Q&A Mentor Call - December 2022

Hello. Hello, everyone. It is Jane and it is December and we are getting going with a review of all that's happened in the last month and my anticipation of what might be coming in the future. Now I'm going to be heading into the three eyes again. We're talking about immigration, interest rates and inflation, and it looks like it's going to be a big year in 2023. So let's get you all ready for that now. Just type in for me, please, if you can see me. And I'm coming through. Long live. And we will kick off now. Firstly, a few apologies. I was supposed to go live last week and I had a bit of a family situation. And I have to say, when you think about property and all that we do as investors and why we're trying to create financial security and wealth, it really comes home when you're sitting in one of those emergency rooms. And as happened to me last Thursday, a family member had a cardiac arrest and was resuscitated, which resulted in 11 broken ribs and a separated sternum and punctured lungs. And they're very nice. They ushered us into a private little waiting room so we didn't have to hang out in the masses. But I realized about five hours later that that little special room was a room that's created for people when they're going to have that conversation about we've got a 50, 50 chance. And unfortunately we did have that conversation, but fortunately it did, did come through and turn out okay. So it was a difficult situation. I'm just going to make sure that we are coming through live and strong on the Facebook group. My people who are there saying it is working, not actually saying that. So I just want to make sure they are. So anyhow, put in a comment I'd love to hear from you, but yeah, so it wasn't one of those difficult conversations. And after you get over, anyone who's been through a health crisis or a family member who is in that kind of significant situation, you know, you were responding at the time and it's not my story to tell, but, you know, after we move through emergency and into ICU and then into the cardiac ward and then within a week that person's home and, well, and sore with a few broken ribs, obviously, but, you know, recovered and potentially going back to work in a week or two, it really gives you an idea of the gratitude that we have for our medical profession. Gratitude for people who know how to do CPR on the side of a road. And also it gives me, I guess, A chance to reflect on what it looks like, to really have that peace of mind that if things do go wrong and for instance, you know, if that person did pass, did they have the insurance and did they have the property and the equity to allow them to be able to have their family looked after? And also, you know, when I was kind of like, at the end of the situation, we weren't really sure about how long it would take the person. Person to get back on their feet. It was like, well, they've got an investment property they bought for 400,000 that's now worth 900,000 with a $360,000 loan, you know, that could be sold in any market, and money would be able to allow them to have recuperate and have time away from work. And, you know, I reflect on that with gratitude of what and why we are building wealth. It's not about the fancy cars and the holidays and, you know, know, the. The holiday houses and all of those things. It's about what it gives us and. And really, you know, property gives us a peace of mind to live how we want to live, to be able to sustain our family and look after them. And, you know, I think about a situation earlier in the year where, you know, we got word that my son's teacher, who was the sports head of the sports department department as well, had passed away at the age of 32 from a heart attack, just sitting at home with his family, two young little kids on a Saturday night, no rhyme or reason to it. And, you know, that. That broke my heart. And, you know, obviously the kids were just devastated, but what absolutely crushed me was that the family had to do a GoFundMe page to afford the funeral expenses. And, you know, it just gave me a real sense of, you know, why we do what we're doing, but also making sure that we have the downside protected as well. And as most of you know, my. My parents have moved from New South Wales to Victoria. You know, having my sister and I having gone to 30 different settlement villages and checked them all out, and they're finally, you know, settled, which is just so wonderful to have them so close and know they had the opportunity to have a property that they could sell to assist them getting to this property. And they had a little bit of money left over. And my dad said to me, you know what? That's my wiggle room. And now we call, you know, we talk about buffers and creating a buffer and making sure that, you know, you've got enough coverage. But I thought you know, that's a really great way of describing it, having a little bit of wiggle room. So, you know, I guess on reflection of all that I've seen over the last couple of weeks, you know, having the insurance to cover you in case that you have a life event and you may not come out of it alive, or you may not come out of it and have the income that you expected is one thing that we need to consider. The other is how property not just creates wealth for us to have the freedom of choice, but in those circumstances when things don't go right, by having a property that goes up in value, you, you actually have a lump sum if you sell that property to give you a lot of wiggle room. And, you know, when I look at a lot of people I speak to about positive cashflow properties and they're making maybe $50 a week or $100 a week, five grand a year, and the property hasn't really gone up in value as much as a capital growth area. You know, there's not a lot of wiggle room in that. And although it doesn't cost them a lot out of their pocket each week. And yes, you know, we're all trying to get to the point where we have a capital growth property and a cash flow positive property, but sometimes there is a little bit of a sacrifice for that. And you know, knowing that you could put, you could sell it, or a family member could sell that property and put half a million dollars in the bank because they've had that property for a period of time or they've renovated and added equity to it, you know, really, really hits home to me, the value of that and also having the wiggle room, having, you know, that little bit of extra cash to cover your living expense, 3, 6 months, 12 months, but allowing you to have that freedom of choice of being able to go back to work or being able to give up the job, for that, I am truly thankful. So, yeah, just a bit of a personal note of what I've been experiencing and seeing over the last week, but also some reflections around that. With that in mind, I'm preparing for a big 2023. I'm creating a lot of new things and as I said in the email, I'm also creating way to put money back in your pocket. Now there's going to be some big ways of doing that with some really big hitting opportunities straight off the bat that you'll hear about in January and February, but also how to create some money as well, because I think, you know, Having that wiggle room of having be it a side hustle or be it a way to create a new business opportunity. I think there's a lot of opportunities out there. I mean, right at the moment there's property buying opportunities. And I hope through this presentation with a bit of a review of what, what I've seen common traders talk about. I've attended a number of webinars, professional panel discussions for mortgage brokers and property educators and real estate professionals. Opened last month. You know, there is this underlying optimism and what I've been talking to you about is this opportunity over the last three months that I see coming and a lot of that is now just being validated with the numbers. So. Got that right. But I think there's still some opportunity to buy in the next three to six months. I've had two of my one on one small group and one on one mentoring property students buy in the last two months and buy really well and buy in areas that have growth potential and buy in areas that have sustained rental market and rental demand as well. So we're really covering all of those bases. And you know, as much as I love working with, you know, everyone and sharing all of this information, I know with my mentoring students I can actually course correct and with our weekly meetings, we can make sure that we can not just narrow down where they're buying, but narrow down how they're buying and how it fits into the whole portfolio. So I'm really grateful that I have the opportunity to do that. And once again in January I'll be opening up positions for people who'd like to join me in that. So hit me up if you want to have a quick little call and see if it's right for you. But let's get on with the show here because I do have a presentation on what's been happening in the market and I'd love to share that with you because I think, you know, there is so many things that are happening and we just need to be aware of how and how we can take the opportunity. And I definitely see that there is opportunity to be had. So I'm just going to show that in the stream so you can see it. Hopefully I'm going to turn off my picture. Let me know that you can still hear me. But I do want to talk about the opportunities that are coming up because I think that as investors we really do have some chance to take those. But let's just do a quick little recap for the month. You all may recall that we had the Block. At the beginning of November, one property sold. And you know, to be honest, there was a couple of things that, that I really quite enjoyed about watching the block. Actually, to be honest, I only watched the Sunday night ones and the auction. I, I haven't watched the block for years and it is just a bit of marketing trash and fun. But I always feel for the people who are going through these experiences. And you know, there was some interesting things. First of all, flipping in a downturning market. Now we saw the outcome of that. That was just an amazing demonstration of when you're buying and you're doing these renovations and you want to sell quickly, if the market's going down, potentially all that expense that you've paid, you may not get back. And you know, we really saw that. We also saw the importance of location. Now if anyone saw any of that show, it seemed to rain the entire time and it was pretty horrible. Anyone to care, they're talking about, why would you live in this area? It's, it's not, you know, the prime spot where if you're going to have a country retreat where it could be now maybe somewhere is a bit different, but location so important as well. And the third thing is, you know, when we're looking at these properties that are selling, you know, three, four million dollars in the middle of the country with, you know, neighbors so close, et cetera, and you start looking the depreciation as an investor, you can see here this is incredible. You know, one of those properties had an estimated $5.8 million worth of deductions. So deductions are based on the physical asset, not on the land. And they'll selling these properties to 3 to 4 million. So it's incredible the spend that went on into these properties as well. I did a quick Google search this morning, can't find any information that any of the other properties actually sold, which is disappointing obviously for those people who went through that experience. Channel nine still made money. They bought the land, they subdivided some off that they could sell and make a profit. They put a couple of houses on the ones that left over and got a lot of money from sponsors. The property that did sell also, it does show you, I'm going to call it the game of property that some people participate in. It was interesting to see the two bidders, one Denny, who's like, that's his thing, he turns up and bids at the auction and has a bit of a game with it. Doesn't like to be told he's an idiot. Like someone told him the year before and one of the buyer's agents, and he's taken that as a personal affront. And I don't think that buyer's agent will ever be able to buy a property. And when your wallet is big enough, you can outspend anyone. But the other one was the other guy who was actually buying that, bidding on the property and running that price up. He has a really unique model. He's, I'm going to call it a charity loophole from what I can work out. But you know, buying a million dollar car, selling $3 million with a rap, raffle tickets, paying a million dollars off the car, paying a million and whatever towards the charity and the risk going to his business expenses, definitely raising a lot of money for charity. And as you know, charity and helping people that are in need is very dear to me. And I appreciate everyone who's made the donation to Kids Helpline. You can keep donating, you don't just have to donate once. But you know, that's got me thinking on a number of different business models, the way he was going to buy that house to raffle off, it had to be at a certain price point. I mean, the house that was sold as part of the block was, let's face it, it was like a boys wonderland in the golf, it had the full basketball court, the tennis court, the, you know, the television room. I mean it was amazing. And it really suited, you know, his demographic of who he markets those houses to. He didn't end up buying it. He put a house that he had in Queensland on the market, on the market, up for the raffle pretty much the next next day. Interesting model, maybe something we can manipulate a little bit into being able to assist people to get into properties, who knows? But now with the worth investigating. So yeah, I think, you know, it's interesting to see the block, it's interesting to watch it with some degree of humor and lightness. And let's face it, it's not the big picture. Another report that came out this month which I thought was kind of interesting, these suburbs with properties have nobody living in them. Recent census shows that there was 1.04 million properties unoccupied on census night. Around 10% of all homes in Australia. Now when we talk about this rental pressure a little bit later, let's just keep in mind that if there is a tax on unoccupied properties, if there is interest rates continue to go up and people start feeling the pinch, these might come onto the market. But most of these, and let's Just see if I can link this to the article. Most of these are actually coming through country towns. Like a lot of people took off to the country and, you know, bought these kind of countryside or waterside properties. But you know, some of these, if you start looking at them, you know, 70% unoccupied, Smith's Creek in Victoria, 70% unoccupied. Now this is just insane, these numbers, highest vacancy rate. So, you know, some of these areas actually have high vacancy rates but also have a high percentage of unoccupied properties. So there might just be a watch and see on this because I think that there's going to be an interesting time ahead where we might just see that the government, if we do have, you know, this increase difficulty in building supplies which they're coming off. They're still increasing the costs, but timeframes are getting them and the rate of what they're increasing is coming down. We have had some significant big building companies going to receivership, some over in Perth, they've got four schools underway and you know, some major infrastructures and they're going broke. So, you know, there are some concerns. The winner of the Melbourne cup, apparently he's coming. Companies are just going into receivership as well. So there's, there's definitely difficulties in building. A lot of the builders can't get these supplies. They can't afford to hold the properties they have. So in Melbourne at the moment, we're seeing opportunities where people actually have, you know, DAs in place ready to go and they can't, they can't get the finance from the banks, they can't get the building materials trades, costs, et cetera, and they're letting these properties go. There's opportunity and chaos, people. So, yeah, I just, I want to bring that to light. And also just this kind of inkling that the government may get involved at some stage and start putting a tax on unoccupied properties or trying to push more of those properties onto the market. So it's not like there's no supply and there's no chance of supply. There could be some innovation here. I don't know how innovative the governments could be, but it's something I'm watching. Okay, so let's also just talk about quickly the New South Wales. I've got a comment here. Wait a second. Ah, the guy who, okay, the guy who apparently was the second up for the, that running the property up, our Adrian has gone on and bought this house with huge amount of deductions. I imagine he may have seen that too. But Opportunity for him to get that and raffle it off. Look, we have ratified the changes on the stamp duty for first home buyers in New South Wales. Watch this space. If it is successful, it could potentially go to be extended for not just first home buyers, but as of 16 January, first time buyers have the opportunity to decide whether they're going to pay an upfront lump sum stamp duty up to a certain threshold. It's over a million dollars. But would they take an annual tax of $400 plus 0.3% of the property's land value? Very interesting this, because once they decide that that decision is linked to that property forever, someone can't then come back. So subsequent purchasing it will be obviously this annual tax. So I imagine that it won't necessarily be a first home buyer who will be buying it at that stage. So hence we'll see that flow through, come through. Now this is really interesting because if you've got, let's combine this. Okay, so let's think we've got the equivalent of the first time loan deposit scheme maintains next year there's another 10,000 people who can get that with a 5,5% deposit in October. If you might recall, regionally There was another 10,000 that were released that we talked about last month. It's about 40,000 of those 5% deposits with family guarantees, etc. Of single parents that also qualify. But if we think about a 5% deposit on a million dollar property, so $50,000, that'd be up for like another 60, $70,000 in stamp duty when you take that away and you don't have to have like 110, 120,000 DOL, but just have this, the $50,000, it actually kind of makes it almost affordable. So what this could mean is, what we see is, you know, we talk about the market, markets within markets. What we may see is, you know, for instance, the Sydney market come down but then have a bounce because all of a sudden we've got these first home buyers that can afford to buy in, in, you know, let's face it, within six weeks time. So there is a, an opportunity there that if we really look, you know, we start reading the market and people are talking about the market further dropping, etc. And all of those things coming in. But then we have a look at the overlay, some of these, you know, little things that don't seem to be that significant and think, well, the first home buyers who now can't afford their rent because their rents are going up 15, 20% and they're going, well, you know, with $50,000 for mum and dad or whatever, I can get into the property that I want to get into. I think we're probably going to see up to that threshold, some real price action and some real activity. So just watch this space because there's probably going to be a bump. And just a heads up, if you're looking in that price range, you're probably going to get a lot more competition. So watch that. Also, you know, just talking about what's happening in the market Anz still talking about by the end of next year, there'll be an overall price drop of 18%. Some of those markets, as we'll see a bit later, have already had quite a significant drop. But the biggest factor driving down the prices is this reduced borrowing capacity, not a rise in forced sales. So it's not like there's a lot of forced sales because of this great big cliffhanger fixed rate. Everyone coming off their fixed rates in the Latter Part of 20, 20, 23, or the fact that people can't afford to pay their interest rates, etc. What they're talking about is it's the borrowing capacity, you know, so the fact that we're going to have. People are going to have difficulty in being able to borrow more money. And that's because the lenders usually put 2.5%, 2.75% on top of the interest rate to see if you can afford a property. And this is going to lead to a lot of other things that are going to affect the market. So we need to just be aware of the fact that there's going to be possibly a lot of people who can't borrow to buy. There's going to be some real interesting effects of the rental crisis. So there's a lot of stuff happening. Other big news this month. Well, this week RBA gave a bit of a oops, sorry, we told you we weren't going to introduce more interest rates until 2024. And all those people who went out and purchased based on the fact that they thought that they were okay. And the reality is we've gone from, you know, up 2.75% since May. So we've had interest rate rises. In my opinion, we're going to have two more. One, obviously next week in December, but January, the Reserve bank takes the month off and come back in February. They're going to be watching what we do over Christmas and Black Friday sales and Cyber Monday sales. And if we're putting the money out there, we've seen the budgets drop down from federally and we've seen the state election in Victoria and you know, they're not throwing money around. And the reason is that, you know, we really need to get inflation under control. And if they give you money to go and spend and you start spending money, then that's, that's gonna, you know, really start putting some pressure on the people who are actually supplying the goods or services and they have some issues in getting people to work for them and they are going to put their wages up so that they can attract more people and people get wages put up and then they get more money and they start spending more money. Inflation spirals so, so you know, we saw a budget which wasn't giving people cash because they're trying to control how much cash is in the economy. That's the reason that interest rates are going up. So being a non economist, that's my explanation of you know, what, what we're seeing in the inflationary moves in the market and the RBA increases. But I do believe that we'll probably see in February the RBA will be watching to see how we spend money, how much money is been thrown around. And maybe that means a sacred secret Santa for all of us rather than giving everyone gifts this year. But it does mean that in February there'll be a potential rate rise, but ongoing. There's a lot of economists now who are saying that the rates have hit a peak. Some good news. This is what I reported to my mentoring clients just a week ago, two weeks ago when I was talking to them about, you know, where we were. We're starting to see this move up the anz Roy Morgan consumer confidence move. This is really good. We've had, you know, we've had a steady decline and we're starting to see a bit of bump. If that bump transfers into us starting to spend some money, we could be in some trouble and we could see more rate rises. So just be aware of that. But it's all looking pretty good at this time. So let's go big picture. I want to give you an idea. As I said, I've been to quite a few webinars this month. Thanks to Pro Solutions Stuart Wemyss for this chart. Michael Yardney from Metropole for some of his data. What else have I been RP data anyhow, lots of different sources information. But this is really interesting. You know, we're looking over 42 years here and I like to look at the big picture. I like to look at, you know, where are the markets if I was going to invest, you know, what are the most likely markets that have, you know, not the big highs and lows, but just get on with it and, you know, have a overall good market. So if I look at this, you know, if I look the, the first, whatever that is, 10 years, Hobart did nothing, did a bit, did okay, did nothing, did fantastic. Go to Canberra, pretty much the same. But what's really interesting here is, you know, I, I've been in discussions many a time with hecklers who come back and say the Australian property market does not go up by 7%. You know, in the long term, you know, 7% capital growth and long term, the rule of 72 takes 72 divided by 7 means your property doubles in value every 10 years. But you look at this data, this is over 42 years here. This is what the long term growth has been. And note that if you have a property in one of these areas that goes up by 7%, and some years it might be 2%, some years it might be 12%. But overall, over that period of time, the long term investing, then properties, if you're in the right location, should double. So I think that's interesting and I also think when I look at this, I look at the ones that have pretty much been, been consistent. Here we have Melbourne, here we have Adelaide, we have some ups and downs in Sydney. Brisbane does its own little thing and we've got, you know, some, some big ups and some pretty lows in Canberra. So, you know, when I'm looking at the market and I'm looking at, you know, where I want to be, I kind of want to look historically to also see where has there been consistency, you know, so we've had that unfortunately, you know, poor Perth and Darwin, I don't even think they make it on here. Not Darwin doesn't make it on here, but, you know, they haven't had any real growth since 2010. And this is like a bit upsetting. So when we look at the capital cities in real values as well, you know, this kind of gives us an idea of what's been happening. And this is interesting because we go back to 1894. So, you know, we're well over 120 years ago where we kind of like going, okay, so in real value, what was the median house prices in all the capital cities? There was a slow time, 27 years of no growth, had some growth, 21 years, 11 years. See how this no growth period is actually shortening 11 years, 13 years, 7 years, 4 years. So, you know, if we did kind of go into a prediction here. And I'm going to come back to this. We went, this is kind of giving us an indication that the next downturn, the downturn that we were in at the moment may not continue for 20 years. 2011, 13, 7 years, 4 years, but may be shorter. 12 months, 18 months to 24 months. This is really interesting. So watch this. And if you knew this, would you be buying now is my question for you. So let's also have a look at this. You know, this is just historical comparison of upswings and downswings of house price steepness in combined capital cities. So we just go to the capital Cities back to 1995. Once again, historic information. But over these periods, big growth, big growth, big growth, big growth, big growth. And then we have the downturns. The downturns are not as significant as the upturns. So if you're in the market and you experience the upturn and then come into a downturn, the downturns have never been as bold. The upside is better. I think you see where I'm going here. Okay, once again, this one was from Metropol who sourced it from Prosolution, who sourced it from reia. Thank you to everyone for the information. But if you look at this, you know, we're kind of looking Sydney, Melbourne and Brisbane here. Once again, we're looking at this long term growth. Brisbane hasn't really been over the long term, you know, as fantastic as Sydney and Melbourne. But when you actually go long, long term, they have. So this is kind of, you know, we're back here with the 7%. Now there's a reason I'm calling out the east coast and I'll get to that in a moment, but note that as well. And he's Michael. Unfortunately my screen capture got him with his eyes closed. But you know, I just want to give you some heads up, you know, that, that looking at the peaks and the troughs, you know, the COVID through to the peak. So the COVID oh my gosh. I became one of those people that says the COVID but Covid through to the peak. Now obviously we're in a decline at the moment. Sydney went up 27%. Melbourne, 272 days. Thanks. Dan Andrews. Lockdown 17%. Brisbane 42. Adelaide 45. Perth. Yes. Finally, day in the sun. Hobart, what a winner. Darwin, even Darwin got a good, good time. Canberra great. And regionals fantastic. So we kind of look at this. There's been a lot of upturn, but look at the downturn. So Far from the, from the peak. We got 25% up, 6% down, 6 and a half percent down. So you know, we need to kind of be mindful of this kind of the peak to the trough. Everyone's talking about the big decline. I'm looking for the next incline and I'm telling you, I'm reckoning it's coming sooner than anyone believes. So immigration, let's get on to the first I. Immigration. This is the reason I'm calling out the east coast. First of all, we looked at this last month, but I just want to reiterate it. Migrants show a tendency to settle in major urban areas of Australia. Traditionally that has been Sydney, Melbourne and Perth. Now let's have a look at Australians as a demographic. And 79% live on the East Coast. 66% are in capital cities, 70% are in houses that are detached. 70% of families, 70% of people own with or without a mortgage. So most people live in the capital city, Sydney, Melbourne, Brisbane, most people live in houses. So what CoreLogic has found in their study is that the 10 year cycle for migrants is they begin to rent and share accommodation and then they go into home ownership which increases over time so that the proportion of overseas migrants eventually end up on par with Australians. That means doing this. Does that make sense? So when I'm talking about where should we be looking at buying, we kind of migrate our down our downsides in the areas that have had, you know, substantial sustainable kind of growth. We also look at the fact that we could be into a growth period coming out sooner rather than later. We look at, we've had a bit of a decline, but we've already still up on it. And now where are they moving? Sydney, Melbourne and Perth. And here's my prediction from three months ago, Adelaide. And guess what, we've just had information that's come through on this that says, hey, nine out of the 10 top areas that are actually the fastest selling areas in Australia are in Adelaide. So where have we got this? Greater Adelaide is home to nine of the country's top 10 fastest selling suburbs. With these guys just taking 18 days. So we look at that and we're like, okay, why else is Adelaide going so fast and why are they continuing to go so well? Well, if you recall what I shared with you back in September with the conversations I've had with immigration lawyers and agents, Adelaide is considered regional, which means that immigrants come to Adelaide, they get a certain amount of points. When they get a certain amount of points, they can apply for a permanent residency when they apply they can then go on and have all the benefits of being Australian when they're successful and borrow money to buy houses. And what do we know? Most people want to buy a house with their family. Usually they buy when where they moved to originally. So I'm putting Sydney and Melbourne, Perth. I'm just going to throw that out there as not being one of the statistically bigger places to move to and I haven't had all of those years of non performance. It worries me and Adelaide. So Adelaide is going to be definitely a short term continuation in growth and 18 to 24 months time we're going to have the immigrants who are moving here over the next year being able to buy houses as well. So I see long term growth in Adelaide. So let's talk about interest rates. Another I well we've had a big impact, you know if we look at people who've got a million dollar mortgage over the 7 rate rises we've had from May to November and we're anticipating one next week, 1500 bucks a month extra in repayments. Now this hurts, right? This hurts a lot and there's a lot of people that are hurting. But there's something that's even worse about this and I think it's one of those things that a lot of people don't even know about and haven't really even anticipated of how this is going to affect them going forward and that is that they're going to have these issues that associated with being in essentially a mortgage prison. So I want to get into that in a second. But you know, I really think that there are, there's going to be a bit of pain that people are feeling and this may come out of your Christmas budget but there is going to be an ongoing issue with these interest rates increasing. So most commentators do anticipate there's going to be two more hikes that will be December and February so bringing the cash rate to around 3.35. Now remember the lenders are putting in their margin on top of this and that's why you're seeing five, five and a half, 6%. If you're like me, I've got lots of loans, lots of properties and I even have a rams low doc line of credit that I just got the letter for yesterday saying congratulations, you're now paying 8.08% but it's still just 2.75% above what I was paying at the beginning of the year. So had been anticipated into my numbers but for people who had bought in you know, last year, listening to the RBA saying there won't be rate rises till 2024, there might be some pain. Stuart Wemyss from Pro Solutions says it's considered likely that higher interest rates in the US will push its economy into recession. Now, having just been in LA over in October, everyone is downsizing and anticipating. So this is definitely on the cards. That will cool global growth and could have an impact on our domestic Australian economy. If that occurs, it is possible that central banks may need to start cutting interest rates in the second half of 2023. So as I told you last month, the month before mid next year, I am anticipating that we are going to see rate rises, rate reductions. Now what does that look like? Well, interesting that you asked. So one of the things that I think that we need to also be aware of is that I've always looked to New Zealand and they're always about six months ahead of what's happening in the market. So their interest rates go up, ours go up. About six months later their property market starts going up, our starts going up six months later. And I would hate to say that the Kiwis are property market. What do they call those, those election seats? Bellwether, is it? Bellwether seat in the US but they're kind of like our indicators, our guideposts of what's happening now. What's concerning about the New Zealand market is they put their rates up last week at 0.75%. They have been like full on going for it. Their rates are over 4 been increased over 4%. This year we're at 2.75%. So you know, you kind of start thinking about, well, what does that look like? When I was reading an interesting newsletter from John Gian yesterday and he was talking about the fact that the New Zealand property market is very similar actually to the American property market. And that is a lot of them fix their rates. So there's so many fixed rates over there. The equivalent, the rba, they're pushing the rates up to try to pull the money out of the economy so that we don't have this kind of spiral of inflation that is driving up the rates at the moment. But if all the rates are fixed by pushing up the interest rates, they're actually affecting a very small part of the domestic market where in Australia we're mainly variable rate people. So you put our interest rates up, we're like, oh my God, I've just lost $750 a month because the rates have gone up this year. So we, I believe are not going to be susceptible to what we're seeing over there. Their inflation is going up, but they're also having wage rises. And we are nowhere near the wage rises New Zealanders have. Wage rises means more money in the market. More money in the market means that people are spending more. Inflation has an ongoing effect of that. I inflation, our third eye. But what's interesting here is that if we're about to welcome 195,000 immigrants to Australia and the 10,000 student visas that are being approved every week as well, that's an extra 500,000 students who are taking up those domestic kind of retail jobs and hospitality jobs. We're not really going to have that pressure on our wages. Be nice to have a pay rise, let's be honest. But we're not going to have what we're seeing happening over in New Zealand. So, you know, if you go back to one of the previous monthly calls that I did in August, September and I showed that the migration statistics are where the high net worth immigrants want to move to, mainly Australia, right? So there's all this opportunity where people are going to be coming and spending money, but more importantly taking some of these jobs. So I don't think we're going to see the wage rises. I therefore don't think we're going to have that recessionary kind of inflationary experience that we're seeing being talked of in other countries. Doesn't mean things aren't going to be tough, but we need to be aware of it. So that's my opinion on that. Borrowing capacity is reducing. So as interest rates go up, obviously the banks assess you at what the rate is plus their margin. They're adding like 2.5% on top of what they're charging you or what the standard variable rate is. So you're probably being assessed at like 7% at the moment. So, you know, that's we're seeing that. And as that rates go up next month and the following month in February, we'll start seeing your borrowing capacity coming down. Now, there is an interesting thing that's happened in the last month is that some of the lenders have started actually giving back a little bit more income on rental income. So, you know, what we were seeing is that normally lenders back in the good old days would take 90% of the rental income. It's kind of dropped down to 70%. And what we're seeing is they're getting back to the 80, 90, 95%. So we're starting to see the lenders go, well you know, we've got some capacity to make some changes internally on how we assess borrowing capacity. So although the interest rate is affecting, they're taking out from the expenses, they're actually giving back a little bit on the income you're seeing. So that's interesting to see. Let me talk about mortgage prison because I think this is really important mortgage breaking hat the mortgage breaking conversation. Mortgage prison. This is what happens where you're and loyalty tax, you're in with your lender and you've been there for years and you're paying 5% and they're offering loyalty taxes, they're offering new to bank people 4.5% and at the moment 2, 3, 4, 5 and $10,000 cash back to move to lender. And so the people who are new to your bank are getting a cheaper rate. So this is not really too fair. But what is also happening is that you all of a sudden you're on half a million dollar loan and you've got $760,000, $760 a month extra, it's costing you. So your repayments are going up, so your ability to borrow goes down, but your house price is now going down. So we're going to have a look at the market wrap but we know the price is are going down. So what happens when your house price actually then tips you into having less than 20% equity, less than, you know, if you were going to buy a property, you'd be saying, oh my gosh, I've only got 10% equity in this property, I have to go and pay mortgage insurance. What happens is as the prices go down and the interest rates go up, you can borrow less, but your price is down here at the moment. So the double whammy is that if you wanted to refinance to one of these lenders that would give you $5,000 and assess you to be able to do that, then they're going to say, well, we don't have to charge mortgage insurance because your $600,000 property is now only worth $500,000 and your loan is now 450. And so therefore you've only got 90% LBR. Wow. That's what mortgage prison is. It means you can't get out. So if you're feeling a bit of problem pressure and you've got, you know, we've got two interest rate rises ahead of us, I believe at least one next week, you know, and your private property is still going down in value, this situation is going to get worse. So you need to be Dealing with this, there's a couple of things. As I said, I want to put money back in your pocket and I'm going to start sending you some thoughts on how you can do that in January. Scripts that you can use with your, your current lender that will get you a quick maybe reduction for your rates and an opportunity to maybe get some of those cash back. So stay watching. 2023. It's all about putting cash back in your pocket. The first way is to do a big way. You know, we gave a script to one of our clients recently with a little bit of tweak, so it was customized to them, which gives you a better chance of actually getting this rate reduction and managed to get 1% off, which is just amazing. Right. So 1% can actually, on a million dollar loan, like that's a lot of dollars. We're talking like being able to, you know, pay for Christmas. So there's a lot of opportunities there. Oh, it's always nice to see you too. Hey, Susie, I'm still going to get you on so you can talk to us about your innovation. Can't wait to hear more about it. So let's just talk about some of the opportunities. So we've got immigration people are going to be moving to Australia, major capital cities, into houses and they're going to drive up the rental yields because we're already in a rental crisis. So expect rents to go up. What happens when rents go up? All of those people who are in crypto and the share market and having, you know, the stock market collapse on them and going, where are the yields? We start looking to the yields. Where are the yields? Yields are in property. I did a deal review for a client yesterday and she's buying a unit and the rental yield equivalent is like five and a half percent. Great area, small block, not a lot of strata, you know, but a really amazing kind of rental yields is what we're seeing at the moment. So what happens? Rental yield, immigrants come, rental yields go up, investors come into the market. There's not as much supply in the market because people like, I don't really want to sell my property because it's down here now. So they start pushing the property prices up, which then makes people think, oh, I do want to put my property on the market. We have. And as I said, you know, we've got other challenges that are coming up. One of these other challenges is this interest rate cliff that's coming. So a lot of people over the last two years have actually fixed their interest rates and they're sitting there with 1.8%, 2.1%. It's all great. They're going to come off those around October next year. And this is the scary bit. $99 billion worth of mortgages are coming off the fixed rate in the second half of 2023 from just CBA and Westpac. There's going to be a lot of people who are going to jump from, like a 2% interest rate to a 5% interest rate, and that's going to hurt a lot. So we may actually see properties come onto the market. Is this really such a big crisis? I don't believe so, because we've got a lot of people. If we go back to all of those graphs, right in the beginning, a lot of people made 25% growth on their property. It might come off 10%. People have saved a lot of money. We look back to, like, the August Q and A call where I talked about. It was August, September, where I talked about the CBA had released how much savings people had put away over the last two years. We have, as my dad would call it, wiggle room. So I don't think this is going to be the calamity that you'll probably start reading about, but it's something we need to be aware of. And also, you know, here's an opportunity too. The people who are getting these permanent residency, visa holders, they will want to buy in the next 18 to 20 months. So let's just put that into context. At the moment, we've got people are feeling a bit stressed about rates. They've got property prices coming down. The properties that are on the market are people who really do have to sell. And as I said, some of my mentoring students at the moment are getting amazing deals. We're getting to the point where we're going to get all these immigrants coming in in the next three to six months. When the immigration department catches up, they come in, they start renting, rents go up because we've got a lack of rental properties. Investors come in, the property prices start going up 18 months to 24 months, depending on where they live. We've got all of these immigrants to start buying houses. We've got prices going up, we've got interest rates coming down. I reckon we've got three to six months before we start seeing the price movement upwards. But caveat on that, what about those first home buyers that are buying in Sydney, New South Wales, and have that land tax threshold coming in on the 16th of January? They can come into the market sooner. So we may actually see that market recover sooner. So there's a lot of upside to the chaos that we're seeing. And for people who are wanting to get into the market, this is the time to do it. So let me just push forward. Thank you again to Michael. You know, listed dwelling rents. We're looking at houses here being the black. Houses are up 9%, units are up 12%. They are saying that units are not going to go as down as much as houses with the property market prices and that's because of affordability. So there is some good news there about units. Finally, the number of capital city homes advertised for rental reached a decade low through November and regional rental ads have now been have not been this low since 2009. So you know, we don't have many properties coming on the market to rent and we're seeing some insane kind of yields going up as well. Now as a mortgage broker, you know we're using like two twos for Sydney and Melbourne. We're up around the threes. We've got vacancy rates less than 1% in most areas. So this is big news. Okay, let's just do a quick market wrap. Thanks to RP Data who put this out today actually. So You've got the 1st of December information at your hot little hands. Interesting stuff. You're going to see a lot of people commentate on it. Just this morning, Christopher Joy, he's talking about the exact same numbers. You know, house price data's out. A capital city index slumped. It's now down almost 8%. The worst performers, Brisbane's down, Canberra's down, Hobart's down, Sydney's down. Melbourne not so much. Didn't go up so much. Didn't come down so much. But you know, we start looking at this and just be aware this is dwellings, okay? Houses and units. So when we're looking at median prices, it's houses and units. Houses in Sydney 1.4 million. So really interesting data here. You know that that peak to trough information I showed you what's interesting to see when the actual peaks were. So they're actually calling those dates of when those peaks were. So obviously Sydney, Melbourne got there sooner. Brisbane's come off since June. We had Hobart come off in May. Darwin's the last to move in August and June and July. We've got Adelaide, Perth and Hobart coming off. I'm still interested in as soon as the immigration opens, I reckon that Adelaide is going to continue very small blip and then go up again. So watch this space. Three months change. Once again, thanks to CoreLogic, this is the October numbers, the most up to date ones they had just on the dwelling prices, you know, overall down 4,4% over the three month period. Over the 12 month period, Australia's only down, you know, 1 1%. Capital cities, you know, they nailed it. But they're coming off faster at the moment. And it's not capital cities, regional, sorry, coming off faster. But they had a real good run obviously South Australia in particular. And over the last 12 months, you know, Adelaide, keep watching Adelaide, I think they're going to have a quick little down and up again based on immigrants coming in. Brisbane's coming off, Melbourne's not as bad as Sydney and yeah, now the top end, hard hit. Oh, I wonder where this link is going to go to. This excites me when I see this. But what we're seeing here is the capital, it's just the link to this. So the capital cities. I've tried to educate you over the many years that there's different markets within the markets. And you know, if we look at the median market, which is what everyone always reports on the median value, there's a top end and there's a bottom end. The top end of Sydney might be over 3 million. The top end of Melbourne might be over 2 million. The top end of Brisbane might be over 1.5 million. So the numbers change. But understand that, you know, 50% of the market's here, 25% here and 25% here. What we see is that the high end of the market starts going up first and then we get the mid market and then we get the lower end of the market. But what happens is when we start seeing the top end of the market coming down, we then start seeing the mid market coming down and then we start seeing the end. So this is why the Adelaide market hasn't really finished and we may actually see this happen again. So why I watch this data is because it gives me an indication of where the markets are now. Hobarts come off now all of these markets have all come off at the same point. So you know, when we start seeing next month, these, you know, the. Or when whatever month it is, the top end of the market starts moving. This gives me an early indicator to watch that market. So just a heads up, this is where we are at the moment. Adelaide's the last to come off. You know, Darwin is coming down. So watch that. This is the latest. I'm expecting the November out today or tomorrow. Lettuce heron, Todd White love watching this stuff because these guys are Thousands of valuations done every single month. So their newsletter is well worth reading. What is interesting here is we're starting to see people come through the market. But I wanted to compare this to one of the ones that I did in April because when we have a look at the April market, it's really interesting because, you know, Southern Highlands was just starting to decline. Now this Southern Highlands has just hit the declining stage. But since April we've had no dubbo still up here hasn't is still at the peak of the market. But then we have these other markets like Ipswich that's gone from where did IPS which come from Ipswich has come from. Where is Ipswich? I've got to put my glasses on. Where is Ipswich? Oh my gosh. They didn't even make it previously. This is traumatic. I can imagine there's people there screaming out Ipswich. But I can't say it all right, look at Brisbane. They've got to be there, right? So Brisbane was here in a rising market in April. They have moved through, rising, approaching the peak, the peak. They're starting to decline and in declining. So what I'm trying to tell you is there's no fixed time for any of these, but it's interesting to watch what's happening. So we still have quite a few areas in a rising market, mainly regional areas. I did an assessment on Townsville for a mentoring client on Wednesday and I was reading. Whose report was I reading? I was writing Terry Rider's hotspotting report that he did in June on the five top regional areas in Queensland and he called Townsville out and I, you know, we're speaking to the person who's living there and there is a lot of development going on. But yeah, I have, I have some doubts and just hearing what's happening on the ground, still have some doubts. So I think we might see that this rising market is going to stay there for a while. But it's interesting, you know, most of these areas we've got Perth in the rising market over here and that's pretty much the only capital city, Newcastle. You know, I think it's like third biggest city in Australia. So it's almost like a capital city. It's still coming up, got Hobart here, still rising now approaching the peak really. Now if we looked at some of the data here, we can see that, you know, we've actually got, according to the latest data here, we've actually got the peak being called. But you know, it's really interesting to see these, the markets and how the markets are, are moving as well. And I really encourage you to read the Heron Todd White report and talking about reports and things what I've been up to. I've, as I said, I'm really keen to share some money saving tips with you. The Nova radio station recently hired me to do a number of podcasts for them and you know, check out the email I sent through today. But the Small Change podcast and some of the ways that you can make money and save money. In this episode I actually give you some ideas about how you could be a bit innovative in getting what you want but not having to pay the full price. So I really encourage you to do that. And you know, one of the reasons that I do encourage you is I really, I'd love you to go and check out your successclub.com after educating, gosh, thousands and thousands of people over the last 17 years on property, on wealth, on financial security, it's really hit me that there's a conversation and stories that a lot of people have about their money stories, be it from their parents or be it from their own experiences. And you know, these money stories hold them back. And I've been studying this over the last five years and I ran a workshop, renovate yourself, renovate your wealth, unlocking your money Stories earlier this year and just put that course up that can be purchased and I'll put for a limited time in the comments below a hundred dollar off code that you can use. But I've also ran a course in the Gold coast, your way to wealth and this was a lot of fun and I really used my mentor, the Magician's Way and his seven secrets to Success to actually talk about how we can actually work through our own stories around our money stories and success. And I actually created some cards also using some of my husband's art, but going through, you know, some of the the secrets of success according to his book. So I have been having a lot of fun putting that course together. It is going to be live, I said November. I've just got the, the videos back and I'll be putting those up very, very soon. But I really encourage you guys to go and check them out. And really it's been something that has been an absolute gift to be playing with and something that I've really enjoyed. So I, yeah, I'd love you to go and see it and check it out and yeah, we can, we can talk about it in the new year, but it's something that I have been playing with and enjoying. So let me turn off that screen so that you don't get that horrible screen. But yep, I didn't want to keep you more than an hour and I hope that I've added a little bit of knowledge about what's coming. As I said, you know, with a bit of hindsight, people always look back with regret about opportunities that they missed. Don't let these next couple of months be an opportunity that you've missed. As I've said, you know, I've really been assisting my mentoring students in really nailing some great property opportunities. And I don't believe it's going to be too long before we're going to see about something in the market. And if we're talking, you know, 18 months, two years, that's a slow period of time to be able to buy low and get into the market. I think we're going to see interest rates on hold in 2023. I think we'll be evading a, evading, evading a recession, but we're going to see that globally we're not going to have as such a crunch as a lot of the other countries are going to have going into winter with gas crisis in Europe is going to be a huge, huge situation. So, you know, there's a lot of positives, but you're going to hear a lot of negatives and I just want you to have the tools to be able to navigate the way forward. So as I said, I really appreciate your consideration over the last week and delaying this call. I hope I have been able to add value to you. As I said, you know, when, when you kind of facing some of those personal circumstances where you think, thank goodness we've got wiggle room. In my dad's word, to be able to navigate life's challenges, it really reinforces to me how important, you know, having your wealth and having your money mindset set up correctly and, and also just having the confidence and competence to be able to buy in the right areas and buy in areas that are going to give you that kind of wiggle room if you need it in the future. So with that, I hope that you all have a, an amazing break over the summer period. I hope if you're traveling, you enjoy yourself and get out there because, you know, we have been locked down for quite a long time. I will be enjoying Christmas with my family and taking a break and setting up some, some new ways that I can assist you in the future. So watch this space. I can't wait to talk to you next year and tell you more about what's going on and the big plans that I have. But until then, as always, here is to your property. Success. All the best for now and goodbye.