Property Investment & Wealth Creation Australia | The Michael Yardney Podcast

We've worked our way through the recession, the property markets are moving on, and more Australians are looking at getting into property.

So today, I want to share three segments with you that will help make you more successful.

First, I'm going to talk about 6 learning fees I don't want you to pay. These are costs that investors and homebuyers have paid to the market, or marketers, or spruikers, and if you can avoid paying them, there will be more money in your pocket.

Next, I'm going to have a chat about some new urban trends with a leading demographer, Simon Kuestenmacher.

We're going to talk about how the pandemic has forced all of us to reevaluate how we live, and what that means for you for your own lifestyle, but also as a property investor and a business owner.

Then finally, in my mindset message, I'm going to talk to you about what I believe success is – and what it isn't

6 Learning Fees

Here are 6 "learning fees" I've seen investors pay:

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 2 years 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 potentially into six figures when you take into account lost opportunity costs.

1. The "no capital 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.

A three-percentage point difference might not seem like a lot but over the years this could add up to a learning fee easily in the hundreds of thousands of dollars.

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 the property blogs would suggest.

Perhaps you bought a property that needs a significant renovation in the order of 10 percent of its purchase price.

But then everything ended up costing more than you expected, and the project ran over time, which increased your holding costs substantially.

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 (oh dear) 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 percent or so 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 actually is and offer well below an acceptable price.

You then get angry that the vendors are being "greedy" and storm off, not prepared to negotiate at all.

This learning fee here is about your own ignorance and not remaining objective and basing your negotiations on cold hard facts such as recent comparable sales.

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 selling agents who are highly trained negotiators who are taught how to get the top dollar for their clients – the seller.

Some highlights from my conversation about urban trends with Simon Kuestenmacher

• Now that we live in a pandemic world with less travel, we're seeking more entertainment within walking distance.
• We have a large share of young people living in apartments, that spend time outside of the home because apartments aren't ideal for socializing and exercise
  • That's going to shift in the next ten years as those young people grow older and move to houses. They'll be looking for neighborhoods that allow them the same amenities within walking distance in their new suburban destinations.
• The features of the 20-minute neighborhood
• Destination locations will be more in demand
• The move toward regional Australia may happen, but it's important to understand who will be moving
  • Young singles are better off in a large city
  • But young families who have more mobile jobs are more likely to move to regional areas
  • Larger homes with 3 or 4 bedrooms will be more in demand

Links and Resources:

Michael Yardney 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.

Simon Kuestenmacher - Director of Research at The Demographics Group

Shownotes plus more here: 6 Investment learning fees you don't want to pay; Important Urban Trends moving forward with Simon Kuestenmacher

Some of our favourite quotes from the show:

"The "I got eaten by a shark" learning fee keeps lots of people out of the market. In other words, they never get past their first investment property." – Michael Yardney

"The homes we're living in today aren't designed to do a lot of entertaining." – Michael Yardney

"Neighborhood's always been important, but it's probably going to be more important moving forward." –Michael Yardney

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The way we live in Australia has changed. We've traded backyards for balconies and courtyards and this has resulted in around one in five Australians living in apartments today. That's up from one in seven in the 1990s.

According to the Australian Bureau of Statistics, of the ten million or so dwellings in Australia, around 10% of these are what they call attached dwelling apartments built in capital cities over the 17 years or so to December 2018. And the trend to medium and high-rise living is only going to increase.

So, are apartments good investments? The answer is yes and no. Not all apartments are the same. Some make great investments, substantially increasing in value over the long term. But many, especially those in high-rises built over the last 15 years or so, will continue to underperform.

Today, I'm going to dissect a recently produced report by Stuart Wemyss on the performance of investment grade apartments, and there are some very valuable lessons in there for property investors and even potential buyers. And of course, I also have my regular mindset message to share with you today.

Highlights from my conversation with Stuart

• Why Stuart decided to research the performance of investment-grade apartments
• Typically, houses tend to have growth spurts that last 5-10 years
• In Melbourne, between 1997 and 2010 apartments grew at 10.7%
• Apartments can provide very attractive growth
• Between 2010 and 2020 the median growth rate has only been 2.7% -- just a touch above inflation
• Why have apartments underperformed?
  • The supply has increased significantly
  • With the demand keeping up with the supply, there's not been much room for overperformance
• The intrinsic value of apartments must have increased, but the increase is being masked by all of the new apartments coming online
• Local buyers are dominating the market, which means that developers need to build a higher-spec apartment
  • This leads to higher costs for the next round of apartments
• Lifestyle is going to be a big factor in the neighborhoods people choose going forward
  • This will push older-style apartments – the kind that used to be called flats – into a renaissance
• It's probably not fair to compare apartments to houses
  • Houses are a better proposition if you're in the financial position to afford one
  • However, quality is always crucial. A higher quality apartment in a desirable area might be preferable over a lower-quality house in a less desirable location
• Location does a lot of the heavy lifting when it comes to property value
• Apartments have underperformed, but they do have periods of cyclical growth
  • Melbourne and Brisbane are set for the next stage of increased apartment values

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 – Rules of the Lending Game

Get Stuart's special report - A performance review of investment grade apartments

Shownotes plus more here: An unbiased performance review of investment-grade apartments with Stuart Wemyss

Some of our favourite quotes from the show:

"The cost of new apartments is going to be much, much higher in the next round of them." –Michael Yardney

"It's hard to subdivide where everyone wants to live, in the middle ring suburbs." –Michael Yardney

"Firstly, most of the things we worry about just don't happen, and secondly, even if they do happen, worrying doesn't really help, does it?" –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

Life after coronavirus will never be the same as before.

We're waiting for a new beginning, and the forecasts for 2021 are starting to appear one by one, and some of them are more optimistic than others.

Today, I'd like to share two sessions with you that will help you make the best of 2021.

First, I'm going to share three tips for 2021 if you're interested in getting into property investment, and then I'm going to have a chat with Dr. Nicola Powell, senior research analyst at the Domain Group. We're going to talk about the trends that Domain has noticed and what's ahead for property.

At the end of today's podcast, you'll be well equipped to have a better understanding of where we are and what's ahead.

I'm also going to share my regular mindset moment with you.

3 Tips for 2021

1. Property investment is a process, not an event. To be successful with property is more than just doing some research on the internet. Searching for a property is very different from researching the property markets. Successful investors have a long-term strategy to grow their wealth. They have the correct asset protection and finance structures in place, and they have a good team around them.
2. Location will do 80% of the heavy lifting of your properties. Some locations in the last decade have outperformed others by 50% to 100%. How do you identify these locations? It has a lot to do with demographics. Look for gentrifying locations, lifestyle or destination locations, locations with a high walk score, lots of amenities, and locations where the tenants rent for lifestyle reasons and can afford to pay more.
3. You can't pick the top or the bottom of the property market, so don't try. Rather than trying to time the market, you should buy the best asset you can and hold onto it for the long term.

One extra tip – don't be scared of taking on debt in today's market, because debt is not a problem. Understand the three types of debt – bad debt, necessary debt, and good debt.

Highlights from my chat with Dr. Nicola Powell

• Two property highlights of 2020
  • It took a pandemic to reimagine work lives
  • The reaction of the housing markets when faced with social distancing rules and lockdowns
• Many workers will choose to continue working from home if they have the option
• The use of the term "home office" has increased since the beginning of the pandemic
• There are other differences in the searches for neighborhoods – specifically, more lifestyle words are being searched
• Interest in a second home may trend upward post-pandemic
• Dire predictions about the property market didn't come to fruition.
  • Historically, property prices fare relatively well against negative economic shocks
  • House prices don't necessarily fall during recessions
• Rental markets have seen more disruption than sales markets
• Likely a shorter holiday period in Melbourne
  • Other capital cities have been performing near normal

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: Property Investment tips for 2021. Is this changing property trend permanent with Dr. Nicola Powell

Some of our favourite quotes from the show:

"I believe our capital cities have passed the bottom, and when we look back next year, you're going to see that in mid-October this year, in general, our property markets have turned." – Michael Yardney

"Your money's going to run out long before the opportunities will." – Michael Yardney

"Who you are today is a result of all the decisions you've chosen to make and the decisions you've not chosen to make in the past." –Michael Yardney

PLEASE LEAVE US A REVIEW

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You invest your money to give yourself the highest likelihood of reaching your goals. But how do you know if your investment is actually helping you reach your goals?

And what do you do if your investment properties are underperforming?

That's what I'm going to discuss today with Brett Warren, and our conversation will be informative for both new and experienced investors.

Then, in my mindset moment, I'm going to share some advice from Bill Gates.

Are your properties achieving the results you were expecting?

Will it get you where you want to get to?

The first thing to understand is what your overall strategy is and how the property fits into that strategy.

Then you need to know whether the property is performing as expected and whether it's outperforming the market.

Ask yourself if you would buy the property again if it were on the market today.

Are there improvements that you could make to the property to increase its value?

How is the property going to perform going forward?

Ask yourself why you chose this property – often because it was recommended by someone with a vested interest.

Where are the locations that will outperform?

• Places where people have multiple streams of income and more wage growth
• Gentrification
• Infrastructure
• Livability and amenities – people will be prepared to pay a premium to live in places where they feel safe and comfortable, especially post-COVID-19
• Good investment properties need multiple pillars. Just one of these factors isn't enough.

4 Reasons why properties under perform

• Timing – bought at the top of the cycle
• Price – paid too much for the property
• Location – if the location is under performing, the property will be as well
• Property – poor selection, something wrong with the property

If the timing or price was wrong, but the property is right, it might just be a question of waiting. But if the property isn't going to improve in value, it's time to sell.

Links and Resources:

Michael Yardney

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

Brett Warren - Metropole Property Strategists

Shownotes plus more here: What you do with a dud property. How do you know if you should sell or hold, with Brett Warren

Some of our favourite quotes from the show:

"I think it's important to understand what motivated them, what their thoughts were when they chose that particular property. " –Michael Yardney

"We frequently say it takes the average property investor 30 years to become financially independent, that's because in the first 10 years you make all those mistakes." – Michael Yardney

"If you can only own 2 or 3 properties, you've got to own the best ones you can." – 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

It looks like we worked our way through the recession, and slowly but surely, the coronavirus pandemic is coming under control.

That means that the recession that we had was very different from previous recessions. But what does our recovery look like?

That's what I'm going to talk about today with Pete Wargent.

We'll discuss what's ahead for our economy, why the recession panned out as it did, and how that's going to set the scene for the next stage of Australia's economy.

Then, in today's mindset message, I'm going to discuss the concept that yes, money can buy happiness… with some qualifications.

How will this recovery differ from previous recoveries?

Most economists predicted a recession due to the pandemic, but they differed on what it would look like.

Today we're going to discuss why this recession, that we've now worked our way out of, and the coming recovery are different from previous downturns.

• We may no longer technically be in a recession, but it's not all over yet. We have a long way to go to get back to pre-COVID levels
• Prices have stopped falling, even in Melbourne
• The reserve bank has released further interest rate cuts, quantitative easing, cuts in fixed-rate mortgages
• There are still issues relating to mortgage deferrals
• The response from the government to this recession has been very different from the responses to previous recessions
• There are actually more dollars in the economy because people can't take vacations and spend money overseas
• Some of the changes in working – such as more working from home and online – are likely to stick
• A V-shaped recovery is probably too optimistic
  • But Australia is still better placed than many other countries for a strong rebound next year
• Sydney and Melbourne will lead the way in double-digit housing price growth next year, with a strong performance in Brisbane as well
  • However, some sections of the market will still lag, such as high-rise apartments in the CBD

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: The recession is over, here's how the recovery and property will be different, with Pete Wargent

Some of our favourite quotes from the show:

"I think one of the government's jobs is to look after its citizens." – Michael Yardney

"Interest rates are not going to go up for at least three years, and that gives people a level of security." –Michael Yardney

"Generally speaking, having enough money for the basic necessities in life, as well as your wants and needs, usually means a happier life." – 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

There are signs that the modest coronavirus-induced housing correction has come to an end.

Nobody's going to ring a bell telling us the market's bottomed, but I'm sure when we look back in 12 months' time, we're going to find that the value of some properties has increased significantly and our property markets turned the corner in October 2020.

But as usual, some segments of our property markets will continue to languish.

Now I'm not denying that we're still going to have some challenging times ahead. We are. But the recovery of our home values has been underwritten by a number of factors that we're going to discuss in today's podcast as I have a chat with Stuart Wemyss.

Stuart's going to talk about what kinds of properties are going to lead the recovery in 2021 and why buying the right property next time around is more important than ever.

And then, in my mindset moment, I'm going to share with you one of the most important lessons I learned from one of my mentors as we talk about the miracle of personal development.

At the end of today's podcast, I hope you'll have a bit more clarity about what's going to happen to our property markets inn 2021 and what you need to do to position yourself correctly.

What properties will lead the recovery in 2021?

The major media has done a backflip on their predictions earlier this year of 10, 15, 20, and even 30% drops in property market values.

One of the people who has forecast things over the past year and gotten it right most of the time is director of Prosolutions, Stuart Wemyss

Highlights from our conversation:

• The market didn't take as much of a hit as many predicted that it would this is because:
  • The government absorbed most of the cost
  • The people who were hit hardest by the coronavirus pandemic were mostly younger and lower income
• There are two major sectors to be concerned about:
  • Regions dominated by low-income earners
  • Inner city apartment markets
• The loan pause data shows that 9 out of 10 of the greatest loan pause suburbs have been in southeast Queensland
  • This might be because the area was heavily impacted by the reduction in tourism
• It's also possible that most of the loan pauses are out of convenience rather than necessity.
• Since prices are down on the lower end of the market, why not get in on that and get a bargain now?
  • There are two types of tenants in rentals: lifestyle tenants and necessity tenants
    • It's the properties occupied by tenants that rent by necessity that are on the lower end of the market
  • These properties don't offer much capital growth in the medium to long-term
  • The tenants may be living week-to-week, which makes it less likely these properties will be profitable
• Lending criteria will soon be lessened. This is a game changer for property markets
• Interest rates are low and probably going to stay low for several years to come
  • This decreases the risk of taking on debt and makes it more affordable
• Lower interest rates will probably have a bigger impact on the top end of the market
• Choosing the right first property is important because good decisions compound and lead to future good decisions

Links and Resources:

Michael Yardney

Metropole Property Strategists

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

Some of our favourite quotes from the show:

"Interest rates are likely to have a larger impact at the top end of the market, the luxury end of the market." – Michael Yardney

"Instead of asking about your work, your job, "what am I getting?" instead you should be asking yourself "what am I becoming?"" – Michael Yardney

"If somebody hands you a million dollars, you better hurry up and become a millionaire." – Michael Yardney

Shownotes plus more here: This is the type of property that will lead the recovery in 2021 with Stuart Wemyss

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 wondering what's ahead in property for 2021?

Maybe you'd like to know what other Australian property investors plan to do?

Well, that's exactly what we discuss in today's show as we unpack the results of this year's Property Investor Sentiment Survey.

You'll hear what 1,500 Australians feel about our current real estate markets and what they plan to do. And you'll also hear what COVID did to their property plans and how if at all it changed their strategy

And to discuss the results of this year's survey, I'm joined by Brett Warren.

Being Australia's longest-running and largest survey of Australian property investor sentiment, it showcases insights from property investors and would-be investors across the country.

Running since 2011, it offers rich and vibrant insights into how property consumer trends and sentiments have changed over time.

And as usual I'll share a mindset message with you – because if you can change your thinking it could change your life.

Highlights from the Sentiment Survey

Has the coronavirus induced recession affected you?

Are you considering moving to live in a different location because of COVID-19?

Has the pandemic changed your strategy or approach to property investing?

These are some of the Covid-19 related questions we recently asked 1,500 Australian property investors and would-be investors in our annual Property Investment Sentiment Survey, and some of the answers were enlightening.

Being Australia's longest-running and largest survey of Australian property investor sentiment, it showcases insights from property investors and would-be investors across the country.

Running since 2011, it offers rich and vibrant insights into how property consumer trends and sentiments have changed over time.

So if you're wondering what's ahead in property for 2021 you'll enjoy today's podcast because you'll hear what 1,500 Australians feel about our current real estate markets and what they plan to do.

And to discuss the results of this year's survey I'm joined by Brett Warren national Director of Metropole Property Strategists.

These are some of the highlights of the survey that Brett and I discuss today:

• Survey respondents already owned an average of about 2 properties each
• Survey respondents who don't already own property are planning to get into the market in 6 months to 2 years
• About half would consider rentvesting – renting for themselves while owning an investment property.
• Most respondents are not considering moving because of COVID-19
• Only 3% of respondents did not have an investment strategy
• 74% of respondents think that now is a good time to invest
• Only 6% said they're worried about the future of property investing
• Only 10% of respondents said they had applied for a mortgage repayment holiday for either their home or investment properties because of COVID-19.
• One-quarter of the respondents had received a request for a rental reduction or holiday because of COVID-19 from the tenants
• While 20% are pausing their investment plans until the situation became clearer, the majority of respondents are not going to change their plans and 14% are going to take advantage of the current climate to enter the market sooner.
• 50% of the respondents were planning to buy an investment property in the next 12 months
• 38% want to buy a property with value-add potential of renovation or development
• Close to half of respondents didn't see boom conditions. Most had a realistic view and saw good long-term conditions
• Ultimately, most respondents have a realistic and positive view of the year ahead.

Links and Resources:

Michael Yardney

Metropole Property Strategists

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

Get the results of the 2020 Property Investor Sentiment survey here

Shownotes plus more here: Here's what 1,500 investors think is going to happen to property in 2021 - Our Annual Property Investment Sentiment Survey

Some of our favourite quotes from the show:

"No one's born talented at making excuses." – Michael Yardney

"As you go in this journey we call life, you're going to get the chance to back out and make excuses or not. You have a choice." – Michael Yardney

"One thing you can't move, change, or improve is the location of your property." –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

You're probably listening to this podcast because you're interested in property investment, but if you're like most people, you're also interested in more success in various elements of your life, as well as more money.

We're going to have two separate sections to today's show.

In one I'll explain to you why wealth is about what you don't spend.

In the second segment, I'll have a chat with Tom Corley who studied millionaires and poor people for five years, and one of his conclusions was that being rich comes down to only two things.

Is it really as simple as that? Clearly, it's not that simple or more people would be millionaires.

But Tom has a great message, and at the end of today's show, you'll know more about the rich habits you want to develop and the poor habits you should leave behind.

Why Wealth is About What You Don't Spend

Some people use exercising to justify food binges. They feel that they've done the exercise, so now they deserve a treat.

The same kind of thing happens with money. Even though Australians earn more than they ever have before, financial gains made by higher wages are often lost due to higher spending.

Financial well-being is in the gap between what you earn and what you spend.

Savings relies on your ability to earn an extra dollar, acknowledge that it would feel great to spend it, but to save it anyway.

In other words, delayed gratification.

Earning more money is an important part of building wealth. But it's not enough by itself. Earning more won't help you build wealth if you spend every extra dollar you make.

Learning to contently live with less has the same effect as growing your income. And it's often easier for you to control.

Building wealth is a negative art. It has a lot to do with actions you don't take and things you avoid.

Everything has a price. The price of building wealth isn't just the work of earning more money, it's also avoiding the urge to spend.

Becoming Rich Boils Down to 2 Things

The first thing you have to do to become rich is to accumulate wealth. This isn't easy and it will take time.

The second thing you have to do is keep the wealth that you accumulate.

How can you do these two things? With the right habits.

• One of the first thing you can do is start by setting some goals for yourself.
• Use visualization. Your brain thinks in pictures.
• When you visualize a goal that you want to achieve, you see a picture in your brain and starts looking for ways to get to that picture
• Once you've started to set goals, you have to start pursuing daily growth.
• Become a bit better every day than you were the day before.
• Don't compare yourself to other people, compare yourself to who you were before.
• How should you pursue daily growth? A common habit of rich people is reading. Rich people do specific, focused reading every day, usually for about 30 mins.
• Another way is to practice your skills outside of work.
• When it comes to keeping your wealth, delayed gratification is important. Spend less than you earn so that you can put your money to work for you.
• Stay optimistic and open-minded. Having a positive mental outlook leads to looking for solutions to problems and listening to other people's ideas.
• You need to have a strategy that you're following for saving and building wealth
• Wealthy people are also prepared to pay for coaches and mentors

Links and Resources:

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

Shownotes plus more here: Here are 2 proven ways to get rich | Rich Habits, Poor Habits Podcast with Tom Corley

Some of our favourite quotes from the show:

"Spending more when your income rises is as tempting as eating more after you exercise. It feels like you've earned it." – Michael Yardney

"Don't compare your chapter one with somebody else's chapter twenty." – Michael Yardney

"The ones who are optimistic, they do better in life." – 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.

We're almost at the end of another year. And what a year it's been!

2020 started off with predictions of a fantastic year in property.

Remember we were coming off the end of 2019 when property markets were very strong.

Then the predictions changed to doom and gloom because of COVID. And it wasn't just the naysayers – economists were suggesting property doom as well.

Now it's been said that the role of an economist is to explain to you tomorrow why what they predicted yesterday didn't come true today.

This is a very apt description of the behavior of many economists and all of those other experts chasing headlines who were very noisy in the media with their attempts to exploit the pandemic for publicity.

But those of you who saw the dark side, you were wrong.

We've had great support from incentive programs from the government, and now it's become clear that our property markets have turned the corner and will perform very strongly over the next couple of years.

However, life is still going to be very different going forward, and that's part of what will discuss on today's episode of the Michael Yardney Podcast.

I'm going to share some lessons that you can learn from what happened to airline pilots (and it's probably not what you think.)

Then I'm going to have a chat with Brett Warren about the suggested trend toward working from home.

And finally, I'm going to share a mindset moment with you that may help you think differently about life and your situation.

What the Bad News for Airline Pilots Means for You

Qantas lost billions of dollars and has shed thousands of employees.

Virgin went broke and similarly, its employees, including pilots, are facing layoffs or job losses.

While a gate attendant might easily transition into a customer service position in another industry, what does a pilot to do?

How do their special skills translate into a new industry?

Of course, pilots aren't the only people with high-paying, prestigious jobs based on skills that are narrowly marketable should the industry they're in slow down.

Chefs and entertainers are suffering.

Even many surgeons were temporarily put out of business to preserve medical capacity for COVID victims.

It can happen to anyone with very little warning.

Do you have skills that are transferable?

And if so, which industries are expanding? Is there even room for you?

If you think about it, it's really no different than when an illness, accident, disability, or any severe life event takes you out of action.

When you trade time for dollars … even for a high income…you are vulnerable.

And even if you have insurance or some money saved for a rainy day – this might not absorb the entire impact.

Of course, the key to security and resilience is to have a cash machine.

By that I mean a portfolio of investments that provides you with enough income to live on … and more … whether you work or not.

And the right time to start building that cash machine is right now.

Actually, that's wrong!

The best time to have started building your property portfolio, your cash machine, would have been 20 years ago. The second-best time is right now.

Wherever you are now, it's smart to use what you have to create resilient wealth to shelter yourself from tough times … whether they're on the horizon or on your doorstep.

The good news is …. properly structured property portfolios have a strong track record of resiliency through challenging times.

The bad news is it takes money, knowledge, relationships, credit, and in particular, time to build a resilient portfolio.

I don't know your personal circumstances; maybe all you can do at the moment is hunker down and get through the challenging times we are going through.

But for many Australians now is the time to get all your ducks in a row and look after your future.

Now is a good time to prepare to take action and set yourself up to take advantage of the next stage of the property cycle which will come sooner rather than later.

Working from home revolution with Brett Warren

We've heard a lot in the media about the working from home revolution that will change where and in what homes Australians want to live.

Will this trend have an impact on property markets?

Brett Warren did the research and found out some interesting things.

For one thing, about a third of Australia's workforce works from home regardless.

For another thing, only about 36% – 37% of Australia's jobs can actually be done from home.

This means that even if the trend of increased working from home continues, it's going to remain a minority trend.

There's only so much room for increased numbers of work from home workers in Australia's workforce.

The other 63% of the workforce will continue to follow historical trends.

So why fight the big trends? We already know where 63% of the workforce will want to be. Rather than chasing minority trends, property investors should focus on known and proven historical trends, supported by facts, research, and data and not the latest headlines.

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

Brett Warren – Director Metropole Properties

Shownotes plus more here: What the bad news for airline pilots means for you as a property investor + The working from home revolution with Brett Warren

Some of our favourite quotes from the show:

"Unless you grow out to where it is, you end up going back to where you are." – Michael Yardney

"When you throw out the blame list and start to become more of yourself, you learn more, you grow more, then all of a sudden everything is going to change around you." – Michael Yardney

"Why chase the trend of the minority of people who may move to other locations? Why fight the big trends?" – 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 pick the turning point of the property market? And are we there yet?

With so many mixed messages in the media today, I'm going to spend today's show explaining my thoughts about what's ahead for the property market so that at the end of the show you'll have a better idea of what's to come.

I believe there's a window of opportunity before we have what I call a "perfect storm of influences" that will create strong capital growth in our property markets.

And before you say "oh, Michael's an eternal optimist," stay with me because I want to share with you what locations are going to outperform moving forward and what type of properties will be popular post-pandemic.

And of course, I also have a mindset message to share with you.

Are we there yet?

The messages in the media have changed in recent times.

Today the common theme is that the property market will turn later this year or early next year, with many asking, "have we reached the market bottom yet?"

But as they say – no one rings a bell when we reach the bottom, so how do you pick the turning point in the property market?

If you're a home buyer or property investor and you have a secure job and your finance organized, now is an ideal time to purchase your next property countercyclically knowing your downside is minimized and your upside is maximized.

However, here are some of the indicators the research team at Metropole watch carefully looking for a signal that the market could be turning.

1. The economic fundamentals

Our property market doesn't work in isolation, so we keep an eye on the macroeconomic factors such as the world economy and Australia's economy.

We're probably out of the recession by now but won't know the official figures for some months yet.

1. Finance

Recognizing that our property markets are driven by the availability of credit we keep track of the ABS data on credit growth which is a leading indicator, turning positive before the markets do.

Finance approvals are moving in the right direction, and the recent announcement of sweeping changes to remove overly restrictive lending rules will give more people access to easier credit.

At the same time many Australians are saving more than they have for a long time and this, together will historically low interest rates, will encourage more Australians to buy their first home, upgrade their home or purchase an investment property.

1. Market Sentiment

Increasing consumer and business sentiment point to good times ahead.

1. Supply and demand

While Australia's population growth will stall in the short term due to lack of immigration, there is currently a lack of good quality property on the market.

A-grade homes and investment-grade properties are selling quickly due to the normal flight to quality which happens after economic shocks.

On the other hand, there is an oversupply of apartments in some locations, particularly in our CBD's, due to the lack of buyer interest from investors and tenant interest in the absence of overseas students and visitors.

To keep an eye on the state of our property markets we track the following:

• Housing credit growth
• Google and Property Portal Search volumes
• Days on Market and Vendor Discounting
• Asking Prices
• Auction clearance rates

We're setting ourselves up for a perfect storm in property

There will be a perfect storm leading to a period of strong property price growth in the second half of 2021 and into 2022 due to the following:

• Federal Government spending, initiatives, and infrastructure projects
• State Government spending and infrastructure initiatives
• Historically low interest rates
• The security that interest rates will remain low for a number of years
• Easing of credit approval criteria
• A return of international demand for Australian property
• A return of immigration and students to Australia is also possible

This means that there will be a window of opportunity between now and the second half of 2021 for savvy investors to really amplify their wealth position.

There hasn't really been as good a time to buy counter-cyclically for well over a decade.

But be careful – our property markets will remain fragmented and not all properties will make good investments.

As always correct property selection will be critical.

What is going to be the right type of property?

We're going to have a two-tier market. Higher-end properties, more expensive properties in middle and inner rings of capital cities are going to increase more.

The right type of property is going to be different than it was before the pandemic. Some will pay more for properties with pandemic appeal.

Apartment living might fall out of favor. Standalone dwellings that easily allow for reducing contact will be in demand. Low-rise, low-density apartments, what we used to call flats, might be in demand.

People will pay a premium for the ability to have social isolation. Buyers will also want to be able to separate work and living space. That may mean a separate home office or Zoom room.

Neighborhoods will also be important. Some people will move to regional Australia for more space, but the majority will want to stay in capital cities – but in lifestyle or destination locations.

The 20-minute neighborhood will become important – people want schools, shopping, jobs, and services they use within 20 minutes of their homes.

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: Here's how to pick the turning point in the property market

Some of our favourite quotes from the show:

"My suggestion is, of course, going to be, don't even try and pick the bottom, because even the smartest economists armed with all the data can't do that." – Michael Yardney

"The cloud of uncertainty caused by the Coronavirus Cocoon that we were forced to hide in for a while is now slowly lifting." – Michael Yardney

"The media always gives you mixed messages at times of market change." – 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