Property Investment & Wealth Creation Australia | The Michael Yardney Podcast

Is this the beginning of the end of the property boom?

If you've been following the property news lately you be forgiven for thinking so.

The Chiefs of two of the biggest banks have suggested that regulators should step in and introduce macro-prudential controls to slow down our booming housing markets.

In the closing statements of the 'Housing Market and Financial Stability' speech delivered by the RBA's Assistant Governor Michele Bullock on Wednesday, Bullock hinted at the possibility that the RBA could intervene in Australia's housing market.

The International Monetary Fund has issued warning about Australian house prices and Digital Finance Analytics principal Martin North gave a chilling forecast that home prices in Sydney and Melbourne outer suburbs could fall a staggering $200,000 while the crash could be even worse for apartments when lending rules were tightened.

So, should we be scared?

That's what I'm going to be chatting about with Australia's leading housing economist Dr. Andrew Wilson today.

And here's a spoiler alert – NO you don't need to worry!

Now if you have been a subscriber to this podcast for a while or followed my blogs or YouTube videos, you'd know for the last 3 years I have recorded a weekly Property Insiders video chat with Dr Andrew Wilson.

And his assessment of and forecasts for our economy and property markets have been remarkably accurate so whether you're a beginning property investor or an experienced I'm sure you'll benefit from my chat with Andrew today which is the audio of one of our recent Property Insider videos.

However, since we recorded this video Federal Treasurer Josh Frydenberg has given the green light to introducing macroprudential curbs to mortgage lending.

The last time lending restrictions were implemented in 2017, the focus was on dampening investor lending and the high percentage of interest-only mortgages.

However, this time around the main concern seems to be an increasing share of loans on a high debt-to-income ratio.

22 percent of new mortgage holders now have debt that exceeds their income by more than six times, up from 16 percent a year ago.

But, as you'll hear Andrew Wilson explain in our chat, regulators should be aware of unintended consequences. Their crackdown is likely to hit first home buyers rather than Australia's wealthy.

Targeting debt-to-income ratios will have a limited impact on higher-wealth households, who often have multiple streams of income. However, it will affect lower-income households and those purchasing property for the first time.

There are several reasons the debt-to-income ratios have risen over the past year.

Firstly, low interest rates by their nature allow people to service more debt as repayments fall.

And second, the share of lending to first-home buyers has increased significantly on the back of HomeBuilder, the federal government's First Home Loan Deposit Scheme, and individual state government incentives. First-home buyers tend to be more indebted as they stretch to get into the market.

Given improving homeownership rates is the goal of these government schemes, it seems counterproductive to limit first-home buyers by reducing their ability to borrow.

And another reason that debt to income ratios have increased is that many established homeowners have upgraded their homes over the last year or two, partly because of the low-cost borrowing, partly because the value of the home has increased considerably given them equity to upgrade and also because of the increased requirements for more space such as a zoom room, etc.

My Property Update Chat with Andrew Wilson

Looking back over the first 9 months of this year, our property markets have performed even more strongly than anyone ever expected, with the rates of house price growth at levels not seen for a number of decades.

In fact, all capital city markets have already experienced double-digit capital growth so far this year and many locations will experience growth of more than 20% over 2021.

Of course, it must be remembered that the last peak for our property markets was in 2017, and in many locations, housing prices remain stagnant over the ensuing couple of years and it was really only earlier this year that new highs were reached.

Meaning that average price growth was unexceptional over the long term.

But over the last week or two, there seems to have been a sudden change of sentiment about our booming housing markets.

A sense of urgency has crept into the tone of those at the helm of our big banks, as the CEOs of two of Australia's largest banks have sounded off about emerging lending risks.

Topics We Discuss on Today's Show:

• Whether or not the high debt-to-income ratios of home buyers is really a problem
• Price growth has averaged a modest 4% per annum since 2017 – despite record falls in mortgage rates over that period
• Monthly house price growth in most capital cities has halved over the past three months and continues to track downwards
• The Reserve Bank does not have a role in setting house prices.
  • The RBA's mandate to stimulate employment which currently means keeping interest rates low
• The Australian Prudential Regulatory Authority, and its purpose of making sure the banks are operating soundly and there is no deterioration in lending standards.
• There seems little to be concerned about current lending practices as interest-only loans are essentially a non-issue these days, and with rental vacancies at near-record lows, the market needs property investors.
• Why more Aussies are joining the millionaire club as Australian household wealth reaches record levels, and what that means

Resources:

Michael Yardney

Dr. Andrew Wilson, chief economist My Housing Market

As our property markets move forward why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors.

Get a bundle of eBooks and reports www.PodcastBonus.com.au

Shownotes plus more here: Uh-Oh. Is this the beginning of the end of our property boom With Dr. Andrew Wilson

Some of our favorite quotes from the show:

"You see, targeting debt to income ratios will have limited impact on higher wealth households." – Michael Yardney

"We're doing our homework, we're doing our research, we're doing a lot online, and we're just making quick decisions." – Michael Yardney

"I've seen it over and over again that unless you grow out to where it is, you end up going back to where you are." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

The general theme of my podcast is property investment, success, and money. But today's show is more about you.

If you're like many Australians you're sick of Covid; and by that I don't mean sick with Covid. But sick of the limitations, the restrictions, the lockdowns, the inability to get on with your life or your investing, or your business.

I know many of us are feeling angry, cross, or frustrated and that's why today I'm having a chat with Rhonda Britten who is a repeat Oprah guest, a TEDx speaker and an Emmy award winner.

And even if you're coping well with Covid you'll love this chat today as I'm sure Rhonda will give you some ideas to make your life even better.

Rhonda Britten is not just another American "Rah Rah" motivational speaker, but she's the real deal as you'll find out in my chat with her today, so welcome to today's show.

What Rhonda Britten has to say about fearless living

Rhonda presented 2 sessions for my team at Metropole over the last month and my team were so taken by her inspiring message I invited Rhonda to pass on her message to you through this podcast.

Currently many of us are being challenged by lockdowns, restrictions and uncertainty.

This too shall pass, we know there is an end in sight and that's most likely when 80% of Australians will be vaccinated.

But we're not really sure of the timing of this and if life will really get back to normal, so how do we cope between now and then?

• Rhonda's history and why she's qualified to give this kind of advice and information
  • Rhonda shares her traumatic personal history, how it affected her, and what led from that
• Advice for Australians who are feeling that they've lost control of their lives
  • Understanding the importance of letting go of things that aren't actually under our control
  • Releasing the things that we can't control leaves room for us to take responsibility for what we can control
• Whether fearless living is really possible
  • The importance of learning and identifying the ways that fear shows up in our lives
• The Stretch, Risk, or Die exercise and what it's for
• Why it's important to eliminated negative self-talk
• How to move yourself forward
• Rhonda's favourite exercise, Acknowledgements
• What we can do to better deal with anger
• How anger can be in service to freedom

Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Rhonda Britten – www.FearlessLiving.org

Download Rhonda Britten's free guide – www.FearlessLiving.org/risk

Shownotes plus more here: Fearless living in challenging times with Rhonda Britten

Some of our favourite quotes from the show:

"We're worried, we're scared, we're stressed, and we're continuously bombarded by negative messages in the media." – Michael Yardney

"I think the other thing is, a lot of people feel they've lost control over their lives." – Michael Yardney

"Feelings are just energy, so you want to move that energy through you." – Rhonda Britten

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

If you've been following the Real Estate columns in the media recently it would have been hard to miss stories about mortgage stress and rising interest rates.

Of course, it's the same property pessimist chasing a headline giving biased views based on the preconception that our property markets are about to crash and backed up by very small sample sizes of data.

So in today's show, Dr. Andrew Wilson and I will discuss not just our views but those of the Reserve Bank – so at the end of our chat, you'll have a good idea about the direction of interest rates in the medium-term.

We'll also discuss a comment by Assistant RBA Governor Luci Ellis who recently lashed out at the Federal Government suggesting negative gearing and Capital Gains Tax discounts essentially encourage speculative investment and are fuelling property price growth.

Really!

Now if you have been a subscriber to this podcast for a while or followed my blogs or YouTube videos, you'd know for the last 3 years I have recorded a weekly Property Insiders video chat with Dr. Andrew Wilson.

And his assessment of and forecasts for our economy and property markets have been remarkably accurate so whether you're a beginning property investor or an experienced I'm sure you'll benefit from my chat with Andrew today which is the audio of one of our recent Property Insider videos.

I'll leave a link in the show notes so you can see all the charts that support the information we'll talk about, but in general, that won't be necessary – Andrew explains his position well.

I'll also be sharing my regular mindset message where I'll explain why being rich is a choice.

So welcome to today's show.

Has unemployment really improved?

Officially Australia's unemployment rate is at its lowest level in almost 13 years, despite half the country being in the grips of lockdown.

However, these figures don't really reflect what's happening on the ground where things have been getting worse for Australian workers.

The headline unemployment rate is no longer a good representation of the jobs market, falling in August despite workers doing it tough.

As lockdowns were implemented, more Australians worked fewer, or no hours and underemployment rose.

It's not surprising that the labour market took a beating as businesses closed their doors.

In August, the participation rate dropped from 66 to 65.2 percent, with 211,188 fewer people in the labour force than in the June survey.

On top of people simply ceasing looking for work, those in the workforce are seeing their hours drop, particularly in locked-down areas like Victoria and New South Wales.

Hours worked nationally fell by 3.7 percent last month, though NSW bore the brunt of the losses, with hours worked down 13 percent since the lockdown started.

Interestingly people working just one hour per week are technically classified as employed, even though clearly, they wouldn't consider that to be the case if you asked them.

Rate hikes are further away than you think

A number of the regular property pessimists are doing the rounds of the media chasing headlines telling anyone who is willing to listen that many Australians will fall into mortgage stress when interest rates rise and that this will occur sooner rather than later.

However, Governor Lowe once again asserted that this won't happen any time soon.

He said he finds it difficult to understand why the market is pricing in rate action 2022 and 2023 and confirmed that interest rate will only rise when inflation hits the target of between 2.5% to 3% and stays there for some time.

Clearly, our rising house prices are not going to affect the RBA's interest rate decisions and Governor Lowe confirmed that house prices and housing affordability are not the domain of the RBA.

Here's what causing our property boom.

Assistant RBA Governor Luci Ellis recently lashed out at the Federal Government suggesting negative gearing and Capital Gains Tax discounts essentially encourage speculative investment and are fuelling property price growth.

These interesting comments at a time when the number of investors is below historical averages, and the government has supported first home buyers to get into the market.

Property Listings are rising

Watch this week's Property Insider video as Dr. Andrew Wilson and I discuss the surge in listings of properties for sale that has suddenly occurred.

It will be interesting to see how these extra properties for sale will affect property price growth, however as most sellers are also buyers, I see significant market depth ahead and higher prices at the end of this year.

Resources:

Michael Yardney

Dr. Andrew Wilson, chief economist My Housing Market

As our property markets move forward why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors.

Get a bundle of eBooks and reports www.PodcastBonus.com.au

Shownotes plus more here: Have you heard the one about rising interest rates? With Dr. Andrew Wilson

Some of our favorite quotes from the show:

"That is interesting, considering how we are hamstrung, how well the markets have done." –Michael Yardney

"I think there's been a change in sentiment from vendors recently, and they're now coming back to the markets." –Michael Yardney

"The words that you use have a surprisingly profound impact on how much wealth you obtain."

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

In today's podcast we're going to take a deep dive into the Brisbane property market with two of my regular guests, Stuart Weymss and Brett Warren.

After a number of years of sluggish growth, Brisbane has been one of the strongest performing property markets over the last year and is likely to continue to be amongst the top performers over the next few years.

Today you'll hear that recently Pam and I bought a property in Brisbane, as did Stuart Wemyss, and while this isn't a recommendation that you should be buying in Brisbane as I don't know your circumstances, I think it will be informative to understand the thought process that I went through.

So even if you're not interested in buying property in Brisbane at the moment, as an investor I'm sure you'll benefit from the insights shared by these two experts.

Property Investment in Brisbane

While there are many great property investment opportunities in Australia, the Brisbane property market has been receiving more than its fair share of attention recently.

Brisbane had already been one of Australia's best performing property markets this year even before it received the news of becoming host to the 2032 Olympics.

So will this add more fuel to the fire, will Brisbane finally enjoy it's time in the sun, or will it remain the poor cousin to the big property markets of Melbourne and Sydney?

I would like to start with a little disclaimer, there are many great investment markets in Australia, and I believe as you build a substantial property portfolio you should diversify and have assets in all our big capital cities – Melbourne, Sydney and Brisbane. In today's show, we're just going to talk about Brisbane.

Pros and Cons of investing in Brisbane property:

Pros:

• Increased interstate and overseas migration
• Large infrastructure spending
  • The city was overdue for growth as it's matured in recent years with billions of dollars in infrastructure projects in the pipeline that will be transformational for the city that has seen significant population growth,
• Better affordability
• Increasing job opportunities – no need to leave Brisbane anymore
• Lower stamp duty
• Higher rental yield
• Brisbane's changing culture
• Brisbane is well-known for its outdoor lifestyle, especially the plethora of dining options along the Brisbane River in residential and restaurant precincts such as Teneriffe, Bulimba, New Farm, and West End.

Cons:

• Smaller city than Melbourne and Sydney
• Fewer Job opportunities

The Olympics don't guarantee house price growth

The direct benefit of the 2032 Olympic Games will vary considerably by location, underpinned by predominantly new infrastructure development projects and the subsequent downstream economic and lifestyle benefits that they provide.

The 2032 Games are expected to support 91,600 full-time equivalent jobs in Queensland and 122,900 nationally. It is often the case that improved labor market conditions result in improved property market conditions, as more jobs lead to greater collective debt serviceability levels, though the broader economy will dictate this, and it will undoubtedly be influenced by the global economy at the time.

The prospect of billions of dollars of planned infrastructure now being brought forward because of the Games will be a big driver of house prices.

Major infrastructure projects tend to have an uplifting effect on property prices as the projects create jobs, strengthen travel links, and improve amenities such as retail outlets and social venues.

What interstate investors need to know about Brisbane

1. There is not one Brisbane market, and the Gold Coast and Sunshine coast are not Brisbane
2. The majority of the new infrastructure projects (before the Olympic games) are within 5 km of the CBD
3. People are not wanting to move as far out from the city as they do in other states – more affluent inner suburbs outperform
4. School catchments attract a premium
5. Watch out for flooding
6. Public transport is important

Resources:

Michael Yardney

Brett Warren – National Director Metropole Property Strategists

Stuart Wemyss – Prosolution Private Clients

Stuart's Book – Rules of the Lending Game

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Get a bundle of free eBooks and reports at www.PodcastBonus.com.au

Shownotes plus more here: Here's why I just invested in Brisbane property with Stuart Wemyss and Brett Warren

Some of our favourite quotes from the show:

"We look for locations where there will be strong population growth that would lead to economic growth ." – Michael Yardney

"You can't assume that you can pull down the old house to build the new house." – Michael Yardney

"We're not suggesting you look for a bargain in Brisbane, you won't find one, it's a very informed market." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Australia's economy and our property markets don't operate in isolation, so I believe it's good to regularly have a look at the big picture, the macroeconomic factors affecting not just Australia's economy, but the world economy to help us understand what's ahead for us, and I do this once a month in these Big Picture Podcasts with Pete Wargent.

Since our chat last month Australia's circumstances have rapidly evolved so we've got a lot to discuss this month.

And today after my chat with Pete, I'll share my mindset message with you.

The Big Picture in September

We're in unfamiliar territory.

A lot remains unknown about what life will look like on the other side of our lockdowns.

This time around it looks like we're not exiting into a COVID-zero world so we don't know what that really means; how households will spend their money, how many businesses will close, what mobility will look like.

Basically, we're in uncharted waters.

Yet despite what is now 3 months of lockdown in Sydney and Melbourne in lockdown number 6 – in fact with more Australians in lockdown than are not – our real estate markets are still in good shape.

Of course, there are concerns that as restrictions drag on, they will weigh down on the housing market and household financial situations.

But so far there are very few signs of housing distress when compared to last year: loan deferrals are at a fraction of the first lockdown, property price discounting is minimal and there is a relatively low number of distressed sales.

In fact, property values increased in all our capital cities over the months of lockdown.

There seems to be a recognition that the lockdown doesn't go on forever, and that once the vaccination rate gets past a critical number our economy will re-open.

There seems to be less fear around losing jobs and greater confidence that house prices can be resilient, and, on balance, our property markets are holding up much better than they did last year.

Some of the topics I discuss with Pete:

• What it's like to live in a place that's not in lockdown
• How Australia side-stepped a recession
  • The shape of the recovery
  • The effect of extended lockdowns on the economy
  • How vaccination increases and restriction increases will boost the economy
  • The Reserve Bank's vision of an economic rebound
• The fall in job ads and the number of Australians working multiple jobs
• The current unemployment levels and what's projected to happen to them
• The reduction of Australian credit card debt
• The increase in Australian savings
• The current activity in home loans
• The fact that property prices have been largely unaffected by the pandemic, lockdowns, and restrictions

Resources:

Michael Yardney

Metropole's Strategic Property Plan – to help both beginning and experienced investors

Gets your bundle of eBooks and reports here: www.PodcastBonus.com.au

Join Michael's Property Update private Facebook group by clicking here

Pete Wargent Next Level Wealth

Pete Wargent's new book Low Rates High Returns

Shownotes plus more here: September Big Picture Podcast with Pete Wargent

Some of our favourite quotes from the show:

"As we entered these lockdowns many households had a stronger financial balance sheet and the housing market was at an all-time high, so Australia's wealth was high." – Michael Yardney

"Just by the skin of the teeth, we dodged what could have been a double-dip recession." – Michael Yardney

"You've won the lottery by being born at this time." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Australia may just have side-stepped another recession by the skin of its teeth after recording a small uptick in GDP growth over the June quarter.

After an initial "miracle" V-shaped recovery, our economy did a U-turn as much of Australia was locked down at the end of the June quarter.

And economists seem united about the outcome of the current September quarter – we will be seeing a steep drop in economic output.

So what's ahead for our economy and our property markets, that's what I'm going to be chatting about with Australia's leading housing economist Dr Andrew Wilson today. And while you'll hear him give six reasons why we are optimistic about the economy moving forward, you'll also hear why we won't have the miraculous V shape recovery many were expecting.

Now if you have been a subscriber to this podcast for a while or followed my blogs or YouTube videos you'd know for the last 3 years I have recorded a weekly Property Insiders video chat with Dr Andrew Wilson. And his assessment of and forecasts for our economy and property markets have been remarkably accurate so whether you're a beginning property investor or an experienced I'm sure you'll benefit from my chat with Andrew today which is the audio of one of our recent Property Insider videos.

I'll leave a link in the show notes so you can see all the charts that support the information we'll talk about, but in general that won't be necessary – Andrew explains his position well.

I'll also be sharing my regular mindset message where I'll discuss 5 common money myths and mistakes I'm seeing many people make.

There will be a lot written in our history books about the Coronavirus pandemic, how the world changed, how we live and the economic fallout that resulted from it.

Last year there were a lot of letters being tossed out about the shape of the economic recovery from the short sharp recession Australia experienced: U, V, W, etc.

There was even talk of a Nike swoosh shaped recovery.

Well, the recession we had last year was not a normal recession.

Government lockdowns and the fear of getting sick kept consumers at home, while the shutdown of supply chains, shortages of workers, the inability to source inputs, and the sudden fall in international tourism, students and migrants devastated businesses.

Then all of a sudden it looked like we experienced a V-shaped recovery marked by a steep, dramatic decline in the economy in the middle of last year (the first half of the "V"), followed by an equally rapid upturn to pre-recession levels, (the second half of the "V").

But just look what's happened over the last few months with half of Australia in lockdown at a time that many of the government supports measures we enjoyed last year not there anymore.

So, what's next for the Australian economy and for our property markets?

These are some of the questions I'll be asking Australia's leading housing Economist, Dr Andrew Wilson chief economist of My Housing Market

Our economy lifts again and posts record growth over the year

Australia may just have side-stepped another recession by the skin of its teeth after recording a small uptick in GDP growth over the June quarter.

After an initial "miracle" V-shaped recovery, our economy did a U-turn as much of Australia was locked down at the end of the June quarter.

And economists seem united about the outcome of the current September quarter – we will be seeing a steep drop in economic output.

In today's podcast Dr. Andrew Wilson gives 6 reasons why he's confident about Australia's recovery.

1. Australia dodged a recession with strong economic growth over the last year.

Australia's economy (as measured by gross domestic product GDP) grew by 0.7% in the June quarter after rising by 1.9% in the March quarter. Over the year economy grew by a record 9.6% – admittedly of a pandemic and use low base.

The level of the Australian dollar and the strength of our share market are a good indication of what's ahead.

1. Unemployment levels are low, and our participation rate is high

Australia's economic recovery is creating jobs.

Interestingly the number of Australians working multiple jobs has never been higher, as insecure work surges.

The economy is creating jobs but not necessarily the ones Australians need.

The latest ABS figures have peeled back another layer on the labour market, revealing Australians are doing it far tougher than the headline number would suggest.

The number of people working multiple jobs surged by 15,100 in the three months to June to its highest number on record.

Over the last 12 months, the number of Australians with at least two jobs has swelled by 32.6%.

Headline unemployment fell to 4.6% in July, ahead of expectations and despite lockdowns coming into force.

As economists have pointed out, the 'improvement' has largely been the product of hordes of people giving up on finding work altogether, discounting them from the survey.

It shows in the fact that over the month Australians worked 3 million hours less.

At the same time, opportunities to get into the workforce are declining. On the back of eastern state lockdowns, new job ads have declined nearly 10% while total job vacancies hit a ceiling.

1. Despite all the challenges consumer confidence is holding up well.

Strong consumer sentiment is important for our property markets and for our economy in general.

When we don't feel confident about our financial futures we don't spend, and in particular we don't buy high ticket items like new homes or investment properties.

1. Australians are richer than ever

Rising house prices and a stronger share market and increasing dividends from stocks mean Australians are richer than ever before.

1. Aussies have stashed their cash

Over the last quarter the Household Savings Ratio eased from 11.6% in the March quarter to 9.7% in the June quarter, but thanks to lower mortgage rates and the raft of government stimulus measures rolled out over the past 18 months Aussie households are sitting on a record war chest of $1½ trillion in cash, so when we are let out of our Covid Cocoons we'll be keen to spend it.

1. Australians have wiped $1.1 billion from their credit card debt in a single month

A surprising financial upside to spending so much life indoors is that Australians have wiped $1.1 billion from credit card debt in a single month.

Coinciding with the first full month of NSW in lockdown, Australians have managed to pay off over $1 billion in personal credit card debt according to the latest Reserve Bank of Australia credit and charge card data.

It seems that as households settled into lockdowns in New South Wales and Victoria during July, they locked away their credit cards and began paying down their debts.

That saw credit card spending plummet 11.4 per cent to $19.5 billion in July.

The value of purchases dropped by 9.29% or $2 billion in July with the total value of purchases sitting under $20 billion for the first time in 9 months, while the number of purchases also dropped by 15 million from the month prior.

The lockdowns obviously offer limited opportunities to spend on credit cards and have prompted many people to prioritise paying down debts amid growing economic uncertainty.

Resources:

Dr. Andrew Wilson, chief economist My Housing Market

Subscribe to my weekly Property Insiders video chat with Dr. Andrew Wilson – www.PropertyInsiders.info

As our property markets move forward why not get the team at Metropole to build you a personalised Strategic Property Plan – this will help both beginning and experienced investors.

Get a bundle of eBooks and reports www.PodcastBonus.com.au

Shownotes plus more here: Here's 6 reasons why we're optimistic about Australia's economic recovery, with Dr. Andrew Wilson

Some of our favourite quotes from the show:

"Another positive for our future is that Australians, in general, are richer than ever." – Michael Yardney

"Becoming financially free is about your habits." – Michael Yardney

"Money shouldn't be feared, shouldn't intimidate you – it's merely a means to an end." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Are you just starting out in property investment?

What fee will you choose to pay?

You're probably hoping for none.

In today's show, we're going to talk about learning fees that you could end up paying as a property investor.

While some are obvious and paid-up front, it can quite often be the less obvious fees how much they may cost you over the life of your investment.

And if you're not looking for them, some of those fees may appear not to have a cost at all – at least not one that you discover until later. So it's important to know how to look for them.

Let's take a look at two fees you should avoid and one that you shouldn't

1. The Built-In Fee

Beware the shiny brochures, champagne launches, rental guarantees, slick sales offices, and other false prophecies.

You are paying a fee for all of this, on top of the kickbacks and commissions for all and sundry. It is all built into the purchase price.

On a $1 million purchase, that means you could be giving the developer anywhere from $50,000 - $200,000 and that should be your money- not his.

2. Opportunity Cost

It can be difficult to admit that we got it wrong and easier to hold onto an asset in the hope its time will come... someday!

Pride, ego, and emotion can get in the way of making a logical and rational decision.

Just 1% or 2% growth better growth per annum may sound like an insignificant amount, but just look at the difference it makes over decades.

The results can be gobsmacking, with the learning fee running well into the hundreds of thousands of dollars, even millions in some cases.

3. Up-Front Fee

Then there is the up-front fee.

The concept being that you pay someone a learning fee before you just jump in.

You pay them to ensure you get efficient and effective results, in the shortest possible time frame.

Your independent strategist can assess your situation and provide a solution and as a result, they are paid to help you arrive at the outcome.

You'll find the most expensive advice you get is free, and the best value advice you'll get will cost but stop you from making the mistakes the average investor makes – and this is worth a fortune.

6 More Learning Fees You Don't Want To Pay as a Property Investor.

1. The "Oops, I bought the wrong property "learning fee"

Did you know that statistics show 20% of investors sell up their property in the first year and 50% in the first 5 years?

So, you decide to sell within the first year or two and regardless of what price you sell the property for, you need to remember the huge costs associated with buying and selling real estate.

There's the stamp duty when you bought it (plus the stamp duty for the new place), legal fees when buying and selling, selling agent commissions and marketing costs and, of course, the cost of moving twice in quick succession.

This means your learning fee is likely to be tens of thousands of dollars and more when you take into account lost opportunity costs.

1. The "capital non-growth" learning fee

This is the fee that you pay when you buy an investment with poor capital growth because it's in the wrong city, suburb, or street.

Perhaps it grows at 2 or 3 percent per annum when buying the right property may have achieved 6 or 7 percent capital growth – it may not seem like a lot, but adds up to more than you think.

1. The "renovation reality" learning fee

This is the learning fee that you must pay when you realize that renovations are hard work and not as easy as the reality TV shows or property blogs would suggest.

This learning fee could easily cost you tens and tens of thousands of dollars as well as a waiting period of many years as you wait for the market to improve enough to get your money back.

1. The "I got eaten by a shark" learning fee

Here we have Sam and Susan, a couple of 25-year-olds who charge off to one of those investment property seminars that promise you'll make a million dollars in six months.

Instead, our bright young things end up knee-deep in cash flow tables, bank documents, and a signed investment home contract that results in their off-the-plan, out-of-town, so-called whiz-bang investment property growing at a miserable 1.3 percent per annum over the next 10 years.

The learning fee in this scenario is especially scary as that "shark advice" could end up being a millstone around their necks for many years.

1. The "buying with emotion" learning fee

You can end up paying this fee in 2 ways.

Firstly, when you fall in love with a property and overpay. Now while this may be allowed when you buy your home, it's a big mistake for property investors.

The second way you pay this fee is when you miss out on an opportunity because you have an unrealistic expectation of what the property's price is and offer well below an acceptable price.

1. The "negotiation" learning fee

This is the extra cost to you when you are too afraid or too inexperienced to negotiate on price.

Many property purchasers are shark bait to real estate agents who are highly trained negotiators who are taught how to get the top dollar for their clients – the seller.

So what should a property investor or home buyer do?

Rather than pay a learning fee to the market, why not pay a buyers' agent to act on your behalf during your property investment journey?

Resources:

Michael Yardney

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Get a range of my ebooks here: www.PodcastBonus.com.au

Shownotes plus more here: Warning Property investors must avoid these learning fees at all costs

Some of our favourite quotes from the show:

"Despite the alarming statistics highlighting how badly the majority of investors get it wrong, many investors still just want to go it alone." – Michael Yardney

"There's definitely locations and certain properties that so far this year, despite the strong growth, haven't been growing much at all." – Michael Yardney

"Positive thinking breeds rich habits." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

What's the outlook for the Australian property markets for the rest of 2021 and beyond?

This is a common question people are asking now that our real estate markets are experiencing the challenges of lockdowns.

However, despite a sequence of fifteen State or Territory lockdowns so far this year, property prices have been largely unscathed.

And even though the rate of house price growth is slowing, property values keep rising in almost every market around the country and our capital cities are in line for strong double-digit property price growth this year.

So what does an investor need to do to succeed in today's market? Some rules will be different while others will remain the same.

In today's show, I'm going to chat with Brett Warren, about nine rules that you need to follow to succeed in today's property market, so welcome to today's show. Then you'll hear my mindset messages about happiness.

Rules for Property Success

Let's look at 9 key beliefs for property investment, no matter what point of the economic or property cycles we are in.

Rule 1: Your long-term aim should be capital growth

Capital growth, or capital appreciation, is simply an increase in the value of your investment over time.

And this should be the ultimate goal for every property investor.

Because while cash flow keeps you in the investment game, it is capital growth that gets you out of the everyday rat race.

Rule 2: Demographics will drive our property markets

Understanding demographics could and should be the final piece of the puzzle for you during the decision-making process.

After all, we are looking for locations that can ride out a downturn and produce above-average rates of return in the good times.

And Covid-19 lockdowns are accelerating this trend further as a large chunk of white-collar workers realize they can easily work remotely and neighbourhood has become more important to them than ever.

Rule 3: Location, location, location

Find a location where there is strong economic growth which will lead to job growth which will lead to population growth which will lead to demand for housing.

Then, given the long-term trend of the rich getting richer and the widening gap between the rich and the average Australian is not going to change, you should look at wages.

And you should only buy in areas where the local demographic has higher income levels so they can afford to both improve and pay more for properties.

Rule 4: Remember rent affordability is linked to wages

As with the above, make sure you take into account the local going rate for rent when researching an investment property.

Because, as obvious as it might sound, rent affordability is linked to wages.

When you eventually retire and enjoy the longest holiday of your life, your income will depend upon your tenant's ability to pay the rent.

Rule 5: Focus on continued strong demand

Location is one thing but buying the right type of property in the correct location is also very important.

Investors should always look for a property that will be in continuous strong demand by owner-occupiers.

If you can walk out of your home and you're within walking distance of, or a short trip to a great shopping strip, your favorite coffee shop, amenities, the beach, a great park, you will appreciate the benefit of the third-place – the importance of your neighborhood.

Rule 6: A brand new property is like a brand new car

Depending on the make and model of the car, you can lose anywhere between 10% – 15% of a new car's value disappears once you drive it off the dealership lot.

And you can apply the same concept to those brand-new properties you've been looking at.

So, remove the emotion of looking for something shiny and new.

Rule 7: Have a financial buffer in place

Always, always have a financial buffer in place to see you through the rainy days.

How much you need as a buffer varies depending upon your money management skills and cash flow circumstances, but it is often wise to hold between 6 and 12 months of living expenses in an offset account.

Rule 8: Be careful who you listen to

Remember, as with anything, there will always be pessimists around willing to give their two cents worth of advice.

And they're usually wrong.

While the Property Pessimists and Negative Nellies will tell you to avoid investing in property, there will always be people who tell you to buy property, or to buy a particular type of property or in a particular area.

But make sure you're wary of their hidden agenda. These people are likely to represent the seller, not you.

Rule 9: Avoid negativity

Similar to the above, when embarking on your property investment journey, try to avoid the negativity.

Sure, the future is uncertain, Covid-19 and continued lockdowns are taking their toll on us all, closed borders are leaving many frustrated, and climbing property prices might cause a feeling of despair for some.

But as the saying goes: This too shall pass.

The bottom line

It is always the property fundamentals that really matter. The long-term view outsmarts short-term thinking.

Over the last year or two, the residential property market has shown its resilience.

People will always need somewhere to live, and homes are the true "safe haven" in the current environment.

It is always challenging to invest when everyone else is running around worrying about the end of the world.

But you shouldn't make 30-year investment decisions based on the last 30 minutes or even the last 30 days of news

Resources:

Michael Yardney

Brett Warren – National Director Metropole Property Strategists

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Shownotes plus more here: 9 rules for success in today's property market with Brett Warren

Some of our favourite quotes from the show:

"The middle class are disappearing at the moment, and there is a stark divide between rich and poor." –Michael Yardney

"We've got to understand that location is going to do the heavy lifting." – Michael Yardney

"No matter how carefully you assess every situation, we often end up in relationships that have soured, or things that once excited us become boring." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how

Why have you been so successful in reaching some of your goals, but not others?

It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail.

It's not as simple as you are predisposed to success because you were born with certain talents or lacking in others.

That's just one small piece of the puzzle, so today we're going to discuss nine surprising things that successful people do differently from the average person in this month's Build a Business Not a Job podcast with Mark Creedon.

Three Categories of Thought

The question of how the wealthy think was discussed in our private Facebook Group for Business Accelerator Mastermind.

This opened up some great discussions amongst our tribe that we want to share in today's podcast.

There are nine thoughts we're going to discuss, and they fall into three categories.

1. What is their internal process – how are they thinking?
2. What is their focus?
3. What are they doing?
4. How successful people think
5. They see themselves as the creator of their wealth – the creator of the circumstances. They take responsibility for their lives
6. They are committed to the process of wealth creation – Not just interested, but continuously thinking about how their actions might produce or erode wealth. They're constantly doing the work.
7. They think big – They think what if it were possible, how could we do it, instead of assuming things aren't possible.
8. What Successful people focus on
9. They manage themselves first – Their mindset, their behaviours, their attitude, their actions, their growth.
10. They are value-driven – The wealthy understand we are living in a value exchange economy – they don't focus on price or cost; they focus on adding value to others
11. They are net worth focused. They are focused on building a portfolio of assets – Real Estate, shares, a business that will deliver multiple income streams – a money machine that allows them to live their life without putting a lot of effort in.
12. What Successful people are doing?
13. They play to win - While the average Australian plays not to lose, the wealthy are playing to win
14. They are in a constant state of self-growth - they are constantly trying to grow, improve, have a bigger impact.
15. They run in successful circles – You should surround yourself with people that will hold you to a higher standard and help you get to the next level.

Links and Resources:

Why not join Metropole's Business Accelerator Mastermind

Learn more about Mark Creedon – Business Coach to some of Australia's leading entrepreneurs

Get a copy of Mark's new book here – Have a business not a job

Get a heap of special reports and eBooks here- www.PodcastBonus.com.au

Shownotes plus more here: Here's how the wealthy think differently from the average Australian, with Mark Creedon | Build a Business not a Job

Some of our favourite quotes from the show:

"The benefit of a Mastermind team is you come up with a lot more." – Michael Yardney

"What you're committed to will rise to the top when you look at those actions, and what you're just interested in maybe you're not going to have achieved." – Michael Yardney

"There's that third group of people who are what we say on the green line, where they're actually taking advantage of this uncertainty period to set themselves up for when we get through all this." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how.

Who are your mentors?

Who do you turn to for knowledge, to help you set goals, to help support your growth, to help you keep accountable, and to offer encouragement?

It's impertinent to think that you can achieve the type of success on your own that took others decades to achieve.

I guess mentors are a shortcut to success and they also stop you're going down the wrong path and point you in the right direction. Stand on the shoulders of your mentors and you'll be able to see a lot further.

Despite having a very substantial property portfolio, and a very successful national business, I still have coaches and mentors in today's show I'd like to discuss with you how I got Warren Buffett as one of my mentors.

I'm also going to have a chat with Brett Warren about the type of properties that could end up the equivalent of the disastrous mining towns that we saw a couple of decades ago so that you will avoid them.

How I Got Warren Buffet As My Mentor

I found the perfect mentor early in my investing career: Warren Buffet.

In fact, Warren's been mentoring me for quite some time now and it's been inspiring.

But to be honest… I've never actually spoken to him. And he's not really a property expert.

But he's generously created a means for me to get inside his head and learn how he thinks about investing.

We have access to his way of thinking through his annual letter to the shareholders of his company Berkshire Hathaway.

One of the early lessons I learned from my mentor was:

"Be greedy when others are fearful (like now) and fearful when others are greedy."

Here are three lessons I took from his thoughts:

1. Fear and greed drive our markets and cause them to cycle – all too often too far in both directions.
2. Trying to predict these market cycles is a fool's game.
3. As an investor, you simply need to know that these cycles keep recurring and be prepared not to overreact.

WARNING: What Will Be the "Mining Town" Type Investment of This Decade? With Brett Warren

I've been investing long enough, close to 50 years now, to see many fads come and go.

I'm old enough to remember timeshare – the ability to buy a week or two's worth of property if you couldn't afford to buy the whole property and share the property with a bunch of other investors who simply couldn't afford to own a property. We did turn that into a disaster.

Then there was the fad of investing overseas – I remember there was a time when you could buy a property in the United States for the price of a car here – 30 or $40,000.

Of course, you can imagine the type of property you would buy at that price and how naïve investors lost out, but promoters made a fortune.

And then there was the mining town investment fad of the late 2000s.

It began in around 2003 when prices for commodities like iron ore and coal began rising, and this led to significant mining infrastructure construction causing a property boom in many mining cities and towns around the country.

Property hot-spotting websites popped up and many naïve investors bought "investment" properties in places they'd never even visited.

Unfortunately, when the boom ended and infrastructure spending in these tiny one-industry towns stopped, and there wasn't a requirement for tenants in these small one-industry mining towns, property prices in these locations began to free fall.

So, what will it be this time around?

Warning signs for inner-city high-rise apartments

There are already some major warning signs that these apartment owners may face:

1. Structural Defects – Newer high-rise apartments are not like the old "solid brick" construction blocks from the 1970s or '80s and builders now opt for cheaper products to cut costs and boost profits.
2. Fire Issues – The inferior cladding being used is a case in point for above, with 629 buildings in Vic and nearly 450 across NSW at risk.
3. Water Issues – While more of a nuisance, the leaking balconies, showers, and roofs can usually be fixed, but it comes at a cost.
4. High Commissions and costs – Kickbacks, commissions, champagne sunsets, and rental guarantees are all built into the purchase price.

COVID Changes

COVID has also forced a host of changes, in particular closing our borders and the way we want to live.

The high-rise, inner-city apartment is often in high demand from overseas investors, new arrivals, and students that come to study here.

This means that many new planned projects may not have enough presale take up to even get off the ground.

In Summary

Will the inner-city, high-rise apartment, become the mining town type investment over the next decade?

There are ample examples of structural and building issues on top of high commissions and demand for certain spaces post-COVID.

Despite that, some investors and homebuyers will be drawn in by perceivably cheap prices.

These types of properties are cheap for a reason and that will remain so moving forward.

Resources:

Michael Yardney

Brett Warren – National Director Metropole Property Strategists

Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us

Collect your property reports and ebooks here: www.PodcastBonus.com.au

Shownotes plus more here: How I hired Warren Buffet as my Mentor | These will be the "mining town" type of investments this decade

Some of our favourite quotes from the show:

"Evidence is overwhelming that we know much less than we think we do." – Michael Yardney

"The lens through which you see the world shapes your world." – Michael Yardney

"There's a whole generation of new people coming in who don't know the hard-luck stories that people have experienced in previous cycles." – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how