Q&A Mentor Call - March 2023

Foreign. It is March. What a wonderful month. What a mad month it has been. Well, we are live and, well, if you're a bit like me, March has kind of caught up with you because it is now the end of March and it's the. The last Thursday of the month and it is time for the Q and A where I do a market wrap and answer all your questions. But you might have noticed that I sent out a reminder about this just a little bit late because I wasn't quite sure when the end of the month was. It just crept up on me. So if you're in the same boat, let me know how you're going and let me know. Coming through loud and strong and welcome to this wrap. Well, guys, it has been a very interesting couple of weeks. When I caught up with my mentoring students for the first Friday of the month, when we catch up, I had put together a presentation and usually what I do is I grab a bit of that and revise it for the end of the month. But there's been so much happening. I've spent the last couple of hours pulling together this presentation and I'm really excited about looking at some, some of the things that are happening. But first of all, tell me, where are you guys? What's going on with you and how can I assist you today? I know most of people watch this on recording, and for those of you, stay tuned, get ready on the pause button because there's a lot of interesting information that I want to share with you. So without wasting any more time, let's just jump straight into the market review because I'm really keen on just showing you, you know, what's going on out there. And I think that there's a pretty extraordinary opportunity now for my mortgage and VIP clients. I sent them a message during the week just telling them where I thought the market was and where some opportunities were right now for them to take action on. And I think, you know, it's worthwhile just showing you where we are in the market because the tide has turned. And for those of you who are, you know, a bit of, I'm not going to say risk takers, but those who can read the market and look at opportunities. And you are going to see some pretty amazing graphs in the next couple of moments. So let me share with you the market update and let's just get straight into it because, you know, there has been this extraordinary change in the last couple of weeks and I think that, you know, the more that we look at the changes and the more that we look at the, the opportunities that are out there, the more we actually see, you know, what is happening in the market as well. So, you know, let's, let's just, I guess have a look at that and, you know, get through what's actually the, the message really is. So here's the thing, we have had 10 rate rises and for all intents and purposes we were going to have quite a few more of those until about mid of the year. Now there were some predictions and Bill Evans from Westpac, who's pretty much always on the money, came up with the fact that he believes there'll be seven rate cuts next year. So that was interesting. We know that they had previously be some discussion by the end of the year, some rate cuts. And if we look at inflation, you know, the numbers that are coming through from inflation is really that things are stabilizing. So this is all pretty good news, right? Things are stabilizing, we're getting out there. But what's happened in the last week is we've had a few of these banks collapse and be rescued, but collapsed. And this is, you know, put a, a bit of a dampener on the market and really a dampener on the rate rise expectations as well. And so, you know, we're even hearing that at the moment there is pricing in the 30 day interbank cash rate futures curve that indicates that we might actually be at a point here where you can see there might be one or two rate rises. But then it starts coming down. Now this was only yesterday's figures, so they're talking around medium, the actual interest rates starting to come down. So this is actually quite a bit of a turn and there's a bit of commentary that's coming out this week that indicates that there may not even be some rate rises coming through in April. So hold onto your horses with this because I think, you know, the more that we, we listen to the media and the more that we see that, you know, there's this, you know, we've had 10 rate rises. There's so much going on out there that, you know, we really need to be mindful. We know that some people are really hur. Like, I get that completely. And there's a lot of people who, you know, I've been chatting to have going coming off fixed rates. Someone was telling me yesterday they were on 1.89 and they're coming off to a 6% interest rate. I know some of my fixed rates are coming off as well and we're talking like they're going up by 6%. And I know also that, you know, there's people who moving from an interest only period into a principal and interest period, period as well. So if you've got that double whammy, then that's a real hit to your finances. Right? So there's, there's some, I guess there's some real opportunity that comes out of this. There is a bit of a bank war going on. And I know I'm talking to quite a few mortgage clients at the moment, and we're able to secure some significant discounts by just asking. And you may or may not have even seen an email from me saying, you know, here's a script that you can go and use with your bank that essentially says, hey, you know, I'm hearing that new customers to the bank are being offered more of a discount. What can you do for me? And you know, if you want an even better chance of getting a rate reduction, go back, talk to your broker. If you don't have a broker, send me a message. I definitely introduce you to a great network of brokers that I have at my disposal that can assist you. But, you know, even just getting something that's very specific, you cannot go to a bank and say, hey guys, I'm with CBA and I want to compare an interest rate from Eubank to get CBA to reduce my rate. It's just not feasible. Eubank does not have branches, don't have the overhead. CBA is not going to use that as a comparable rate rate for their negotiations with you. But if you go to CBA and say, hey, you know, Anz is offering this, I'm ready to move, but what can you do then that's a comparable rate with a comparable lender. Obviously there's more diligence that has to be done around, you know, are they offset accounts? Are they professional accounts? Are they like, for, like. But, you know, these are the, I guess the things that you can take into account right now and do for yourself. So just let me know, you know, if, if this is resonating with you and if any of you have actually had an opportunity as well to check out the market and have a look. And as you can see there, we'll just read through this. You can see here, you know, there's been these rate rises. Now, this is just a report that's. It came out obviously before the March rate rise. And this just indicates that there's a lot of banks who are actually writing unprofitable loans. And what they're doing is they're trying to get as many lenders onto their books as possible. Now if the rates do keep going up, it makes it harder and harder for those people to refinance off as well. Now even CBA is offering NBN Access free for three years. There's a lot of cashbacks offerings that are going on 4, 5, 6, 7, $10,000. So, you know, there's a lot of bank war going on at the moment and you can capitalize this and put some money back in your pocket. You know, I had one of my clients just last week say that the two and a half thousand dollars that we'd saved her per year obviously would add up over 20 years, but was able to pay for a holiday that she's about to take. So, you know, that's really good opportunities. As we know, you know, fixed rates are going up. These had just come out early March. Anz was putting their fixed rates up. So we know the fixed rates are going up. But hey, keep in mind the fact back in 1990, we were looking at rates that were a whole lot more than that as well. So, you know, it's interesting just to see where the rates were at the time and you know, what people were paying. It's interesting here to see, like if you look at this cash management accounts, like they're paying people 12%, but they're lending the same money out to someone else at 18%. This is the difference that the banks were making between their savings that they were taking in and the money that they're lending out. Huge differences. So they're not, they don't have that much of a premium these years. But you know, it's interesting just to see, you know, this is where rates were and we all kind of got through that. There was a, you know, beginning of March, there was a, I guess a conversation Peter Switzerland was having in the Switzerland report that really indicated that we needed to be looking at what was practical. You know, how much more could the average family hit? And you know, we've got households have spent 4% of their gross incomes on mortgage interest. And this is the highest level since, since 2015. So there was a large amount of gross incomes going on interest. Personal income taxes had jumped up. There was some bracket creep going on. Savings fell. Now we know that our savings really boosted up during COVID Let's face it, we had nothing to spend it on. But, you know, people were dipping into their savings to start, you know, paying for the $13 iceberg lettuces that we saw, you know, late last Year. So there really had been a bit of pressure on the hip pocket and families are hurting. Bill Evans, once again from Westpac started talking about wage pressures are easing, exerting even more pressure on the household sector through persistent falls in real wages. So wages are kind of coming down is what he was indicating. And the side effects, there was some terrible statistics here. One in 10 parents said their children had to go without food at some stage in the past year. 27% of parents said children missed out on whole holidays, while 18% that they had to forego extracurricular activities. 17% said kids had missed out on new clothes. The poverty New South Wales University poverty report found that there was nearly, you know, just over three quarters of a million Australians living below children living below the poverty line. So, you know, there's. There is this financial pressure that was going on as well. We have to be aware of the fact that now this can't go unseen. But as I said, there's potentially going to be more of pressure come on. If this $350 billion in fixed rates rolling actually does go ahead and does create angst and problems for people now combined on that. We have a rental crisis going on. So, you know, we've got all of these people who are coming to Australia, We've got these rental, you know, I guess vacant residential dwellings have just dropped considerably. We've got the borders reopened and now we've got. In the last year, there's been 750,000 temporary visas issued. It's not capped. We Talk about this 160 to 195,000 increase, impermanent visa holders. All of these people are going to have to live somewhere. This is a million people that have to be housed. So 750,000 have taken a visa out in the last 12 months. Those numbers are going to continue. So we are really in this rental crisis. For those families who are doing it tough, you know, they're going to do it tougher if they're renting. And that's the fact of the matter. And, you know, we kind of look at some of these metrics here. You know, I just pulled this up from Propertyology, you know, just to see, you know, where's the house value versus, you know, the listings and what does that kind of mean? And, and, you know, where does this lead us? But essentially, you know, what he's saying is the green columns in the pot, the value of houses. So the value of houses is a lagging indicator and it's lagging because it's only after, you know, Four to six weeks. It's after it settles that it gets registered and then we see it. So we're starting to see, you know, the fact that the Sydney and Melbourne are always pretty similar in their figures. So we can see that, you know, that come up and that come back down. One of the biggest influences on the degree of change in asset value is the housing supply availability. And that's that blue line that we've got. So how much supply? So when there's not a lot of supply, values go up. We're at equilibrium, it would seem here, you know, tight supply, not a lot of supply. Values go up pretty much here at the equilibrium here. So nothing's nothing really changing here. So it kind of gives us another metric that we can look at and how we actually looking at the market now. The Cordell report came out today, talks about, you know, number of projects in the pipeline around Australia. What's more interesting here to me is that what is the construction that is actually going ahead at the moment? You know, they're moving into construction. Only 9% of all the projects are in apartments and units, which is kind of, you know, our indicator of property. And of the value, only 11%. So what does this mean? This means that we're not really building as many properties that we need for all of the people that are coming in. So the pain and gain report just out this morning as well, you know, it looks at the amount of resales in the last quarter who made money and who lost money. And you can see here, the amount of sales are actually down. So 25.1 billion in the quarter, down from 27.1 billion in September. So this is a decline in the market. We're seeing decline in sales. Decline in sales could be based on two things. Decline in sales can be based on the fact that A, there's no properties on the market, or B, people have lost the confidence and they don't want to buy the properties on the market. So this is kind of a very interesting thing to have a look at. The other thing is the nominal gain. So of all the properties that had been sold, most is sold for $250,000 more. But there was a loss of $40,000 for those that had lost. So people had hold, held their property. And on average here we're seeing people hold their property 9.9 years before they sell, which is more. They've held onto it, so the market wasn't right for them. They've held on to it. Those who have sold have made a profit majority made A profit usually around 90% have made a profit on those sales. And for those that hadn't had sold at a loss, they'd lost about $40,000. Now one of the things I want you to remember as well, we're talking about, you know, this interest rate cliff we're talking about, you know, how will this affect Australia? All these people are in, you know, big, big problems. Two things I want you to, to think about with this. First and foremost, when we look at the asset value of Australia and we look at those that have mortgages and about 24% loan to value ratio, most people own their own homes. So it's a small amount of people who even have loans. Of those that have loans, there's an even smaller amount that are coming off this fixed rate. But we have gone through this period where we've had this increased equity in our properties on average since 2020, about 15 to 20%. There has been some decline. But I'm going to show you in a moment how that's come back. And then in addition to that, what we have is most people are lazy. So you tick that mortgage box that says yes, charge me $2,500 a month for my interest repayment. And when the interest rates came down from 5, 4, 3 to 1, everyone was still paying $2,500 a month. Which means according to Anz, that I think 60% of their mortgage holders are three years ahead on their interest rates repayments. So they've already ahead on their repayments. So those people aren't going to be that hit. I don't think that this mortgage cliff crisis is such a big deal. I think it's a bit of a hoo ha. Yes, it's going to affect some people. Look, I know that just with some of my fixed rates coming off that I'm going to be paying a significant amount more in interest. And I know that that hurts. Right? I'm with you on that big time. But I don't think this means there's a mass sell down coming. And people been talking about it for over a year now. It's not going to surprise anyone. So you know, let's just keep mindful of that as that information comes up as well. Okay, so let's just push on. This is, this is really important for me to tell you where the market is at the moment. I think it's really important to, to just see what's happening and this is one of the measures that I use to see where the market is. Now what this does is it Goes through every single capital city and it looks at the market. So where you see, you know, the market's gone up by 0.2. Well, it could be that there's three parts of the markets. The bottom 25%, there's the medium around 50% and there's the top 75%. So really, you know, we can we, we divide the market into three. Now what I see is when the market starts moving, the top end of the market starts growing. So it could go up by 10%, the mid market could be down by 7% and the bottom end of the market could be down by 8% and they go. Overall the markets moved. Now if you know that the top end of the market comes down first and goes up first, what are you going to look at when you're trying to understand what's happening in the market? You got to look at the top end of the market, right? The top end of the market, especially in Sydney and Melbourne has moved. There is no doubt in my mind about it. So check this out. If we just have a look at the Sydney market, you know, we can see it's all down about 2%. Melbourne's around down about 2.5%. We've got the top end Brisbane down quite considerably compared to the 50 percentile and the 25 percentile. You know, we've still got Adelaide in the bottom part of the market is still having a bit of growth. Perth is still a bit of growth. So you've got this. Now what I want to show you is how this compares. So this is last month I showed this in January. So we had. Even in January we had. What do we have? We had. Darwin was still up as well, you know, see how it starts coming down. Act starts coming down. Well, here's the comparison. So if we're looking at January last month to this month, we are starting to see, you know, these 6.3 are now or is it 2 minus 2%. So sorry. Minus 4% went to minus 2% in Melbourne minus 3 and a half. Minus 2.9. Brisbane minus 6, minus 4, minus 2.9 in Adelaide minus 2.8. So what we're seeing, you know, the 1% growth in the bottom end of the market, Adelaide is now at 0.6. So we're starting to see 6.1, 6.1. Hobart hasn't moved. We've got Darwin here. 1, 2.6, it's starting to move. 4.2, 3.2. Number one indicator guys, the top end of the market is moving. So check that out and when we start looking at this, you know, housing prices are now falling in every capital city. The whole market, the 25 percentile, 50% aisle, 75% are. They're all falling, but they've started to slow the rate of the fall. So just be aware that the market has started to change. Now, for those of you who have done my ultimate guide to Renovation course, you've seen hundreds of photos of the renovations that I've done over the years. One of the properties that we renovated, in actual fact, the last property that we purchased was way back in like, 2006 for $625,000. We've just listed on the market on St. Patrick's Day, 17th of March, which was coincidentally the day that we bought our very first property in 2001. Now, the interesting thing that I kind of wanted to show you here, so we've just listed this property as if you've seen the Ultima Guided renovation. You can't not have seen some of the pictures of this renovation before and after. And I was speaking to one of my mentoring clients just this week who said, said, I'm so sad that you're selling this property, but it's time. And here's an interesting fact. If you have a look at, you know, this figure, so they say, you know, the estimate of the property value, yada, yada, yada. If we have a look at, you know, the medium estimate around June 2022, they had it around 2.2. Now we are in March 23rd. Now, we've just talked about how the market has come down and, you know, there's been this major change in the market in the capital cities. But when we look at these two figures, we see that the 2.2 and the 2.2, it'd be great to get 2.2, by the way, 2.2. We're back to where we were in June 2022, this great fall, this great drop. We're actually back to 2022. So, you know, you're going to be hearing about all of these things, but in my opinion, this is where the clever people are at the moment. So I sent an email out to 10,000 people in the last couple of months. Maybe you got one that said, hey, you thinking about buying in the next six months? Are you thinking about refinancing? Are you thinking about selling? I've got numerous ways and many, many professional partners that I can introduce you to to assist you. Partners that I have used in the past to assist me and my clients in buying and selling and in, you know, getting better finance, conveyancing, you name it. You know, having been in the, in the property space for the last 17 years, I've got to know some really great people who are really good at their jobs and I want to share that. So I went out and said, hey, out of your 10,000 people who's looking at buying in the next six months, guess how many people, guess how many people? 83. Less than 1%. Right. So the 1 percenters out there, this is what I reckon is going to happen. So watch this. So what happens at the moment is these data that we've just been looking at starts trending up. We start to see the top end of the market moving, we start to see clearance rates going up, we start to see more properties come on the market. Then what happens? The clever people are sitting there going, you know what? I think the market's about to move. There's a lot of confusion. There's people who are like, yeah, what's going on? You know, things are kind of tough now. There's conversations that rates are going to come down. There's going to be a bit more confidence. I think I better get my finance set up. Now we know if you're going to refinance and you're going to pull equity and then you're going to get a pre approval. Honestly, it's a six week wait. So let's just say we're sitting here at the end of March, six weeks time, we're in May now because these people are watching the market. Their behavior is, they're pretty, you know, switched on and clever and they're not going to go. Now I've got a pre approval, let me start doing my research. They're going to be having conversations with people like me with, you know, strategies of, you know, what their strategy is, where they should buy, what kind of suburbs and characteristics would be suiting them. They might engage a buyer's agent, they might start, you know, getting access to RP data Investor. Yeah, there's two new data suppliers coming on the market. I've just been working. One is now live microbirth. I've been working with Luke and testing his latest microburbs. And another I can't wait to tell you about next month is coming on the market as well. So there's all this data, right? Do their data, they're going to research, they're going to get that 16,655 suburbs, they're going to come down to three to five suburbs. They're going to get to know the suburbs, the properties, the demographics. So as soon as they've got the pre approval they are out there and they are starting to look now they're going to start potentially securing the property by June. So then what happens in it takes four to six weeks for the property to settle and then the property settles and they start reporting that these sales going on and then all of a sudden it's a slow newsweek in August and the media goes, the market's starting to turn and so everyone else is sitting out there going, I should probably get a pre approval. Six weeks later in October, they get the pre approval and they're not as switched on and as quick to the market as you guys are. So what happens then? They wait until they get the pre approval, until they start really doing the research. They're not really serious about it. They so they might buy in December, but we know what happens In Australia in December, 30th, November, Christmas parties start, everyone tunes out until the 1st of February when the kids go back to school. We'll just take December and January off, we'll have a look. I bet you there's not a lot on the market, yada yada, February, we better get back into it. The market starts turning again and as the market starts turning again we start seeing people go, I should be buying. And so they start looking. They might buy something in March, cause they have been looking since October. They buy something in March, six weeks later it settles. We hear in like let's say April that it's settled, the media starts picking it up and then guess what happens. We start talking about the property boom in April 2024 and guess when it started. April 2023, that's now. So for all of you people who are watching this and watching the moves in the market and you've got a buffer of cash and you've got a security secure income and you're comfortable in making the repayments and you are ready to buy. For those 83 people out of the 10,000 that I've been talking to over the last couple months, welcome to the next property boom because you are on the ride of your life. It is about to happen. I've been watching these markets for 17 years. I've been watching the lead indicators and the lead indicators are all indicating that if we don't have another world war, another crisis, another Covid, another whatever that could happen, bank collapsing across the world that don't get rescued, then we are seeing indicators of another move up. Will it be sustainable? Who knows? Will another 750,000 people come to Australia in the next 12 months and require to have somewhere to live? Well, they have in the past and the safety and sanctuary of Australia through Covid has really attracted a lot of attention. We know the Chinese government has told their students they need to get back to campus. We know that there's, there's some real amazing opportunities out there and these are opportunities that you can take. And as a rent owner or a landlord, you know, we've seen rents go up, the rents are increasing. The yields for, you know, rental yields are increasing quite considerably by at least 1% across the states from where I've seen in the last year. And what that means is that people who are investors, who are yield investors start coming to the markets. So if people are a bit worried about the shaky share market, they might start coming here. So this is where we are, this is how it turns out, in my humble opinion. And this is where the opportunity is. So let's just look at it now. You're going to start looking at the markets, the whole market. And we start looking at the markets, we start seeing that, you know, over the last 12 months there has been some losses, but as you now know, there's markets within the market and there is those percentiles that I showed you. I know that rental yields are starting to go up. Look at these. Rental yields are starting to increase as well. We're getting a real incredible turn here. And we look at the property clock. You know, let's look at the clock. This has just come out in the last two weeks. You know, we've got a lot of the markets that have started moving down the property clock. We've got some that have been there forever. If I compare it to April last year, like almost a year ago, Duo was sitting up there, Dubbo's still sitting up there, whilst everyone else has kind of like moved through the process. And you know, the ones that are orange are the ones that have moved. Since last month there has only been like Coffs harbor has moved from starting to decline to decline. We still have in theory these, these areas that are increasing in value, getting to the peak. But as you can see, not every single market moves at the same rate. And you know, we're starting to see this bottoming of the market. And my prediction is that we're going to see, you know, once we get all those lag indicators through mid year, they're going to start talking about the bottom of the market. Well, let's just call it now, it's Happening. Okay, so how can I help you? Well, there's a couple of things I wanted to introduce you to as well and that's my you success club. And the reason that I am so passionate about this is having worked with, you know, I think it's been like over 9,000 people who've bought my books, courses, etc over the last 10 years and you know, obviously hundreds and hundreds of mortgage clients. You know, I have worked with a lot of people and it's always frustrated me that some people just can't make it work for them. And I really doubled down the last five years in understanding why it works for some people and why it doesn't for others. And I really got to the bottom of that and looked at some of the beliefs people have. There's an old operating system of patterns of them not being wealthy or not deserving wealth or thinking that rich people are bad. And you know, I hear that and I've been listening to people's stories. Why they couldn't buy or why they're going to wait for the market or why they were going to wait until the kids left home or why they're going to wait till they had a better job, all of these things. And I've really listened to that and I've created a program renovate yourself, renovate your wealth. Which is really about understanding those patterns and those stories that are going on and removing those beliefs and, and following, you know, the wealth abundance is available to you. So I want to introduce you guys to your success club. I've also got a great fun course there, your way to wealth, which is fabulous. It goes into seven ways that you create wealth throughout all aspects of your life. Financial, spiritual, relationship, careers, all the things that you're looking for. And obviously I still offer those vision calls about assisting people and looking at where they want to end up, where they are now and what that bridge is. And for a lot of people that bridge is property where, you know, I can double down. And I have a three month mentoring program. If you're interested, send me a message janevestorschoice.com and we can have a chat and find out if it works for you. And there's a lot of people who want to be in a business startup and for those who are in the business startup, I really love supporting people in that place as well. And I have another three month program where I help people in getting a clear vision of what their ideal client is, what their skills and core story is and then the positioning and the opportunities for them to create a service or offering. So lots of really good, interesting things that I'm playing around with in the moment. I really encourage you to go check out YourSuccessClub.com or follow your success club and the Facebook group. You know, it's something that I absolutely love sharing with the world and it's something that I really enjoy as well. So that's about it for the month guys. A bit of a wrap. I have doubled down, finished off the last 1800 suburbs that were the difference between the 2016 and the 2021. 2021 was it census. So all that information I've updated, you'll see that in the suburb selector software for those of you in the Location Masterclass or Ultimate Guide or Innovation. And yeah, as always, it's been, I guess, an amazing period of time that we're in at the moment. I'm really seeing the, the market moving and I'm seeing opportunity for people to step into the market and, and really, you know, start creating wealth. There's a lot of conversations around the long term of what's happening with Commonwealth Games in Victoria and you know, the Olympic Games in Brisbane, some of the major infrastructure changes. But the fact of the matter is that, you know, there's a lot of people moving to Australia and not leaving Australia and they need somewhere to live. And you know, rental yields have increased quite considerably, rents are going up. For those that are feeling a bit of tightness of the belt and their cash flow, there might be an opportunity if you have a mortgage, to ring your lender and just ask them what they can do for you or reach out. And if you want a connection to a fantastic property professional that can assist you, buyers, agents, conveyancers, quantity surveyors, mortgage brokers, let me know, send me a message. And more than happy you to, to connect you to those in the know. But as always, you know, it's been, it's been a mad ride this month and it, if anything it just teaches us not to, you know, take anything for granted and let's just wait and see what happens in April. Maybe we will not have a rate rise and 11th in the row and we'll have a bit of a pause. So. Always hoping for that. Anyhow, as always, I hope you have a fabulous month. I look forward to speaking to you next month. And as always, here is to your property success. Bye for now.