Property Investment & Wealth Creation Australia | The Michael Yardney Podcast

As we move through 2021, we're still getting regular reminders that even though life is more normal, the effects of Coronavirus will be with us for a long time.

While some people are still looking back in the rear vision mirror to see what lessons we can learn to give us some guidance for the year ahead, today I'll be looking forward into the future as I chat with leading demographer Simon Kuesetenmacher about what he calls the Big Shift – some major demographic changes that you should be aware of if you're interested in the property or if you're in business

But first, let me give you a couple of quick lessons from 2020 to help you take better advantage of our property markets.

1. Timing the market is hard.

Anyone who tried to time the top or the bottom of our property market over the decades I've been investing has usually missed out, so I would suggest spending your efforts finding the best asset you can rather than trying to time the market.

1. Don't try and fight the RBA or our government.If you think about it, it's a government job to look after its constituents and protect them – not just by providing police and hospitals and the judicial system; but also protecting their jobs and the value of their biggest asset - their home.
2. Economic depressions can be avoided.

Our regulators have learned a lot over the last couple of decades and 2020 proved it - a rapid, large and well-targeted economic policy response can protect an economy from a significant shock and enable it to rebound quickly when the threat abates.

1. Be careful who you listen to and turn down the noise.

Last year investors were bombarded with information and opinions around what the coronavirus would mean to our economy and our property markets but much of this was just noise.

Now that I have shared some of my lessons with you we are going to hear what Simon Kuestenmacher has to say, and even though we have discussed some of these concepts in previous podcasts, I'm sure you'll get a lot out of my chat with him as he introduces some new concepts we haven't discussed before that I think will help give you some clarity on what's ahead.

And as always, I will share my mindset message with you at the end of our show.

There's a big shift ahead for our property markets

If you're like many Australians you're probably wondering what's going to happen to life beyond coronavirus.

What's going to change in the way we live, work, and organize our cities?

The simple answer is... quite a lot!

And if you're a property investor, or a business owner you must understand how Australian cities are reshaping to stay ahead of the game.

That's what I going to chat about today with Simon Kuestenmacher, one of Australia's leading demographers as I ask him for some insights into what his research suggests is ahead.

Simon is Director of Research at The Demographics Group, a columnist with The Australian, and a regular guest on this who is globally recognized as a rising star in the field of data management and insight and a regular guest here on my podcast.

Just to put some context to our chat…

It's easy to forget that one year ago we have a government dedicated to balancing the budget and bringing in a surplus. Our property markets were rebounding, and business owners would looking forward to a great year ahead.

Then look what happened in 2020 - we experienced a pandemic, a lockdown and a recession, and then a rebound.

Fortunately, we controlled the health issues better than almost every other country in the world, and it seems that our government has minimized the impact of the coronavirus cocoon induced recession.

But the dynamics of our society have changed considerably.

So, what next?

Global context

• What's happening in the world economy?
• Australia's economy has recovered remarkably quickly
• International capital and international talent will still want to come to Australia
• Based on sheer economic data, investors might want to invest in Australia, New Zealand, S. Korea, and maybe Taiwan

Local Context

• Lower population growth
• Some sectors of the economy are booming and others floundering
• Despite COVID & temporary low migration, the pie keeps growing in the 2020s. Demographics drive particularly high demand for family-sized homes. Low demand for small apartments before migration amps up again.
• COVID and working from home will reshape our cities. CBDs perform poorly for a few years; outer suburbs & regional towns benefit from millennial families seeking sizeable homes. Millennial values will transform suburbia. Expect more demand for active transport, hipster cafes, and family-friendly spaces.
• We will want future homes to be pandemic-proof

The rise of the 20-minute Neighbourhood

• Pre-Corona Fried Egg – Post-Corona Scramble Egg
• Location is critical to the long term performance of your investment.
• It seems that in our new "Covid Normal" world, people love the thought that most of the things needed for a good life are within a 20-minute public transport trip, bike ride or walk from home.
  • The ability to work, live, and play all within 20 minutes' reach is the new gold standard desirable lifestyle.

Imagine being able to carry out your daily activities within a 20-minute walk from home.

All the things you need in a day would be just a short walk away.

Things such as shopping, business services, education, community facilities, recreational and sporting resources, and some jobs.

In urban planning circles, it's a concept known as the 20-minute neighborhood.

What type of property will be more in demand post-COVID-19?

• WFH will mean different desires – zoom room, gym, extra room for home office
• Some will see high rise apartment towers as "vertical cruise ships" - high-rise buildings were designed to organize as many people as possible in one place. With busy lifts, shared hallways, and communal facilities like laundries and garbage disposals, high-rise living is the ideal breeding ground for the virus, as we've seen both in Australia and overseas.
• So, it stands to reason that the buyers of 2021 and beyond might not be so keen to live in an apartment and be breathing the same air and touching the same lift buttons as hundreds of other people. Instead, they may prefer to purchase standalone dwellings that they can barricade and sanitize to their heart's content in the event of another wave of the virus.
• Similarly, we'll want to be able to separate work and living spaces. We all need a Zoom Room nowadays.
• I can only imagine what a nightmare the stay-at-home orders must have been for parents with small children living in apartments without a garden, or for gym junkies forced to substitute cans of baked beans for their usual weights in their at-home workouts.
• As such, room for a home gym setup, space for the kids to do their karate or dance classes online, and a reasonable outdoor area for the family to get some fresh air and vitamin D are likely going to shift from the "nice to have" category into the "non-negotiables" list for owner-occupiers.

The hollowing out of the Australian workforce

• Education determines your income and spending capacity
• The increasingly polarized workforce drives property prices and geographical segregation. Low- and high-income workers demand similar things from their homes but are driven to different locations. That puts social cohesion at risk.

Links and Resources:

Michael Yardney

Simon Kuestenmacher - Director of Research at The Demographics Group

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

Shownotes plus more here: Successful property investors must understand this Big Shift, with Simon Kuestenmacher

Some of our favourite quotes from the show:

"How often have you heard me say over the last couple of years that you shouldn't make 30-year investment decisions based on the last 30 minutes of news?" – Michael Yardney

"Sections of our economy are doing pretty nicely, and it's the demographics that are going to drive demand." – Michael Yardney

"Not one person said you should choose your work based on your desire for future earnings." – 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

Success is no accident.

The most successful people in life – whether in business, family life, music, or on the sports field – may not always seem like they have much in common.

How are The Beatles similar to Steve Jobs? Or Warren Buffett and Shane Warne?

But when their traits, habits and work ethics are distilled down, these unlikely characters share many similarities.

You see, aside from the random element of luck, much of what makes some people successful involves the cultivating of certain habits. Learning what these habits are and how to employ them in your own life is worthwhile.

So in this month's Build a Business Not a Job podcast, I'm going to discuss 15 of the common success habits with Mark Creedon founder of Business Accelerator Mastermind.

And if you're not in business or planning to go in one, if you're planning to be successful in your life, in your career, or as a property investor you'll definitely be listeners

And then I'm going to have a chat with Mark about his new book – Have a Business not a Job and I'll get Mark to share 3 special tips or takeaways from his book you could start implementing straight away.

Habits of Highly Successful People

1. Capitalize on the time you've got. Time is your most valuable and scarcest resource. Successful people understand this and think in terms of minutes instead of days and weeks. They understand the true value of their time and manage their priorities accordingly.
2. Understand what the most important task is that you have to do in your day. Lock that in and schedule time to work on that task first.
3. Control your inbox.
4. Schedule meetings as a last resort and make sure that you have a clear time frame. There's no sense in having a meeting just to have a meeting.
5. Say "no" to more things. Business owners appreciate input from workers who know how to prioritize immediate goals.
6. 80 percent of your results will come from 20% of your activities, so slow down and take stock of your activities and what actually is getting results.
7. Consider batching your work.
8. If you can do something quickly, get it out of the way. Do it, delegate it, or delete it.
9. Know the rules of delegation.
10. Set aside time to journal. It allows clarity of thought and the opportunity to take stock for a moment.
11. Look after yourself, your body, your energy, and your focus. It's not a constant marathon, try taking the time in sprints instead.

Takeaways from Mark's Book

The book was designed for people who were just getting started in their business journey and to help them overcome some of the hurdles. Or for people who own a business that they have to work all the time (so it's still a job.) Some of the major things readers will take away from the book include:

• Understanding that time is the most precious commodity that they have, so they'll understand how to make better use of it.
• Understanding that the people around you are your most important asset.
• Tapping into what the true product is that you're selling.

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

Shownotes plus more here: The 12 habits of highly successful people you should also practice with Mark Creedon | Build a Business, Not a Job Podcast

Some of our favourite quotes from the show:

"Most people work on other people's most important task first." – Michael Yardney

"Every time you put something on your list, you're actually saying "no" to something else." – Michael Yardney

"Clients really seem to want a straight answer, take away my problems, help me by protecting me." –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.

Property values can't keep rising!

It's all a Ponzi scheme and is going to come crashing down around us!

The only reason our property markets have survived COVID-19 is because of bank and government support.

That's some of the commentary you'll find in the media and over the Internet at present and on the other hand you'll find many experienced property commentators saying we're at the beginning of a new property cycle, one where property values will rise considerably.

Who is right?

Can property values keep rising, and can they rise as much as they have over the last three or four decades?

That's the question Stuart Wemyss and I discuss today as we explain the various factors that created the significant property price growth over the last couple of decades.

However, looking forward many of those growth drivers won't be the same. So what's ahead for property values?

That's what we going to discuss so welcome to today's show.

Will property values continue to rise?

As we enter the beginning of a new property cycle some people are asking can property prices continue to rise at the same rate at which they have over the last three or four decades?

In fact, some people asking can property values keep going up at all considering how expensive they are today?

I know that's a question that has been asked of Stuart Wemyss, an independent financial adviser and author because he's written recently written a blog outlining his thoughts, so I look forward to hearing how he would answer these questions.

Some of the topics Stuart and I discuss

In Stuart's blog he had a graphic showing what happened to house prices over the last five decades from 1970 to 2020.

Now I know I bought my first investment property in the early 1970s, paying $18,000 and I got $12 a week rent and I was excited.

$18,000 was a lot of money in those days when the family car was a Holden Kingswood and cost $2000; so I guess one of the first things we have to do when looking at house prices is see how they performed after inflation.

• Property has always been expensive. It seemed like a lot of money in the 70s because it was a lot of money in the 70s. You need to take a longer-term view to understand how property prices have occurred. But no, property prices can't keep growing at the same level.
• Over the last 40 years, there has been population growth along with the rise of 2-income households.
• Some properties won't increase in value, but others will and some will perform better than others. It's important to look at real price growth, ignoring inflation.
• The bigger impact population growth has with investment-grade property is overall economic activity.
• Established money areas are liable to do better over the next 2 years or so.
• Borrowing capacity not likely to increase, interest rates not likely to decrease because they're already low.
• You want a property that will appeal to someone whose income is rising faster than the general population
• People from the work from home movement will want to live where things are, not out in areas where there's nothing around.

Links and Resources:

Stuart Wemyss' blog mentioned in this show – Property prices cannot keep rising at the same rate

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

Stuart Wemyss – Prosolution Private Clients

Stuart's Book – Rules of the Lending Game

Shownotes plus more here: Property prices can't keep rising at the same rate they used to; with Stuart Wemyss

Some of our favorite quotes from the show:

"It's real, after inflation, growth that's important." – Michael Yardney

"There are more of us (Australians's), but we're also wealthier. We're earning more." – Michael Yardney

"As always, demographics is going to be very important moving forward." – 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

Have you ever wondered how certain people become so rich and successful?

Well, if you've been listening to my podcast or reading my blogs and my books, you'd know that rich people don't become rich by luck or by accident. Becoming rich requires hard work, dedication, and a certain set of habits. We are what we repeatedly do.

That means excellence isn't an act, it's a habit.

My friend Tom Corley spent five years studying millionaires and gathering insights that become the basis of his blogs and books, including the book we co-authored: Rich Habits, Poor Habits.

He found that people who became wealthy practiced certain habits, and that's what we're going to discuss today. Since there are so many habits, we're going to break this into a two-part series, and today we're going to start with the first group of habits that the rich do that differentiate them from the average person.

Rich Habits

Of course, not all rich people are successful, and not all successful people are rich; but remember I was much younger and more naïve then and wanted it all.

So I tried to understand why some people were rich while others kept struggling financially.

Over the years I attended many seminars, paid mentors, and read as many books as I could on the topic of success.

I modelled successful people and eventually grew successful myself.

It wasn't easy, I've had my challenges in life (mostly self-inflicted) and I've hit rock-bottom, but I got up again, learned from my mistakes, and moved forward.

And over the years I've mentored more than 3,000 successful (and some not so successful) investors, business people, and entrepreneurs.

In fact, a by-product of this is our top-selling book – Rich habits Poor Habits

In it, Tom Corley and I explain…

Being rich has little to do with the money itself

Instead, it has a lot to do with how you think about money.

So if you want to become rich, one of the first steps is to know how the wealthy think about money differently than you do and to start thinking like them.

The next step is to take action and to let the action become natural by thinking the way wealthy people think.

We've found rich people share similar habits.

While we explain this in some detail in our book, today I'd like to briefly share…

The first of the 21 Success Habits of The Rich ….

1. The average person thinks about spending their money, while the rich think about how to invest their money.
2. The average person worries about running out of money while the rich think about how to use their money to make more money.
3. Most people believe hard work makes you rich, while the rich know that leverage creates wealth.
4. Successful people don't procrastinate. They don't spend their life waiting for the 'right time' or waiting until they know it all or have figured everything out.
5. The average person believes having a job gives them security. The rich know there's no such thing as "job security."
6. Most people want to be rich. The rich are committed to being rich. (They are very different things.)
7. When things go wrong, the rich find a lesson, while others only see a problem.
8. The average Australian sets their financial expectation low, so they're never disappointed. On the other hand, the rich set their financial expectations high so they're always excited.
9. Successful people take calculated risks – financial, emotional, professional, psychological. But once they've built their wealth, they take fewer risks.
10. The rich consciously and methodically create their own success, while others hope success will find them.
11. The rich look for and find opportunities where others see obstacles.

1. The average person believes life happens to them. They are a passenger, while the Rich believe that they create their own destiny. They are the pilot of their lives.

Successful people align themselves with like-minded people. They understand the importance of being part of a team. They create win-win relationships. Links and Resources:

Tom Corley - Rich Habits Michael Yardney - Metropole Get your own copy of our international bestseller Rich Habits Poor Habits

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: Learn These Rich Habits of Successful People | Rich Habits, Poor Habits Podcast, Part 1 with Tom Corley

Some of our favourite quotes from the show:

"As you'll learn, it's not your fault if you're born poor. But it is your fault if you die poor." – Michael Yardney

"It depends what your focus is as to what you see." – Michael Yardney

"2020 taught us the importance of that. How many people who had multiple income streams – such as you, such as me – still had a really good year, while those who were dependent on one income stream, unfortunately, found that dried up." – 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.

Navigating the world of personal finance can be overwhelming, even for an adult who has quite a bit of experience in the working world.

Yet with some smart planning, a good strategy, and an understanding of the basics you should be able to develop the money-management skills you need to get your finances under control.

And that's what I discuss in today's show with Australia's leading finance columnist Effie Zahos.

While many people listen to this podcast because they're interested in property investing, money management is a critical part of any type of investing, and especially real estate investing.

You need good money management to save your first deposit and once you own a property or two money management is even more important.

So don't let the financial world intimidate you.

You may not have been taught much about finances, but I believe that 80% of personal finance is not financial education, but financial behaviour.

If you can modify your behaviour with your finances, you can modify your financial future.

And even if you don't have money problems, I think you'll enjoy my chat with Effie today as we discussed her new book and some lessons that we should be teaching our children and grandchildren.

And of course, I will be sharing my regular mindset message with you.

Ditch the Debt and Get Rich

The Covid-19 pandemic impacted just about every Australian.

Some people manage to cope well financially – others did even better financially turning lemons into lemonade, however, many Australians ran into financial difficulty with some only managing to stay afloat by raiding their super or putting a pause on their debt

It was just another example of the rich getting richer and they did so by understanding the way money and finance works.

Now you know one of the aims of my podcast and my blogs is to make more and more Australians financially fluent and help them get control of the finances.

So, I was pleased to hear that leading Australian finance commentator and author Effie Zahos has just published a new book called Ditch the Debt and Get Rich.

Effie Zahos is one of Australia's leading personal finance commentators, with more than two decades of experience helping Aussies make the most of their money.

She's a regular money expert on Channel 9's Today Show and on radio around Australia and was editor of Money magazine and is now Editor-at-Large at Canstar.

Some of the subjects that Effie and I discussed

• Effie's journey and why she believes it's so important to be the best financial version of yourself and learn the right things to teach your kids about finance.
• Why more Australians aren't wealthy and how they've become an instant gratification society.
• The importance of mindset in developing wealth.
• Money personalities – The animal traits that correspond to how you deal with money: Peacocks, Squirrels, Sloths, Owls, Ostriches
• The problem of buy now, pay later, and how to be more aware of the tricks retailers use to get us to spend.
• How to break the cycle of living payday to payday by no longer setting yourself up for failure. And how to put yourself on a bare-bones budget to catch up.
• Common money mistakes.
• Debt repayment strategies.
• How to think rich in order to become rich.
• How children learn financial literacy from their parents.
• Some of the lessons Effie has learned over many years writing and speaking about finance.
  • It's not what you earn that counts it's what you spend.
  • Compound interest can make you a millionaire. The great Albert Einstein once said: "Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it".
  • Learn to say no
  • I am my best investment
  • I will continue to make mistakes
  • love your superannuation fund
  • Set your savings on autopilot
  • Have a plan and stick to it
• The people who will most benefit from Effie's new book: savvy investors, people who need a nudge, and people who want to be a better financial version of themselves

Links and Resources:

Michael Yardney

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

Effie Zahos' new book – Ditch the Debt and Get Rich

Shownotes plus more here: Ditch the Debt and get Rich with Effie Zahos

Some of our favourite quotes from the show:

"There's a whole science behind behavioural finance, and that's why I think reading your new book Ditch the Debt and Get Rich is important." – Michael Yardney

"Some financial discipline early in life will allow people to have those enjoyments later on." – Michael Yardney

"The gap between what you gain and how much you avoid offsetting the gain is the figure that matters the most." – 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

How do you evaluate the investment potential of a particular property?

Well, that's what I'm going to share with you today as we I share 5 metrics that we use at Metropole when discussing the investment potential of properties that we're considering showing to our clients.

But I'm also going to share 1 metric that you probably think is important, but we think is very misleading.

In assessing a property's investment potential, we have a checklist of more than 100 metrics. I'm only going to share 5 with you today. But they're going to give you a good balance of the science and art of property investing.

If you don't understand what that means, you'll understand a lot better after today's show.

Then, as always, I'm going to share today's mindset message with you.

Here are 5 numbers you can use to assess a property's investment potential and one you shouldn't

When it comes to the numbers (scientific) component, I see many investors get swamped by the seemingly endless numbers that can potentially paralyse them into inaction.

In reality, you don't need to know one million things; you just need to understand a few critical metrics.

While this list is not exhaustive, here are a number of metrics the team at Metropole uses to assess the investment potential of a property.

1. Past sales history

We look at past capital growth to give us an indication of future growth potential.

You probably know that one of the rules in Metropole's Six Stranded Strategic Approach is buying in an area that has a long history of strong capital growth and one that will continue to outperform the averages because of the demographics in the area.

Once we've confirmed the quality of the location, we need to drill deeper into the property itself.

And the best way to gauge its growth potential is to back-track its past performance by getting the history of at least two previous sales (if possible.)

This is where a seasoned buyer's agent with intimate local market knowledge can be worth their weight in gold.

1. Days on market

Days on Market (DOM) is a measure of how long it takes to sell a typical property in a particular suburb, and more important than the actual number is the trend which provides context.

Clearly, when demand is high and there are more buyers than properties available, the days on market will decrease.

On the other hand, when the market is soft because of economic conditions, perhaps, or because of a flood of new properties becoming available, then time on market will increase, which will drive down prices.

This statistic helps investors to identify those locations that are strengthening so they can buy before the masses and therefore make the most of the price uplift as the time on market decreases.

1. Depth of Market

What we're looking for here is an assessment of the supply vs demand balance within a particular market.

This is a measure of how long it would take for the current inventory (number of properties on the market) to be absorbed completely (purchased) based on the current rate of monthly sales, assuming there is no more new inventory being added to the market.

A market is considered to be balanced if it has between 5 to 7 months' worth of inventory (properties for sale.)

If hypothetically all the stock on market (inventory of properties) in less than 5 months that implies there is great market depth – lots of buyers waiting in line, with an inventory turnover of more than 8 months implies an oversupplied market with little depth of buyers.

1. Ratio of owner-occupiers to renters

While many beginning investors have their prospective tenant top of mind, an important strand of Metropole's Six Stranded Strategic Approach is to only buy properties with owner-occupier appeal.

Since owner-occupiers own 70% of Australian properties they "make the market" and add stability to property values in those suburbs where there is a predominance of established owner-occupiers who bought their homes many years ago and have significant equity in their properties.

This is very different from the instability and volatility we see in house prices in areas dominated by investors - think the inner-city apartment market or the other suburbs where there is little scarcity and many first home buyers have over-committed themselves and have a little equity in their homes.

1. Above average wages growth

Since property investment is a game of finance with some houses thrown in the middle, it's important to find locations where the local residents have higher disposable income than average and suburbs where wages are growing faster than the state averages; as in these locations people will be able to afford to, and usually be prepared to, pay more to buy new homes or upgrade their homes.

You'll often find these suburbs are going through gentrification - a change in the fortunes of the suburb as it is discovered by a higher income demographic, which slowly pushes out the lower-income residents.

Be careful relying too heavily on the data

There is no doubt that it's important to understand the property fundamentals and research property data, and the longer back the data research goes the more accurate the data is likely to be in forecasting future trends.

But let's be frank -- you can make data say almost anything you want.

I've seen too many property investors find a property that they like, one they become emotionally attached to, and then find the data to confirm their decision.

That's called "confirmation bias" - they're using data backward rather than in the right way.

What I'm getting at is that while you need the data in the research phase of your investment journey, to be a successful property investor you need much more – you need on-the-ground experience and perspective.

Don't get me wrong, doing your research is a critical step in getting ready to invest, but it is only one of the many important steps. There is no substitute for practical, on the ground experience.

One commonly quoted metric that a lot of people investors look at, which we tend to ignore

Median price data, which is the most common data reported in the media (other than auction clearance rates) and researched by property pundits, is actually very unreliable and can lead to costly investment mistakes.

So here are 5 things you need to understand before you draw any conclusions from the regularly reported changes in median prices:

1. How is the median price calculated?

The median house price is essentially the sale price of the middle home in a list of sales where the sales are arranged in order from lowest to highest price.

So in a list of 11 sales, it would be the sale price of house number 6, which has 5 lower-priced sales below it and 5 higher-priced sales above it.

This is different from the average, which would be the total value of all the house sales, divided by the number of homes sold.

1. A change in the median price does not necessarily mean a change in your property's value

While median prices are a useful tool for understanding the price changes of properties that have transacted in a market, a 10% increase does not necessarily mean that your property is worth 10% more.

In fact, your property could have dropped in value during this time.

What it does reflect, however, is activity in the market.

1. Median prices are a more valuable indicator in some areas than in others

Changes in median price statistics are more meaningful in determining property price growth in some areas than others.

For instance, suburbs where the properties are largely homogenous and therefore of similar pricing are likely to see the median price as a more accurate reflection of true value changes.

1. Different data providers measure different statistics

Ever wondered why different data providers' median prices are different?

That's because there are three key differences between all the providers.

• The data they collect,
• The time frames they report on – daily, monthly or quarterly
• The accuracy/complexity of the index methodology they rely on.

1. Statistics are more reliable if looked at over the long term

Investors should pay less attention to short term trends and understand that median prices (as with all statistics) are more useful when viewed as a change in trend over a longer time frame and not at over a month-to-month period.

This helps you get a better understanding of an area's performance.

Median prices are really best used as an indication of the composition of sales rather than a good indicator of changing property values.

The bottom line

In summary, understanding these 5 metrics will give you a head start in analyzing the investment potential of any given property.

However, just like any other parameter in the property market, the numbers may not mean much on their own and there is a risk of drawing a wrong conclusion from them if you do not have intimate hyperlocal market knowledge.

That's because, as I said, successful property investing is part science (understanding the data) and part art (having on the ground perspective to interpret the data correctly.)

Perspective comes at a cost - the cost of time, experience, and learning from your mistakes.

You can't buy perspective, but you can "hire it" by working with an independent property investment adviser, like the team at Metropole to ensure your property selections are the best they can be every single time.

Links and Resources:

Michael Yardney

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: 5 metrics you can use to assess a property's investment potential and one you shouldn't

Some of our favourite quotes from the show:

"While past performance is obviously not a guarantee of future performance, the basic fundamentals of a location or a property don't change." – Michael Yardney

"I've found owner-occupiers buy with their hearts and not their calculators and they tend to happily pay an emotional premium if there is something unique about the property they fall in love with." – Michael Yardney

"The problem is data is often wrong or to put it correctly – the way investors interpret data is often wrong." – 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

No one expects 2021 to be the same type of rollercoaster ride as 2020.

And while there's plenty of good news for our economy and our property markets, it's important to remember that considerable uncertainty remains and the extreme dislocation to many businesses over the past year will take time to resolve.

Now the general optimism is well-founded.

We seem to have this virus "thingy" under control, around 90% of the jobs lost during the pandemic have now been restored – and that's a tremendous achievement and our property markets are rebounding.

Australia and the world also stand on the cusp of the biggest vaccination rollout in human history, which will only increase the rising levels of consumer and business confidence we're experiencing.

Sure, the COVID rollercoaster may be slowing, but we still face a bumpy road to economic recovery and that's what I'm going to discuss in today's show with Pete Wargent as well as giving you five of my predictions for our property markets in 2021.

Then I'll share my mindset message with you.

2021 Property Trends

It seems that everybody has been making predictions for our housing markets for 2021 and they're all extremely positive.

While on the one hand I love to hear this, on the other hand I'm always concerned when everybody thinks the market is going to perform in a particular way as we have seen how wrong consensus opinion has been over the last few years.

So in today's show I share 5 property trends that I think will occur in 2021 and I'm looking forward to Pete Wargent's view on these, plus we'll discuss some economic trends that will influence our property markets.

1. Property demand from home buyers is going to continue to be strong.

One of the leading indicators I watch carefully is finance housing approvals, and these are at record levels suggesting that we will have strong demand from owner occupiers and investors in the first half of this year.

Despite the "recession we made ourselves have", rising unemployment, and many small businesses facing challenges, interest in buying residential property has skyrocketed.

This has come particularly from owner occupiers who have amassed household savings at levels not seen since the mid 1970s, and this is in part because they have not been able to spend their money on vacations or even local entertainment as they normally would.

Now, with borrowing costs lower than they ever have been, the reassurance that interest rates won't rise for at least 3 years and increasing confidence that we've got this virus thing under control, it is likely that buyer demand will remain strong throughout the year.

1. Investors will squeeze out first home buyers

While currently there are many first-time buyers (FHB's) in the market, buoyed by the many incentives being offered to them, I can see demand from first homebuyers fading as property values rise from increasing competition as investors re-enter the market.

You see…typically investors compete for similar properties to FHB's.

1. Property Prices will continue to rise

As always, there are multiple real estate markets around Australia, but in general property values should increase strongly throughout 2021.

However certain segments of the market will still continue to suffer, in particular in the city apartment towers and accommodation around universities. It is unlikely the segments of the market will pick up for some time and the value of these apartments is likely to continue to fall as there just won't be buyers for secondary properties.

At the same time some rental market will remain challenged. In particular the inner-city apartment markets which are reliant on students, tourists (AirBNB) and overseas arrivals.

1. People will pay a premium to be in the right neighbourhood.

If Coronavirus taught us anything, it was the importance of living in the right type of property in the right neighbourhood.

In our new "Covid Normal" world, people will pay a premium for the ability to work, live and play within a 20-minute drive, bike ride or walk from home.

Residents of these neighbourhoods have now come to appreciate the ability to be out and about on the street socialising, supporting local businesses, being involved with local schools, enjoying local parks.

1. We will not fall off the fiscal cliff in March

Some commentators are concerned that we will fall off the fiscal cliff when JobKeeper and the mortgage deferral system end in March.

I can't see the government allowing this to happen after having put so much time effort and money into "building a bridge to get us across the other side" as Prime Minister Scott Morrison promised.

In fact APRA (the Australian Prudential Regulatory Authority) released data showing Households and small businesses are now paying back more than 80 per cent of the almost $250billion in loans deferred at the height of the coronavirus pandemic.

This is just another sign that the national economic recovery is on track and we won't fall off a fiscal cliff in March as some of those Doomsayers were predicting.

The reduction in our banks' exposure to loans that may default puts them in a stronger position to continue lending and support of the economic recovery by lending to homeowners, investors and businesses.

Now, let's talk about the number of the influences that will help influence our economy and our property markets in 2021

• The IMF now expects global GDP to grow5% in 2021, Huge fiscal spending worldwide plus unbelievably low interest rates plus vaccinations will stimulate economies
• Australia's projected growth ranges from 4.5% to 5%, which is huge compared to our usual growth rates. In the past we were excited if Australia had 2-3% growth!
• Unemployment fell and jobs are being created
• Interest rates are low and likely to remain so for three years, even though some people are suggesting this may not occur if our property markets keep rising
• InflationThis year has started with a bit of an inflation scare and US and Australian headline CPI inflation measures look like rising to around 3.5-4% over the year to the June quarter as last year's June quarter price slump drops out of annual calculations and higher commodity prices feed through.

Core and underlying inflation measures will remain the main focus of central banks and right now they are well below target in the US, Europe, Japan and China as is the RBA's preferred measure of underlying inflation in Australia at 1.2% year on year.

Consumer and business confidence is rising

Some concerns:

• China will be a problem, but the fact that we're not travelling overseas means we are spending $69 billion locally instead
• Whether rising house prices cause because Apra or the RBA to interfere

Links and Resources:

Michael Yardney

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

Pete Wargent – Next Level Wealth Pete Wargent's new book Low Rates High Returns

Shownotes plus more here: Here's why I'm excited about 2021 - What the next 12 months has in store with Pete Wargent

Some of our favourite quotes from the show:

"I'm optimistic about our future, but this year we're going to require optimism balanced with realism because that's what gives us resilience. – Michael Yardney

"We're not going to have a cliff. We may not even have much of a step in March." – Michael Yardney

"One of the things that happens after every downturn is a flight to quality." – 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

Would you like to know where the property hotspots are going to be as Australia enters some semblance of normality in 2021?

Or maybe you'd like to know exactly where property values are going to end up at the end of this year.

Now I know that's what a lot of the other podcasts are currently offering you, so I'm sorry if I'm going to disappoint you, but I'm not going to make any short-term predictions.

You only have to look back 12 months to see how all those short-term forecasts worked out, or even further back to the beginning of 2019 and again see how incorrect those predictions were.

On the other hand, it's much easier to tell you what the value of well-located investment-grade properties will be in 10 years' time. But that's not as sexy, is it?

The problem is many investors take a short-term approach to real estate which is really a long-term investment.

They try and make a quick profit such as buying cheaply, or looking for the next hotspot, which is a short-term approach, and then wonder what to do next; rather than taking the long-term approach of owning the best asset they can which will give them long-term compounding growth and in time produce substantial wealth.

In today's show we are going to continue on the discussion I started last week with Stuart Wemyss and work through his 8 fundamental rules for property investment.

These will serve you much better than learning where the next hotspot is going to be because as you know, this year's hotspot will become next year is a not-spot.

When you understand these fundamentals and use them to formulate your investment decisions, you'll be ahead of the game and be in that small group of investors who builds a multi-million-dollar property portfolio, rather than in that large group of 1.9 million Australian investors who never gets past their first or second property.

If you haven't heard last week's show, please listen to that after you've heard this episode – the order in which you listen won't matter - just go to The Michael Yardney Podcast on whichever player you use to listen to the podcast because the two shows are complimentary – there was just too much information to pack into one show. And while you are there, if you don't already subscribe, please subscribe to this show so you keep up to date as we enter an interesting year ahead.

Once you've listened to these two episodes, I believe you'll be in a much better position to take advantage of the changing property market in 2021 as you understand Stuart Wemyss's eight rules of property investment.

The Golden Rules That We Discuss This Week:

Golden Rule 5: Set your asset allocation to reduce risk and maximize return

Understand that you can't predict what's going to happen in the short term.

Invest in a combination of assets that diversify outcomes.

Be realistic about what long-term returns are going to be.

Golden Rule 6: Invest in the share market using low-cost passive investments

Two types of approaches: active fund management and passive management.

Golden Rule 7: Only invest in 'investment-grade' property

Three characteristics of an investment-grade property:

• Strong land/value component
• Have scarcity in terms of location and in terms of architectural style or building type
• Proven performance

Golden Rule 8: Protect your investments from expected and unexpected risks

Plan for the worst and hope for the best.

Make sure that you have the right insurance, including income protection insurance.

You need to put a will together.

You need access to several year's worth of living expenses.

A finance strategist can help you put the appropriate buffers in place.

Links and Resources:

Michael Yardney

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

Stuart Wemyss – Prosolution Private Clients

Stuart's Book – Investopoly

Shownotes plus more here: 8 Golden Rules for building wealth in this new property cycle – Part 2, With Stuart Wemyss

Some of our favourite quotes from the show:

"Property's lumpy, so it's not easy to buy a property every six months or every six years." – Michael Yardney

"Investing is meant to be boring, to give you the wherewithal to make the rest of your life fun." – Michael Yardney

"The first rule summarizes it all, also. Invest for the long-term. Understand the long-term rules. Don't invest for the latest hotspot." – 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

As we enter a new year, many of us will be focusing on the strange year we've had and trying to extract the lessons we've learned.

Rather than do the same, in today's episode of the Michael Yardney Podcast I'd like to remind you of some of the foundations of lifetime investment success with Stuart Wemyss.

Now to be clear… this is very different to what you hear in the news, which basically focuses on short term investment trends.

One of the core tenants of my approach is that true lifetime investment success is goal-focused and planning-driven.

And the good news is by focusing on the long-term big picture trends it removes the burden of correctly guessing future short terms trends such as interest rates, inflation, hot spots, and the many other variables that the average analysts and many investors spend their days obsessing over.

In a culture that will always be market-focused and performance-driven, my approach sees our clients at Metropole and also my personal investing acting on a financial plan, a customised strategic property plan that we build for our clients, rather than reacting to the vagaries of the investment markets.

And that's why I'm looking forward to my chat with Stuart Williams today because I know he takes a very similar approach.

Four Investment Principles

At Metropole our approach is built on an evidence-based foundation of four investment principles. Master these, and lifetime investment success will be available to you.

The four inner principles are:

1. Faith in the future

There are so many doomsayers out there, and I regularly get trolled by them, particularly on YouTube.

But based on history, I confidently believe in the ability of a capitalistic society to prosper on the back of our collective ingenuity.

1. Patience

Contrary to the financially illiterate, the strategic investor refuses to react inappropriately to disappointing events.

That's why they have a plan to follow, and they act on this plan rather than the short-term ups and downs of the investment markets.

1. Discipline

Similar to the principle of patience, discipline sees strategic investors continue to do the right things, even if the fruit of these decisions can't be seen in the short-term.

1. Building a great team around you.

Property investment is a process, not an event.

In fact, property investment is a long-term process, and it takes up to 30 years to develop financial independence through residential real estate.

And all successful investors I know can you to educate themselves, so they become financially literate, but they're very careful who is your bias they take, because they have learned most educators and so-called advisors have a vested interest

They also surround themselves with professionals and mentors who they are prepared to pay for advice to ensure they maximise the investment returns, by having elastic advice in the areas of not only property but finance, tax, structuring legal matters and estate planning.

These financially literate investors accept the guidance of their holistic wealth advisors and if they have sufficient disciple and allow time compounding and leverage to work its magic, their investment success is all but guaranteed.

While simple, it's not easy.

The 8 Golden Rules of Successful Investing - part 1

Golden Rule 1: focus on the long game

Long term financial decisions promote exercising delayed gratification – patient investors are rewarded, impatient ones are not.

The best question you can ask yourself is "what action can I take today that will result in me being a lot financially stronger in 10, 15 and 20 years?"

Golden Rule 2: Know what you need and when you need it

You need to set two important goals: how much income you need in retirement and when will you retire?

Look at what you are spending today to extrapolate what you will need.

Golden Rule 3: Spend less than you earn. Then invest the difference

Commit to an annual surplus that you will contribute towards building your financial future then spend what's left over.

If you are not a "saver" then redefine "saving" as "future spending"

Golden Rule 4: Grow your asset base first. Then tilt towards income

Select assets that provide most of their total return in growth and lower proportion of income

How can capital growth help fund retirement? Sell assets, with enough time income will be substantial, invest in other income-style assets, sell one property and reinvest in bonds, etc.

You need to develop a financial model in order to work out how much to invest, when and in which asset classes.

Links and Resources:

Michael Yardney

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

Stuart Wemyss – Prosolution Private Clients

Buy Stuart's book Investopoly here – use the coupon code Yardney

Shownotes plus more here: The 8 Golden Rules for mastering the game of building wealth – Part 1 with Stuart Wemyss

Some of our favourite quotes from the show:

"While it's easier and more trendy to be a pessimist, I believe that optimism is the only realism." –Michael Yardney

"They haven't learned the simple fact that the cheapest advice is the one that gives you the best investment results" – Michael Yardney

"In Australia, residential real estate is a high growth, relatively low yield investment." – 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 ahead for our property markets this year? Is it time to be fearful or time to be greedy?

We survived 2020, and 2021 is going to be another interesting year with a lot of positive things happening, but there's no doubt will have our share of challenging times, because even though we are over the recession there it will still be fallout from the recession to deal with, and clearly, we will keep getting reminders about coronavirus coming out of the blue.

And every year there's an unexpected X Factor– I don't know what it will be otherwise it wouldn't be an X factor, but hopefully my discussion today will give you some clarity and direction forward to hitting property.

However, there is one thing that I can assure you will happen this year. The typical property pessimists will be back again telling us our property market is going to crash.

So today I share with you my thoughts or the short and long term prospects for our property markets.

And in my mindset moment today I'm going to teach you one of the most useful lessons you can pass on to your children and grandchildren, and even if you don't have any or are not planning to have any, this lesson will be critical for you if you want to obtain financial freedom.

What should you do in the current "interesting" property markets?

I know many investors are confused with concerns remaining about the Coronavirus, high unemployment and the many mixed messages forecasting what's ahead for our economy and our property markets.

I've noticed two types of emotion in those interested in property:

1. Last year as it became clear our markets wouldn't crash like some property pessimists predicted, FOBE was the predominant sentiment - Fear Of Buying too Early - home buyers and investors trying to time the market wondering "what if prices do fall further?"
2. Now FOMO (Fear Of Missing Out) is creeping back as house prices are rising around Australia.

In fact, master investor Warren Buffet advised: "I'll tell you how to become rich.... Be fearful when others are greedy and be greedy when others are fearful."

The two significant structural events that caused the massive rise in property values over the last three decades were:

1. The Reserve Bank kept inflation within a narrow band meaning interest rates could fall at a time when time banks became deregulated and this allowed new non-bank lenders like Aussie John Symond to make cheap finance available for borrowers and over time interest rates kept falling and credit was easily available.
2. At the same time wages grew and there were more two-income households. This allowed more Australian families to buy new homes or upgrade their existing homes as their families grew.

These factors won't carry our markets forward in the future, in fact they played out a few years ago and haven't been relevant for much the last decade.

• We are currently in a low inflationary, low interest rate environment (not only in Australia but around the world) and there is really no room to lower interest rates.
• The effect of the extra spending power of low interest rates has washed its way through the system.
• We are now in a period of lower wages growth and more part-time jobs so it's unlikely that the average Australian family will have more cash in their pockets to spend on property
• There is still economic fallout from the recession we decided to have.

Here's why I believe property values will increase in the short term.

The big game changer that will bolster our property markets moving forward is the anticipated loosening of restrictions on banks' lending practices in March this year which will give the average home buyer and property investor significantly more borrowing capacity.

More than that, there is a perfect storm of positive factors developing for our property markets – a confluence of multiple growth drivers which will propel our property markets into 2021 and 2022:

• Our economy is improving and moving forward further jobs creation, consumer confidence and business confidence (leading to spending and employment) will underpin our housing markets.
• Auction clearance rateshave been consistently strong in the last few months of 2020, not just in the two big auction capital of Melbourne and Sydney but around Australia.
• More buyers and sellers are in the market and transaction numbers have increased
• At the same time the banks are keen to write new business– another positive for our housing markets.
• Bank loan deferrals have been falling– there's no chance of an avalanche of forced mortgagee sales as many were worried about.
• The latest rate cut and the "guarantee" of rates remaining low for at least 3 years, will give home buyers and investors' confidence.

Why our property values are guaranteed to increase in the long term

While it's important to understand that while many factors like interest rates, supply and demand and market confidence, affect a country's property prices in the short term, in the long term prices are driven by two main factors:

1. Population growth, and
2. The wealth of the nation

Despite our international borders currently being closed, Australia's strong future population growth is a given and as a matter of fact so is our increasing wealth.

Then there's all the good economic news

If you're reading the general media you'd be forgiven for feeling a little pessimistic about the state of our nation.

The recession we experienced in 2020 wasn't due to a fundamental problem with our economy – it was our government putting the economy on hold to get a health problem under control.

But our economy is on the move again and likely to keep grow strongly over the next couple of years; and despite the geopolitical and trade challenges we will are likely to face, Australia's economy is well positioned to keep growing strongly.

The bottom line:

While nothing in life is guaranteed, if like me, you are confident that Australia has a prosperous future, and you agree that our population is going to keep increasing and that most of us are going to want to live in much the same parts of our lucky country; you can understand why I see a strong long-term future for our capital city property markets.

Sure there is a risk in buying property, but don't forget there is also a different risk in not buying!

Links and Resources:

Michael Yardney

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: Is it time to be fearful or greedy in property in 2021?

Some of our favourite quotes from the show:

"It's been said that the 2 most powerful emotions that drive markets are fear and greed." – Michael Yardney

"I accept that some of the gains over the last three decades were related to structural changes that won't be repeated." – Michael Yardney

"Please excuse me if I remind you how COVID has made neighbourhoods more important than ever – location more than ever important." – 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