The Property Trio (formerly The Property Planner, Buyer and Professor)

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: 1. A look in the rear view mirror at 2021 The trio revisit the predictions they made for 2021. Were they on the money or did they miss the mark? Tune in to find out! 2. What will the property market do in 2022? What capital growth rates can we expect around the nation this year? The trio lay their predictions down for 2022 and how that compares with other forecaster's. 3. Which capital cities will be the top performers? The trio look into the crystal ball and explain which capitals are expected to top the charts this year. But remember, property is not an asset class that lends itself to short-term investing. The important thing is to plan and strategise for the long-term. 4. How will regional locations fare? Will regional locations outperform capital cities again or will capital cities continue to reign? 5. Investor participation Investors have shown strong increases in activity over 2021, but is this trend likely to continue? The trio share their insights. 6. Will APRA intervene in the property market? The trio discuss their predictions for the regulator's level of intervention and whether or not they feel government policy changes will be prescribed temper the market in 2022. 7. The outlook for developers and building starts Residential construction costs have jumped by 7.1% in 2021and builders are flat out with projects, exacerbated by labour shortages. Will this trend continue and what impact will it have on the property market? 8. Can we expect a rate increase in 2022? The trio share their predictions for a cash rate rise by the RBA and where fixed rates will go this year. 9. Rental market forecasts 2021 has been a story of increasing rents and decreasing vacancy rates. The trio discuss the outlook for rental markets in 2022. 10. Sales volumes 2021 was a record breaking year for sales volumes, but will 2022 keep pace? Tune in to find out! 11. Risks which could impact the property market The trio discuss potential risks on the horizon which could impact the property market this year. Visit the show notes - https://propertyplanning.com.au/predictions-for-2022-and-a-look-in-the-rear-view-mirror-at-2021-ep-137/

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: 1. Value growth continues to lose steam Values increased nationally 1% over December, which is the lowest level of monthly growth since January 2021. The trio share a sneak peak of some of their predictions for 2022. 2. A look at our capital cities Brisbane and Adelaide were the outperformers for the final month, and each have been gaining pace since October. While Melbourne had a slightly negative month, Sydney growth reduced from prior months to 0.3%, proving again that December can be one of the best times to buy in our two biggest cities. 3. How regions have performed For 2 years in a row, regions have outperformed capital cities, reaching a whopping 25.9% growth over 2021. But is this trend here to stay? The trio share their insights. 4. Rental markets With vacancy rates continuing to tighten, rental markets in just about every city (metro and regional) will become increasingly competitive. This will place pressure on governments to address rental stock shortage, although investor activity may provide some respite as investor numbers have been steadily increasing over 2021. 5. Investors gain foothold in the market Investor lending is now up to 32.1% in November, climbing steadily from 29.11% in July. With an election looming, it will be interesting to see what policies the incumbent government proposes to walk the tight rope between supporting mum and dad investors and championing for first home buyers. The trio watch this space with keen interest. 6. New listings flood the market New stock on the market was the highest since 2016, however the total listings in December were still significantly lower than the five-year average. This indicates that buyers are still heavily active in the market, snapping up new and old stock. Will these competitive conditions continue 2022? 7. Consumer sentiment on purchasing a property continue to languish? The 'Time to Buy a Dwelling Index' shows consumer sentiment dropping to the lowest point at 81.9 over December. However, the house price expectations index is up at 150, indicating that the majority of Australians are optimistic about property prices increasing. This general trend reflects the current state of play, that it's a bad time to purchase a home because prices are soaring. However, buyers will need to harness their reluctance to compete hard, and balance this with the fear of a market outpacing them. 8. Unemployment improves but is inflation here to stay? The unemployment rate has decreased back to 4.6%, back in line with September after increasing to 5.2% in October and is expected to keep reducing. Will the Australian story follow the US, (which is now down to 3.9% unemployment with inflation hitting 5.5%) or is our inflation transitory? The trio discuss the early signs of expected US rate increases and how this could impact the property market. Visit the show notes - https://propertyplanning.com.au/top-capital-cities-of-2021-will-the-stellar-rate-of-growth-continue-in-2022-is-interest-in-regions-here-to-stay-how-rents-and-vacancy-rates-continue-to-entice-investors-the-outlook-for-unemploymen/

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: L - Lenders Mortgage Insurance (LMI) LMI is a type of insurance you can expect to pay if you borrow more than 80% of the property value. Although you pay for it, it protects the lender, not the borrower as above 80% lending is seen as higher risk for the lender in the event of mortgage default and subsequent mortgagee sale. The trio discuss how the insurance premium is calculated, what kind of borrower is likely to have to pay this fee and how you can reduce LMI surcharges. M - the critical components of your Mortgage The Property Planner takes you through the top 6 mortgage strategies that can greatly impact your wealth and ability to hold property as you grow your portfolio N - Negative and neutral gearing Negative cashflow simply means that your investment is running at a loss from a cash flow perspective. This is because the rent earnt doesn't cover property costs, such as interest paid and maintenance. Negative gearing relates to the tax benefit applied to reflect the investor's cashflow losses. Although you get a tax deduction, negative gearing is not necessarily a positive thing. It should be considered merely a benefit, as opposed to a reason to invest. Negative gearing means you pay a dollar to get 30 cents or slightly more back from the tax man. The trio discuss the dangers of selecting a property based on tax benefits alone. O - Offset accounts, God's gift to mortgage strategy! The offset account is arguably the banks' greatest invention. Effective use of offset accounts forms the basis of many of the mortgage strategies that can enhance your wealth creation such as money management, optimising tax deductions, risk management and the ability to hold onto your home when you upgrade. Take a listen to episode #48, a whole episode dedicated to the effective use of offset accounts. P - Positive gearing Positive gearing is essentially the opposite of negative gearing. It is where income earnt from your property covers more than the expenses. A positively geared investor will pay additional tax; a nice problem to have. The trio discuss how gearing is not static and can change over time. It is normal for a property to become neutrally and then positively geared over time. Take a listen to find out why. Visit the show notes: https://propertyplanning.com.au/the-l-to-p-of-property-success-lmi-what-is-it-and-how-to-reduce-it-critical-mortgage-strategies-negative-gearing-and-making-it-work-for-you-ef/

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: How does bias impact our financial decisions? Behavioural biases are defined as unconscious beliefs that influence our decisions. In the field of finance, behavioural bias is a study that focuses on psychological factors that influence the decisions of investors. There are some 180 recognised biases and unfortunately we can't unpack them all, however the trio have picked the top 6 biases to investigate. Bias 1 - Mental accounting Mental accounting refers to the concept where people treat money differently depending on where it came from and what we think it should be used for. The trio discuss the varying ways that this bias can manifest in our financial lives. Bias 2 - Loss aversion This bias refers to a higher sensitivity to incurring losses than making gains. It impacts investors when the fear of loss is disproportionate to the risk itself, and fear stalls their ability to make a decision. The trio delve into how this bias can hamper investors and how to mitigate the influence of this bias if you are conservative in nature. Bias 3 - Overconfidence bias This bias is the tendency to see ourselves as better than we are and is common in investing. Overconfident investors generally do not manage and control risk properly; they engage in active investing, (instead of passive investing) and adopt a DIY philosophy. In the property space, we see it most commonly when people assume they can carry out a major renovation or development, when ordinarily this activity should be carried out by a skilled/experienced renovator or builder. Bias 4 - Anchoring bias Anchoring is a phenomenon where someone values an initial piece of information too much to make subsequent judgments. In investing, this can influence decision-making regarding a security, such as when to sell or buy an investment. The trio discuss how this bias can come about: either through a negative or positive personal experience, (or third party experience). Anchoring bias can also be passed on through generations. The trio discuss how you can effectively tackle this bias and carry out your own assessments. Bias 5 - Familiarity bias This bias is characterised by investors preferring familiar investments, despite the advantages of diversification. This can manifest itself in people wanting to purchase investments in their own state, region, city or suburb. To counteract this bias, you need to be prepared to do comprehensive assessments to look at a broad array of options. Bias 6 - Herd behaviour bias Herd behaviour occurs when investors follow others rather than making their own decisions based on financial data. People follow the herd because it feels safer, which is the opposite of contrarian investing. The trio discuss examples of herd behaviour in property. How can buyers think more rationally and independently? The trio share their insights on how to make informed and successful property decisions, and specifically; to mitigate any biases that may be in play. Visit the show notes: https://propertyplanning.com.au/behavioural-economics-101-tackling-the-biases-that-impact-our-property-and-investment-decisions-ep-134/

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market update 1. Proposed land tax changes in Queensland In a surprise move, the Queensland government has put forward in their mid-year budget update plans to change the calculation of land tax so that an investor's entire investment portfolio is taken into account, (not only the land owned in Queensland). The trio discuss the probable impacts for demand for Queensland property, property values and also rents. Not to mention the potential that other states will possibly follow suit. 2. Regionals outstripping the capitals in unit growth When looking at property growth over the last 12 months, units in combined capitals have increased by 12.6%, while units in combined regions have increased a whopping 23.1%. The trio discuss the possible reasons behind this perplexing bit of data. 3. Auction volumes still strong despite Christmas only days away Last weekend (ending Sunday 19th) was the second busiest auction week, (in terms of stock volumes) since CoreLogic began tracking in 2008. The week beforehand was the biggest stock volume week on record and we are now in the fourth consecutive week where more than 4,000 capital city homes have gone under the hammer. What it means is that supply and demand ratios are slightly closer to equilibrium, and in contrast to the difficult buying conditions that have been a hallmark of 2021, it's now a (comparatively) great time to buy, with more properties for sale than ever before and many buyers giving up the search and packing up for Christmas already. Keep your eyes open over January, as there is likely to be more stock hanging around than normal as clearance rates have eased somewhat for the short term. Purchasing laws - Part 2 1. What is underquoting? Sometimes known as 'bait pricing', underquoting is the practice applied by agents knowingly advertising the price of a property for sale on the market at a price lower than the true value of the home, (or worse still, at an advertised price that is lower than the vendor's asking price). The Property Buyer sheds light on why this practice occurs in Victoria, (and other states). 2. What is the danger to the buyer of underquoting Buyers will waste money and time carrying out due diligence and building inspections on a property, only to find out that the property is not within their actual budget and out of reach. Buyers who have been in the market long enough and those who have been burnt enough times will start to cotton on that the quoted range is not representative of the realistic price that the property will go for. So now, there is an expectation that a property will sell for more than the quoted range. 3. How Queensland has tackled this issue Agents in the Sunshine state are prohibited from representing a property for sale at a specified price while being aware the vendor will not accept that price. In addition, if a property is going to auction, agents are banned from making any price guide representations at all. While this does effectively deal with the problem of underquoting, it does raise other challenges for buyers. In this case, buyers must carry out the hard task of working out for themselves what a property is worth, when many are not experts in property. Is it better to have no guidance at all on price?... or some (mis)guidance that's inaccurate? The trio ponder this question. 4. How Victoria's underquoting regime misses the mark The Property Buyer explains the 'Statement o...

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market update 1. Highest annual sales since December 2003 Over the last 12 months, national dwelling values have risen 25.2% across regional Australia and 21.3% in capital cities. An incredible story for the regions that we are excited to keep watching closely. In the same period, ~614,000 homes were sold, which is the highest annual sales volume reached since December 2003. However, buyer demand is so great at the moment, that stock on the market is simply being soaked up at a rapid rate. 2. Fixed rates on the rise, and here's why Lender fixed rate offerings have risen sharply since June, when the Property Planner made his prediction that fixed rate hikes were likely to occur. Three year fixed rates have taken the biggest hit, with some lenders increasing the rate by as much as 0.95%. The trio discuss the reasons why fixed rates have experienced a sharp incline in recent months. Those who took advantage of the low fixed rates will be laughing all the way to the bank now! Property purchasing laws 1. Check out our show notes for a detailed breakdown on the differences in purchasing laws between each state In this week's episode, the trio discuss the differences, advantages, disadvantages and quirks of property laws in each state. It is critical to familiarise yourself with the laws and processes that apply to your purchase, particularly if this is your first purchase or you are interested in purchasing interstate. There is a vast amount of information to get acquainted with, (enough to do one episode on each state!) and unfortunately we can't cover it all. Visit the show notes for further information and detail on each state. 2. The starting point - what constitutes a legally binding contract? The commonality between all states and territories in Australia, is that no legally binding contract exists until the contract is signed by both parties. However, some states also hinge on the concept and requirement that contracts must be 'exchanged' as well before they are binding. The different approaches here can cause confusion and also leave the door open for gazumping, (which we will explain shortly). The trio discuss the different requirements in each state and how that impacts the purchasing process. 3. Cooling off periods The trio discuss the varying statutory cooling off periods in each state, (or absence of cooling off periods in the case of some states), when a cooling off period does not apply and can the cooling off period be waived as a negotiation tactic? 4. Negotiating 'subject to' clauses and contract conditions While all states allow for 'subject to' clauses to be entered into contracts, interestingly, this is not common practice in the states of NSW and ACT. The trio discuss the common conditions that are negotiated between the buyer and the vendor and also why NSW and ACT don't take this approach. 5. Gazumping - what is it and why is it legal? Gazumping occurs when an agent or vendor accepts an offer made on a property, but before the contract is signed to formalise the deal, another buyer swoops in with a higher offer or better conditions and the vendor sells to them, leaving the first buyer out in the cold. This occurs because in most states, the buyer and vendor do not sign legally binding contracts at the time of the sale agreement. Before the contract is signed, the agent is legally oblgiated to present to the vendor any further offers received for the property. 6. Why is gazumping mos...

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: 1. A look into recent market cycles The Property Professor shares some research from ABS home value index data on property market movements over the last 5 years. Cycles are a key component of the property market and they are difficult to predict. However, when property prices do drop, the declines are generally not as large in magnitude as the increases. 2. Consumer spending and impact on the property market The household savings ratio is now up to 19.8% from 11.8% last quarter due to the Sydney and Melbourne lockdowns. Inflation is starting to increase, but this may only be transitory, as spending increases once lockdowns are lifted, but as savings decrease, people will tighten their belts once again. If listings decline in the new year, we may see buyer conditions stiffen and prices increase if consumer confidence remains high. Supply and demand ratios are anticipated to tighten if listings decline. 3. Property market further softens over November Australian housing values increased a further 1.3% in November, gradually losing steam from March's high. With the exception of Brisbane and Adelaide, monthly growth for each capital city has declined to 1.1% or less. Perhaps with growing unaffordability, investors are turning to Brisbane and Adelaide, both of which are the star performers currently. 4. Rents and vacancy rates Darwin and Hobart are still rocketing along, but the rate of growth in rents is starting to come down. Investors have flocked to these markets, meaning that rental stock is increasing, and this has consequently taken some of the heat out of the growth. A 2% vacancy rate is considered equilibrium, while Perth, Adelaide, Canberra, Darwin, Hobart are all below 1% vacancies, (indicative of a tight rental market) hence causing pressure in these markets. 5. Houses vs units The median price gap between houses and units is the highest on record. Based on median values, capital city houses are now 37.9% more expensive than capital city units. However, the difference in the quarterly rate of growth between houses and units is now the narrowest it has been since October 2020, with only 1.6 percentage points between the two broad housing types. If you're looking to purchase a quality unit, now is probably as good a time as any to buy, considering the gap is likely to shorten in the future. However, the trio warn against buying "any" unit. There are good units and, well... not so good units. It's imperative to know the difference. 6. New listings rise but total stock remains low A rise in the number of homes available for sale is a key factor driving the slowdown in capital growth. New listings are up 34% from the same time last year and 15.7% above the 5 year average. However, total listings are still 15.4% below this time last year and 24% below the 5 year average, indicating that buyer demand is soaking up the new stock on the market as well as the old. Listings that have been on the market for over 180 days have dropped a drastic 51% from this time last year. 7. Growth in regions continues to burgeon on Over the month of November combined regions achieved 2.2% growth and this is not just because of the COVID-induced escape from the city. Now affordability issues are forcing people to consider and aim for regional property, with the support of infrastructure upgrades and lifestyle factors that attract newcomers. It will be interesting to watch this space over the next few years. 8. People are still pessimistic about now being a good time to buy...

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market update 1. Only a few weekends left to capitalise on a pre-Christmas purchase Auctions have been booked for each weekend all the way up to the 18th of December and mid-week auctions scheduled as well, as vendors look to sell prior to Christmas. Although some buyers may drop out of the race to purchase due to property search fatigue and holiday planning distraction, while others may suddenly pivot from one property to another. Agents are finding the task of predicting buyer numbers quite challenging at present. Stock on the market will take a seasonal dip in January, meaning that buyers who have missed out will most likely need to wait till February to purchase, amplifying the mad dash to secure a property prior to Christmas. 2. Interest only loans will get more expensive in the wake of APRA announcements In the last week, APRA has announced that banks need to hold more in cash reserves for every dollar loaned on an interest only loan. This means that lending interest only loans to consumers will become more expensive for the banks and the cost is expected to be passed on to consumers. APRA's direction to the banks will come into force from January 2023 and we are likely to see the margin between interest only rates and principal and interest rates increase as that happens. APRA's requirements were more stringent than expected, perhaps being employed as a tool to take the heat out of the market. 3. Queensland and regions benefit from population movements The REA Group has published a report revealing the interstate and intrastate population movements in the 12 months leading up to March 2021. Queensland is the biggest benefactor of this period, with some 30,000 people moving to the sunshine state. Over the same period, Sydney has lost 31,000 and Melbourne 32,000 people, but not all have moved to Queensland. Regional New South Wales saw an increase of 13,000 and regional Victoria a similar increase of 14,000. Considering that the population of both Melbourne and Sydney is over five million, it seems a wonder that a few thousand people can make a big impact. The trio discuss the significance of these population movements and their impact on regional price growth. The F to K of property success F - First Home Buyers and what do they need to do to be organised Purchasing your first home can be a daunting task, as you've never done it before. Whether you should purchase a home or an investment can be a bigger conundrum as first home buyers are often in an earlier stage of life, where they may not be established or settled yet. The trio discuss arranging and understanding finance, government and parental assistance, what first home buyers often overlook and what can trip up a good strategy. G - Goal Setting Taking time out to set goals will help you immensely, not only on your property journey but in your life journey as well. Determining goals will help you gain clarity on your property strategy and selection, whether you want to: retire richer, retire earlier, make a little bit more money right now, or make regular extra money so you can scale back work or give up your day job. The trio discuss how to approach goal setting and some common mistakes to avoid. H - Houses (not apartments) If capital growth is your aim, buying a property with a good land to asset ratio is essential. The trio discuss what denotes the difference between houses and units, and how the lack of uniformity can cause great confusion. Plus, buyers beware! Houses are not always a superi...

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market update 1. Expected end of year activity If you're committed to purchasing a property, now is not the time to take your foot off the pedal. There is a distinct determination of buyers, vendors and agents to get deals done prior to Christmas and with other buyers getting distracted with Christmas preparations and other plans, now may be an opportune time to purchase. Unlike last year, where many agents worked through January after the desperation caused by lockdowns, agents want to take a break and are motivated to wrap up sales before the holidays. 2. Melbournians and Sydneysiders are moving back to the CBD Today's episode is about the contrarian approach to investing and one potential opportunity, (although the horse may have bolted) is purchasing a quality unit in the inner-ring or CBD that has unique attributes to provide long-term growth. Rental stock on the market for apartments in inner Melbourne have plummeted by 76% since February and this same count is down 56% in inner Sydney, showing that buyer demand for city units is now starting to pick up. 3. How COVID has impacted overseas property markets The Property Professor outlines the striking similarities between Portuguese and Australian property markets and the impact that covid has had in relation to commercial and residential property. Contrarian investing 1. What is contrarian investing? Contrarian investing is an investment style in which investors purposefully go against prevailing market trends by selling when others are buying, and buying when most investors are selling. Contrarians may be seen as courageous, unconventional, counterintuitive thinkers, able to withstand herding pressures from crowd-following conformists. As Warren Buffet has said ""Be fearful when others are greedy, and greedy when others are fearful." Contrarian investing is often discussed within share trading circles, but it is entirely relevant in property too. 2. Real examples of contrarian investing in property The Property Buyer talks through her own personal experience of purchasing property during the GFC, when buying conditions changed dramatically and many were fearful. Also more recently, a client who purchased four properties at the beginning of covid, who saw the opportunity, while others put their purchasing plans on hold. 3. What would happen if you purchased half-way through a market fall? The Property Planner shares his research on how your assets would have performed if you purchased shares mid-way through the GFC and 2020 covid crash and purchased property during the APRA driven downturn in 2018. When a market is falling, it can be one of the best times to buy. But it is scary, due to the uncertainty of how far the market will drop or how long the decline will last before it swings back up. 4. Property market downturns Check out our show notes to see a graph of the last few decades of downturns. The downturns look like blips in the long run. When the market declines, the magnitude is not as great and the length not as long as when the market is on the rise. The most recent downturn lasted 18 months, which felt like a long time when you're living it, but in the scheme of our lives, is not very long. 5. Segmenting markets - contrarian investing is not just about market timing Whilst buying when others are fearful of buying is an obviously contrarian approach, there are also other strategies to within...

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode, Dave, Cate and Pete take you through: Market update 1. Thank you for your feedback We've received a number of listener reviews that are insightful and also gave us honest feedback, which we really appreciate. One was in relation to past performance bias, specifically whether past performance reliably predicts future performance and also the impact of our own personal biases. The Property Buyer acknowledges this feedback and hints at a future episode that will address human biases. 2. The state of retail property In the most recent JLL quarterly retail market report, the CBD retail vacancy rate in Adelaide is the highest it's ever been since 1993 at 16.8%. Regional retail has only a 3% vacancy rate. However, 'regional' in the retail sense has a different meaning to residential property. The Property Professor explains all in his market update. 3. Inflation is the talk of the town, but is it here to stay? Increasing inflation should lead to increasing wages, but most people assume that it equates to increased interest rates, making many nervous. Underlying inflation in Australia jumped to a six-year high of 2.1% in the September quarter, which is still well below the 4.6% experienced in the US. This level of inflation is only at the lower end of what the RBA targets, (being between 2% to 3%). The Property Planner talks through the factors that create upwards pressure on inflation, the RBA's response and whether inflation at this level is sustainable. Considerations for upgraders 1. How does upgrading fit into your property plan? The earlier you can start planning for your long-term home, the better. However this does come down to stage of life, and often people are not able to picture their future home until they've reached a certain level of stability or decided on the location that they want to live in. Understanding how your investment decisions and other lifestyle purchases fit in with your decision to upgrade is also key to making successful long-term purchases. For some, the long-term home may be out of reach due to stage of life or circumstances. For some who aren't ready to upgrade, rent-vesting or a stepping stone home may be the right choice for you. 2. Mapping out your future home Many buyers get hamstrung when it comes to the critical decision making because their search criteria is unreasonable. Having a clear plan on which suburbs to target, property types, architectural styles, land size, bedrooms and living spaces, (to name a few) is key to narrow in your search. Then, to ensure that you don't get bogged down and spin your wheels while the market continues to run away from you, have a plan of what you will be willing to compromise on if your dream home is out of reach. 3. Purchasing a property that you can grow into The holy grail of property ownership is only ever owning the one home, because each purchase and sale of a property eats into your wealth. Due to changing commitments and affordability, not many are able to achieve their dream home on the first go. However, you may consider buying a home with a larger block size with a smaller dwelling, where you could extend the home as your family grows, to avoid needing to sell. 4. Why are money goals so important? Finding a property that you want to live in for the rest of your life can be like finding a needle in a haystack and many are willing to pay an emotional premium to get into their dream home. In this situation, we're more likely to be stretching ourselves to the largest level of debt that we'll ever take...