforts to return back to normal, as international education is in the top 3 exports for every Australian state. We hope to see education get back up and running, watch this space.4. May property Index results are out!May has returned the 8th consecutive month of growth for national housing values, reaching 2.2% in May and a stronger result than April’s 1.8%. The Property Planner explains expectations of reaching 15% annual growth in all capitals in the next few months. The poorer months of June, July and August 2020 are still included in the annual growth rate, which are weighting it down even though the market has been booming for the last 6-9 months. Once these levels are reached, there will likely be greater noise in the media and political pressure for intervention against run-away house prices.5. Capital cities are up on regionals for the month and the quarterWe’ve had over a year of regional cities outperforming capital cities, due to the pandemic induced sea and tree change. For the second month this year, capital cities have outstripped the regions in monthly growth and as predicted, the tide is starting to turn towards capital cities. Regional areas are still exhibiting strong results, but the capital cities will catch up.6. Taking a critical eye to median valuesThe Property Professor takes you through some data analysis of the ‘Turquiose coast’ in SA, pointing out that median values can be unreliable when looking at the suburb or lower level, because of the smaller number of sales that the data is based on. Incentives can also skew data, such as concessions that have a cap on the value of the property that can be bought.7. Upper and lower quartile analysisWhen markets are bullish, the upper quartile (the top 25%) tends to outperform, which is what we’re currently seeing. This is because the people who have more money, spend at a greater level on higher priced properties. Conversely, when there is a downturn, the upper quartile tends to drop the furthest, because there are less buyers as a total proportion of all buyers who are circling the top quartile properties (based on affordability). In particular, at this price level people are more concerned about their level of wealth and hold on to their money. We’re seeing this play out across the combined capitals, where the upper quartile increased by 9.2% over the quarter and the lowest quartile rose 4.2%.8. Rentals – supply is dwindling and demand is increasingWith the return of expats to Australia and an increased number of home buyers converting previous investment properties into homes, rental stock on the market has been dwindling. The stock shortage is creating fierce competition within the rental market. Regional cities have exhibited the highest rate of increase, with rent increases of 9.6% over the last year, while capital cities have exhibited increases of 3.3%. It’s important to remember, though that oversupplied, undesirable 1 bedroom apartments in high rise blocks will be skewing this data for some of our cities in particular, (cue Melbourne and Brisbane).9. Investor activity picks upThe rate of change has been quite dramatic for investor activity in the last few months, which speaks volumes to the strength of the market and low cost of finance. There will be increased pressure on lending restrictions and we expect the jungle drums to start beating when we see the 15% annual growth level hit in the next few months. It’s likely that measures will be applied Australia wide, which is not necessarily a good thing. Darwin for example, is in the midst of a much needed recovery, showing 20% annual growth for the year. Our rental housing shortage is a serious issue for our nation, and one that will only be exacerbated by a tightening of credit for investors.10. Listings data shows the strength of the marketAlthough new listings are coming on to the market, the total number of listings is still dropping, showing that older properties on the market that were previously not receiving any interest are now being snapped up. Total property listings fell by 6% in May, while the listings for properties on the market for over 180 days dropped by 9.2%.11. RBA updateThe RBA holds steady on keeping low rates, however they are more conscious of what’s occurring in the market, particularly with the return on investors. We expect the RBA to make a decision in July on whether they will focus on keeping the 3 year yield curve down at 0.1% and will most likely end the $200B funding facility for banks. This means we’ll probably see an increase for fixed rates, which could slow down the property market.12. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/market-update-22-the-property-boom-continues-median-values-rental-demand-and-rba-minutes/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:Market insights 1. The number of vendors lifting their asking price mid-campaign has droppedNew data from Domain reveals that the percentage of vendors who increase their asking price mid-campaign has lowered from March to April for Sydney, Melbourne, Brisbane and Canberra, which covers around 2 out of 3 property sales. This is likely occurring for a combination of reasons. Values are going up but not as fast as they were earlier this year, agents are more conscious of being busted for under-quoting, and vendor price expectations have risen since the rebound began in earnest. The locations with the highest proportion of vendors lifting their asking price is dominated by Sydney and Melbourne.2. What are the clear signals that an agent is underquoting?This will normally be easy to spot if you’ve done your homework, know your market and are armed with your comparable sales. If an agent is saying that there are limited comparable sales or where sales provided are not actually comparable, they are probably trying to pull the wool over your eyes.Another factor for the lower quote could be because there is an issue with the property that the agent has factored in that you are not aware of! The important thing to remember is that you’re highly unlikely to get lucky with an under-market purchase price on a good quality property.Conveyancing 1011. What do conveyancers do?Conveyancing is the legal process of moving land or property from one owner to another and conducting the pre-purchase contract review and associated due diligence. The trio discuss the ins and outs of the conveyancing process, what are they responsible for and how you can engage either a solicitor or a licenced conveyancer to do the job.2. What is the difference between a conveyancer and a solicitor?Either are sufficiently equipped to manage a property transfer and in the end, the most important factor is the quality of the service provider, not their official title. However, there are some key differences in the breadth of their advice that you should know before making your selection.3. Can your conveyancing representative work Australia-wide?Property law and the conveyancing process differs state by state, which means a conveyancer must obtain a licence from the state in which they operate and cannot operate in states in which they are not licenced. This can be a huge positive, as you want your property conveyancing representative to be an absolute expert in the law relating to your property transaction. Having to be across one set of property laws and processes is hard enough, let alone seven. A solicitor on the other hand can work across all jurisdictions, although we would recommend working with local experts.4. What are the limitations of your legal representatives due diligence?The trio discuss the elements of the property purchasing process that your conveyancer or solicitor will not do, which you must be on the look-out for!5. What can go wrong?The Property Buyer takes you through the legal elements and deal-breakers that conveyancers can uncover during the conveyancing process, that buyers often miss. Tune in for the Property Planner’s real-life examples where legal handy work has picked up illegal cladding, a vendor trying to slip through old body corporate minutes and incorrect fence lines, highlighting why it pays to have a great solicitor or conveyancer in your corner.6. How do pre-purchase contract reviews work?Having the contract reviewed by a conveyancer or solicitor before you sign on the dotted line is critical. They will look for any potential errors, zoning, outgoings, unusual clauses, any other red flags and give you advice on any special conditions which could be added into the contract to protect you. In today’s market where there is increased time pressure, it’s important that you communicate to your legal representative ahead of time that you expect contracts to be reviewed prior to purchase and be clear on the turn-around time expectations, as it could be the difference between success and missing out.7. How do you find a great legal representative?There is nothing as reliable as word of mouth. If you’re asking a real estate agent or other professional to point you towards a conveyancer, beware of any kickbacks they may be getting for the referral. Select someone who is a trusted source, that you can rely on to protect your interests, to introduce you to a solicitor or conveyancer who will provide you with great service.8. What does a conveyancer cost?The trio discuss how much money you should set aside for a good conveyancer or solicitor. When you’re making a million-dollar decision on a property, now is not the time to be cheap on your legal assistance.9. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/conveyancing-101-why-you-need-a-great-solicitor-or-conveyancer-in-your-corner-ep-82/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:Market update1. Stamp duty and the VIC budgetFor Victoria, a new premium for stamp duty was announced for property transactions above $2million, increasing the duty payable for contracts entered into from 1 July 2021. The trio share their thoughts on this ‘lazy taxation grab’ from the government and the potential impact on both residential and commercial property investment in Victoria.2. Sydney prices taking flightLatest figures from CoreLogic see growth in Sydney housing values reaching 9.21% in the last quarter. Annualised, that is 40% when compounded. The Sydney market is very hot indeed, but we do expect the heat to dissipate? Taking the lead from the other capital cities may not be an accurate gauge.Comparable sales1. Valuation methodsThe Property Professor takes you through 3 of the most common methods of evaluating the price of a property: comparable sales, summation and income/capitalisation. Tune in to our show notes for a visual presentation.https://propertyplanning.com.au/how-to-determine-property-market-values-by-using-comparable-sales-ep-81/2. Finding comparable salesThe main attributes that buyers should itemise to compare the subject property to are: similar location, land size, building size, building condition and the recency of sale. The trio discuss the ins and outs of what to be looking for in order to determine whether a sale is ‘comparable’.3. Additional property attributes that can impact valueOther factors that could impact demand for a property (and therefore competition) include: topography, environmental factors, accessibility, utility services, town planning, zoning, other restrictions, improvements to the property, the potential for alternate use (commercial for example), views, orientation and shared ownership of common areas.4. How to value a propertyEach component of a property can be boiled down to dollars and cents to arrive at an end figure – EG what you are willing to spend! The trio take you through how to attribute monetary value to the various components of the property and which factors are most important. The Property Buyer shares a hot tip when it comes to properties on main roads vs quiet streets. Don’t forget, finding the similarities between properties is easy, the tricky part is identifying the differences and placing a value on those.5. Case study….be sure to watch the video to get the most out of this educational experienceIn true lecturer style, the Property Professor takes you through a real-life example of finding comparable sales for a property going to auction on Saturday 22nd of May. Cate and Pete value the property and the expected result on auction day, with the disclaimer that there may be additional factors identified after walking through the property.6. When is comparable sales methodology a challenge or impossible?The trio discuss the circumstances that may cause some obstacles for comparable sales analysis. The Property Planner issues an important reminder that comparable sales cannot be taken as gospel.7. How to deal with anomaly sales resultsWhen you come across a sale that has a surprising result, it is important to understand the reasons behind it and the circumstances of the sale. What bank valuers often don’t take into account is real estate agents with excellent digital marketing skills, irrational bidders and tenants that hinder access to the property. A call to the selling agent can provide clarity behind the anomaly results.8. The invisible factors that buyers can missThe trio outline the facets of evaluating a property that may not be readily apparent through online searches and visiting an open for inspection.9. How far back in time can you go before the sales aren’t comparable?This largely depends on whether the market is a buyer’s market, a balanced market, or a seller’s market. The trio share their tips on how to manage comparable sales if you have to go back further than is ideal.10. And of course, our ‘gold nuggets’Visit the show notes: https://propertyplanning.com.au/how-to-determine-property-market-values-by-using-comparable-sales-ep-81/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode, Dave, Cate and Pete take you through:1. Heat in the market is dissipatingAnecdotally, we’re seeing some behaviours such as vendors holding out for better prices that are not always being achieved, supporting the fact that the heat is coming out of the market to some degree. As touched on during recent Podcasts, we don’t expect prices to be growing at quite the same rate of knots as the first four months of this year across most part of Australia.2. Smaller capital cities have been the outperformers of the last 12 months.The latest property index results for April from CoreLogic reveal that Adelaide, Hobart, Darwin and Canberra have outperformed Sydney, Melbourne and Brisbane over the last year. We know that the larger capital cities took the biggest hit during the covid-downturn due to lockdowns and halting of international travel. It’s worth noting that while Darwin and Perth are doing well, they are still behind their peak medians reached in 2014 and still have far to go. And many of the regions around our nation have also outperformed the two biggest cities, but Sydney in particular is making up ground rapidly and we expect these numbers to evolve over the next three to six months.3. What tales are the vacancy rates telling?Looking at the vacancy rates for Melbourne and Sydney, you’d think that they are in dire straits. What’s increasingly evident is that the markets of the largest capitals are operating at two speeds and there is a large disparity between vacancies for houses versus units. Much of the higher vacancy rate will be due to medium to high density apartments and student accommodation. This is another example of why you need to dig beneath the data, as it can’t always be taken at face value, and generalising data can hide important detail.4. The swinging pendulum – investors vs home buyersInvestor mortgage numbers have recorded an increase, suggesting that the pendulum could be swinging back towards an investor market. First home buyers are starting to reduce, as prices get more unaffordable for new entrants to the property market. This latter point is one of the drivers for government initiatives that have been announced in our most recent federal budget.5. Property incentives from the budget announcementThe trio talk through the 4 key property market incentives and schemes announced in the federal budget, including their merits, insights gleaned and likely impact on the property market. They include:· New Home Guarantee (increase demand and price) - additional 10,000 places allowing first home buyers to build a new home or buy a newly built home on as little as 5% deposit, with the government acting as guarantor on the loan, freeing the buyer from lender’s mortgage insurance.· First Home Super Saver Scheme (increase demand and prices): first home buyers will be able to release up to $50,000 as part of voluntary contributions under this scheme (increased from $30,000).· Family Home Guarantee (increase demand and prices) - a scheme allowing for 10,000 single parents over the next 4 years to purchase a home with a deposit of just 2%, with the government providing a guarantee of 18%.· Downsizer Super Scheme (Increase supply) - allowing those age 60 and above to contribute $300,000 into super when selling the family home. This will not only bolster retirement savings, but also free up critical housing stock.6. RBA reiterates its commitment to maintaining a low cash rateThe RBA have consistently communicated since mid 2020 that rates will remain low until inflation hits the target band and remains there for a sustainable period. The target band for inflation is between 2% and 3%. For inflation to reach this level, the Reserve Bank believes we require wage growth to be 3% to 4%. It’s becoming increasingly evident that unemployment needs to drop down to the low 4%’s, or perhaps even the high 3% from the current 5.6% for this kind of wage growth and inflation to occur. If this level is reached, it is unlikely to happen until 2023 or 2024. Hence the central case is that interest rates will remain nailed to the floor until then. For context, unemployment has not been at 4% since August 2008. As you can see below, the current forecast from the RBA is for unemployment to reach below 5% by the end of next year.7. APRA interventionAPRA has made it clear it has no mandate to control house prices, but it will need to act if risks are growing on the balance sheets of regulated banks, or if they feel that there are financial stability concerns. They are also conscious not to be as heavy handed with macro prudential measures as they were in 2017-2019 with Sydney prices retracting by 15%, and Melbourne by 12%. For perspective, these are the biggest price drops on record. This is why any measures implemented will be designed to softly flatten the market, rather than decimate it.8. Non-bank lenders, the next target of APRA?Non-bank lenders are often more lenient in their borrowing capacity assessment, allowing borrowers access to more money than a major bank would allow on most occasions. The differential can be quite significant. For this reason and the fact that the government targeted non-bank lenders as part of their policy to repeal responsible lending laws, non-bank lenders could be part of the next target for APRA if concern builds over the risks of non-bank lending policies and practices. The Property Planner explains the policy differences between bank and non-bank lenders and why you can regularly access more credit using a non-bank lender. And why you shouldn’t let a few percentage points in interest rates get in the way of your property strategy.9. Australian’s on the spend – a consumer driven recoveryThe household savings ratio had spiked to a historic high of 19 per cent during the pandemic. But as households emerged from lockdown the rate of savings fell quick smart to 12 per cent in the December quarter. We certainly all enjoyed being able to get out and about and spend on holidays, social activities, material goods and of course, housing. This savings rate is expected to fall to 8 per cent by the end of the year. This is exactly what the government wants to see, as consumer spending creates jobs which drives the economy.10. Property market sentiment is shiftingThe ‘Time to Buy a Dwelling Index’, which is one of the indexes feeding into the Westpac Melbourne Institute Consumer Sentiment index has decreased from 116.4 in March to 107.2 in April. It is now 18.8% below its recent peak in November 2020 of 132. Some buyers are discouraged by the recent surge in prices and implications for affordability, however the index is still above 100 which means the majority still believe now is a good time buy. The lowering of this index is reflected by the heat in the market is dissipating. Despite this, we expect the property market to continue to see price growth at a reduced pace right into the first half of 2022.Visit the show notes - https://propertyplanning.com.au/australian-budget-2021-interest-rates-non-bank-lending-market-update-21/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#100 of the Property Planner, Buyer and Professor Podcast, Dave, Cate and Pete take you through:1. Walking down memory laneFrom the beginning of the podcast journey in March 2019 to now, much has changed in the world of property. The Property Planner, Buyer and Professor discuss the early days of podcast recording and how the podcast and listenership has evolved since then.2. Our top 10 episodes, as rated by you!The results are in! After two years of podcast recording, the trio share with you our top 10 episodes with the most listens and the insights gleaned from each.3. Dave, Cate and Pete’s favourite episodesThe Property Planner, Buyer and Professor take you through three of their most favourite episodes to date and why they’re worth a re-listen. The trio each acknowledge that they too are constantly learning from each other.4. The Property Planner, Buyer and Professor’s hottest property tipsThe trio share their best tips and learnings after decades of experience in the property industry. Their tips include: attitude to taking action, expecting perfection, how to manage property investing on top of a full-time job, how often you should buy property and combining finances with your partner. Don’t miss out on these tips!5. A big thank you to our listenersThe trio share the wonderful feedback received over the journey from our listeners. We couldn’t have done it without you! We have some surprise listener engagement in store too.6. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/best-property-tips-in-australia-and-top-episodes-100th-episode-special-ep-80/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#79 of the Property Planner, Buyer and Professor Podcast, Dave, Cate and Pete take you through:Market insights1. Month on month growth reaches peakSome say that the housing market is beginning to show some signs of slowing. Agents who have been so inundated with activity are starting to return to their usual practices of performing pre-auction calls to firm up bidders. This signals that some of the heat in the market might be subsiding. The trio believe that we’ll still continue to see positive growth, but not at the same rate of knots experienced over the last few months. The Property Buyer suggests that the velocity is decreasing despite the pace remaining positive.2. Positive market indicatorsThe latest unemployment figures released by the ABS for the month of March show unemployment lowering from 5.8% to 5.6%, which is great news. Iron Ore spot prices per tonne cracked $190, which is the highest price since 2011 and 1% off record highs in the mining boom years. This bodes well for the Government’s coffers and our federal budget returning to surplus over the coming years.3. Loan deferrals back on trackIn more positive news, only 0.5% of the million loans deferred due to Covid are still frozen. Many people who were hanging their hat on waiting for properties to flood the market because of forced sales have missed out on opportunities. Like we always say, there is no time like the present to purchase property, provided that you are making decisions based on your own personal economy. Timing the market is incredibly difficult, even for the property experts.4. Houses outperform unitsLatest figures from CoreLogic reveal that for all capital cities (bar Melbourne), houses have performed units over the last year. That has been the case for many decades, but accentuated further through Covid where people were looking for bigger dwellings. We expect rental yield and capital growth for units to slow down even further.Cross collateralisation1. What is cross collateralisation?Also known as cross securitisation, put simply, cross collateralisation is where you have a single loan secured by two or more properties. The Property Planner and Buyer unpack the myths that surround this loan structure strategy.2. Why do people think cross collateralisation should be avoided?The main reason why people are averse to cross collateralisation, is the belief that by having a single property providing security for a loan, you are protecting your other assets from the bank in the event of loan default and forced mortgagee (lender) sale. If the value of property is not enough to extinguish the debt on the loan, the lender may look to your other assets to cover the shortfall. While retaining individual loans for each security property may limit a lender’s ability to access your other assets, it is certainly not impossible and there are other legal means that lenders can use to access your other properties to recoup their losses.3. Beware of spruikers!A large proponent of not crossing securities are property spruikers who are selling properties under the guise of ‘free property advice’. This is because their aim is to convince people to buy multiple properties, with high loan to value ratios which are often poorer quality assets, with low prospects of capital growth. Brand new properties can often decline in value, so the spruiker is actually protecting themselves by advising against cross-collateralisation, and promoting assets are financed across multiple lenders.4. Using mortgage strategy to manage risk and why prevention is better than cureWe see protecting your assets from a lender as the absolute last line of defence in a worst-case scenario. As we always say, prevention is better than cure and there are many mortgage strategies that you can put in place to ensure that you manage risk effectively. The Property Planner talks you through the different strategies to protect your family and build your war chest.5. Is your property strategy conservative or aggressive?Your risk tolerance and risk profile are critical in determining what is the right risk management strategy for you and how aggressive your property accumulation strategy should be.6. Should you pick one lender or spread your loans across multiple lenders?The trio discuss the pros and cons of a single lender and multiple lender strategies. Generally speaking, if your property strategy is particularly aggressive or high risk, you may consider loans across different lenders to be appropriate for you.7. Business debt and non-property investmentsHow cross collateralisation can enable you to do some wonderful things. The Property Planner and Buyer explain the considerations when making decisions about business debt and non-property investments.8. Selecting the right strategy for youIn the end, there is no one size fits all approach. To make the right decision for you, you need to get tailored advice based on your goals and circumstances, and work out what your top risk management strategies will be.9. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/cross-collateralisation-myths-busted-best-loan-structures-mortgagee-sales-and-more-ep-79/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#78 of the Property Planner, Buyer and Professor Podcast, Dave, Cate and Pete take you through:Market insights1. Stretching budgets and changing sentimentsThe gap between what a buyer can actually spend vs what they planned to spend is getting closer as we see buyers revise up their limits to compete in this market. We made a prediction that APRA would step in with macro prudential measures late this year or next, now every man and his dog is reporting on the potential for APRA intervention. Although APRA Chair Wayne Byres recently stated that APRA has no mandate to target the level of housing prices – they are simply a risk factor, not a goal.2. Tips to increase your borrowing powerThe Property Planner and Buyer share the insider scoop on how you can increase your borrowing power to maximise your buying power.3. Banks and economists revise UP their expectations for 2021NAB is the latest bank to jump on board and predict 15% national price rises for 2021. This follows ANZ upping their predictions in late March to 17% growth this year. Recent reports tip Sydney and Perth to exhibit 19% capital growth each, 18% for Hobart, 16% for Melbourne and Brisbane and 13% for Adelaide.Preparing for auction #21. Can you have a ‘subject to’ clause at auction?A common misconception is that ‘subject to’ clauses cannot be introduced in an auction. The Property Buyer explains that although very rare, everything is negotiable.2. Cooling off periods – what are they and when do they apply?A cooling off period is a purchaser’s right to terminate the contract without needing to validate their decision. The cooling off periods and penalties vary State by State, so it’s important to know your legislative rights and any penalties that may follow.3. Boardroom auctions vs public auctionsThe Property Buyer takes you through the key differences between boardroom auctions and publicly scheduled auctions that you need to know about to put your best foot forward.4. Getting yourself finance readyWith turn-around times improving, it’s possible to be finance ready if you plan to go to auction in three weeks’ time. However, it’s incredibly important to move with speed and have your finance arranged as early as possible. The Property Planner shares the critical need to be able to juggle multiple balls at the same time, rather than focusing on one thing at a time.5. What prep do you need to do to get ready?If you want any variations to the contract or deposit terms, these need to be arranged before the big day. Doing your market research, planning and setting your bidding price point and strategy is critical and likely to take more than an afternoon. Ensure that you have not left this to the last minute!6. What is an auction quote range and why you shouldn’t rely on itIn a moving market, an auction quote range at best can be wrong and unreliable, at worst, it’s misleading. In determining a quote range, the agent is permitted to cover historical sales prices, (in Victoria for example; over the last 6 months), which could be 15-20% lower than the current market. The best thing is to do your own research and collect your own comparable sales.7. Where to stand at auctionThe Property Buyer shares with you the key vantage points to give yourself the edge over the competition.8. The differences between auction campaigns and private sale campaignsThe Property Buyer explains the key differences that you need to be aware of to handle a successful purchase.9. Valuation shortfallsIf you know the market and you’re not paying a ridiculous price, it’s unlikely that a valuation will come in short, particularly in a seller’s market where competition is fierce. The Property Planner and Buyer discuss the Plan B strategies to have in place as a safety blanket in case the valuation comes up short.10. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/cooling-off-period-finance-approval-negotiating-terms-and-auction-quote-ranges-preparing-for-auction-2/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#77 of the Property Planner, Buyer and Professor Podcast, Dave, Cate and Pete take you through:Market insights1. Investors creeping back inWestpac lending numbers for February reveal that investor lending is up 4.5%, while first time buyers are down 4% and upgraders down 0.8%. It’s still early days, but it’s likely to be a sign that the tide is starting to turn from home buyers driving the market to investors. Investor lending at Westpac is still only at 35%, compared with 65% when APRA brought in macro prudential measures in 2015. We expect these numbers to continue to grow in the coming months as investors tap into increasing equity and the lower cash flow needed to service a loan, with increasing rental yields covering much of the cost of interest with rates at an all-time low.2. Property cyclesSydney has recorded 6.7% growth for the March quarter, which when annualised is growth of 26% for the calendar year. You may think that’s amazing and has never happened before, but according to ABS data, Sydney prices went up 50% in 1988. The following year, prices dropped by 6% before rising again, albeit at a slower pace. The property market is cyclical in nature, sometimes they spike, but it doesn’t mean there will be a collapse afterwards.3. The property peaks and troughsLooking at property data over the last few decades, it’s clear to see that the negative periods are much shorter than the positive periods. Amazingly, despite all of the doomsayers, the covid downturn was one of the shortest and lowest downturns that we’ve had over the last 30 years. Our most recent property market price reduction lasted for almost two years from 2017 and 2019 and was predominantly driven by APRA implementing macro prudential measures and not economic factors. A poignant reminder of how our property market can be manipulated by government policy and stimulus.What will drive capital growth after interest rates rise?1. Access to finance and consumer confidenceThese are two key drivers of the property market. If finance is restricted or there is a lack of consumer confidence, this will have a significant impact on demand, which in turn will affect property prices. Consumer confidence is largely impacted by low unemployment or the wealth effect, which is rising property and to a lesser degree share prices. This is why the RBA are so strong on keeping rates low through to 2024, until we see inflation growth of 2% to 3%.2. ImmigrationAlthough we’ve had negative population growth due to Covid, we still find ourselves in the midst of a property boom. Whilst immigration can certainly increase demand, it will be heavily influenced by the number of ‘skilled’ workers that migrate. The Morrison government have spoken about specifically targeting this sector once borders open which is likely to have a positive multiplier effect on the economy.3. Interest rate increases may not be significantGovernor Lowe of the RBA has stated that interest rates will remain low for the next 3 years. However, important to remember, when we do see some increases, it won’t happen overnight. Based on the interest rate environments we are seeing for many other first world nations, it’s likely we will see gradual increases spanning years to come – and this will only occur if we have very low unemployment resulting in inflation hitting the target band, which has not been achieved for around a decade.4. Mastering renewable energyOur ability to transition away from creating fossil fuel-based energy and move to more sustainable energy production will have a big bearing on the long-term prospects of our country, economy and therefore the property market. Politically, we may not have adapted quickly enough as this change is being led by the commercial sector.5. Our relationship with China 30% of our tourism and Uni students come from China, whilst Iron Ore amounts to $91billion of our $140billion in exports traded with China, which is a significant risk for Australia, as it is for China. Which means for now, we are somewhat connected at the hip in an increasingly uncomfortable mutual reliance. Our relationship with China and future developments is a potential risk on the horizon.6. Government stimulus and regulationThe reality is that our property market is not a true free market. Our Government’s have a great ability to impact prices and activity through stimulus packages, incentives that assist a particular segment, such as first-time buyers and macro-prudential measures to take the heat out of the market. Each of which are effectively proven by the record reductions in values from 2017-2019, mostly due to macro-prudential regulation and the maintenance of values and subsequent market rebound during the pandemic.7. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/what-will-drive-capital-growth-after-interest-rates-rise-listener-questions-answered-2/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's market update #20, Dave, Cate and Pete take our listeners through:1. Hobart median dwelling valuesDespite being the capital city with the smallest population, median home values in Hobart are higher than Brisbane, Perth, Adelaide, and Darwin. The trio explore the reasons behind this surprising statistic. But is it sustainable? The Property Buyer thinks yes!2. Melbourne growing at 1% a fortnightAt last, the data is catching up with what we’ve been seeing since the inflection point in the final quarter of 2020. The median price for homes sold at auction has soared 18% since March last year.3. Why stock on the market is still so lowIn economics 101 we learn that price is a function of supply and demand. With supply still so low, it’s no wonder that we’re seeing the highest monthly rises in value since 1988. The trio discuss why new listing figures have returned to normal levels, but total stock on the market remains at half the usual level.4. Escape to the regionsFor the first time since covid lockdown, monthly data shows that combined capital cities have come ahead of regions in monthly growth statistics this month. This reflects what we’ve seen anecdotally, with the number of enquiries of people looking to sell up their city homes and move to regional areas decreasing as life returns to ‘normal’.5. How long will the frenzy last?The trio make their predictions for the property market in 2021. The consensus is that there is still a lot of steam and heat to go. Until we see some lending or macro prudential changes, we don’t expect to see the buying conditions easing for some time.6. Relaxation of responsible lending guidelinesThe Property Planner explains the expected impact to the property market if responsible lending laws are amended as planned by the Morrison Government.7. Australia the ultimate destination nationAlthough it may not happen this year, when boarders open up again allowing for immigration, we expect this will add more entrants into the property market, further fuelling the fire into 2022.8. Many purchasers are dropping out for fear of overpayingAlthough no one wants to buy at the peak of the market, the risk you take by holding out is that you’re priced out of a market that you could have bought into. Provided that you plan for holding the property for the long-term and it fits within your overall property plans, now is the best time to buy.9. Top tip – don't bypass the properties that have been on the market for longerThe Property Professor shares this hidden gem for finding a great property.10. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/hot-property-median-home-values-largest-property-rise-since-1988-stock-on-the-market-capitals-vs-regionals/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's ep#76, Dave, Cate and Pete take our listeners through:Market insights1. March index results show the largest growth since 1988CoreLogic property results are finally starting to show what we’ve been seeing on the ground since late last year. Every capital city is increasing full steam ahead. We think the market is only going to heat up further and there’s more to go in this property run. What’s more, we know that data lag creates delayed reporting. Our trio are certain that the record growth is yet to come to light.2. First time buyers dominating the marketDespite the fact that prices are high, first home buyers have never had it easier to get their first property purchase under their belt. Interest rates are the lowest they’ve ever been, the level of government stimulus and support is at an all-time high and savings are at record levels as well after months of buckling down (and locking down) on savings, particularly in the Melbourne market. As we recall, Melbourne suffered the longest periods of lockdown in our nation and the strength of the market bounce-back is palpable.3. The bank of mum and dadAnother player in the first home buyer corner is the bank of mum and dad providing their assistance. Parental contributions are averaging more than $89,000, which is an increase of nearly 20 per cent in the past 12 months. $89,000 is enough for a 20 per cent deposit in most of the nation’s postcodes outside Melbourne and Sydney.4. APRA won’t intervene in the short-termAt the Australian Financial Review Banking Summit held last week, APRA have said that their job is not to regulate the property market, it is to make sure there’s no systemic risk in bank lending. As the media and political pressure increases with property values rising to new highs, APRA may get a tap on the shoulder sooner than anticipated to intervene and help take the heat out of the market.How to help your kids get on the property ladder1. Monetary gifts (it’s better than Christmas!)One of the primary ways a parent can assist their child is providing a lump sum of money to go towards the deposit. The trio explain how this method can be particularly helpful for many first-time buyers who have a strong borrowing capacity.2. The difference between gifts and genuine savingsDespite your generous gift, a lender may still require evidence of genuine savings before they provide the tick of approval. The trio discuss the optimum timing to give your gift, and some of the perils and pitfalls associated with this approach.3. Security guarantees – the most popular method of assistanceThe Property Planner and Buyer take you through how a security guarantee works, the benefits and why it is the most common way parents help their kids in property.4. Going in to a security guarantee with your eyes openIf you’ve got equity available in your property, it may sound like a fantastic idea to offer your home or investment as a security. But as with any major decision, there are risks involved, not to mention a mountain of paperwork. The trio discuss the ins and outs of providing a security guarantee and costs, (and steps) involved.5. Co-borrowing with your kidsThe Property Buyer and Professor share their first-hand experience of purchasing a property with their children. They cover off on ownership considerations, caveats and the agreements they’ve made with their kids.6. The risks of purchasing a property ahead of time on behalf of your kidsDon’t assume you know which direction in life your child will take! They may not want to live on the same street as you, or go to the university you want them to. But that’s all part of life!7. Education is keyAside from gifting your kids money or equity, there are many other ways that you can support your kids and give them a leg up on their property journey. The trio share with you the key insights and education they try to pass on to the next generation. And as any of you with children would know, despite their best efforts, it doesn’t always sink in!8. Support comes in all shapes and sizesSome parents can’t offer financial support – and that is OK too. It’s a very personal decision when it comes to how we can help our children get onto the property ladder. From open conversations about creating wealth, to starting them young with a good savings regime, and all the way to offering moral support with the inspections and shortlisting of property, parents need to work out what their preferred method of assistance is. Some children need to just do it all for themselves too. But when it comes to advice, the best help a parent can give is to steer their kids into GOOD advice.9. And of course, our ‘gold nuggets’Visit the show notes - https://propertyplanning.com.au/security-guarantees-co-borrowing-gifts-helping-your-kids-buy-their-first-property/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#75, of the Property Planner, Buyer and Professor Podcast,Dave, Cate and Pete take you through:Market insights 1. NZ abolishes negative gearingAny properties purchased after Saturday 27th of March will not attract tax deductibility on the interest portion of the repayments, while existing investment properties will have the negative gearing benefit phased out over the next 5 years. Although there is no silver bullet to cure housing affordability, could this be on the cards for Australia? Our trio discuss reasons it may or may not be a future policy setting of at least one party. As the Property Professor points out, investors share the task of providing shelter and this is something that our government is unable to deliver without the help of investors.2. Increased agent activity unlikely to abate the pace of the marketAlthough data shows an uptick in agent activity, which is a precursor to more stock on the market, it’s unlikely that this will take the heat out of the market. Corresponding data for buyer search activity is going through the roof and any new stock on the market is likely to be swallowed quickly.3. The bigger picture with property pricesDarwin and Perth property prices are growing strongly, exciting many property owners and prospective home buyers and investors. However, when looking at the data, it’s important to remember that although they’ve had strong growth recently (Darwin 16.7% and Perth 5%), prices are at the same level they were in 2009 and 2010. Data can be manipulated to support any intended view, so we advise you look beyond the superficial and news sound bites!The winner’s curse and how to avoid it 1. What is the winner’s curse?Where there’s competition to win an asset that is in limited supply, (eg: a house), there can only be one winner. Typically, the person who wins the property pays the highest price. The winner’s curse can manifest in concern and fear about overpaying.2. Why are we prone to the winner’s curse?It stems from our need for social proof to affirm that we’ve made a good decision and if we feel like we did not do enough research and analysis to accurately understand the market and/or our own financial position and goals. The fact that a buyer is willing to pay the highest affirms that no one else was willing to pay a price at that magnitude. This can make a buyer second guess all of the planning and preparation that went in to their decision in the first place.3. When is it most likely to strike?The trio share the scenarios where the winner’s curse is most likely to creep up on the successful purchaser.4. How to combat the winner’s cursePlanning and preparation is a sure-fire way to avoid feeling concern that you’ve overpaid. The Property Planner and Buyer share their top tips on how to prepare so that you can be confident in your evaluation of the property’s value and when to stretch beyond this price. You also need to understand your financial position, short and long-term goals clearly to buy confidently without regret. But if you can’t help feeling the winner’s curse, it’s important to remember that if you’re in it for the long-haul, the property market is forgiving if the property is held for many years to come.5. The other side of the coin – loser's regretLoser’s regret is the feeling of having been too conservative with the limit that you ended at in your bidding or highest offer, when you fail to purchase the property. This is particularly pertinent when you find out the winning bid or the winning offer was both a reasonable market price to pay and affordable for YOU.6. The under-bidder's remorseThe trio share different examples of situations that cause people to fall short and end up as underbidders for a property and how buyers can put their best foot forward when preparing themselves for auction.7. Home buying – where emotions run highThe Property Buyer explains her auction price setting strategy when evaluating what is a suitable limit to adhere to for a property and the team discuss the when, where and why it is worth considering paying an emotional premium for a property.8. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/purchasing-property-in-australia-the-winners-curse-and-how-to-avoid-it/
In this week's Ep#74, Dave, Cate and Pete take you through:Market insights1. ABS and Core Logic data reinforces strong growth for 2021According to ABS data for the December quarter of 2020, each capital city recorded growth between 2.6% and 3.4% which is between 10%1 and 15% annualised. CoreLogic data, which is more recent, for start of this year suggests even stronger growth of between 3% and 5% for Sydney, Melbourne, Adelaide, Perth and Brisbane which is in the 15% to 20% range when extrapolated. Property Planning Australia has now revised its forecast up to 15% house price growth for 2021.2. FOMO causing irrational buying behaviour from first home buyersFear of missing out is driving some first-time buyers, particularly those backed by the bank of mum and dad, to take “over the top” measures to secure properties. The Property Buyer shares her experiences at the coalface.3. NZ Government expand powers of the RBNZThe Reserve Bank of New Zealand is now the first reserve bank in the world to include in its remit how its decisions may stabilise house prices. This part of the NZ government determination to take action against rapidly escalating house prices that have increased by over 20% over the last year. NZ were a world leader being the first bank to include a target for inflation under the Reserve Bank powers which all major economies subsequently followed. Could history be about to repeat this move by the NZ government be a harbinger of what’s to come as other Federal Reserve follow suit in the coming months and years.4. Property price growth is a world-wide phenomenonAcross the globe, 2020 was the fastest year of house price growth since 2016. But 2021 could set even larger records. Canada, NZ and the US have seen housing markets rise faster than Australia, but Australia is on the move following in there footsteps as reserve bank employ previously unseen levels of monetary policy through rate setting and bond buying.5. APRA says increase in debt to income ratio is not a concernData released by APRA for the December 2020 quarter show that the number of property owners with debt greater than 6 times their income has almost doubled. The commentary from APRA is that debt to income ratios are broadly in line with historical averages and not something that they are concerned about currently with rates so low, but will this change? We think yes, the question is whether it is in 2021 or 2022.Secret steps to buying a house - The seven ‘S’s1. StateProperty cycles play a part in determining price increases (and decreases) so when you do buy, you want to ensure that you buy in a state that is about to enter the upward swing of the property cycle. If your plan is to hold for the long-term, the stage of the property cycle diminishes in importance.2. (S)City or TownTechnically, not an ‘S’, but phonetically it works! When selecting a city or a town, understanding the capital growth drivers is paramount, including changing demographics and employment opportunities.3. SuburbJust like cities, regional towns also have desirable suburbs primed for capital growth and gentrification and those that are best to stear clear of! The trio share the signs and data to look out for.4. StreetIn blue chip suburbs, the A-grade streets are evident. But in a gentrifying suburb, it may not be known yet and you have to go looking. The trio share with you the secret characteristics of spotting an A-grade street.5. StyleThe best styles of property, especially in our eastern and southern states are period and character style buildings. Dave, Cate and Pete explore the characteristics and styles of dwellings to target in your property search.6. Size – it matters!The size of the dwelling is of critical importance, but bigger is not always better. The trio discuss the ideal size for an investment property.7. Soil (Land)A common misconception that unravels many investors is that more land is better, regardless of the location or the dwelling. What really matters for capital growth outperformance is the proportionate value of the land. What we coined the land-to-asset-ratio of the property.8. SentimentThe Property Buyer sneaks in an eighth ‘S‘ for main stream buyer sentiment. Quality properties will always attract competition, if there’s great interest, it could mean that you’re on to a winner.9. And of course, our ‘gold nuggets’Visit the show notes: https://propertyplanning.com.au/property-investment-the-seven-secret-steps-to-buying-a-house/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's Ep#73 of the Property Planner, Buyer and Professor Podcast, Dave, Cate and Pete take you through:Market insights1. Business confidence reaches decade highsAccording to the NAB monthly business survey, business confidence rose further in February to reach 16 index points, its highest level since early 2010. Whilst we’re still not on the other side of the pandemic, it shows the human psyche of bouncing back from difficult circumstances, and also demonstrates the power of social proof to build confidence.2. GDP growth revised up by the OECDThe forecast for GDP growth has been upgraded from 3.2% to 4.5%, which puts Australia on the top of the Covid-19 ladder for the strongest bounce-back economy for 2021.3. Properties in the top quartile show outstanding growthAccording to CoreLogic, properties in the top quartile of value are growing at the fastest rate. Historically, other downturns and recessions have demonstrated that top quartile properties drop fastest in the downturn and rise the quickest in an upturn.4. Price as a function of supply and demandThe Property Professor shares insights that draw a correlation between new finance commitments compared with total listings to paint the picture of supply and demand driving value growth.5. What’s driving the market in Ballarat?Renters are opting to purchase as mortgages are now more affordable than ever. Facing rents of 4.5% versus 2.0% for a mortgage is an opportunity many locals are taking advantage of.Property planning & your next purchase1. Peeling back the onion to determine the pathway forwardThe Property Planner shares the layers of steps to be taken and decisions to be made to come to the right outcome for your next property decision and your long-term portfolio plan. The key is to understand that investment decisions are intertwined with your lifestyle and family choices.2. Achieving clarity for your long-term goals and your next decisionKeep your binoculars and magnifying glass handy as you go through the journey of seeing your long-term goals with clarity and focusing in detail on your next decision. The pathway in between may change as you go through life, but having one eye on the end outcome and one on the next step will help you get there.3. Hold or fold?The trio discuss the considerations, emotions and cognitive bias that factor in to making decisions about property you already own. What holds people back from making these decisions and why might you keep a property that is not performing?4. Timing a property divestmentThe Property Professor shares key tax considerations to be mindful of when putting together your divestment strategy.5. Selling property - two sides of the coinUnderstanding whether a property you own is top quality is only one side of the coin. The other side is understanding what you will be able to achieve by selling and is paramount to making successful property decisions.6. Planning for the flexibility stage of lifeAs we’re working for longer, it’s more common now to scale back work, rather than stop abruptly. You’ve still got investment decisions to be made post-retirement, you may not be on the same retirement timeline as your partner and your debt consolidation and divestment strategy need to take that into account.7. Modelling your next property decisionThe best way to make an informed decision is to fully understand the different options available. The Property Planner shares the key components and moving pieces that need to be considered when determining the strategy for your next decision, including mortgage structure, loan to value ratios, money goals, cash flow considerations, price point and buffers.8. Lifestyle v investmentWhether your next decision should be lifestyle v investment is a conundrum faced by many. Modelling scenarios can help you understand the full picture, including how the purchase will impact future decisions, to determine what is the right step for you.9. Modelling capital growthThe trio share the key growth rates to use when modelling out the projected performance of your investments. It's better to be conservative and experience a happy surprise on the upside.10. And of course, our “gold nuggets”Visit the show notes - https://propertyplanning.com.au/property-planning-and-your-next-purchase/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's market update #19 of the Property Planner, Buyer and Professor Podcast, the team discuss “Property values rise at the fastest rate in 17 years, which locations are outperforming, emerging trends and more". Dave, Cate and Pete take you through:1. The February results are in!Summer might be coming to an end, but the property market is getting hotter by the minute. The national market is up 2.1% just for the month of February, the highest jump in 17 years! It’s a very impressive growth rate for a 28 day period. Annualised that’s a whopping 25.2% growth.2. Data skewed further by long settlement datesIn an upwards moving market, we’re seeing many cautious upgraders and downsizers choose to purchase first with a long settlement date, allowing them to comfortably sell after signing the purchase contract. This delay between purchase and settlement is skewing the property data even further, as many sales aren’t officially recognised until they settle.3. The perfect storm for a property runLess people taking time off to go on holiday, the highest savings and borrowing capacity on record and a seasonal stock shortage in January has created a whirlpool of demand outstripping the supply. Even though more stock is coming onto the market, it’s not enough to soak up the demand.4. What’s behind the property feeding frenzy?We all know that we have the lowest interest rates on record, but what is not as well known, is the nuances behind the unemployment data. Employment is lower by 3.3% for those aged between 15 to 34. However, for people who are aged 35 plus, which is most property buyers, employment has actually increased by 1.2%.5. The update for regional areasRegional areas are still performing at a great pace, with interest from investors, local home owners and tree/sea changers pushing prices up. Rents do not move as fast as capital growth, so the outcome is a reduction in yield. The Property Buyer shares with you how to tell if a market is heated, by looking at rental yields.6. Capital cities v regionals – the gap is closingRents have started stabilising in Melbourne and Sydney and even in the apartment market, which was one of the segments that were hardest hit. Combined capital city growth is catching up to the regional markets, with 2.0% recorded in February v 2.1% in regionals.7. The story behind capital city performanceSydney and Melbourne make up close to 50% of the properties in Australia, so if these markets drag the chain, it brings down the combined capital city data with it. Other capital cities recorded strong growth for the last 12 months, whilst Melbourne and Sydney were the most impacted by Covid. You could almost have 3 data sets: Melbourne & Sydney, other capital cities and regional areas.8. Predictions for 2021The Property Planner and Buyer update their predictions for 2021, in light of the February data. Cate and Dave debate how and when they think regulators are likely to step in to cool the market. Watch this space.9. Early market indicatorsThe trio share with you how to get your hands on the critical data to inform your property purchase.10. Painting the picture with lending dataInvestors could be muscling their way back into the property market, with investment lending jumping by 9.4% according to the ABS, the fastest rate of growth since 2016. Lending commitments to investors have risen every month for the last 5 months, while loans to upgraders are up by 11.3%.11. And of course, our “gold nuggets”!Visit the show notes: https://propertyplanning.com.au/market-update-19-property-values-rise-at-the-fastest-rate-in-17-years-which-locations-are-outperforming-emerging-trends-and-more/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #72, the Property Planner, Buyer and Professor Podcast team discuss “Property prices - what causes values to fall & how to tackle a rapidly rising market", as Dave, Cate and Pete take you through:1. On the flip sideMany of the facets we discussed in the previous episode #71 "Capital growth – what increases property values” have an adverse impact on property values if the opposite occurs so for this episode, we covered some different topics.2. Macro prudential regulationWe now have a track record that macro prudential measures have the ability to influence property prices. APRA slammed on the breaks by putting caps on investment lending, LVR’s and interest only loans in an effort to dampen the market and it worked!3. Higher and new property taxesNew policy and government announcements do affect buyer behaviour and the beauty is that policy makers can target particular segments of buyers, such as investors, foreign buyers, first home buyers, and so on, (to name a few). The trio touch on some of the changes we have seen and could see in the future.4. Negative gearingTying in with taxes, the abolition of negative gearing is still on the Labor party agenda. Whether it happens in the 3 years or 10 years is anyone’s guess and the extent of any reduction of negative gearing to a certain number of property V total abolition. The Property Planner share how Labor have not taking this off the table yet and makes his predictions that they will roll it out in some down the track.5. Global and political unrestOur international trade relationships have a large impact on the economic well-being of our nation, and therefore, can directly impact jobs, employment, wages growth and inflation – which all have a bearing on property prices. The Property Planner explores challenges and an example of a left tail or black swan risk that could cause future conflict and severely impact the Australian economy. It wasn’t that long ago a pandemic was scoffed at as a left tail risk!6. Natural, environmental or health disastersAs we all understand much more clearly now following the Covid-19 pandemic, these events are significant set-backs for any economy that must manage through these disasters. They often come with a huge cost to governments and can spell increases in unemployment. This event has also increased the willingness for business and consumers to better perceive the risks of climate events also.7. Fear of...The trio explain how fear can either be a driver of property values or a wet blanket. During 2020, even people who were stable and confident in their employment chose to wait on the sidelines of the property market, for fear of the unknown. Fast forward to 2021 and the trend playing out now is fear of missing out, causing a feeding frenzy in the property market. Fear plays a large part when it comes to price movement and Cate drills into this, and the immediate affect it can have on local markets.8. Doomsday mediaOne thing living through a pandemic has taught us among many, is take what you read in the media with a grain of salt. The Property Buyer explains how the media can irresponsibly skew consumer confidence, creating self-fulfilling prophecies.9. Too many rentersOwner occupiers have a greater ability to drive property prices, as they’re willing to pay extra to get into that lifestyle property they’ve always dreamed of. Where the ratio of owner occupiers to renters is decreasing, can cause dampened competition and buying conditions softening values because owner occupiers are price makers. Be careful of the mix in your selected micro location.10. And of course, our “gold nuggets”!Visit the show notes: https://propertyplanning.com.au/property-prices-what-causes-values-to-fall-how-to-tackle-a-rising-market/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #71, the Property Planner, Buyer and Professor Podcast team discuss “Capital Growth - What increases property value?", as Dave, Cate and Pete take you through:1. Consumer confidenceIt doesn’t matter how low interest rates are or how easy it is to borrow money. If people are not comfortable and confident, they’re not spending extra or making life-changing investment decisions. Security of employment, community health (pandemics for example!!!), government support and stability and the geo-political environment are all critical factors that feed into consumer confidence.2. Interest rate cuts and banking competitionRBA confidential analysis shows that property values could rise by 30% if people believe the cut in interest rates is permanent. Although far from permanent, 4 years is far enough away in the eyes of many, along with lender competition to drive up property demand and speculation.3. Availability of creditAccess to funding is one of the most critical elements that can increase property prices when the tap is turned on, or deflate the market when it’s switched off. We now have a history of APRA’s macro prudential regulation stalling ‘runaway’ property growth. We also have relaxing of the responsible requirements which will make it less onerous to obtain a loan.4. Business confidenceJust like consumer confidence, when businesses are happy and comfortable with a strong pipeline of sustainable income, they’re more likely to spend more, including upgrading systems and putting on more staff. This all drives up spending, creating more jobs, increasing employment, wages and....you guessed it, property prices.5. High employmentWhen we have high employment, more people are likely to consider leaping out of the rental market and embarking on the quest for home ownership. Reducing unemployment down to below 5% is a core focus of the RBA’s low rates for longer and quantitative easing to drive wages growth.6. Wages growthThe Property Planner explains the RBA’s plan to overstimulate the economy in a bid to push down unemployment, promote spending and increase in wages. The resultant effect of these objectives will drive investment and property growth.7. Population growthThe trio discuss the nuances of population growth on a macro (Country, State, City) and micro (Suburb, location) level. Be careful not to confuse affordability with desirability. Just because an area has had a lot of uptake, does not mean it is desirable and will exhibit capital growth.8. Government stimulusWhen our politician’s throw money at us, and particularly when it’s enabling a purchase decision, it has a direct impact on asset price growth because of the increase in buyers. This also results in great competition pushing up property values and creating new benchmarks, and potentially meaning that some people overpaying for property because they’re desperate to get the discount. You should never base a property decision on benefits that represent a false economy when contrasted against your intended outcome.9. A rare few infrastructure upgradesThe trio share the infrastructure upgrades that are worth paying attention to and those that are capital growth red herrings, which is the lion share of them despite what the media, spruikers, agents and the well-intended friends and family might tell you.10. Increase in overseas buyersOver the last decade, we’ve seen rapid price increases, partly due to an increase in overseas investors entering the market. Restrictions on the type of asset foreign buyers can purchase and additional fees taxes is just a few of the levers that the government can pull to increase or decrease interest in the property market or dampen demand. The wonder from down under’s ability to manage Covid will only amplify Australia as a destination nation for those who can afford to move here, purchase here or send their children here to study and live.11. MigrationWhilst overseas migration has come to a halt, there is still interstate and intrastate migration to take into consideration. Age, education, and other demographic factors shape an area when it comes to comprehending the impact on capital growth from our new arrivals.We have also repatriated around 200,000 Australian’s which essentially has replaced migration. Since the pandemic struck (and particularly for those in lockdown capitals), people are moving domestically, whether it be a move away from a city in favour of regions, or an interstate move. Overseas migration may be on hold for now, but we do need to ensure that when it recommences, we don’t confine our attention only to capital cities and the impact of these new foreign arrivals.12. InflationTying in with employment and wages growth, inflation is not an arbitrary consideration. The engine room behind our economic drivers is well-integrated, but it goes without saying that inflation will impact property price growth. Every reserve bank is doing its utmost to stimulate inflation. It will be super-interesting to see the role of inflation in the recovery and if it makes its way back into the target band, and potentially takes off which some wise-heads are concerned about given the extent of the fiscal stimulus.13. Higher rental demandThis is a function of population growth, migration, building approvals, household numbers and employment. Lifestyle and overall desirability will discern some areas from others however.14. Commodity prices and boomsOther than Iron Ore, fluctuations in commodity industries will not have a significant impact on a big city, but drives demand in regional towns that are reliant on that industry for employment and their economic well-being. At the moment, the price of Iron Ore in particular, is providing significantly tail winds behind the economic recovery of our nation. Our reliance on China remains a risk.15. And of course, our “gold nuggets”!Visit the show notes - https://propertyplanning.com.au/capital-growth-what-increases-property-value/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's market update #18 of the Property Planner, Buyer and Professor Podcast, the team discuss “The early trajectory for 2021", as Dave, Cate and Pete take you through:1. The current property climateWe may be heading towards autumn, but temperatures are going through the roof as the property market heats up. If you don’t want to get burnt on the property hunt, don’t forget to slip, slop, slap - get clear on your strategy, determine your price range and study the comparable sales.2. Property values for January are in the booksThe national property market has started off the new year on a strong footing, as expected, following the seasonal slowdown. The trio take you through the January highlights.3. Beware the data lagWith the market surging forward at this pace, November’s sales won’t cut it anymore. The Property Buyer shares her tips on how recent your collated data needs to be and warns that this data may not be fool proof either.4. Regional areas and days (or hours) on the marketBecause regional areas are less reliant on auctions, days on market tend to be shorter as a direct reflection of private sale pricing regimes. At the coal face, bullish offers are being made to quickly snap up properties. Remember, the better the quality the property, the faster it is likely to sell. If you’re targeting top-shelf properties, you need to be prepared for competition, and be prepared to make quick decisions.5. CBD apartments and expected immigrationThe CBD apartment market continues to languish, partly due to the great lifestyle re-evaluation and flight to larger properties and also lack of international students. Mounting pressure to bring in international students and lower-level workers for our agricultural industries may open up boarders in mid to late 2021 – watch this space.6. New Zealand and macro prudential measures to cool the marketKiwi house prices have taken flight and over the last 12 months, resulting in an average capital growth figure of 17.3%. The NZ Central Bank has slapped restrictions on investors and 60%+ LVR lending in a bid to put out the property fire. The trio explain the outlook for Australia and when our regulator is likely to pull the trigger on similar macro prudential measures although they note that unlike NZ, we haven’t really seen investor numbers represented in our market yet.7. JobKeeper and JobSeeker coming to an endThe Property Planner, Buyer and Professor share their predictions on the impact to the property market, when both JobKeeper and JobSeeker come to a close at the end of March.8. Interest rates won’t rise for 4 yearsGovernor Lowe has adjusted his expectations for the cash rate to stay at 0.1% from 3 years to 4 years. The Property Planner explains the motivations driving this monetary policy.9. Vaccine success in IsraelThe global guinea pig for vaccines, Israel, has turned in a positive success story as more than 50% of their population has been vaccinated. Effective vaccines are critical to the success of macro markets and the economy, so far, the outlook is promising.10. And of course, our “gold nuggets”!Visit the show notes - https://propertyplanning.com.au/market-update-18-early-trajectory-for-2021-january-results-regionals-v-cities-interest-rates/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #70 of the Property Planner, Buyer and Professor Podcast, the team discuss “Tax optimisation – using mortgage strategy to create wealth ", as Dave, Cate and Pete take you through:Weekly market insights1. RBA revises low interest rate forecastGovernor of the RBA Phillip Lowe has said that he expects interest rates to remain low for the next 4 years, extending from his previous forecast of 3 years. In addition, there are no concerns on the horizon about an asset bubble forming for the property and share markets. It’s game on!2. Demand spikes for hot propertyAt the coal face, we’re seeing floods of prospective buyers at open for inspections, with not everyone in the queue able to inspect the property. Supply is not dramatically shorter, but the numbers of buyers have gone through the roof. The last time there was this much activity was after the GFC where the government was throwing money at first time buyers and interest rates dropped to 5%. Now, rates are even lower, stimulus is greater, and consumer sentiment has spiked; creating the perfect storm to propel the property market.3. Comparative salesIn light of demand and market movements, if you’re interested in purchasing a property, you should be looking at comparative sales from the last 2 to 4 weeks. Anything over that is too old in many markets, and likely to give you dated sales results to depend on.4. Property predictionsThe trio share their predictions for when regulators will step in with macro prudential measures to dampen property market activity and run-away prices. They also share their individual insights into how they feel the measures will be rolled out.Tax optimisation1. How can you optimise your tax deductions?Tax optimisation is multi-dimensional and you only have one opportunity to borrow funds to purchase an investment asset. There are many mortgage strategies you can put in place to ensure you’re getting the most bang for your buck.2. Using equity to maximise borrowingsAlthough counter-intuitive, maximising your investment loan can put you in a better financial position. The trio explain why you should consider borrowing the full purchase price plus costs of the investment if you have equity available in an existing property.3. Paying principle and interest on your home and interest only on your investment loanThe aim of the game is to pay down your non-deductible debt as fast as possible, while preserving your deductible debt to make holding your investment property more affordable.4. Preserving the balance of your home loan if you plan to upgradeThis is a critical point to consider for anyone who has purchased a stepping stone home and has plans to keep their home as an investment when upgrading to the long-term home. The Property Planner outlines the mortgage strategies that can be employed to make the most of your future tax deductions.5. Why do so many people get this wrong?Many of us are taught by our parents and grandparents to pay down debt as fast as possible, without realising that you may be shooting yourself in the foot and killing wealth. We advocate that everyone should pay down their debt by using the right strategy, which will hold you in great stead when you transition to the flexibility stage of life.6. Redraw v offset accountsThe Property Planner explains the difference between redraw and offset accounts, and why the smart use of offset accounts means you could end up with an extra asset or two in your retirement.7. Understanding the ATO test for deductibilityUltimately, the ATO decides what expenses are deductible and what is not and understanding the ATO ‘purpose test’ is key. The trio explain the ‘purpose test’ and how it works in simple terms.8. And of course, our “gold nuggets”!Visit the show notes: https://propertyplanning.com.au/optimising-tax-deductions-2020-and-2021-top-mortgage-and-loan-strategy-tips/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #69 of the Property Planner, Buyer and Professor Podcast, the team discuss “Self-managed super funds (SMSF) in Australia – Pros and Cons", as Dave, Cate and Pete take you through:1. What is an SMSF?The trio take you through a crash course in SMSF basics and who you can turn to for advice.2. How does property fit in the picture?Your SMSF can invest in a number of asset classes, including residential or commercial property, provided that the asset meets your documented ‘investment strategy’. Business owners and those short on cash flow, may find it particularly appealing as a way to invest in property. The trio explain why.3. What attracts people to invest via an SMSF?Managing your own super gives you a higher degree of control over your investment strategy than you would otherwise have if your super was in a managed investment fund. But don’t be fooled, it takes a village to run a ‘self’-managed super fund.4. SMSF game changersThe trio explain how the SMSF landscape has changed over time, including the advent of instalment warrant arrangements, which changed the playing field completely in the SMSF space.5. How does SMSF lending stack up?The Property Planner outlines the critical differences between SMSF loans and regular residential mortgages. Do you feel comfortable risking the farm with a personal guarantee?6. SMSF property restrictions you need to be aware ofThe Property Buyer and Planner explain the key restrictions that relate to your SMSF investment strategy and how your freedom in asset selection could be impacted.7. The risks behind purchasing a property in an SMSFLike the boxing day sales, the unfortunate reality is that whenever a new market opens up, the spruikers are the first to run in and elbow their way to a sale. The SMSF market is no different and many mums and dads have fallen prey to dodgy investments and underperforming assets sold to them under the guise of an ‘investment strategy’. An SMSF may be a great strategy for you, if you’re getting your advice from an independent expert who is tailoring a strategy specifically for you.8. Can you hear the alarm bells ringing?The Property Planner and Buyer share the tell-tale signs that a bad SMSF decision is about to be made.9. Setting up and running an SMSF, have you got what it takes?So, you want to manage your own super fund? The Property Planner outlines what goes into setting up and maintaining an SMSF. Do you have the time and the cash flow to take on this responsibility?10. And of course, our “gold nuggets”!Visit the show notes: https://propertyplanning.com.au/self-managed-super-funds-smsf-in-australia-pros-and-cons/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's ep#68 of the Property Planner, Buyer and Professor Podcast, the team discuss “Off the market properties – everything you need to know", as Dave, Cate and Pete take you through:1. What are off-markets? In a nutshell, off-market properties are properties that are up for sale without public advertising or marketing.2. The difference between off-markets and pre-markets Don’t get sucked into the real estate agent’s ‘pre-market’ vortex. A genuine ‘off market’ is not the same as a ‘pre-market’. The Property Buyer explains the difference.3. Why would a vendor choose to sell off-market? The trio discuss the different motivations behind a vendor’s decision to sell their property ‘off-market’.4. How do you find off-market opportunities? Anyone can be privy to an off-market opportunity, but if the property is not publicly advertised, how do you know about it? The Property Buyer shares her tips on how to put your best foot forward with real estate agents and get in the know.5. The importance of rapid decision makingOff-market opportunities are often time sensitive and require quick and decisive action on the part of purchasers. If a good off-market opportunity lands in your lap, now is not the time to equivocate! The Property Planner and Buyer explain the methods used to make decisions fast.6. Are all off-markets good opportunities? A critical mistake is thinking that all off-markets are great opportunities. This is not true. All off-markets are not the holy grail. The Property Buyer shares how to spot the genuine opportunities from the time-wasters.7. Off-market discounting Many purchasers incorrectly believe that an off-market sale is an opportunity to get a discount on a property. But the reality for most off-market's is that you need to be prepared to pay what the property is worth.8. And of course, our “gold nuggets”!Visit the show notes - https://propertyplanning.com.au/off-the-market-properties-everything-you-need-to-know/
In this week's market update #17 of the Property Planner, Buyer and Professor Podcast, the team gaze into the crystal ball to make their “2021 predictions: capital cities, regions, first home buyers, investors, construction and why property values will continue to surge", Dave, Cate and Pete take you through:1. Why the market will rise in 2021The trio explain the key factors at play that will continue to drive property prices up throughout the year.2. The risks to our economy and property pricesThey outline possible events and market forces that could dampen the economy and property prices, however we believe the factors stimulating the economy and property prices will outweigh any bumps in the road.3. A detour into rental marketsAlthough vacancy rates have increased for Sydney and Melbourne, there are particular properties that are outperforming, with rentals being snapped up quickly and above the asking price. The Property Professor explains why.4. Predictions for regional activityRegions have been the top performers for 2020, but will this growth continue in 2021? The Property Buyer makes predictions on what we can expect to see in regional markets.5. Capital cities – who will come out on top?The trio agree that all capital cities will see value increases over 2021, but have differing opinions on which capital city will be leading the pack at the end of the year. They explain the drivers putting upward pressure on prices for each capital city.6. Building industry set to take offWith the government throwing money towards the construction of new homes through the HomeBuilder and first-time buyer incentives, we expect that tradies and builders will be flat chat and turning away work in 2021. The desire of many Australian families to add a room or extend their home will further exacerbate this trade shortage issue. This will be a key driver for our economic recovery.7. The outlook for apartmentsApartments and office spaces have been the hardest hit investments during the global pandemic, particularly high density apartments in the Melbourne and Sydney CBD. We predict that penthouses and 3-bedroom apartments will recover quickly and exhibit growth, while bedsits and 1-bedroom apartments will continue to languish.8. Investors to return with a vengeance2021 is primed with conditions ripe for investors to make a comeback. Debt affordability is the best since 2001, we have the greatest level of savings on record, interest rates are at all-time lows and anticipated relaxation of lending rules to occur in March, all creating the perfect storm of investors to launch back into action.9. Abolition of stamp dutyThe Property Planner makes a long-term prediction, that if the transition away from stamp duty goes well for NSW in 2021, other states will follow suit.10. Runaway prices and APRA intervention With investors predicted to return to the market in droves, housing affordabilty will become an issue in the media towards the middle of the year, the government will chime in and APRA will intervene with measures to cool down the market towards late 2021 or 2022.11. And of course, our “gold nuggets”!Visit the show notes - https://propertyplanning.com.au/property-predictions-for-2021/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's market update #16 of the Property Planner, Buyer and Professor Podcast, the team discussed “Who were the property outperformers, the under-achievers and why the market remained resilient", as Dave, Cate and Pete broached:1. 2020, the year of the first home buyerFirst home buyers have been entering the market in droves and hitting record numbers in 2020, taking advantage of the many incentives available. First home buyer activity has also propped up the construction industry, which certainly helped the economy. But when will investors return to the market? The trio share their insights.2. The outlook for interest ratesNot only are interest rates the lowest they’ve ever been, but fixed rates are also lower than the standard variable rate. What times we live in! The Property Planner explains why fixed rates have dropped so far, how long we can expect interest rates to stay low and potential future issues that may arise due to a sustained low rate climate.3. What economic cliff?The levers that the government can pull to prop up the economy and support during downturns are many and varied, and we haven’t seen any sign of the dreaded ‘economic cliff’ trumpeted by doomsayers. Let this be a lesson to the naysayers!4. Houses v unitsHow did houses fare compared with units? It comes as no surprise that units, and particularly small apartments, were the hardest hit during 2020. Downturns often reinforce the weaker areas of the market place and this has played out in 2020.5. The great renovationWe’ve lived through the renovation boom and our houses are growing to be the biggest in the world. We are truly the lucky country, but how structural will this change be once people start heading back to the office a couple of times a week?6. Regional locations – capital growth and sales volumesRegional locations have been the star of 2020, outperforming capital cities in both capital growth and sales volumes with some stellar numbers. But will regional locations remain at the front of the pack in 2021? The Property Planner and Buyer make their predictions.7. Why did the property market remain resilient?Overall, national property prices increased by 3% throughout the year and the trio share their insights on the key factors that kept the property market chugging along through 2020, driving the quickest recovery we’ve seen in a property downturn over recent decades.8. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/market-update-16-2020-thats-a-wrap/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week’s episode #67 of the Property Planner, Buyer and Professor Podcast, the team share some of their insights, experiences and best tips for our listeners when it comes to setting goals. In line with the first week of 2021, this podcast is well-timed according to our trio, as they each see a heightened degree of property investor goal-setting and planning activity at this time of year. But not all goals turn into successful outcomes and in this episode the trio explore why, and more importantly, the fundamental goal setting behaviour that can make all the difference between dreams and outcomes.Goal setting fundamentals1. Why is goal setting important?Cate asks the Property Planner, (Dave) to share his approach that he uses to enable his clients to achieve their property plan goals, from property goals, investing goals, lifestyle goals, to the ’flexibility stage of life goals.’ Pete sheds light on why people set goals, (particularly in January), and why so many people’s goals don’t come to fruition.2. You can only manage what you can measureDave uncovers the professional approach he guides his clients on when creating goals, setting measurable targets and avoiding procrastination. He shares an interesting psychological study where a study focused on a group of students who were split into two groups; those who visualised the outcome of the goals, and those who visualised the process required to achieve the goals. Visualising the required steps is an integral part of successful goal setting.3. Creating an action plan and holding yourself accountableSetting goals is the vehicle that will drive you to your destination. Dave talks about the adoption of a timeframe map; when, where and how you’ll apply the behaviour.4. Five core reasons why people set goalsPete shares these five core reasons that he has incorporated into his university property investment course;* retire earlier * retire richer * earn extra money from time to time * work part-time * give up your day job
Some can be set in tandem, but ultimately these various reasons for setting goals will determine what you buy, where you buy, and when you buy.Pete also offers some great insights for listeners who are keen to retire richer.5. Keeping it simple (and avoid goal competition)Dave speaks candidly about one of his preferred authors, and a great lesson he’s picked up from Jim Collins, (Good to Great, Built to Last).The importance of setting three clear goals; “If you have more than three priorities, you have no priorities”, and he also encourages people to consider three things they should stop doing. 6. Set your goals for the now and hold yourself accountableDave cites Steven Covey (Seven Effective Habits); “Schedule your priorities daily, don’t prioritise your schedule”.The way that Dave describes a stepped model is as follows;* What’s your “some-day” goal * What’s your five-year goal that will help you reach your “some-day” goal? * What’s your one-year goal that will help you reach your five-year goal? * What’s your monthly goal that will help you reach your one-year goal? * What’s your weekly goal that will help you reach your monthly goal? * What’s your daily goal that will help you reach your weekly goal?
The planning fallacy is something that can strike the most organised people – but breaking down goals is critical to success.7. Dave breaks down S.M.A.R.T. goalsThis is a well-known, clever method that is widely used by organisations and corporates for setting clear employee/team goals. Dave spells out how property investors can adopt this same methodology when setting their own goals.1. Specific (simple, sensible, significant). 2. Measurable (meaningful, motivating). 3. Achievable (agreed, attainable). 4. Relevant (reasonable, realistic and resourced, results-based). 5. Time bound (time-based, time limited, time/cost limited, timely, time-sensitive).
8. Write your goals down, share your goals with others and create your action planWriting down goals improves recall and allows us to emotionally and intellectually connect with our goals.Sharing our goals with others increases the chances of us being able to keep ourselves accountable and enable us to take the right action with our goals.Re-evaluation and assessment of progress can only be done effectively when goals are clearly documented.9. Why do some goals fail?Cate chats about some of the key contributors that block people’s goals from becoming reality. The two main offenders are:1. Greed and impatience: people who want it to happen overnight. As Pete says, “property is great for those who want to get rich slowly” 2. Relevance: some of their goals are NOT realistic
10. What happens when people buy the wrong thing?Cate chats about the downsides of getting a costly decision wrong, and Pete clarifies the risk of opportunity cost.* People rush the purchase and buy the wrong asset, only to have it underperform * People buy the wrong asset and then sell it * People miss deductions because they don’t structure loans/purchases right. Dave shares some of the outcomes that can strike when people ignore this important element * Goals can’t be achieved when opportunity strikes because finances and/or structures aren’t ready or suitable * Regret down the track
11. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/goal-setting-fundamentals-for-property-success-ep-67
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #66 of the Property Planner, Buyer and Professor Podcast, the team discuss “Holiday homes – delirium or dream?”, as Dave, Cate and Pete take you through:1. Lifestyle, investment or hybrid – what is a holiday house?The trio share whether you should be looking at your holiday home as a lifestyle property, a money-maker or a mix between the two. They shed light on the compromises involved when opting for the hybrid scenario, and the key considerations that investors need to acknowledge if they want to purchase with eyes wide open.2. The opportunity cost of holiday homesHoliday homes are typically in locations that do not exhibit long-term outperformance in capital growth and your use of the home will limit the rent you receive and the tax advantages. Compounding this, your borrowing capacity will be significantly reduced, limiting your investment opportunities for wealth creation. Considering how your retirement goals will be impacted if you purchase a holiday home instead of a pure investment is critical to ensure you make the right decision for your today, and your tomorrow.3. The tax implications and limitations for holiday homesThe trio explain the tax implications of leasing out your holiday home, whether it be a long-term, traditional residential lease, a short stay Airbnb arrangement or an ad hoc approach.4. The perils of purchasing a holiday house with friends or familyPurchasing a holiday house with your mates or siblings may seem like a great idea at the time, but the reality of managing the property can be the cause of strains on the relationship. In addition to a usage roster and the clean-up and provisions protocols, co-owners also need to consider how joint ownership arrangements can change and evolve. The trio talk about the importance of an out-clause and rules around equity access before signing on the dotted line.5. Maximising rents on a holiday homeThere are differing management fees and service costs that must be factored in, depending on whether your property will be leased ‘hotel style’ like an Airbnb or for longer-term stays. From appointing cleaners to sourcing breakfast provisions, to linen changing and beyond, the trio discuss the various ways that holiday house investors can maximise their profits over a holiday period.6. When should you buy a holiday homeAlthough cash flow, long-term investment and ongoing maintenance are critical factors to consider, the memories and traditions that you’ll create with family are priceless, as is the respite from the day-to-day grind of a professional career or running a family. So, when is a good time to consider purchasing a holiday home, and how do you create a cost-benefit analysis when some measurements are non-financial?7. What’s in store for 2021?2020 has seen some holiday locations take capital growth by storm. But will the tree and sea change trend continue or has the capital growth boat for holiday locations already sailed? The trio reveal their predictions for 2021.Visit the show notes - https://propertyplanning.com.au/holiday-houses-delirium-or-dream/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #65 of the Property Planner, Buyer and Professor Podcast, the team discuss “How to combat your naysayers and make successful property decisions", as Dave, Cate and Pete take you through:Weekly market insights1. Demand for holiday homes increasesFears of another outbreak, combined with additional household savings following lockdown have driven a large proportion of buyers to consider a holiday house purchase. But is this the right strategy for you? We think this warrants a full episode, so stay tuned for next week’s podcast as the Property Planner, Buyer and Professor tackle holiday homes.2. Sunshine Beach wins the 2020 crown for capital growthCoreLogic figures released last week have revealed Sunshine Beach had the largest capital growth return of 2020 with values rising by a whopping 27.6%. No doubt the capital cities of Melbourne and Sydney have been channelling money into these locations as beautiful holiday hotspots. It will be interesting to see whether long-term performance will result for investors.3. Unemployment forecasts have improvedBanks and economists have revised their unemployment predictions, with most agreeing we won’t even reach 8% unemployment, a vast improvement from the previous forecast of 11%. Commonwealth Bank economists have announced that they expect the unemployment rate has already peaked and we won’t go any higher than where it is right now.Combatting the naysayers1. Why are some people naysayers?2020 was the year the naysayers and in the end, the sky didn’t fall. The trio explain the drivers that turn people into naysayers.2. When is a naysayer doing this out of care?Parents are great at spotting the risks their children may be opening themselves up to. That doesn’t just disappear when the kids reach adulthood. We explain how to manage the people that care about you the most.3. When should you listen to your ‘old folks’?You’ll be laughing all the way to the bank with the money management tips you can mine from your parents and grandparents.4. What has a naysayer cost you in the past?The Property Buyer shares the opportunities she’s lost from listening to those near and dear.5. How to get past the naysayersThe best way to combat the naysayers, is to understand the ‘why’ behind the opinion and make up your own mind. This means doing your research and asking your independent experts great questions.6. What role did the media play during our recent downturn?Interestingly, the media’s focus on trumpeting the worst-case scenario may have actually mitigated the impact to the property market. The trio explain how.7. How are predictions shaping up now?The sun has come out on the property doomsayers, with many now predicting growth of around 10% in 2021. However, the clouds are still hanging over Melbourne, with predictions that Melbourne will see the lowest growth next year. But we think this is overly pessimistic.8. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/how-to-combat-your-naysayers-and-make-successful-property-decisions/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #64 of the Property Planner, Buyer and Professor Podcast, the team discuss “Property v Shares - How to strike the right balance in your investment portfolio, which investment strategy is superior, how to get started and should it actually be property AND shares?", as Dave, Cate and Pete discuss:Weekly market insights1. Australian bonds in negative yield territoryFor the first time ever, Australian bonds have been purchased at a negative rate last week, with an average yield of 0.01% and buyer’s who bid most aggressively receiving a yield of minus 0.01%.2. Landlords and tenants in limbo as VCAT unable to settle interstate disputesThe Court of Appeal has ruled that property disputes in Victoria involving landlords who are residents of other states are not within VCAT’s jurisdiction. This means that neither the tenant or the landlord can apply to have a tenancy dispute managed in VCAT. We expect this unsatisfactory state of affairs will be dealt with and rectified by the Government shortly.3. Savings spike the highest since the 70’sOne silver lining of the coronavirus pandemic is that many Australian’s are saving more money than ever. The last time we saw a spike in savings this high was in the early 70’s where fuel was being rationed. Increased savings will add fuel to the property fire for many borrowers whose borrowing capacity is contingent on their deposit size.Property v Shares1. Share investment lessons from the property expertsThe Property Planner, Buyer and Professor share their first-hand experiences and lessons learnt the hard way from their first foray into shares.2. What does an investor need to do to be purchase-ready?It’s a lot easier to get your foot onto the share market ladder, than the property ladder. With the ability to invest a few $100 in the share market and low transaction costs to purchase and sell, the trio share with you what you need to do to get purchase-ready.3. Leverage and borrowing funds to investOne key difference between property and shares is bank policy in providing funding, which typically allows for lower loan to value ratios of 50-70% for margin loans. Whereas home buyers can seek loans of up to 95% to purchase a property. This is because of the perceived risk and volatility in the share market and relative stability of the property market. This also means that the value of the investment that you can purchase with your initial capital is greater, and this leveraging bolsters net capital growth, which translates to more opportunity to invest and leverage in the future.4. Share trading v share investingThe trio explain the differences between share trading and share investing, and if you’re not a share market expert, why share investing is likely the right strategy for you.5. How mortgage strategy applies to sharesThe good news is that the same principle of mortgage strategy apply to share investing as property investing. The Property Planner, Buyer and Professor outline the key strategies to implement.6. Market volatilityWhile there is certainly more risk in the share market, there is also more gains to be had when leveraging is not considered. The value of shares can increase by 10 times their original amount and some companies just seem to take off. In contrast, outperformers in property see typically 10% or more capital growth in a year. However, it seems with shares that as quickly as they go up, they can come back down. We highlight the critical reasons why.7. How to strike a good balance between asset classes in your portfolioThe trio share their insights on how to structure and diversify your asset portfolio.8. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/property-v-shares-how-to-strike-the-right-balance-in-your-investment-portfolio/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode #63 of the Property Planner, Buyer and Professor Podcast, the team discuss "Setting yourself up to purchase with confidence and why getting your pre-approval in place is more critical than ever", as Dave, Cate and Pete discuss:Weekly market insights1. Economic wins driving our recoveryAustralian Bureau of Statistics data released last week reveals why property values have been taking off since October as the economic & property upturn continues at record pace. ASX 200 gained over 10 per cent in November, (a whopping return of 120% when annualised) and is in the top 10 of monthly returns recorded over the last 40 years. Car sales turned positive for the first time in 2.5 years, with 10,000 cars sold and Iron Ore exports hit a record $13.5 billion, already $13.2 billion ahead of the average, a significant boost to the government’s revenue, offsetting some of the stimulus and much of China’s tariffs in other areas.2. Property values on the rise over NovemberDwelling values rose across every capital city, as Melbourne joins the market rebound. The national index increased by 0.8% over November or 9.6% annualised, double the 0.4% growth recorded for October. Darwin and Canberra were the strongest performers, increasing by 1.9% or a whopping 22% when annualised. Regional areas have been the stand outs with a total return of combined capital growth and rental return of over 10.6% over the last 12 months. Banks and economists re-evaluated their projections to be somewhere between 5 and 9% growth for 2021, but we thing that these could be on the conservative side.3. Holiday hotspotsWhilst Melbourne recorded an increase of 0.7% over November, the Mornington Peninsula broke Vic records with a massive 2.2% capital growth for the month. This location has seen strong capital growth since the gates opened and the extensive lockdowns driving the great lifestyle re-evaluation have made the Peninsula an even more attractive place to purchase.4. Aussies officially out of recessionTreasurer Josh Frydenberg announced officially last week that Australia is out of recession. The property market is leading the recovery – as increased values flows into increased confidence and consumer spending. Compared to the recession in the 1990’s where unemployment reached 11%, we’re looking at revised forecasts of under 8%.Getting your pre-approval in place1. The current state of the marketThe Property Planner and Buyer shed light on the flood of enquiries and high levels of interest from prospective purchasers looking to get their ducks in a row to make their next property decision.2. What's driving the flurry of activity?Affordability is the best it’s ever been, interest rates are at an all-time low (and will stay that way for a few years according to RBA Governor Philip Lowe), existing properties have held their value and started to increase, which gives people the confidence to take that next step.3. How long will it take to get a pre-approval?Trying to get a pre-approval has been difficult since Covid started, banks have had their challenges with an influx of queries from customers looking for repayment pauses, assessment criteria has been stricter than ever before, with new rules implemented for checking (and re-checking) income. The time to have a pre-approval assessed has blown out to 20-30 days with some of the major banks, plus it’s worth noting that pre-approvals are the second-class citizen of the finance world. The upshot – it's critical to act now and act fast!4. Should you get multiple pre-approvals?With the long turn-around times and queues to get an approval, you may be tempted to apply a scattergun approach to lenders. But this is not necessarily helpful and could also harm your credit score. The trio share strategies you can use to get your pre-approval up and running quickly.5. What should you be doing right now if you are interested in purchasing?Contact your strategic mortgage broker and buyer’s agent right now! Knowing a ball park range of your borrowing capacity and determining your strategy are the first ducks that need to be herded in line. Getting caught up on the lender can waste precious time!6. When is the right time to purchase?It’s easy to get swept up in the FOMO (fear of missing out), but you also need to consider what is the right decision for you and when is the best time to make it. If you can purchase a superior asset if you wait, you could set yourself up for better financial success than if you purchase a poorer quality asset now. Getting quality and independent advice is the key.7. What pre-approval should you get?The Property Planner, Buyer and Professor discuss the different types of pre-approvals available and which you can rely on (and which you shouldn’t) to purchase with confidence.8. Selecting acceptable securityA pre-approval is never a guarantee for lending and will always be subject to the property being acceptable security for the bank.9. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/the-ins-and-outs-of-setting-yourself-up-to-purchase-with-confidence-and-why-getting-your-pre-approval-in-place-early-is-more-critical-than-ever/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team pick apart the behaviours of real estate agents that drive buyer’s’ up the wall and shed light on the method behind the madness, as Dave, Cate and Pete discuss:Weekly market insights1. Rent-vesting to make a comeback?With interest rates the lowest they’ve ever been and homebuyers looking at where they will purchase and what they can afford, we expect that rent-vesting will return with renewed vigour. Life is too short to live in a location where you’ll be unhappy and more people will turn to purchasing investments. It’s never been easier to find neutrally geared properties, to ensure your money works hard for you.2. All capital cities have increased in the value in the last yearAfter the pandemic dust has settled and now all capital cities have returned to growth, all capital cities have recorded an increase in values over the last year. Perth just made it with 0.04% increase, and Melbourne with 0.7% despite the market retraction. Perth and Darwin in particular have been dragging the chain for years, due to the retracting resources market, so this is certainly positive to see. Some capital cities will, of course, go up faster than others.3. Vic stamp duty concessionThe Vic budget has announced stamp duty concessions for any property purchases up to a value of $1M, with a stamp duty waiver of 50% for new residential properties and 25% for established residential properties. The offer will be available for contracts entered into between 25 Nov 2020 and 30 June 2021. This is another factor that we expect will drive strong value growth in 2021. Some questions are yet to be determined, for example, whether you can double up on concessions including first home buyer discounts.Agent behaviours that buyer’s don’t like1. Why would an agent leave a price tag off the listing?This comes down to understanding what is market centric for the area that you’re purchasing in. The trio reveal the reasons why the listing may not include a price tag and how this could present a hidden opportunity to take advantage of.2. What is the psychology behind underquoting auctions?While this may cause endless frustrations for purchasers who repeatedly miss out, there are reasons why agents adopt this practise. The trio discuss some of the quirks of each state, what the legislation dictates, and how buyers can overcome this hurdle if it strikes.3. Why do some agents talk in riddles when asked about a price tag?Ultimately, the agent does not work for you, their job is to get the best outcome for the seller. This means that you will be sometimes find yourself on the front line of many well developed, tried and true negotiation tactics.4. Why is it naïve to assume an agent will negotiate exclusively with you?Whilst it may be frustrating to think you’ve put in a winning offer, only to find out hours later that another buyer has come over the top of you, this is the agent doing their job. The more people who are involved, interested and willing to purchase, the better outcome the agent will secure. Rather than being sour grapes about competition, buyers should be on the front foot, quizzing the agent prior to submitting their offer to explore how the agent intends to deal with any competing offers.5. Why do agents shop around after receiving a firm offer for purchase?Encountering competition from other interested buyers is part and parcel of the home buying process. The trio share with you the tips and tricks you can use to minimise the risk of another buyer submitting a winning offer after you’ve already submitted yours.6. What does it mean if an agent doesn’t ask for your offer in writing?The typical way to submit an offer, is by returning a signed contract with consideration. We share with you the reasons why an agent may direct you to hold off on submitting your offer in writing.7. Why do buyers sometimes miss out on being notified when an auction property they were interested in gets sold before auction?It’s rare that this is because the agent is no good at their job. If you’re interested in a property, now is not the time to be playing possum! The trio outline what you should do if you’re interested in a property8. Why do some properties get sold to someone else in a hurry, even after you’ve told the agent that you’re ready to put in an offer?The reasons are many and varied, ranging from the risk that you present, your past dealings and history with the agent or there are simply other candidates more fiscally desirable than you. The Property Planner, Buyer and Professor unpack what that means and how you can present as a rock-solid buyer with minimal risk.9. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/understanding-the-real-estate-agent-behaviours-that-buyers-dont-like/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's market update on the Property Planner, Buyer and Professor Podcast, the team analyse the factors playing out in Australia and abroad that are shaping our economic recovery and property market growth, as Dave, Cate and Pete take you through:1. All aboard as the last of the big banks revise their property forecast UP for 2021!ANZ is the last of the big 4 bank dominos to fall, and revise up their previous gloomy 2021 predictions for the property market. As we shared in April, we expected the market to fall by less than 5% and in early October we predicted 10% + growth in 2021, and more to come in 2022. Now the banks and other economists have adjusted their views.2. The peak to trough fall in values from Covid well within our predicted 5% bandThe impact of the Covid pandemic on property values from peak to trough was a modest decline of 1.7% for the entire Aussie property market and 2.8% for capital cities. CoreLogic data tells us that the Melbourne market bottomed on Oct 18 and the Aussie market a week earlier. In the Podcast we called the inflection point in late September due to data lag. Once again, many analysts have egg on their face, predicting cataclysmic price falls. Perhaps we need to have a Podcast on why macro- economic experts still do not understand the true drivers of the residential property market!3. The Melbourne property market has joined the party.Melbourne property values are surging with CoreLogic showing growth in values since mid to late October, auction clearance rates surpassed Sydney on the weekend and all signs point towards a larger recovery, because of the larger fall and Melbourne was on a tear leading into Covid. This has been playing out at the coal face since the start of October.4. The kiwi property market, a look into our future?The New Zealand government went hard and fast locking down to stamp out Covid. The effective eradication of the virus along with significant stimulus and with interest rates has resulted in median property values rising a whopping 11.1%! This trajectory means that the Reserve Bank of NZ is talking about macro prudential measures, such as restricting LVRs to slow down the property market already. We have predicted this kind of intervention will be on the cards for Australia towards the end of 2021 or into 2022 as APRA has proven it works.5. We explain some key reasons why we predicted property values would surgeFor starters, debt serviceability is the lowest it has been since 2001. Interest repayments as a share of total household incomes are the lowest they have been since March 2002. The Australian property market has provided zero net capital growth for about four years now. The unfortunate reality is that despite so many people having such a difficult time, many of them were young people in part-time and casual work and not on the property ladder. A larger cohort of people have the greatest level of savings on record and benefited from stimulus which they can now deploy in investments.6. The repeal of ASIC’s Responsible Lending obligations is looking increasing likely!At the AFR Banking and Wealth Summit during the week, treasurer Josh Frydenberg ratcheted up the pressure on regulators to ensure they played their part, which acting ASIC chairwoman Karen Chester indicated she had heard loud and clear. The ASIC chairwoman painted the picture of a clear pivot of ASIC’s position and it provided another sign that the Morrison government will ensure that the recovery is not hampered by lack of access to credit.7. Why property value increases will not be halted by the end of JobKeeper and loan repayment pausesThe trio explain the critical drivers that will continue to put upward pressure on values.8. Explain why the latest cash rate drop was not about reducing interest rates for borrowersWhile the low-rate environment is doing wonders for our debt=to-income ratio, it’s not the primary reason why the RBA has been steadily lowering rates. The Property Planner, Buyer and Professor explain the real reason behind the rate cuts which are primarily about keeping our exchange rate lower and creating jobs which are more important than focusing, or worrying about excessive inflation.9. Banks forecasting an ever-improving positive outlook for GDP and unemploymentGovernment stimulus, our proven ability to suppress Covid, successful vaccines, the property market in full rebound mode and the expectation of record-breaking internal tourism all points to updated forecasts for superior GDP growth and reduction of unemployment in 2021, with one major back predicting unemployment to be as low as 5.75%.10. We touch on the big news in the NSW budget, with the plan to make stamp duty optionalWe take a high-level look at this potential transition from stamp duty to a yearly tax on property and our hosts provide some different perspectives on what this could mean, but it is only early days yet.11. Listen to some of our predictions back in April and MayFor perspective, we suggest that you listen to our market updates during the early stages of the Covid pandemic where we discuss why a downturn is usually the best time to buy property and a number of the factors that we expected, and have, played out now because history may not repeat, but it sure does rhyme!Market update 5 recorded 20/4/20 - “The green shoots – what are the early signs of market recovery?”Market update 6 recorded on 27/4/20 - “Getting your ducks in a row before the economy opens up!”Market update #7 recorded on 5/5/20 - “Recovery lessons from recent recessions, the great depression, GFC & Spanish Flu – the market forecast”12. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/market-update-15-where-we-are-headed-bank-predictions-rba-governor-speaks-nsw-abolishing-stamp-duty/
https://propertyplanning.com.au/propertyplannerbuyerprofessor/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team conduct a crash course on “How to navigate the demographic statistics that will help you identify an up and coming suburb”, as Dave, Cate and Pete take you through:Weekly market insights1. Melbourne market is movingRecords have been set and houses are flying past the reserve, Melbourne is hot on the ground and quickly moving into recovery.2. Consumer confidence has jumped to a seven year highThe Westpac Melbourne institute "time to buy a dwelling" index surged 8 per cent to 132 points – the highest reading since November 2013. Often with investing, you need to go against the grain. That means investing when everyone else is fearful of investing. If you’re doing it when everyone else is doing it, you’ll be paying more than you otherwise would have.3. Australia has surpassed the US for the largest house sizes in the world!Spurred on by the pandemic and lengthy lockdowns, the average size of our homes have increased predominantly through the increased number of renovations, which has also been supported by the government HomeBuilder stimulus grant of $25,000 to build a new home or substantially renovate an existing home. The virus crisis has been driving the ‘great lifestyle re-evaluation’ phenomena. How long this will last post a vaccine is unknown. A side effect of increasing the foot print of our homes is increased median property values.Deep dive into demographics1. Occupations, education and incomesIdentify the key data sets the professionals look at, and how to use them to analyse whether gentrification is on the cards. And importantly, which data sets to ignore.2. Rental propertiesSpotting the trends in tenure and weekly rental payments that will steer you in the right direction.3. Mortgage monthly paymentsThe trio explain what percentage of household income mortgage repayments should make up and why is this an important factor to look at.4. Usual address and internal migrationHow many people lived at the same address 5 years ago and what does this mean? Who is moving in and who is moving out?5. Dwelling growthHow many new dwellings are being built and is this a positive or negative indicator of gentrification?6. Population GrowthTaken at face value, population growth is one of the stats that can lead you to believe a location is gearing up for massive capital growth. The trio explain how to treat population growth and what indicative changes to look for.7. Going to the suburbsDon’t forget to take your eyes away from the numbers on the paper and visit the location. What are the signs that a location is attracting attention? Look out for fancy eateries and even fancier pooches on parade.8. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/how-to-spot-an-up-and-coming-suburb-understanding-demographics-and-statistics/
http://propertyplannerbuyerandprofessor.com.au/In this week’s episode of the Property Planner, Buyer and Professor Podcast, the team delve into the planned upcoming changes to responsible lending legislation and what this will mean for the property and mortgage market, as Dave, Cate and Pete take you through:Weekly market insights1. Property values continue to climb. Despite the economic recession, property values have remained resilient. We expect strong activity to continue right up until the 24th of December and into the new year.2. Beware the data lag. As property data is collected at settlement, we typically see markets shift faster than the data comes through. The increased time for approvals and many homes under ‘subject to’ clauses means that data received is even further behind the actual date of the sale.3. Record number of first-time buyers and mortgage approvals. First home buyers have flocked into the market with more people than ever before getting their foot in the property door. Mortgage approvals have also hit high levels, creating the perfect storm for fervent market recovery. Supply is starting to come back on board, which could slow down the growth in property values, although with the rate of new market entrants and positive buyer sentiment, this is questionable.Responsible lending repeal1. What is responsible lending and when did it begin? Post the GFC there was a crackdown in high-risk lending, which led to responsible lending obligations being legislated by the Rudd Government in the National Consumer Credit Protection Act 2009 (Credit Act). The trio translate the complicated legalese of the current obligations to simple terms. 2. The reasoning behind the repeal. The Property Planner, Buyer and Professor delve into the purposes of the repeal and whether it is likely to be effective at meeting the government’s goals. 3. When did applying for credit get tough and what instigated it? Over the last 10 years a litany of cascading events have resulted in a gradual creep of lenders and borrowers being faced with overly prescriptive, complex and onerous processes, which really gained pace from 2014 when APRA started to put limits on lending and calls began for a Banking Royal Commission. 4. What are the changes in lender behaviour we’re likely to see? The reduction in red tape is likely to see many positive impacts in speeding up the process of approvals, but be warned, the model will switch from ‘lender beware’ with a ‘borrower responsibility’ principle. What does that mean for your loan application? 5. Borrowing capacity set to increase. Reduction in assessment rates could see borrowing capacity skyrocket, opening the door for prospective purchasers to up their limits. 6. Gazing into the property market crystal ball. The Planner and Professor make their predictions 2021 and 2022. 7. Consumer protections, who will be looking after you? With the litigious ASIC out the door, the APRA watchdog will be the sole enforcer of responsible lending obligations. But never fear, the freshly legislated best interest duty will be picking up the slack. The trio explain how. 8. How does this relate to mortgage brokers? Interestingly, a significant amount of paperwork that mortgage brokers are currently required to complete and provide to clients could be scrapped entirely. Watch this space. 9. What other areas are the government targeting? Key areas of reform that haven’t received as much media spotlight are business loans and non-bank lenders. We cover off on the planned evolutions to streamline business lending and further protect vulnerable consumers by raising standards for the second and third tier lenders. 10. And of course, our ‘gold nuggets’!
Visit the show notes - https://bit.ly/3n7vcMK
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team delve into how to prepare for auction so you can put your best foot forward, as Dave, Cate and Pete take you through:Weekly market insights1. The recession has endedThe September quarter has seen an inflation rise of 1.6%, the largest quarterly jump in 20 years, marking an official end, (by definition) to the June quarter recession.2. Good quality properties are going well above the reserveOn the ground, the Australian property market is hotting up and particularly for houses. CoreLogic figures released after recording on Friday 30th October show that all capital cities (bar Melbourne) have increased in value over the month of October, marking the turn-around for Sydney which has increased by 0.1% after a drop of 0.3% in September. Melbourne continues to decelerate in value decline with a drop of only 0.2% in October from 0.9% in September.3. 'Subject to finance’ a key component of missing outEnsuring that you have a fully credit assessed pre-approval in place is now as critical as ever, as we see many buyers miss out because they’re not willing to take on the risk of not having a ‘subject to finance’ clause.Preparing for auction1. Inspecting and appraising – beware of underquoting!Don't get unravelled by properties selling above the price guide given by the agent. The trio share how to work out a more accurate understanding of value.2. Budget setting – home buyers v investorsThere are key differences in the budget setting process for home buyers and investors to be aware of when setting a walkaway price. In the end, it should all come down to the numbers and factoring in ‘emotional premiums’ where appropriate.3. Purchase price shouldn’t be determined by borrowing capacityMany purchasers come undone with buyer’s remorse if they’ve allowed their upper limit to be dictated by borrowing capacity and haven’t appropriately budgeted. The trio share how to work out your purchase limit so that you don’t blow the budget and lose sleep!4. When can you find out the reserve?The Planner, Buyer and Professor share the top tips for how to approach an agent to get the insider intel (that they’re not required to give you!).5. Auction twists Pre-auction offers, probate, family law, off the plan and different schedule auctions – find out the twists that can impact how the auction is conducted.6. When to kick-off an auction with a low-ball offerThe trio share the psychology behind low-ball offers and when to use them.7. Due diligenceHaving the contract reviewed by your solicitor and conducting a building and pest inspection are critical steps to ensuring that you make property decisions that you don’t later regret. Buyer beware!8. Finalising contract termsHow should you pay the deposit to the agent if you are successful and what is the settlement date?9 And of course, our ‘gold nuggets’!Visit the show notes - https://bit.ly/3oV2bWu
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team dive into more property myths that can lead purchasers down the garden path to poor property decisions. First, they share their market insights, as Dave, Cate and Pete take you through:1. Weekly market insights 1 – New home loans see a record jump in AugustABS figures released for August show a jump of 12.6% increase in new home loans (excluding refinances), and the largest month on month increase since 2002. It’s also the first time in 11 years that there’s been more first home buyers than investors purchasing in the market. So, what does that entail for the property market? The trio share their insights.2. Weekly market insights 2 – More than 50% of mortgage repayment holidays have ceasedIn a really encouraging sign, more than half of the Australian’s who opted for repayment holidays have recommenced their repayments, contributing to a more positive outlook for our economic recovery than the previously reported forecasts.3. Weekly market insights 3 – Property prices remain resilientCoreLogic data for the last quarter reveals that Sydney is down by 0.9% and Melbourne 0.27%, while Adelaide, Brisbane and Perth have increased. As the trio revealed in “Market update #7”, history shows that during previous economic downturns, property prices have remained stable due to low interest rates and reductions in supply as well as demand. This recession is no different, history repeats!4. Myth #1: You need a 20% deposit to purchase a propertyThis is wrong on two levels: the amount that you pay to a real estate agent that you’re not willing to walk away from and your contribution to settlement are two different things (and neither of them are required to equate to 20%). The trio explain why.5. Myth #2: A successful auction bidder doesn’t need skill, only the most moneyPlanning and preparation does the heavy lifting for getting great results. Your strategy and behaviour can knock the competition out of the park, even if their pockets are deeper than yours. We share with you the tactics that will have opponent auction bidders shaking in their boots, (even if you are shaking too).6. Myth #3: You lose your First Home Owner’s grant if you purchase an investment propertyMany people incorrectly believe that if you purchase an investment property first, you’re no longer eligible for the First Home Owner’s grant when you then go to purchase your home. The Planner, Buyer and Professor reveal how you can access the grant, even if you’re not a first-time buyer.7. Myth #4: Eligibility for the 6-year capital gains tax investment exemptionIf you’re thinking of moving out of your principle place of residence and renting it out, there are key requirements that are often missed by many in order to claim the capital gains tax exemption. But is this strategy right for you? The property with the highest capital growth prospects is the one you want to be claiming the exemption on.8. Myth #5: Off-markets opportunities are all motivated vendorsThe reality is that there are 3 different kinds of off-markets and only one that is worth your time. Home buying is a lengthy process as it is, and time is our most precious commodity. Don’t get caught out with time-wasters!9. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/2TzsKSh
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team delve into the common property myths that lead property purchasers down the path of making bad property decisions. First, they share their market insights, as Dave, Cate and Pete take you through:1. Market update - rate cuts and consumer sentimentThe trio share their thoughts on the whispers of upcoming RBA rate cuts tipped to occur over the Melbourne Cup weekend, the downward pressure on the 3 year bond rate and how long into the future low rates will stay in place. Plus, the recent surge in consumer sentiment, despite being in the thick of a global pandemic.2. Myth 1: Property prices always go upWhat goes up, must always come down and property markets are no exception, (but they rarely bottom out at the same level that they started). Like any market, property prices will fluctuate on the basis of supply and demand and the institutional intervention that influences these factors. Beware of one trick ponies and cities that are heavily reliant on the success of only one particular industry.3. Myth 2: Property values double every 7 to 10 yearsThis may have been true once upon a time, in a land of high interest rates and strong inflation. But the property landscape is vastly different now. For property to double every 7 years, you’d need annual capital growth of 10.28%. So, how long will it really take for values to double? The trio share their insights.4. Myth 3: Picking a good suburb is the key to property successThere is much more to selecting a great asset than simply picking a good suburb and buying whatever you can get your hands on. There are markets within markets, and compromising on quality to get into that blue-chip suburb can lead you astray. Not all property is created equal and that means that not all property in the same suburb increases at the same rate of capital growth.5. Myth 4: Housing is unaffordable nowadaysCalling all millennials - put the avocado down and listen up! Housing affordability is more than just looking at current property prices and lamenting that the aspirational, forever-house of your dreams is out of reach. Affordability comes down to the percentage of your wage that goes towards your loan repayments, but what is the hardest part? Getting the money together for a deposit, in order to get your foot on the first rung of the property ladder. Choose wisely and you can leap frog into your ideal home.6. Myth 5: All good property opportunities are takenFrom capital cities, ‘huburbs’ and regional centres, there are hidden gems everywhere. The location may not be glamourous right now, but that’s the point, each swan started out as an ugly duckling. The Planner, Buyer and Professor share the signs to look out for on the hunt for gentrification.7. Myth 6: Big land is more important than location of landUnless you have a goal of subdividing, this belief is a furphy. Location is the most critical factor that influences capital growth, and a smaller block of land in a great location will often outstrip a full block of land on the fringes of the capital city. Land to asset ratio is key!8. And of course, our ‘gold nuggets’
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team dive into the nitty gritty of completing a successful renovation, sharing with you the tips to plan for a positive adventure with your home or investment property, plus some learnings from their own experiences, (mostly learnt the hard way). First, they outline key measures announced in the federal budget, as Dave, Cate and Pete take you through:1. Budget 2020 and the property marketThe trio share their thoughts on key federal budget measures that will drive the economy and property market. From tax cuts, providing perspective on national debt levels, to identifying the market segments that have missed out on further government stimuli.2. Homes that you can grow intoUnfortunately it’s often the case that the home we desire and can afford don’t exactly match up. The compromises are normally between the dwelling and the location. To get into your preferred location, considering purchasing a home that you can grow into by extending out or up is a plausible option for many – the trio share with you the key benefits of this strategy.3. Top tip – live in your home before you renovateGet to know your property! After living in your home for some time, you’ll find out what you love and what you would like to change. This will save you from making some renovation decisions that you later regret.4. Home renos - how will the renovation impact your ability to sell?When renovating your home, thinking about being able to sell it down the track, (after the kids have grown up and moved out) is not usually the first priority. However, having an understanding on the future saleability and likely buyer pool can help you make critical decisions on your renovation ideas.5. Investment renos – understanding your deductionsWe always say that tax deductions are the icing on the cake, but you should still have an understanding of the tax implications of the works you plan to complete. Various materials and appliances will have differing depreciation schedules. Speak to a quantity surveyor to find out what tax benefits you are eligible for.6. More bedrooms doesn’t equal more valueProportionality is critical! Adding a few extra bedrooms doesn’t always add up to more value if you don’t have the space to pull it off, or if you don’t have the living areas and bathrooms to boot! The key is to know your market and deliver what tenants or prospective purchaser’s desire.7. Speaking of bedrooms, size is important!Hands up who has been to an open house inspection advertising 3 bedrooms, only to find out on arrival that it’s actually 2 bedrooms and a study? Almost everyone. We share with you our tips on minimal bedroom size – anything smaller, is a great home office or a baby’s nursery.8. Granny flatsThe capital gains tax incentives in the federal budget provide incentives for families to house their elderly parents in a self-contained unit. But do granny flats add value?9. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/2GXqQbd
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team analyse the macro economic factors which are pointing to property values being at a pivotal turning point towards an upward trajectory. To balance the conversation, the trio also discuss some of the risks which may hold values back. Dave, Cate and Pete take you through:1. Why property values are likely to rise by 10% in 2021 and into 2022Weighing up the market forces at play, (and in the absence of a loss of control of COVID case numbers) it’s looking likely that we’re at an inflection point in the market and we’ll be gearing up for a property run.2. How property values have remained relatively stable throughout COVIDAs we’ve been saying since the beginning of COVID, (and contrary to the property doomsayers and alarmists), due to a reduction in supply, property values had a floor underneath them and Dave, Cate and Pete felt that national median prices were unlikely to drop more than 5-10%. Well, the results are in!3. The green shoots emergeProperty values in 6 out of 8 capital cities have recorded an increase in median values over September. The two exceptions have been Sydney and Melbourne; Sydney has recorded a slight decline in values of 0.3%, and the reduction is decelerating from previous months, which is typical before an uptick. Melbourne’s median value has declined by 0.9%, and we know that Melbourne is getting their COVID cases under control from the second wave, so we expect the recovery will be a few steps behind the other capital cities.4. How low can interest rates go?Interests rates have been slashed and dashed since mid 2019, with a total drop of 1.25% so far. RBA pre-pandemic modelling suggests that when the cash rate is dropped by 100 basis points, property values will increase by 28%. Yes, you heard right, 28%. With more whispers in the wind about a further rate cut – watch this space.5. Responsible lending laws to be axedNow seen as a ‘handbrake’ on our economic recovery, responsible lending laws are due to be repealed in March 2021, which will open up ease of access to lending. There’s nothing like making it easier to borrow money to heat up the market.6. Ready, set.. SPEND!With nothing to do and nowhere to go, Australian’s are saving more money than ever. Coupled with the ‘wealth effect’ from rising property values, consumers spending money locally instead of overseas will have an enormous impact on the economy.7. Unemployment loomsFrom our own analysis, led by the Property Professor himself, we discovered somewhat surprisingly that in the recent recessions and hikes in unemployment, property values remained obstinately consistent, barely showing any reductions greater than 5%. This is not to downplay the horrific impact that the pandemic has had on some businesses and Indvidual's. That remains. The trio believe that the impact on property values is likely to be less than many people imagined.8. Vaccines, migration and riding the wavesTowards the back end of 2020, we can expect to see viable vaccines in production, international travel slowly coming back online and better management of COVID breakouts. Practice makes perfect, and by now, we would hope Victorian’s are well versed.9. International recovery blueprintLooking overseas at other Western countries, positive housing stories are playing out in the US, UK, Canada and NZ where values are increasing and we are not far behind.10. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/3nlIcz7
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team dive into the world of project managing a renovation and they outline the factors to consider before you embark! Dave, Cate and Pete take you through:1. The most common mistake; over-capitalisationIt’s very easy to find a property that needs a renovation, but not so easy to find one that will reap a profit. The team take you through the various approaches to renovating that will add value to the property, and those which will not.2. Ballooning budgetUnreliable tradesmen, deadlines slipping through your fingers like sand, and alterations to the plan can quickly add up to cause your renovation budget to blow. Planning for delays and allowing for contingencies is critical to a successful renovation.3. Unexpected and invisible costsFrom finding asbestos to hitting hard stone when excavating, these are just some of the unexpected costs that can come out of the woodwork when your renovation begins. These additional costs burn into your wallet, but removing the issues do not add perceived value to the property. It shouldn’t come as a surprise to hear that prospective purchasers expect to buy a house free of asbestos.4. Sharpen your project management skillsLike any major project, a renovation involves multiple moving pieces and parties to corral. The average renovation requires 10,000 decisions to be made. If you do not take the time to plan, arranging your tradesmen, deadlines and budgets can be like herding stray cats.5. How do you value your time?Many people do not factor in the cost of their own time and stress when ‘running the numbers’. Be prepared to set aside significant portions of your time for planning, making/taking phone calls, wrangling and negotiating with suppliers, making decisions. If renovating is not your day job, this could mean hours after work and on weekends. Could that time be better spent with your family? Or doing your regular job?6. Financing a renovationThe Property Planner shares with you the various ways that you can finance your renovation project. It goes without saying, but the least involvement you can have from the bank, the more freedom you will have.7. On the flipside - beware of flipped propertiesPurchasing a freshly renovated home can seem like a dream come true, but beware, not all that glitters is gold! If someone is flipping to turn a profit, be weary for potential cut corners.8. And of course, our ‘gold nuggets’
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team analyse the important considerations for completing a successful subdivision and the risks that small time developers need to be aware of. Dave, Cate and Pete take you through:1. The first step - planningAsk yourself how does this step fit in with your overall property plan? Start with the big picture and work out what stage of life is the best time for you to complete this project. Is it an acceptable risk to take on now?2. Buying well – a critical requirement to successSelecting the right property and the right block will either make or break your plans. It could be the difference between make a profit or ending up with a vacant block and a hole in your wallet.3 Know your marketIs there demand for smaller blocks of land with townhouses in the location that you’re purchasing in? Who is your target buyer and how will the property cater to their desires and price point? And is the project likely to be as profitable as other, similar priced alternatives?4 Have an in-depth understanding of council plansEven if your plan is to subdivide, sell and leave the building project up to the next purchaser, the council still wants to see the plans. If you want to get three townhouses onto a block, be prepared to demonstrate the feasibility of your plans. Each council has their own guidelines, so it is important to understand the sensitivities, likely steps and local town planner’s approach at every step of your process. In particular, it helps to get to know who you will be dealing with.5 Consider all costsFrom transaction costs, holding costs, tax obligations and the value of your own time – ensure you have an accurate understanding of the true projected cost of your project. Have you modelled what your budget will look like if a few key costs vary by 5%? And will you still make a profit?6 Obtaining finance for developmentsDevelopment finance is not as straight forward as getting a loan for a purchase. There are many additional hoops to jump through before you get the lenders tick of approval.7 Common mistakes and how to avoid themJust because your neighbour did a subdivision 5 years ago, doesn’t mean you are bound for success. We outline the common mistakes, misconceptions and unwitting risks we see time and time again, so you can put your best foot forward on your development journey.8 Getting educatedOne of the most critical factors to success is to ‘know your stuff’ and learn from the experts. We provide a bonanza of resources in our show notes for you to start learning and work out if subdivision and development is the right move for you.9. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/2ZVJJSo
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team delve into the top fears that keep landlords up at night and what you can do to safeguard yourself. Dave, Cate and Pete dissect:1. The property market dippingCoreLogic capital city data shows that 5 out of the 8 cities have started growing in value or remained at the same level, while Melbourne and Sydney have dropped slightly further. It appears that we are now at an inflection point. Contrary to the property doomsayers, we haven’t yet seen a gross drop of 5%, which has been our central case since April.2. Tenants claiming COVID financial distressAnecdotally we’ve seen 8% to 14% of tenants looking for reductions in rent, as a result of loss of income due to COVID. There are also areas that have seen a much lower percentage of tenants claiming COVID financial distress – due to location demographics and property features that may attract a particular quality of tenant. Careful tenant selection is critical.3. Debt and cash flow managementTreat your investment property like a business! That means understanding how to manage your risk and selecting an appropriate repayment strategy and buffer. Letting your money goals drive strategy and price point will mean that you are prepared and comfortable, when income ebbs and flows.4. Repairs and maintenance – does your buffer cover rainy days (and leaks)?Unexpected repairs can burn deep holes in your pockets, but an appropriate risk management strategy will avoid the financial stress of having to carry out major repairs on your property.5. Building and pest inspectionsDo your due diligence and get a building and pest inspection done before you purchase. This will help guide your negotiations if you know there are maintenance issues lurking!6. Tenants from hellFrom non-payment of rent to trashing properties, a tenant from hell can be a landlord’s worst nightmare. Starting with a good property manager and selection process can help you avoid a painful tenant. Listen to episode 41 “Tenants from hell” for more education on how to select a quality tenant and property manager.7. Protecting yourself with insuranceIt is critical to know the difference between accidental, deliberate and malicious damage and how your insurance policy covers you in these situation – it can be difference between a successful claim or not!8. And of course, our ‘gold nuggets’
http://propertyplannerbuyerandprofessor.com.au/In this week's episode of the Property Planner, Buyer and Professor Podcast, the team take a deep dive into the world of credit reporting, debt consolidation and how you can manage your money effectively to get a great credit score. Dave, Cate and Pete dissect:1. Credit scores and comprehensive credit reportingBig brother is watching! The team take you through the new comprehensive credit reporting system, what goes into your credit report, and how your credit score is calculated for a positive or negative outcome.2. The traps to avoid that impact your credit scoreEven honest mistakes that are rectified quickly can show up on your credit report (and remain there for 5 years). We take you through some careful tips to help you avoid these common errors.3. Tips on how you can manage your money effectivelyMoney management is a critical pillar for success in your property journey. We outline key strategies on how you can keep a handle on your spending habits and build the foundation of your wealth creation journey through an effective money management system.4. Money management and a detour into the Australian economyAustralian’s rate of savings is up 20% during Covid. We are saving more money than ever since our lenders have been monitoring the rate of consumers savings. This huge amount of savings will be spent domestically, especially when travel is back on the cards, and it will play a large part of supporting the Australian economy. If you can save now, you can save any time!5. Debt consolidation and why prevention is always better than cure!Debt consolidation through refinancing can make it easier when you have multiple, (higher interest/shorter loan term) repayments that are getting out of hand. With tailored assistance, you can consolidate into one loan to reduce your overall monthly repayment(s). The key is to act quickly before the situation unravels – speak to your strategic mortgage broker today about the pros and cons, but the most important part of the equation is changing your spending habits!6. Real life bad credit storiesHave you heard the one about the bank that gave a poor unsuspecting consumer a permanent credit default because they were uncontactable, even though they made the payment right away once they were reached? It happens all the time. The same lender 5 years later is now the only lender who will lend money for a new mortgage. Oh, the irony! David and Cate share some of the weird, wonderful, and frightening stories and first-hand experiences, how they could have been prevented, and the different solutions available.7. Credit scores are very important, but there are lenders who cater for those getting their finances back on track!There are many niche and non-conforming non-bank lenders that are willing to take on consumers with poor credit ratings – but it comes at a price, normally in the form of higher fees and interest rates. Accessing these lenders can means that property plans don’t need to be on hold while you clean up your credit rating, and once you get yourself tidied up, you can always refinance to a mainstream lender with lower rates that suit your mortgage strategy!8. How to check your credit scoreDid you know that you are entitled to access your credit score and credit report for free? There are a number of websites that allow you access, ensure that you choose one that is government recommended. Check below in our show notes for some portals.9. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/3bABa44
In this week's episode of the Property Planner, Buyer and Professor Podcast, the team answer burning questions from our listeners. From mortgage strategy and prepping for decisions for first time buyers, to what would you do if you had a time machine and could go back 25 years and start again.We put Dave, Cate and Pete in the hot seat to discuss:1. Top tips for first time buyers entering the market during COVID-19Although we’re currently in a unique time (did someone say pandemic?), there are some fundamentals of property purchasing that always apply, rain hail or shine if you are a first-time buyer.2. What should you focus on if you’re not purchasing your long-term home?Your first purchase can catapult you forward on your wealth creation journey if you get it right. But conversely, it can set your lifestyle and financial goals back if you get it wrong. Each property decision can either help or hinder and should be considered very carefully, but none is more important that your first!3. Getting your mortgage strategy right at the beginning of your journey. In episode 50, Dave, Cate and Pete shared their biggest mistakes and one mistake they all had in common was selling property they could have kept. This is in part due to not understanding mortgage strategy and how it helps you to keep properties during your wealth creation journey. Is your lender or mortgage broker an expert in mortgage strategy? Very few are!4. Have a plan for holding your first purchaseIt is unlikely that your first property will be your long-term home, but you will be better off if you can keep it as an investment when your long-term home comes along.5. Rentvesting, a viable option but not everyone’s cup of teaAs a first-time buyer, you often can stretch your budget by purchasing an investment property based on the fact that the projected rent will be added to your income tally. This might allow you to secure a stepping stone home that will meet your requirements for longer, or just purchase a superior quality asset whilst maintaining your lifestyle. Education and understanding your options is the key to successful property decisions.6. Price tag v comparable salesAdjusting your expectations at the beginning of your search will help you narrow in faster and make any necessary compromises to purchase your property. Make sure you are following the sale prices and not the asking prices!And here’s a little secret, there are always compromises. Shhh!7. If Dave, Cate and Pete and could go back 25 years, what would they do differently?The answer to the first question is they would do many things differently, and yes, they would have a better financial outcome, even if the property market does not perform as strongly as it has over the next 25 years... but it might!8. And would they have a better financial outcome?From buying and holding rather than having less itchy feet, starting earlier, making each property count, to self-education, the advice is varied!9. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/tips-for-first-time-buyers-listener-questions-1/
In this week's episode of the Property Planner, Buyer and Professor Podcast, the team explore the commercial property sector in part two and share with you how to determine the value of a commercial property, what to look for in a tenant, investing in real estate investment trusts and the ins and outs of warehouses – and more!David Johnston, Cate Bakos and Peter Koulizos discuss:1. How to determine the value of commercial property when buying. The Property Professor explains what determines the value of a commercial property and what to look for in a quality commercial investment. 2. Land tax. Due to the higher cost of getting in and out of commercial real estate, land tax must be considered as part of the ongoing costs and factored into your decision making. For most states and territories, land tax is grouped with residential property. Be sure to do the sums on your land tax bill because the costs grow proportionately to total aggregated land value. Take a listen to Ep#43 “Diversification 101 – How and why to plan for diversification within your property portfolio” for more on this topic. 3. What should you look for in an ideal tenant? Long-term lease agreements and stable companies or government organisations can be your best friend! 4. Unpacking warehouses (pun intended!) Everything you need to know about investing in warehouses and logistics. This category has outstripped office and retail for popularity and overall returns with the advent of online shopping, and Covid has only hastened this transition. However, there are some traps for new players! 5. Real Estate Investment Trusts (REITs) - The pro’s and con’s, and everything in between. REITs are a great way to gain exposure to commercial property without having to outlay millions of dollars on a single asset, which brings huge concentration risk. REIT’s offer instant exposure to commercial real estate in a bite size chunk that suits your investment profile. No need to buy the whole shopping centre or office. You also can get exposure to various properties across office, retail and logistics providing diversification. REIT’s are a great way to provide cash flow as part of your transition to retirement as a trust must distribute all profits, unlike companies. 6. Publicly listed V unlisted/private Real Estate Investment Trust’s (REIT’s). Unlisted property funds are the closest proxy to direct property investment – but with the benefit of professional management. A major con is that your capital is locked in for the duration of the trust as private units cannot be bought and sold on the ASX in the open market, which usually ensures greater liquidity. If you are selling, you may be required to sell to someone within the private REIT. If you are worried about liquidity, this is not the asset class for you and you would be better off in a listed REIT. 7. Flexibility of the property to mitigate risk. Investing in commercial property comes with higher risk than residential for many reasons, but you can mitigate that risk by purchasing a property that allows for flexibility of tenant types. 8. Let’s go in reverse, beep, beep, beep, how about converting a warehouse into a residential property?! The ‘latest’ craze in modern living, well actually this has been happening for two decades as industrial property in inner cities cease being used for their original purpose and transition to residential property. Warehouse conversions can pay off from a lifestyle and financial perspective, but often do not. They are high risk, and are not for the faint hearted (or those with a tight budget). So go in with your eyes open and be sure that the property really is your dream home, or the investment will get a sustainable long-term financial return. Enter at own risk! Caveat emptor! 9. And of course, our ‘gold nuggets’!
Visit the show notes: https://bit.ly/3gqXdeC
In this week's episode of the Property Planner, Buyer and Professor Podcast, the team intimately share with you some of the most significant mistakes that they have made along their property journeys, and their lessons learnt.In this episode David Johnston, Cate Bakos and Peter Koulizos discuss:1. Selling properties they could have held. The Planner, Buyer and Professor have all made this mistake at some point on their journey, along with many other Australians. Selling a property that you could have kept, is one of the most common regrets we see. 2. Not having a mortgage strategy in place. Your mortgage strategy allows you to use equity, optimise your tax deductions and plan for holding property into the future as you accumulate more properties in your portfolio. It is critical to help you avoid the first mistake of selling properties that you could have held. 3. Keeping track of your Money Management! The way you manage your money is critical to success and ensuring that you have an effective money management system in place will not only give you peace at night, but will allow you to build your cash reserves to take the next step in your property journey. 4. Not knowing what makes a good investment. The allure of shiny and new can be tempting, but beware! Not all that glitters is gold. 5. Listening to the wrong people. Whilst your friends and family are well meaning and have your best interests at heart, they are most likely not property experts, (unless you are lucky to have a dad like Pete’s who worked in real estate). Ensure that you surround yourself with, (and get advice from) independent experts. 6. Buying a ‘bargain’. We all love a good bargain, but when it comes to property, looks can be deceiving. Purchasing a bargain property can attract a poor quality of tenant and you need to ask yourself whether it’s worth the headache and trouble. 7. Not purchasing when you could have. Your risk profile may preclude you from taking that critical step in your journey. Whilst most people regret selling a property, you can also regret not taking the risk of purchasing a property that would have performed well. As they say, hindsight is 20/20. 8. And of course, our ‘gold nuggets’!
Visit the show notes - https://bit.ly/34c3hVU
In this week's episode of the Property Planner, Buyer and Professor Podcast, the team take you through the ins and outs of investing in commercial property.In this episode David Johnston, Cate Bakos and Peter Koulizos discuss:1. How commercial property investment differs from residential, from a higher return on investment, duration and construction of leases, flexibility in lease length, business category of tenant and to ongoing running costs. 2. An introduction to the different types of commercial property – industrial, retail and office. 3. Higher return also means higher risk, and that risk comes in the form of vacancy rates, rental volatility and higher funding costs. It’s often much easier to find a tenant for your home, than your warehouse or high street shop. 4. The high cost of entry and ongoing maintenance. Buying commercial property is often much more expensive than buying residential property, on top of that commercial property investment requires higher deposits as a direct result of lower loan to value ratio constraints, and higher interest rates for commercial lending. 5. Real estate investment trusts and how you can invest in commercial property without purchasing the whole building; Dave touches on this exciting purchase pathway, but only scratches the surface. The trio look forward to delving even further into REIT’s. 6. Volatility in the commercial market as a result of the Covid-led economic slow-down, with sentiment dropping to unprecedented levels for some categories, dire vacancy rates are the market indicators. 7. The economic outlook for retail, office and industrial commercial property including some positive insights for specific subsets of commercial property 8. And of course, our ‘gold nuggets’!
https://propertyplanning.com.au/propertyplannerbuyerprofessor/This week, the Property Planner, Buyer and Professor turn their thoughts to established properties and why they offer superior capital growth prospects.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Established houses tend to be located close to the CBD, andgenerally the older the property; the closer to the CBD, (being the central location for the majority of jobs and the highest land value per square metre.)2. People want to live close to where they work, but will that be the case going forward as many businesses comfortably shift to ‘working from home’ life?3. Established properties are more likely to have an optimal land to asset ratio, with the majority of the value invested in the appreciating component of the asset - the land!4. New estates may offer larger blocks of land than inner established areas, but that doesn’t equate to a higher land to asset ratio. In fact, the abundance, (and lack of scarcity) of land in these new estates means that they have a lower value per square metre. 5. You don’t pay a ‘brand new premium’ for established property. Paying for a brand-new property means that you also pay for the developers profits and cost of labour.For established property, you pay only ‘market value’.6. The NIMBY effect (Not in my backyard!) - Long established communities have great influence over councils, (including the implementation of heritage listing and overlays) that make it significantly more challenging to increase supply through development in the preferred pockets and streets.7. Melbourne’s highly sought-after ring of suburbs located 5-20km from the CBD have seen very little growth in population in the last 30 years. This phenomenon has directly impacted property price growth in such areas.8. Period homes have architectural appeal and features that Australian’s love, increasing the demand for those properties due to the irreplaceable nature of these elements.9. And of course, our ‘gold nuggets’!Visit the show notes - https://propertyplanning.com.au/why-established-properties-outperform/
The Property Planner, Buyer and Professor continue analysing off the plan purchases, and in particular, high rise apartments. This week, in the second of two episodes dedicated to this type of property, their focus is on the financial risks of purchasing off the plan.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. The ‘Pros’ of purchasing off the plan. The team start off outlining a number of financial benefits of purchasing off the plan, however many are short-term and what you could call a ‘catch 22’.2. The risks of not being able to access finance (through no fault of your own). Lenders protect themselves by limiting their exposure to off the plans because they understand they are ‘risky’ securities – less likelihood of capital growth and hard to sell in a fire sale. That includes limiting the number of properties in a building or postcode they will take as security, limiting the loan to value ratio (requiring a higher deposit), and working to a minimum limit of the number of square metres in the apartment that they will lend against.3. The contract can limit your re-sale options, with many contracts stipulating that only a particular real estate agent can on-sell your property. This is so the developers can maintain control of the sale prices within the block.4. Homogenous dwellings of identical apartments in a building or houses in a development have significantly reduced scarcity value, and it is likely that sellers will have competition from properties that are similar to theirs. Buyers must consider what makes a property unique and desirable?5. Over-supply can adversely impact the expected rental yield, particularly when many identical properties flood the market at the same time, causing a race to the bottom for landlords to find a tenant.6. Limited capital growth prospects from low land to asset ratios, as the land component which is appreciating can make up only a small percentage of the overall asset value.7. The likelihood that the value of the property will go backwards after you purchase, as the largest component of the asset (the dwelling) is depreciating.8. The cost of management fees that are not certain upfront. Owners corporation and strata fees are not typically specifically outlined at the time of an off the plan sale. To compound the issue, future special levies for maintenance or issues arising out of poor quality builds can quickly eat into your available funds.9. Lost opportunity costs in waiting years for an asset to be finished, that you could have invested in the meantime in an asset with superior capital growth prospects.10. And of course, our ‘gold nuggets’
The Property Planner, Buyer and Professor take a deep dive into the risks of purchasing off the plan. Because the risks are many and varied, this will be a two-part episode with an episode solely on financial risks to come next week!In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Pros of purchasing off the plan – for a balanced view, we take you through the advantages of purchasing off the plan. Following the pro’s, we then detail the risks that buyers need to be aware of.2. Risks of buying a property that doesn’t exist. You may be able to visit a display home, but often you are looking at plans, dioramas and drawings – and unless you are an architect or builder, it can be quite difficult to visualise the end product.3. Alterations to the property without your consent. The contract will normally allow the developer to make changes to the property within a certain percentage of variance, and without your approval. Often this results in unexpected changes/reductions in floor area to the plans, specifications or differences in the quality of the final finishes.4. Lenders may not accept the property as security if the alterations cause the square metreage to fall beneath their prescribed level.5. Contracts often favour the developer and the build completion almost never runs on time.6. The timeline to settlement is uncertain and you could be waiting between 12 to 48 months. In the meantime, your lifestyle, financial position, lender policy, property value and the market could change. The lost opportunity is pertinent if the project is cancelled or builder becomes insolvent.7. The value of the property can fall before settlement, and combined with a large number of off the plan purchases being overpriced from the start, valuations coming in lower than the purchase price can cause significant out of pocket expenses.8. Limited recourse against the builder in the event of a dispute, your contract of purchase is with the developer and not the builder.9. Are you dealing with a spruiker or an independent advisor? Is the person selling the property receiving an income from the developer for the sale? Beware of spruikers masquerading as advisors!10. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/2OIrp9x
In this episode The Property Planner, Buyer and Professor take a deep dive into the impact of the lockdown in Melbourne and Victoria border closures on the property market and broader economy, and how the key indicators were tracking up to this point.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Victoria back into lockdown just as consumer confidence and new listings recover to pre-Covid levels – what does this mean for the property market, economy and what are the differences from the last lockdown?2. Lender scrutiny and efficiencies are clogging up the approval process, how can this impact your ability to snap up the right property? If you’re looking to purchase or refinance, getting your ducks in a row is critical to ensure timely assessment.3. Extension of repayment holidays for an additional 4 months through to 2021 as the liquidity bridge is extended for those who cannot meet their repayments, but how and who qualifies?4. How does accessing your Super impact your ability to borrow? A little hint, it’s not helpful...5. How the property market has bounced back and is normalising with auction clearance rates steadying and new listings recovering - prior to Melbourne lockdown at least.6. Buyer demand continues to hold up prices, with the combined capital city index showing only a 1% drop since Covid started and 1.3 buyers for every one new listing.7. First time buyer purchases are going through the roof, as many take up Government and State based initiatives to get into their first home.8. Rents continue to fall, particularly for the problem child of property - medium to high-density apartments in Melbourne and Sydney CBD and inner suburbs.9. Will there be an economic or fiscal cliff? Public and private sector institutions continue to build the bridge to the other side with talks of extending JobKeeper and Jobseeker but making it more targeted, and extension of repayment holidays.10. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/2ZtArxs
The Property Planner, Buyer and Professor dive into the capital growth v cash flow debate when it comes to planning your investment strategy. Who will have their arm raised in victory?In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. The Property Professor makes the case for capital growth, by comparing property value and rental return over 20 years if you had purchased a capital growth v cash flow property for $600,000.2. The Property Buyer explains how you can achieve the same outcome with a cash flow strategy – not everyone can afford to hold a capital growth property, but everyone can make great property decisions that grow your wealth.3. Don’t forget about gearing! Whether the property is positively or negatively geared carries a large bearing on the end results.4. How the cost of holding a capital growth focused property decreases over time – negative gearing is not forever.5. Counter intuitive but true, how the rental yield of a capital growth focused property increases faster than yield on a cash flow property.6. How bank policy and assessment can impact your ability to execute your strategies and why you need a strategic mortgage broker in your corner.7. How your age and stage of life is a critical factor to consider when piecing together your investment strategy.8. Who, I mean which strategy, won? You will need to tune in to find out the Property Planner’s adjudication!9. And of course, our ‘gold nuggets’Visit the show notes - https://bit.ly/31R7NYH
As we come to the end of another financial year, The Property Planner, Buyer and Professor delve into all things property tax and uncover the myths that can lead you astray on your wealth creation journey.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. All the deductions you can claim on an investment property so that you do not miss a trick when completing this year’s tax returns. 2. Depreciation, what you can claim as a tax deduction on fixtures & fittings, the building and when do you need a depreciation schedule? With thanks to some great tips from our good friend Mike Mortlock from MCG Quantity Surveyors. 3. Capital Gains Tax and how you can avoid nasty tax bills that eat into your wealth if you ‘property plan’ ahead. 4. Negative gearing, how it works and why it doesn’t last forever – at some point all properties become positively geared. 5. Tax variations and the risks of using this as an investment strategy. 6. How your mortgage strategy is the foundation to maximising your tax deductions (good debt) and reducing your non-deductible borrowings (bad debt) if you have the right mortgage strategy and structure in place from the moment you purchase a property. 7. Expats, the changing tax landscape and how laws relating to capital gains tax and land tax have changed this year. 8. And of course, our ‘gold nuggets’, plus a sneaky third nugget from our host Cate!
Visit the show notes - https://bit.ly/3dL8Lb8
The Property Planner, Buyer and Professor unpack the economic cliff. What will happen when JobKeeper, HomeBuilder and lender repayment holidays end?In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. How banks will look to help keep many of the most affected borrowers and businesses to stay afloat with new initiatives such as interest only repayments, lower rates, extended loan terms and pauses, although some zombie businesses will need to be let go. 2. What holds for employment, as124,000 people are re-employed in May and a further 850,000 expected by the end of next month. 3. HomeBuilder scheme, the ins and outs of the scheme and questions yet to be answered. 4. How state governments will provide further stimulus to support home buyers and builders, beefing up stimulus packages offered to Australians. 5. Where to get your information from, and why the Treasury, ABS and RBA are the most trusted sources. 6. The effect on buyer behaviour as more people work successfully from their home office and recalibrate what is needed in a home and location as part of their Property Planning. 7. And of course, our ‘gold nuggets’!
Visit the show notes: https://bit.ly/3du5eOr
The Property Planner, Buyer and Professor discuss all things diversification, from the reasons why you should diversify your portfolio to the many ways you can implement diversification in your investment strategy.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Beware of one size fits all strategies! The suggestion that you should have a 50/50 balance of shares and property (or any other type of investment) is vastly oversimplifying the concept of diversification and neglecting the most important element of the equation, YOU! 2. Discussing the different asset classes for diversification, there’s more to consider than just property v shares. 3. How you can diversify with property – state, city, regional centres, different suburbs, city segments, property types, growth focused V cash flow and more. 4. Tax comes second! Tax benefits should never be a primary reason to invest in a particular asset, it is the icing on the cake. Don’t sacrifice the cake for the icing. 5. Considering the macro and micro of diversifying your property portfolio. The macro is the state or the city and the micro is the suburb. Start with a big picture view and work down to suit your property plan, not the location you live or a buyer’s agent. Or worse, where a buyer’s agent is buying, but not based in. Your next purchase could be anywhere in Australia. 6. Capital gains v cash flow, how your investment strategy needs to be tailored to you. 7. Land tax, an often neglected area of property investment. How and when should land tax factor in to your property decisions? More than two reasonably priced properties in any state will generally start to eat into your returns via land tax. 8. Blue chip v gentrification, higher rewards come with higher risks. 9. Fractional investing, is it worth getting a fraction of your foot in the property door? 10. And of course, our “gold nuggets”!
Visit the show notes - https://bit.ly/3e1Jzy1
This week we go back to our podcasts recorded pre-Covid and in this week‘s episode, the Property Planner, Buyer and Professor discuss data provided by CoreLogic on Australia’s top performing cities. Which cities took out the gold, silver and bronze?In this episode David, Cate and Peter take you through:1. Dissecting data provided from Core Logic for the last decade for all capital cities and regional centres of each state. You may be surprised by the winners and losers as we hand out the gold, silver and bronze medals. 2. How regional centres fared compared with their capital city counterparts and why capital growth and rental yield often have an inverse relationship. 3. The performance of units compared with houses, which are gaining in popularity in some cities. But beware of the data! Metrics surrounding units can very easily lead you astray. 4. How much $1,000,000 invested 10 years ago in each capital city would be worth today and which cities actually went backwards during that time. A good reminder that not all property rises in value! 5. The importance of risk management and mortgage strategies to save yourself stress and hold on to assets when the market inevitably starts to dip. 6. How your next investment purchase could be anywhere in Australia, depending on your price point, risk profile and stage of life. 7. Why values based on growth over the last ten years are now on trajectory to double every 15 years, not every 7-10. 8. Why your specific location and property selection is the key ingredient to financial out-performance as you do not purchase a city, suburb or a street. Every property provides a different financial return to the overall market return which is a formula-based average! 9. And of course, our “gold nuggets”!
Visit the show notes - https://bit.ly/3hbZcVB
The Property Planner, Buyer and Professor met this morning for a ‘breaking news’ recording on the $688 million HomeBuilder stimulus package announced by the federal government yesterday. The new package aims to safeguard the jobs of a million tradies, and to prop up the construction industry which was teetering on the edge of oblivion.Home buyers and home renovators will be offered a cash grant of $25,000 for signing a contract to purchase a new dwelling, build or renovate from today through to 31 December 2020. Hear the full story as David Johnston, Cate Bakos and Peter Koulizos take you through:1. Setting the scene, why this package was initiated by the federal government. Supporting over one million employees, around 9% of all employees in the country are working in the construction industry, which provides an estimated $100 billion and a whopping 5 per cent of our economic output each year. 2. How home building in Australia was collapsing prior to Covid-19 after four boom years to 2017-18, when the industry started around 225,000 homes a year. Starts have since fallen to around 165,000 this financial year due to a cascading set of events from the tightening of finance by APRA, The Banking Royal Commission and the exit of investors, particularly from offshore, and the consequent inability to finance apartment projects. 3. Unpacking the In’s and Out’s of the scheme, who can take advantage and the criteria for grant approval, how, where, when and why. 4. Discuss why the package is well balanced, whilst also dissecting some potential weaknesses. 5. How state government has said it will play a role in speeding up council approvals if needed, which must be obtained prior to signing the build contract. 6. Why regional areas and first-time buyers may be the big winners due to the lower value entry points, and the state-based grants and stamp duty benefits already on offer. A close second could be those who were about to embark on a major home renovation. 7. The impact this could have on the established property market. We could see a resurgence in home buyers wanting to buy a doer upper home. To do this within the almost 7-month time frame is no mean feat. 8. How the economic effects of the stimulus will flow through the broader economy and property market on a macro-economic level and this will mostly be a good news story. 9. Why Australia continues to build on its international reputation as a safe haven for the flow of overseas investment and capital which is vital to our economic prosperityas a capital importing nation. This has been reflected in the international willingness to purchase our government bonds, the Aussie dollar and ASX share market. The latter two of which hit 5 month and 3 month-high's respectively this week. 10. And of course, our “gold nuggets”!
A good property manager is worth their weight in gold, and equally, so is a good tenant. A great tenant who is happy and obliging will stay in your property for a long time – avoiding long gaps between tenancies, advertising costs for vacancies and loss of rental income.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. What makes a good tenant, it’s more than simply paying on time. 2. What does a bad tenant look like? A bad tenant is a liability to avoid at all costs. 3. Does your property manager stack up? A bad property manager can be worse than a bad tenant. 4. The correlation between the quality of property and the quality of tenant. Low socio-economic areas do not necessarily equate with bad tenants. 5. How to capture a great tenant. Pricing your rent, asking great questions, arranging open for inspections and knowing your property inside out. 6. And of course, our “gold nuggets”!
Visit the show notes - https://bit.ly/2MljDRI
In the ninth Podcast since Covid-19 took hold, we turned our thoughts to the property market forces at play, how sentiment is increasing as restrictions are easing and what’s on the horizon for property.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Supply of properties on the market continue to remain low, however competition is picking up as more buyers are jumping into the mix. 2. The outlook for construction remains uncertain as building and development contracts come to an end, however Government intervention is likely to support new building projects. 3. How the downturn has sparked interest in diversification, as we see investors looking for more balance in their portfolios, flocking to assets with a higher yield. Could this be an opportunity to snap up a great capital growth asset while yield focussed properties have higher demand? 4. The tried and true fundamentals of property remain the same throughout Covid-19, and that is that quality real estate is holding strong. 5. The long-term impact of reduced rents as demand for rentals decreases and supply increases, and the sub-markets likely to be impacted the most. 6. How the reduction in interest rates is helping to offset many of the negative market forces in play.
Visit the show notes: https://bit.ly/3d6WbDD
This week we resume normal transmission and return to our education based Podcast, and take a break from our market and economic commentary and observations in our Covid-19 series.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Optimising tax deductions, how utislising your offset account will help you to save tens of thousands in future tax deductions over your lifetime. 2. How offset accounts can help you to hold property you would have otherwise needed to sell. This alone may add $1,000,000 to your bottom line in retirement. 3. Calling all upgraders, how you can put your best foot forward and maximise your ability to keep your current home as an investment when you upgrade. 4. Why offset accounts and your mortgage strategy are fundamental to your risk management. The government and banks targeted mortgage pauses and repayment reductions during this crisis to help the economy manage through difficult times. Counter intuitively, as we have said for a long time, a lower forced payment allows you to build up more savings via your offsets without costing extra interest, allowing you to build up savings buffers and have more surplus monthly cash flow. Great to see the government and banks get on board with our strategy during a crisis! 5. Offset is not the same as redraw and misuse could not only cost you tax deductions, you might also get in trouble with ATO! There is a critical difference which many people do not fully understand. A misuse of your offset or redraw could lead you astray with the ATO and cause you to fail the ‘purpose test’. 6. How offset accounts provide the platform for your Money Management System as lenders now offer multiple offset accounts linked to your loan keeping more dollars in your pocket through interest savings and better tracking of your spending. 7. Interest earning accounts v offset accounts and why an offset account has greater financial benefits to you. 8. Interest only v principal and interest, and how your repayment strategy can provide you with choice and flexibility whilst optimising your tax deductions, manage risk by improving your cash savings buffer, enhance your ability to keep and accumulate property. Counter intuitively, sometimes paying less is more in the long run – if you are using offset accounts of course. 9. And of course, our ‘gold nuggets’!
In the eighth Podcast since Covid-19 took hold, we turned our thoughts to the property market and the multitude of forces that determine its trajectory. We look at the stabilisers, head winds and yes, even tail winds, despite what the mass media might have you believe!In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. The seller’s market, how supply and low interest rates are underpinning property values. 2. Why auction clearance rates have improved each week for the last three weeks and one noted property market expert with a proven track record is re-calibrating his previous dire predictions for the market. 3. Why access to finance is critical to supporting property values, and how lender policies are adjusting given the changing economic situation. 4. The forecast for unemployment what this means for the property market. 5. The impact of sustained low interest rates on property values based on RBA modelling. 6. How property values remained resilient during the early 90’s recession despite unemployment above 10% and the RBA cash rate peaked at a punishing 17.5 per cent. 7. An update on relaxed restrictions as state governments begin the process of easing, with kids returning to school and social gatherings back on the agenda. 8. And of course, our ‘gold nuggets’!
In the seventh Podcast since Covid-19 took hold, we turned our thoughts to the alarmist headlines emerging, warning that the property market will drop by 20-30%. Why in all likelihood that won’t be the case by taking a critical eye to data and forecasting, and jumping in the time machine to look at the economic impact of previous pandemics and recessions on the property market.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. We share our insights as to what we are seeing at the coal facewith residential property transactions and buyer activity. 2. We discuss our property market forecasts, why we hold the position that we do, and why we urge you to seek data from credible sources, whose area of expertise and skill set specialises in residential property. 3. How property values actually increased in April across Australia during lockdown, and why this happened, despite the negative headlines. 4. Why you should give short thrift to shock headlines that property values will drop significantly, and why you should be careful what you read, and how headlines are often diametrically opposed to the actual content. 5. A look at the Spanish Flu and the Great Depressionand how the policy and events of the time stack up to our current situation and the economic recoveries. 6. Analyse the residential property market data from Australia’s three most recent recessions and the GFC.The results will surprise you! 7. Why turning the finance tap off, or rising rates are the most likely key indicatorsto precipitate a significant reduction in residential property values. 8. And of course, our ‘gold nuggets’!
Visit the show notes - https://bit.ly/3c4D7p6
In the sixth Podcast since Covid-19 took hold, we turned our thoughts to focusing on planning for your next decision, as the governments start planning for, and in some cases such as WA and QLD, removing restrictions to open up the economy.It takes time to develop your property plan and selection strategy for the next purchase. This all happens before you can even begin the searching process and get your finance approved.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Confidence and market sentiment continue to rise with the data telling us more people are walking, driving and working as two states lift restrictions, with case numbers reducing. 2. Property market economics and how they can be different to the broader economy. The property market is expected to bounce back faster, there is a different set of factors at play when it comes to property values V the economy and job market. 3. What stimulus will remain after 6 months, what reform agenda will be rolled out, and what new incentives will be added to drive the economy? Many lender and government initiatives have a timeframe of 6 months, but other incentives and reform will take place, while some of the stimulus will remain for some time. 4. Who are the likely sellers and buyers in today’s market? 5. Working out your next property decision! Now is a time for introspection and reflection, ultimately you will fall into one of two camps - people who are happy with their current home and those who wished they were in a different property. We will see many motivated home buyers after this experience who have re-evaluated their lifestyle preferences. 6. How coronavirus has challenged the mindsets of investors, money management, risk management and lifestyle choices – a great education opportunity for many home owners and investors. 7. The importance of money management and planning for the future – Covid-19 is a great example of precisely why we have focused two decades on managing risk via your mortgage strategy, despite many of the strategies being counter intuitive during the good times. Good money management never goes out of fashion. You never know when you may require a liquidity bridge. 8. Reverse engineering your price point via your money goals – Setting Money Goals which should determine your property price, strategy and selection. Merely borrowing the maximum available that the lender will provide, without any thought to your monthly surplus cash flow and available funds buffer, is a great way to get you into trouble, as Covid-19 has amplified. 9. The Property Planner, Buyer and Professor share what advice they would give their kids/staff/students if they were wondering if they should buy now or wait. 10. And of course, our ‘gold nuggets’!
Visit the show notes: https://bit.ly/35mJ7ah
In the fifth of our Covid-19 Podcast specials recorded on Monday, we turned our thoughts to focusing on the green shoots, marking the early signs of recovery with the federal and state governments now turning their focus on how we navigate an effective exit of the shutdown, whilst keeping infections low or entirely eradicated. We have seen talk of lifting restrictions, sporting bodies have been working through their plan to get back on the field and elective surgeries are back on the agenda. This adjustment in focus to how we exit successfully has the ability to spur on the initial turn in market sentiment and provide a glimpse into the possibility of opening back up the economy and workplaces.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. What are the tell-tale signs of recovery and a rebound in market sentiment? 2. Comparing the market forces between last year’s post-election recovery and how the post Covid-19 property market rebound could play out in 2020 and 2021. 3. Who are the early movers that have the confidence to purchase in a shifting market and are you prepared to take the plunge? 4. Negative Nellie’s - why the media is focused on predominantly negative outcomes and you should be very selective in who and what you listen to. 5. The Bull Market of the last two weeks and how the US federal reserve stared down short sellers – how the share markets are a leading indicator of the overall economy (but has the rebound been overly optimistic?), what the US federal reserve did to stave of short selling hedge funds and some education on how the financial markets work. 6. And of course, our ‘gold nuggets’!
Visit the show notes: https://bit.ly/2Vnae1q
In the fourth Podcast in our Covid-19 specials recorded on Monday we turned our thoughts to focusing on the impact to landlords, tenants and those selling property. NSW and QLD have released their packages for assistance to landlords and the residential market was rocked last week by Consumer Affairs Victoria announcing that open for inspections for occupied homes would be banned. Victoria has since backtracked and reversed these restrictive regulations yesterday.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Restrictions on landlords – as the state governments enact ‘no evictions’ for non-payment of rent, preventions on rental increases and inspections done via video conference. 2. What to do if your tenant is unable to pay rent – if you have a stable income, now is the time to refinance to reduce repayments, get on a lower rate, consolidate debt, access equity to increase your liquidity bridge to get you through to the other side. Be clear on your landlord insurance and what it does or does not cover. Get on the phone with your lender and swap to interest only – ASIC has updated their responsible lending guidelines to allow for this. Repayment pauses are available and should be an option of last resort as most lenders are capitalising interest. 3. Tenants who are falling through the cracks – international students, those on temporary visas and people casually employed for less than 12 months do not meet JobKeeper and Jobseeker criteria. 4. Regulations for commercial rentals – if your business has been impacted by Covid-19, your rent must be decreased by 50% of the revenue lost, if you have lost more than 30% revenue, with 2 years to make up the difference. 5. The longer-term impact to the commercial rental market as businesses successfully work from home. 6. Lack of regulation for residential rentals as the rental market takes a dip – landlords encouraged to cut a deal with their tenants and real estate agents left to decide how this process is managed. Anecdotally, rents have decreased by 5-15% due to decreasing demand. On the supply side, Airbnb and other properties which were short-stay rentals are set to come onto the market in droves. 7. Increasing difficulty to sell – as Consumer Affairs Victoria has quickly revoked their regulation announced last week that occupied homes could not host open for inspections. 8. And of course, our ‘gold nuggets’!
We wish you and your families the best of health and say a big thank you to all our health workers during this time.Visit the show notes: https://bit.ly/2wDSQvR
In the third Podcast in our Covid-19 specials recorded on Monday we turned our thoughts to focusing on what the property market is doing during this period, what it could look like as we come out the other side, and how to proactively protect your financial position through an effective mortgage strategy.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. Gearing up for the property run as markets open up and what this could look like. 2. Why we think property values will have a floor put under them during this period, but rental yields may not be so lucky. Airbnb was declared illegal in NSW after going to air. Presciently we covered off on how the demand for Airbnb was being decimated and what this and other supply factors will mean to the rental market. 3. Calling all upgraders – if you still have a stable income, now would be a great time to upgrade as the higher value properties will see the biggest discounting. 4. What you can do to protect your financial position during this period. We once again talk through why ‘risk management’ is one of our 5 core mortgage strategies and how you can proactively protect yourself during the proverbial rainy day or months during this time. 5. Hot off the press! ASIC allow switching from principal and interest to interest only without completing a full application and financial assessment. 6. Property prices in all capital cities except Hobart recorded value increases during March but what are some of the nuances with this data. 7. Flattening the curve and the light at the end of the tunnel – we've gone from a peak of 28% increase in infections to 5% in the last two days. These are the trigger points that economists are looking for to signal economic recovery and the share markets of the USA and Australia have been more stable in recent days. 8. Property market impacts with agents facilitating inspections individually and how agents will be more particular with who they sell property to. 9. Be wary of the mortgage repayment pause because your interest could be capitalising which means you will have a greater debt at the of the period. 10. And of course, our ‘gold nuggets’!
We wish you and your families the best of health and say a big thank you to all our health workers during this time.Visit the show notes: https://bit.ly/2UNu1qh
We recorded the second Podcast in the space of five days of our Covid-19 specials on Monday to keep you updated with some of the latest news, as we assist you to navigate the rapidly changing property, financial and economic landscape. On this day, the share market had its biggest jump in 40 years with the expectation of the $130b government package which was announced that night. Victorian Premier Daniel Andrews also took his state into Stage 3 lockdown.In this episode David Johnston, Cate Bakos and Peter Koulizos take you through:1. The unaddressed impact to landlords – as the Government announces no evictions for tenants who can’t pay rent but is yet to decide on how to support landlords beyond the bank’s assistance. 2. We suggest ideas for how to assist self-funded retirees relying on rental income - whose income level have dropped below the standard pension. 3. Why now is the best time in history to refinance to proactively manage risk and cash flow. Risk management has always been one of our five mortgage strategies, well prior to the Covid-19 contagion. The strategies have always been counter intuitive because they include a larger loan limit, lower minimum repayment and using offset accounts for surplus funds. Each strategy amounts to a bigger buffer when supported by an effective money management system. This all leads to flexibility for emergencies, such as right now for many. 4. The implications of the pending government stimulus package for businesses and those who have lost their jobs and how business owners can approach the situation of declining revenue. 5. Why you should spend (appropriately) if you have a safe job and a large buffer to keep the economy moving and Australian’s in jobs. Every dollar spent helps pay a wage somewhere. 6. The problem v the solution - The big philosophical question that has no perfect answer, but everyone has an opinion on. At what point does the economic shutdown leave a longer lasting negative impact from a health and financial perspective than the effects of the virus? 7. Flattening the curve – how the daily percentage rate of infections has reduced and what we can do to continue this trajectory. 8. Lockdown, what does Stage 3 and Stage 4 actually mean? 9. Property market update – how the market is expected to stay relatively consistent for sought after property, as seen at the coal face with a slump in sellers and buyers. But there are sprinklings of opportunities to purchase at a discount as some people are forced to sell. 10. And of course, our ‘gold nuggets’ to get you through this period.
We wish you and your families the best of health and say a big thank you to all our health workers during this time.Link to show notes - https://bit.ly/3dL3YYC
We recorded a special Covid-19 Podcast yesterday to keep all of our listeners updated with some of the latest news, as we attempt to navigate the rapidly changing financial and property market landscape. In this special episodeCate, Peter and Dave take you through:1. A detailed update on the status of the financial markets as they are lead indicators for what is ahead and help us to look beyond the near-term. In the last few days, we have seen a significant share market rebound off the back of the US $2trillion (USD) stimulus package, including the single largest day jump in history in the US. 2. A historical stock market comparison. We provide perspective as to how well the market is holding up, in comparison to other key periods in history. 3. How the Shanghai stock exchange has fallen and recovered. 4. Information about the government stimulus package. 5. The support being provided to SME’s, the temporarily unemployed and vulnerable consumers. 6. The vital role the banks are playing, with great assistance from the RBA, including reducing interest rates and buying up bonds to keep rates low. 7. How YOU can build your own bridge of liquidity through to the other side. 8. Real-life examples of the impact on landlords and renters. 9. And of course, our ‘gold nuggets’ to get you through this period.
We hasten to say that first and foremost, Covid-19 is a major public health issue, that has severely impacted economic activity, essentially due to the lack of personal mobility.The resounding message is that this is temporary. The reality is that Covid-19 will have an end date. Once mobility resumes, the economy will resume, and in all likelihood, at a faster rate than ever in history.Let’s each build our liquidity bridge and support one another, SME businesses and owner's, as the largest employer of Australians, those who are temporarily out of work, and the vulnerable on our way through to the other side.We wish you and your families the best of health and say a big thank you to all our health workers during this time.Show notes - https://bit.ly/3dAr0Rw
Today’s episode is all about what the Governor of the Reserve Bank of Australia, Phillip Lowe has called ‘superstar cities’ - Sydney and Melbourne.What is it about these two cities that give them ‘superstar’ status, drawing international attention and capital growth acclaim?In episode 39, we discuss “Why Sydney and Melbourne outperform"Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the reasons why Sydney and Melbourne are leaders in median capital growth, why diversification is still a critical factor in your property strategy and how property selection can put you a cut above the rest.
How are you tracking with your new year’s property resolutions?Statistics show that less than 1 in 10 people keep their new year’s resolutions.Sure, after the celebrations and holidays are over, life can get in the way. Getting back to the grind can get you stuck in the mud. But if your resolutions involved an element of property planning or wealth creation, you are doing yourself a disservice by not following through.In episode 38, we discuss “Are you being true to your new year’s resolution?"Listen as David Johnston, Cate Bakos and Peter Koulizos take you through why investors make new year’s resolutions, tips for planning and setting your goals, and what you can do to stay on track to achieving them.Show notes - http://bit.ly/3b1vnDe
Did you know that purchasing three homes and selling your first two over your property journey can equate to a financial loss of 10% of your lifetime earnings? You work too hard to throw away that kind of money! In episode 37, we discuss “Needing to sell property too soon" - No. 7 of the top 7 Critical Mistakes.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the causes that trigger a premature decision to sell, how you can maximise your ability to hold property and how selling properties can impact your bottom line during the ‘flexibility stage of life’.Link to show notes: http://bit.ly/2xhnScH
It’s time to play a game of “which would you rather?”An investment property with a great floor plan and a daggy fit-out or a freshly renovated dwelling with living areas located in places that make you scratch your head?A location under a flight path but close to the CBD, or away from a flight path, but further away from the city?In episode 36, we discuss “Buying the wrong property and/or the wrong location" #6 of the top 7 Critical Mistakes.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through what exactly is a ‘wrong’ location and property, tips that will help you spot a winning location, pocket, street and property, and many of the key questions to ask yourself about what you’re willing to compromise on. Because unfortunately, compromise is inevitable. No properties will rate as a 100/100.Link to show notes: http://bit.ly/32KPpiD
In this episode, we tackle the art and science of recognising and removing emotions when purchasing a property. When we are not thinking objectively, we risk making poor impulsive decisions. In the property game, this can mean purchasing an under-performing asset, losing money, having to start all over again and regretting the home you have chosen for yourself.So how do emotions impact our judgement and decision making?This question has been explored in great depth in the last couple of decades, so much so that ‘Judgement and Decision Making’ has now been reduced to an acronym, JDM, in the world of social science.Take a listen as David Johnston, Cate Bakos and Peter Koulizos take you through the property related causes of emotional decision making, how you can detach yourself to make objective decisions and the emotional biases that we all have.EP # 35 - “Emotional decision making" - No.5 of the top 7 Critical Mistakes.Link to show notes: http://bit.ly/2Pm5GVD
How does an extra cool million $$ sound for your retirement?Or how about a war chest that will get you through any battle life throws at you?An effective Mortgage strategy can make this difference for you, but it is the least understood discipline of finance professionals.Why is that, when for most people, it’s your largest expense? Ever.In episode 34, we discuss “No mortgage strategy" - No.4 of the top 7 Critical Mistakes.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through why mortgage strategy is vital to create wealth and protect your downside.Link to show notes: http://bit.ly/38FspU4
Have you ever done a long-distance run with a blindfold on?It takes longer, you come across bumps and collect some bruises on the way.Not very effective if you’d like to cross the finish line in one piece Or at all.Yet many people buy property without a plan or clear idea of where they want to end up. This is the property equivalent of getting into the starting blocks with the blindfold on.Which brings us to number 3 of our 7 critical mistakes.In episode 33, we discuss “Starting without a plan and an end goal - No.3 of the top 7 Critical Mistakes".Listen as David Johnston, Cate Bakos and Peter Koulizos take you through why planning is critical to success, the mistakes to avoid when putting together your plan and the misconceptions that trap property investors.Link to show notes: http://bit.ly/2SujwWG
Give me one dollar and I’ll give you 35 cents back. Doesn’t sound like a great deal does it? In fact, it sounds like you’ve been cheated.Yet property spruikers will point to tax deductions as a reason to invest. In their property. That they are trying to sell you. Which they make a margin on. At your expense.The ability to claim a tax deduction is certainly a benefit, but it should never be the primary reason for investing.And it definitely does NOT mean that the property you are purchasing is a quality investment.In episode 32, we discuss “Misunderstanding what makes a good property investment" - No.2 of the top 7 Critical Mistakes.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through examples of the wrong reasons behind why some people invest in property.Link to show notes: http://bit.ly/2OnG0as
We all love the idea of a get rich quick scheme. Just imagine planting some money, growing it in abundance and next week you’re off on holiday... indefinitely.Most of us understand that in reality, that’s not how things work.In fact, get rich quick schemes are commonly a great way to lose your money.In episode 31, we discuss “Get rich quick schemes - No.1 of the top 7 Critical Mistakes”Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the schemes to look out for, why higher returns demand higher risk and why if it sounds too good to be true, it probably is.Link to show notes: http://bit.ly/2vkjadd
Money - it can be your best friend or your worst nightmare.Being able to manage your money is not only vital to financial success, it is also critical to your mental well-being. Most research shows that concerns about money are in the top 1 or 2 stressors of our lives.It only takes a few big bills to make you feel like your credit card or depleting savings is a runaway horse, threatening to buck you further away from your goals. But we aim to get you back in the driver’s seat and on track to achieving your ideal lifestyle.In episode 30, we discuss “Money Management – 7 steps to success”.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the 7 steps to implementing an effective money management system, the critical mistakes to avoid and how you can spend more money on what matters most to you.Link to show notes:: http://bit.ly/2NK0RV4
So, you’ve found the property for you and now comes the negotiation battle.Get ready and brace yourself! It may be time to put down your shield and sword.Not all negotiations are adversarial back and forth matches of strikes and sneaky jabs. Sometimes the softer approach is the winning one.In episode 29, we discuss “Congenial negotiation tactics and how to apply them in the right situation”.Listen as David Johnston, Cate Bakos and Peter Koulizos take us through how to build trust with real estate agents and get on their good side, why adversarial negotiations are not always desirable and how you can cut the competition off at the knees.Link to show notes: http://bit.ly/2FJdKKZ
Jump on the roller coaster as we take a look at 2019 in the rear view mirror.If you look to your left you will see the Royal Commission into Banking coming to a close with a slap on the wrist for lenders. On the right we have the LNP with a surprise victory, taking out the election. Back to your left is APRA reducing the assessment rate and caps on lending and the RBA slashing rates.Hold on to your hat's ladies and gentlemen! We’ve hit the trough and started to climb.In episode 28, we discuss “2019, the year that was (and a sneak peek at 2020)”.Listen as David Johnston, Cate Bakos and Peter Koulizos take us through the events that shaped the property market as we shut the door on 2019 and some predictions of what's in store for 2020.Visit the show notes: http://bit.ly/2EJs1Xl
The magic number.There are many voices and opinions which will tell you that you need to amass as much property as you can over your life time.We’ll let you in on a secret – in the property game, it's often the case that less is more!In episode 27, we dissect “How many properties do you need to retire wealthy?”.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through why 2 to 5 properties is the optimal number for most Australians, why quality trumps quantity and the danger of taking the advice of property spruikers.Visit the show notes: http://bit.ly/372tNPz
Property – it’s a veritable panacea for reaching any of your financial or lifestyle goals.But not all property is created equally. The property comes in many different shapes and sizes, purposes and potentials.The key is knowing what type of property asset is the smartest buy to align with your long-term goals.In episode 26, we dissect “The different property types that you can spend your hard-earned cash on”.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the ins and outs of residential property, as well as the risks and rewards of commercial investment opportunities.Visit the show notes: http://bit.ly/2PuSi1P
Leaving aside those who invest in vintage cars or antiques, the vast majority of Australian’s will make a choice between investing in property, shares or a combination of both.There’s no doubt that the key to retiring comfortably is to make good investment choices throughout your working life.So, what’s inside your investment portfolio?In episode 25, we dissect “Why is property a good asset class to invest in”.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through why property is perceived as a reliable investment, the pitfalls that you don’t get with shares and the need for diversification.Visit the show notes: http://bit.ly/2PvFqsx
It’s widely known that getting a low interest rate can save you hundreds and thousands of dollars over your life time. What most people don’t get is how an effective mortgage strategy can make you hundreds of thousands of dollars, or more, over the same period.In episode 24, we dissect “How mortgage strategy shapes your ability to hold property, and grow your wealth for decades into the future!”.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the mortgage strategies that if you get right, will empower you to grow your wealth through holding property rather than selling.Selling property that could have been held through better planning is the biggest property regret most people have in life!So, take a listen as the team unpack why your mortgage strategy needs to come first, before selecting the lender and a great interest rate!Visit the show notes: http://bit.ly/346DZor
Get ready to jump in the time machine and explore Australia’s transition through the decades. Learn how our approach to living has been impacted by the fortunes and growth of our nation.The team cover Victorians to Edwardian’s, pre—war to post war, art-deco to villa units, toilets separate to the house to alfresco dining, split level living, formal dining rooms, McMansions and everything in between.It’s clear to see that changes in property trends have mostly boiled down to three things – evolutions in wealth, transport and jobs.In episode 23, we dissect “How property and market trends have changed over the decades”Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the changes that have shaped the property market, how our view of ideal living has evolved over time, and we gaze through the crystal ball for a glimpse at the future.Visit the show notes: http://bit.ly/2rXou4u
We all have a picture in our heads of what our ideal home looks like.For most of us, chasing our ideal home can be akin to chasing a unicorn. Unless you have a bottomless pocket, compromises will need to be made (particularly if you’re a first home buyer).In episode 22, we dissect “Why the family home is commonly the biggest piece of the investment puzzle”.Listen as David Johnston, Cate Bakos and Peter Koulizos take you through why you should treat your home as your greatest investment, the compromises you should plan for and the critical mistakes to avoid!Visit the show notes: http://bit.ly/2L9pPfF
Ever tried to run a race backwards? Reaching your goals is just as hard when you are working back to front.We see plenty of purchasers let a bank tell them their price point based on a maximum borrowing capacity and then purchase next door to where they live. This is the investing equivalent of doing a three-legged race with your partner. Blindfolded.Set yourself goals, that will determine the appropriate price point. Then work out the best location to purchase from there.In episode 21, we dissect “Why price point should determine location and strategy”Listen as David Johnston, Cate Bakos and Peter Koulizos take you through how to get at your true price point, the compromises you need to make peace with and the critical mistakes to avoid.Visit the show notes: http://bit.ly/2NXtq23
Bidding at auction – for the majority of us, this can feel like stepping into the Thunderdome.After all, only one will leave victorious.Chances are, all the other bidders are just as nervous as you. So how do you get the upper hand without letting your emotions run away?In episode 20, we dissect “Bidding tactics 101”Listen as David Johnston, Cate Bakos and Peter Koulizos take you through how to keep a cool head on auction day, reading the play and strategies to add to your arsenal.Visit the show notes: http://bit.ly/2KbVeNH
Should you use the crystal ball to determine where we sit in the economic and market cycle ORShould you purchase a quality property when it suits your own personal economy?In episode 19, we dissect “TIME IN the market v TIMING the market” and the evidence is very clear, the odds are stacked heavily in one direction. Which is it and why?Take a listen as the Property Professor takes you through his analysis across each capital city over an extended period of time, and the team dissect it with a fine-tooth comb!So, grab your vanilla slice and fruit mince pies (as Peter did before the episode), sit back and relax as David Johnston, Cate Bakos and Peter Koulizos break down the data, expose the upside, risks and poor outcomes on this age-old topic!Visit the show notes: https://propertyplanning.com.au/time-in-the-market-v-timing-the-market/
Making a decision to fold can be a nerve-racking ordeal. And we’re not just talking about playing cards.Sometimes you need to make difficult decisions about the properties you have purchased. Whether the property hasn’t performed as you had initially hoped or some life event has changed your plans.There’s one thing for sure though – the stakes are high.In episode 18, the Property Planner, Buyer and Professor dissect “When to hold and when to fold!”Listen as David Johnston, Cate Bakos and Peter Koulizos, take you through the considerations before making a decision to sell, the strategies to get right to avoid selling and their own stories of folding too soon.PS – Be sure to stick around to hear the trio singing Kenny Roger’s Gambler!Visit the show notes: https://propertyplanning.com.au/when-to-hold-when-to-fold-18/
School’s back in session and this week’s topic includes everything you need to know about valuations. There are many different types, each producing a different result based on the purpose.In episode 17, the Property Planner, Buyer and Professor dissect the ins and outs of “Valuations 101”.Listen as David Johnston, Cate Bakos and Peter Koulizos, take you through the different types of valuations, the consequences of falling short and how you can proactively support a valuer with comparables to manage the risk of a conservative lender valuation.Show notes: http://bit.ly/2Jc9DZO
Yep – no footy talk in this episode – it's all Land to asset ratio and what a ripper of an episode this one is.In episode 16, the Property Planner, Buyer and Professor dissect the mystery behind "Unpacking land to asset ratio”.Listen as David Johnston, Cate Bakos and Peter Koulizos, take you through what is it, why it underpins a good investment strategy, and whether there is a perfect ratio!Visit the show notes - https://propertyplanning.com.au/unpacking-land-to-asset-ratio-ep-16/
Banks – can’t live with them, can’t live without them!Did you know that lenders limit the amount they will lend against certain properties and they reject some outright as security for a mortgage? Do you know which ones and why?In episode 15, the Property Planner, Buyer and Professor dissect “Why you must keep clear of the properties banks don’t like.”If we all accept that banks want to make money - we can understand that there is method to their madness. Listen as David Johnston, Cate Bakos and Peter Koulizos, take you through what property locations and dwelling types the banks turn down and why the banks put restrictions on certain properties in the first place. It may just save you from making a big mistake. The last thing you want is to be left high and dry without finance and a dud asset.As if purchasing a property wasn’t stressful enough!Visit the show notes - https://propertyplanning.com.au/why-you-must-keep-clear-from-what-the-banks-dont-like-ep15/
Weekend excursions, reconnaissance missions and scoping out an area. While you may not be a secret government agent, you are on the property hunt, looking to make your next big decision.And did we mention you also need to be a time-traveller? Analysing data to ascertain historical outcomes and looking forward to determine future expectations.Understanding the key data based fundamentals of a location is part and parcel to making a successful property decision.In episode 14, the Property Planner, Buyer and Professor dissect “how to choose a location for investment – what to look for and what to avoid”Listen to David Johnston, Cate Bakos and Peter Koulizos, as they take you through the critical considerations when choosing a location for investment.Visit the shownotes
The type of property that suits your current needs, will not necessarily meet your long-term needs.Beware of Dad’s acting on behalf of kids and pregnant women bidding at an auction! They have a time deadline and the purchase price may be less important.Where you are competing to purchase a property and you are up against people who are motivated by time – instead of money – the price tag can quickly fly out of reach.In episode 13, the Property Planner, Buyer and Professor dissect “How age and life stage can impact your property strategy.”Listen to David Johnston, Cate Bakos and Peter Koulizos, as they take you through the critical considerations and how they change throughout your life’s journey.
The media hype around timing the property market can lead to many unnecessary concerns about ‘timing’ the market. You may ask yourself what if property prices fall? Do you ask yourself what if they keep going up?In our 12th episode, the Property Planner, Buyer and Professor dissect “Property cycle management – why now is always the best time to buy if it suits your personal economy and you have a long-term property plan.”Listen to David Johnston, Cate Bakos and Peter Koulizos as they take you through market cycles, the catalysts behind market movements and how to deal with a downturn.
Everywhere you go, new townhouses and apartments are springing up in droves. Does that mean you should be getting in on the action and become a small-time developer?In our 11th episode, the Property Planner, Buyer and Professor dissect “Small time development – how it can work for you, but is it a risk worth taking?”Listen to David Johnston, Cate Bakos and Peter Koulizos as they take you through where to begin if you’re interested in property development, the inherent risks and of course, setting your strategy before going on the hunt for a viable site.
How do you frame risk when making property, mortgage and money decisions?What risk management strategies do you have in place to minimise your downside while optimising the upside?It can be a tricky balancing act.In our tenth episode, the Property Planner, Buyer and Professor dissect “Why your approach and assessment of risk is paramount to property success”, and if done poorly, how it can lead you up the garden path!Join Peter Koulizos (Property Professor), Cate Bakos (Property Buyer) and David Johnston (Property Planner), as they take you through all the different ways to look at, consider, and manage risk when making property, mortgage, money and lifestyle decisions before your next purchase and the critical mistakes to avoid.Follow the Property Planner, Buyer and Professor Podcast:* Facebook * Instagram
Do you have a mortgage strategy for your largest expense in your lifetime – or have you focused on a short-term win – your interest rate?What if I told you that you can have the best of both worlds, a great mortgage strategy AND interest rate!In our ninth episode, the Property Planner, Buyer and Professor dissect “Why your mortgage strategy is more important than your interest rate”.This isn’t simply about paying down your mortgage faster. Everyone understands that!Listen to David Johnston, Cate Bakos and Peter Koulizos as they take you through the key mortgage strategies that the mortgage industry neglects, resulting in a lack of awareness for consumers and the critical mistakes to avoid.Follow the Property Planner, Buyer and Professor Podcast:* Facebook * Instagram
Data can provide great insights, but it will never give you the full picture.One of the key errors a property investor can make is hanging your hat on data. You need to be careful that you are not the artist painting the canvas with the data and statistics that tell you the story you want to hear!Listen to our three experts as they dissect the different types of data, data providers and the way the information can be sliced and diced!Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/
In our seventh episode, “How to select property like an A-grade buyer’s agent”, our Property Planner, Buyer and Professor will be discussing:1.The keys to selecting quality assets – whether you are purchasing a home or investment.2.Why a bargain may not be all it’s cracked up to be.3.Critical traps that could mislead you on your property hunt – and how to avoid them!Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/
In our sixth episode, “What determines your Property Strategy”, our Property Planner, Buyer and Professor will be discussing:1. How do you decide whether your next purchase will be lifestyle or investment?2. What is your financial return focus? And how does this apply to you when purchasing a home?3. Are you provisioning for future plans?4. Do you know how many properties will be required in your portfolio to enable you to meet your goals?5. How your Mortgage Strategy is a critical element in helping you achieve your Property Strategy.6. Typical mistakes and how to avoid them!Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/
In this podcast our Property Planner, Buyer and Professor delve beyond the numbers and answer the lifestyle questions behind property strategies and decision-making. Often, it’s not all black and white when it comes to property planning and buying, and the team will show you why.Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/
In this podcast our Property Planner, Buyer and Professor discusses about the three steps to developing a successful Property Plan!Step 1) PlanStep 2) StrategyStep 3) Select.Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/
This podcast is dedicated to meeting the Property Professor, Peter Koulizos who will provide his insights and philosophy on why Property Selection is so vital to your financial success!Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/
This podcast is dedicated to meeting the Property Buyer, Cate Bakos who will provide her insights and philosophy on why Property Selection is so vital to your financial success!Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/
Our first episode provide an insight into the Property Planner, David Johnston, the company he founded in 2004, and why he passionately believes that we all should have a Property Plan to navigate our lifetime’s property decisions so that we all can create our ideal lifestyle.Follow the Property Podcast:- Facebook: https://www.facebook.com/propertypodcast- Instagram: https://www.instagram.com/the_property_podcast/