Will Australian Interest Rate Rises CRASH Property Prices

Will interest rates crash the property market? I'm hearing this a lot for people and it's just. It's just ludicrous when you start looking at the details. And, you know, I've jumped on. I just really wanted, you know, to talk a bit more about that. Hi, Dax. Stanley. I help people debunk what this media is telling about the property market. And it's really important because once all these media headlines came out, when the interest rate rise and you know there's 15% drop in the market, you know, there's always a scare and all this sort of stuff, I went back to basics and I researched the property markets that have experienced rate rises. You know, a lot of people remember the 2002-2008 rate rise, you know, I think from around 6%, you know, up to 9.5% even. And I went back 50 years to see a number of rate rises and see what happened to the property market then what. The information I got out of 50 years of detailed historical data was just too good not to share. Not to share. So I sort of jump on and I talk to you about that because it's really important to understand what has happened in the past and not what this media, all this misinformation that they're giving you so that you can make a really clear decision on your next investment property purchase. Okay. And look, I just want to start with, you know, some of those misinformation topics that are out there around property. And, you know, there's a couple of things that you need to be aware of about the misinformation cycle. But the key things that we're seeing is, you know, the boom is over, prices are falling completely wrong. And, you know, it's just amazing. The floods that happened in Brisbane are going to crash the property boom in Brisbane. It's still going. Interest rates, like I said, 15% drop. We saw the property market's going to crash. We're seeing it everywhere in the media. Sensationalism. They just want. That's clickbait. They just want to get you and get your attention. I even saw the other day the Ukrainian war is going to drop the property market by 15 to 20%. I mean, the Ukraine war has been going on for a very long time. Amazing. Just unbelievable. Even, like the exodus trend, you know, moving out of the capital cities is caused by Covid. Yes, there has been an increase during COVID to do that, to move regional. But the exodus has been happening for a long time. Sydney's been. The population of Sydney has Been reducing for a very long time. So, yeah, really, really interesting stuff. Let me dive into a couple of things. Firstly, misinformation cycle. So, you know, there's some organizations that have been producing press releases to a whole lot of media outlets, and they want free publicity for their brand, you know, and. And it's not their motivation to help the public at all. Okay. The media picks these up, rewrites the press release into an article, puts a clickbait heading on it, and, you know, they just want to get your attention, grab it. You know, they don't care. They just want, you know, you know, sensational negativity, which is the way they do it. And they really get onto that. And then the thing that you get is these. These consumers absorb this information, absorb the headlines and the sound bites, and they think it's credible because it's from a major media outlet. You know, they believe that and it's. They assume the author's an expert. They're just taking a press release from a company that wants some branding, and they don't realize that the headline is a lie, and then they base their decisions on it. Now, for the astute investor and people that do the research, sometimes that works in our advantage because people will panic, sell, and they go, I just need to get rid of this. And we can pick it up really quickly. So just don't be a herd animal. I guess that's my big thing. Be in the lead. Do good research. Figure out what's going on in the market, where markets are going really well, for example. But when the interest rates rose between 2002 and 2008, I bought a lot of property and made a lot of money in that space. It went up a lot, from six to nine, nearly 10. It was really a great time to do that, even though interest rates were going up. Look, key messages. Stop reading the newspapers. Stop reading those sensational headlines that grab you and want you to read that disconnect from all that white noise. Like my. We don't even have a TV connected to an aerial here. So we don't even get that. Do some real research, get that information, and just don't be a herd animal. So let me go back 50 years ago, okay? Some of the data we found was amazing. So a lot, a lot of older people will remember, you know, in the 90s, we had interest rates at 17%, you know, and right at that time, when the recession hit, around 1990, you know, it was the recession we had to have. That's when the property boom stopped. Okay? But having a look at it, it started 20 years ago. Okay, just. And the interest rates were 6.5% back then. And it went up to 17% into the, in 1990. Okay, so over a 20 year period it slowly crept up. Now what, what happened? It didn't stop the median price from increasing at all. The boom all across Australia, like funnily enough, Sydney in 1970. Imagine this house, median prices was $18,000. $18,000 for a median Sydney price. Now imagine buying one of those. You would be just wrapped and some of you have, some of you got no debt, you know, two, $3 million properties. That's amazing. Now, 20 years later, 2008, in 1990, the property prices in Sydney, the median price in Sydney was $147,000. Okay, so over a 20 year period went from 18,000 to, to 147,000. That's eight times an increase in eight times the value. Okay. Even in Hobart it went from 11,000 to $83,000. So interest rates went from 6 to 17 and Sydney prices went eight times the value increased over that time frame. So that's the first one. The other one was around 2002 to 2008 when it went from 6.3 to 9.5. The median price in, you know, over 100 cities and towns doubled in that time frame, including six of the major capital cities. Okay, so looking at those stats, do you think our small interest rate rise and maybe a couple more is going to affect this boom significantly? You know, some of the rate rise, some of the increases around the country between 2002 and 2008, like Cairns went up 147%. Burnley and Tassie went up 199%. And Albany in WA went up the same 199% in that rate rise over those six years. Massive increases. So really you want to do your research, you want to make sure that this is, this is working really well. Now let's talk about today. Day and day, day and age, today's market. There are some good media outlets out there that are producing some data. The Anz CEO released something. It was, I think it was on the Financial Review. Unemployment was continuing to fall to 3.4, 3.3%. Interest rates hikes do not always cover lower prices in properties. They're expecting a moderate correction compared to the rapid rises in prices recently over the last two years. The main reason for this is they've got a book, a mortgage book of over $200 billion. And they can do this research and they can find that sort of detail to make sure that they're comfortable with these sorts of things. So one of the things they looked at and they said is 70% of mortgage holders are way above, way ahead of their mortgage repayments. And that's a really key thing. So when interest rates started to drop, and with COVID it dropped quite significantly, their interest repayments stayed the same. A lot of them just kept them the same thing. If you wanted to reduce them, you had to ring them or do an inquiry to get them dropped. But most people kept the same repayments going in. So they're like two years ahead of their interest payments. So there's a big safety net there that's really good. And also, so that's a buffer to start with, also the most vulnerable ones. So what's happening is the banks have got this buffer in place. It's a 3% buffer based on the current interest rates that they're providing for consumers. So when you go to a bank right now and you go in to have a look, go to apply for a mortgage at the moment, say 2 to 2.5%, they tack on another 3% on top of that and make sure that you've got the capacity to repay that. So at 5.5%, okay, that's to ensure that any sort of rate rises up to an extra three, you're covered and it's not going to impact your lifestyle. Okay. So this is really key to understand that the interest rate fur fee that the media is telling us about is going to impact them. You know, it's right now that, you know, the increase in property right now over the last couple of years is really been homeowners upgrading their properties. Okay, They've had an increase, they've got a good wage, they can, you know, they've got a growing family, they've been doing that. Now the investors are coming into the market in large numbers, including foreign. Now, you know, the reason we're seeing right now, you know, there's major influences. I've got 16 different reasons why the booms happened, you know, over the last two years. There's three major ones that haven't even occurred yet that are coming. Okay. One of the massive ones is, you know, the massive infrastructure spending that the government's doing that has been approved by budget, approved by the government and it's. And they're rolling those out over several years. The inland rail, billions of dollars, whole lot of other stuff, the Olympics, the Commonwealth Games, these have all been not earmarked. These have been approved and ready for spend and Contracts have already been awarded for a lot of these. So massive spend across the country, which is just going to bring in, you know, skilled migrants. We'll talk about that in a second. Workers into the areas, spending across the whole sort of thing. Yeah, the second big one is the foreign investors. The investors are getting into the market right now. You know, they've seen the growth. The vacancy rates are really low, you know, 1.2 nationwide. You know, we've got areas where buying is 0.2%. You know, that's an amazing opportunity for investors to get in and be a landlord right now because with no vacancies, that props up your numbers. And the last one is about reopening our international borders. I mean look, that's just huge. All the international students will be coming back. You know, the overseas migrations increasing, the governments, you know, increase the cap for skilled migrants. They're all coming in. Vacancy rates are really low. Lack of supply, high demand. It's the perfect storm. So look, we don't see this slowing down to all going backwards as the media being saying. So I hope that makes sense. I hope that really solidifies around interest rates, hikes, that it's not going to create a crash. Anz bank saying it's a slow moderate drop from the boom that we've had over the last two years. It's really key for you to do your research. Stop reading newspapers, stop turning on that idiot box and listening to all that white noise going on. Do your research. Do quality research. 50 years, let's see what's happened in the market and I've shown you what that looks like. And don't be a herd animal. Just be in front of the herd. Be a leader in this and make sure you're making the right decisions for you and your family and your generations ahead. So if this has given you any great insights, helped you along the way, I'd love you to comment below. I'd love you to give us a like subscribe and definitely reach out to you, to me if you need any more information, I'd love to help you. Thank you.