Your Property Success Mentor Call April 30-04-2020

Hello everyone and welcome to the your property success club Facebook group. This is our monthly Q and A call and it is April 2020. Oh my goodness. So many things have happened in the last month, let alone the last three months. So welcome, welcome and as always, I have my co host here, John Hubbard. Hey John, how you going?

Hey Jane. Hey everyone.

Where are you streaming from today? Home.

Home isolation. Yeah, I'm not going to. I've got everything plugged in, otherwise I'd give you the tour. But yep, isolated as of coming on four before weeks this week. Jay.

Oh my God, it seems amazing to think that we have, you know, just over the end of the year. Last year is like I was sitting down thinking, okay, so what are the kind of things that I want to do in 2020? And you know, I was thinking, geez, these bushfires are really going to be. We look back on 2020 and think, oh my gosh, can you believe we survived it? And the reality is there's something so much more that's been happening.

Yeah, it's extraordinary really, isn't it? Extraordinary times. Now, before we start, Jan, I better just do our disclaimer quickly and get that out of the way. Just to keep the. I think we're safe so far with whatever was said. I don't think the lawyer would be too unhappy so far. But it is important for you to take care in applying what you'll hear on this call. Everyone's situation is different. While we go to great lengths to ensure that everything we share is accurate, what you're about to hear is based on our personal experiences and opinions and not intended to be specific to your circumstances. So in order for us to share this information openly in the way that we do, we just need to make the following disclaimer that we're not real estate agents, financial planners, lawyers or accountants and are not liable for any loss, damage or misunderstanding caused by reliance on any of the information provided or inferior.

Wow, that was a big one. Well, welcome everyone. This is the April 2020 your property success club Q and A session. We are here to answer your questions. Please, you know, put your questions below. They will pop up for us and we will answer them as always. You know, we have been running these now, John, for like eight years monthly.

Yes, that's true. Eight years. Wow.

And you know, a lot of the same questions come up time and time again, but this is obviously a property conversation and community. Over the last few weeks, we've kind of refocused over to our Thrive not just survive series. So I know we've welcomed, well, you know, over 260 new people into our community who have made a donation to the Kids helpline. And let me just show you exactly what that looks like. We have. Oh, I wonder if I can make that big. Nope. Can I make me big? No. Oh, well, I'll make it solo. Geez, the things you learn to do. This is the week that we've had. This week I have interviewed even my mum, which is pretty exciting. So Monday has been our days talking about mindset, and we've had Fay Chan in the first two weeks who taught us this ancient Chinese kind of technique and adaption to tapping and looking at anxiety and dealing with food cravings. Anthony Hartsha joined me this week to talk about mental health, but he also joined me in week one to talk about foods, to assist you in building your immunity, which is amazing. And the wellness session we had in the second week was with Jay Roberts around Qigong, which is another Chinese practice that I just love. And she was so generously shared with us. In the first week, our home and half session, we had Jo make, who is a dog whisperer. And, gee, I was blown away by some of the things she talked about, the anxiety and separation that dogs will go through once we all go back to work. And then week two, Emma, she joined us and she talked about. She's a personal stylist. She talked about a DIY audit of your wardrobe, which was fantastic. And she shared her favorite online shopping sites, so check that out. And this week I had my mum. She was an interior decorator for over 30 years and she was so sweet. And so she shared, you know how to create a sanctuary whilst you're at home. I just got off the line with Cassidy and Caitlin Murray, amazing young women who have just done incredible work with refugees and they've talked about how to get that teenager out of the bedroom and give them a voice so that they feel that they can be a change agent for the world. I interviewed their younger brother the week before, Trevor, who taught us how to create our own YouTube channel. And the week before that, I spoke to their mother, Gina, who has been homeschooling for 15 years, and boy, did she have some really good thoughts. So that's a lot of fun. We had the first Friday Fun Day. We had Kathy from Bop til you drop ran a disco for the little kids and for me. And last week we had a bit of fun as well, and we went on a virtual holiday to the Gold coast with travel consultant Kelly Cleary. Big times but the most important thing, which I'm just so grateful for and I know that a lot of you have participated in, let me see when people join the club now, not only do they have those 10 great modules, the Q and A calls, the support of the group group, but we have raised $10,690. Funds have gone to Kids Helpline and this is just an absolutely mammoth achievement guys. You know we are just, we are so very grateful for what you've done. So thank you so very much. You know we've, we're really committed to making a change. I think John, that when we made a donation, our last donors we were raising $10,000 for the pipilepsy, the kids epilepsy. I think it took us like 14 months to do that.

It sounds about right. Yep.

It took 14 days.

It's extraordinary.

And I know that everyone's in kind of lockdown, shutdown at the moment and appreciate the fact that you know, we're kind of watching our pennies. So thank you so very much for doing this because this is just, you know, absolutely remarkable.

So yeah, yeah. Brings out the best in people at times like this I think.

I think so too. I think so too. So John, I'm not sure. I know we've got some people there watching. Let us know. I can see some hearts and love being sent our way. Just let us know we're coming through clearly. But and more importantly, this is your Q and A session. So you know, we get to go home early if you don't, you don't want to ask questions. But we do have some things that we want to chat about as well.

That's right. Well I've got an update for you Jane, because you know I've had a property on the market which is my parents property. Dad passed away last year, Mum's gone into care with dementia. And so it's been the saga that unfortunately comes around at some point in your life where you've got to go and clean the parents house and get it ready for market and as you know, the minute we finished, got it ready for market, put it on the market, had been on the market one week and then the COVID 19 hit and it was just like oh my God, could the timing be any worse? You know. Yeah, a few things tied up in there that we've got. One is that we've got what's called a rad fee that we have to make to pay for mum's accommodation. One and then the secondary thing is of course we've got Three. Three siblings that the inheritance has just dropped. Dropped as. As well based on the. What. What the resale is going to be. The timing of that's not great as well. Which was less. Less. There's no entitlement there but you know, it's a factor. So anyway, we went through a full campaign and didn't have. We had. The first week was good. We had good number of parties through the first week. Second week still okay. By the time we're in it was like a five week campaign. By the time we're in the third week, inspections have been shut down altogether and having to do them individually and actually the first week was very of the. When they. Because no one actually knew what they were allowed to do and what they weren't allowed to do. It wasn't very clear. So there's a bit of a gray area there. But in the end a new normal sprung up and gloves and hand sanitizer and one group threw at a time and as long as they're the same living in the same household and all.

This kind of stuff.

And so eventually we. And so when it came the day for the auction there was only one person. So the auction was called off. But he ran it as if it was going to run anyway. So he said what we're going to do is I'm going to take offers. So it was offers by sealed bid in the end and this is an outer suburb of Melbourne. And he said I'm going to take offers by sealed bid on the Saturday of the auction. And then that Saturday came around and we only had one basically one bid which was quite a bit below about. Probably about 100 below what we could have got in a. In a good like. Yeah. If we had a. If everything had gone our way it was probably about 100 below that, you know, maybe about 70 below what we would have hoped for. And then. So he shopped that offer around as. As you do when you get one offering and another buyer came out of the woodwork and we eventually got an offer from that person that was another 50 grand above that. So really only about 20,000 below what we would have got on a good day. So it was a good win in the end. But it was right up to the wire that, you know, we weren't sure which way it was going to go. And in reality was we would have had to have taken that lower offer because of, you know, all of the complications and so on with mum's care accommodation. But at the end of the. But it was a good result in the end anyway. But a couple of, couple of moments there, Jane, throughout the campaign, you know, it's, it's amazing.

I just, I reached out to a school friend of mine today and said to her, because I know that she had a property on the market and they were going to, you know, high end property, eastern suburbs, Sydney. They were going to do a nice kind of quiet marketing campaign which was by appointment and, you know, didn't want the neighbors coming in. And it was all going to be kind of, you know, the agents were just going to shop it around. And then all of a sudden we had this COVID 19 and the, the changes and she was like, okay, full on marketing. There was drone shots, everything was going on. And I reached out to her this morning and she said, yep, they ended up selling. You know, they weren't going to get greedy about it. Someone walked in with a check, no conditions, and they accepted it. So, you know, I think in these times we don't know what's going to happen at the end of all of this. But what we do know is that, you know, there is an upside to every downside, but we just don't. It's the length of time I think has got most people worried. So taking a little bit of a chop on the chin and getting your mum into, you know, where she needed to be and all that kind of stuff.

Yeah, one of the things we do, yeah, it was always going to take priority and it affects different. It's different for different situations, isn't it? I guess if you're, if it's a change of principal, place of residence and you're potentially selling and buying in the same market, it's potentially not as big a deal or perhaps you're even buying in a lower market, who knows? But there's other people at the moment that have caught up in development deals where they've got original feasibility is going to be quite different from the way it started. And that's always that danger when you're in the, you know, the buying and selling game, which you are in flipping and property development. Yeah, so. And there's other people that have got holiday rentals that were turning over a nice healthy cash flow that suddenly aren't all of a sudden too.

So let's just talk about the things that have happened in the last 12. Well, last four weeks, you know, since we talked last, we know that in Victoria they went harder, faster with a lot of the restrictions and they actually stopped those open by appointment inspections of properties as well. Now we haven't seen that in other states, which is good. In Queensland we all got behind the petition where you know, the Queensland government came up with a rental assistance package which essentially said that, that no, they didn't have to deter, defer their rental payments. They could actually just have them waived which was just, you know, for mums and dads who, who own an investment property and choose not to or may not be able to prove hardship enough to create, get a hardship from the bank that's a, that's you know, considerable. They back that, they back down on that. So that's good to see. So you know, just keeping up to date with what the different states are doing with some of these rental things as well. I know that there's, you know, some discussion around if you take for commercial etc. If you do take a commercial hit and reduction in your rent, they're going to help out with land tax. So reduce the land tax. So there's all of these different things that you need to look into. Sydney in New South Wales they announced yesterday that the government's looking at buying up all the surplus property stock all the empty units on the market to keep the construction industry going. So you know, that's just out there. So all of a sudden we might have some thoughts there. I had a borrow my brain session with someone yesterday who has a, is trying to build in Queensland 4 units community based units to assist people's social housing and you know, lower socioeconomic area. And I mentioned to him that there might be something similar like that in Queensland. He said oh, I have heard about the Queensland government looking into a JV on social housing. So you know, for people who are. And he's in the middle of the development. So for people who are trying to come up with some creative type of ways of getting things done, you know, have a look at what the government is offering at the moment. I know John. We were talking to one of our mentoring students just recently and she has an NRAS property that she was thinking about selling so she could get into another opportunity she was looking at and she pulled it off the market. And my advice to her was, well, NRAs with the government kind of backing and you know, benefits to the owner might just be what some conservative investors are looking for at the moment. Yeah, it may be time to point.

A difference in times like this.

Yeah, absolutely. So you know, it's not. The market isn't dead. One of our clients, we negotiated and assisted them with engaging a buyer's agent and running that process for them. Baby bought in Brunswick west and we've just had one of our mentoring students buy in Geelong and they've just exchanged this week. And the important thing to know is on both of those contracts we put in extra clauses that suggested that we wanted to have access prior to settlement but after formal exchanging of contracts to have access to do small repairs but also to show and let the property. So the owner would be getting all the rent during that period of time and they would pay 25% of the letting fee and the incumbent owner would be paying 75% of the letting fee. And that's just to get the property on the market quickly and so that you're not sitting there for like six months of vacancies. So just be aware that that's available as well. Some other things that we've had John, is people looking to apply for hardship through their banks. So if you're an Investors Choice Mortgages client, go and check out the updates I've been doing every Wednesday with Lisa for you on that updates page because we gave you some tips on how to negotiate better rates and how to potentially get discounts before you have to go into hardship. If you do have to get into hardship, I think the two things that you really need to know is that if you do have money in redraw, pull it out of your redraw first of all and put it into your offset account. Because as soon as you go into hardship the bank will freeze that money and you won't have access to it. And the second thing is if you're with a bank that's a non deposit taking facility. So in bank, so you don't have branches that you can go and put money in and they take deposits from people.

What if one of those ones, Jane, just to give some examples for people.

Yeah, so some of those are things like peppa, they might be Eubank, it might be Resimac, you know those type of lenders they even if you put money into the offset account, they can freeze the offset account as well. So just be aware of that. So if you've got cash and you're going to hardship, just be aware that there's those things to be aware of. The other thing is most of the lenders are actually deferring the, the payments for you for three to six months, whatever you negotiate. So let's just say you don't pay for three months but the amounts that you were supposed to pay, the repayments that you have, so your repayments will increase when you come back. A few lenders are Just extending the term of the loan. So it's not 28 years, it's 28 years and three months for instance. Most of them are putting it on top. So you do have to pay more when you come back. So just be aware of that as well. So it's not always the best answer for you. It won't hit your credit file because you haven't defaulted, which is a thing. The other thing is the there is opportunity for you to negotiate on pricing. So you know, we went through and told our mortgage clients just be aware of if you're going to say to CBA, I see that Eubank's offering 2.99, I want 2.99. They're not really going to pay attention to you because Eubank does not have a shop front. They don't have all the overheads you have to compare it to like NAB, ANZ, Westpac, St. George. So those are the ones that you compare for cba. Anz, just a heads up, I've got the cheapest interest only and principal interest loans for own occupiers and for investors at the moment. So they're kind of like the ones I would compare to. I believe NAB has just stopped there. At the end of April their rebate for refinancing took them of $4,000. But I was just on a call with Anz this morning and they've just confirmed that they will proceed with their cash rebates. For people who are refinancing and can refinance to if it's below $250,000 they'll give you $1,250 and if it's under $250,000 they'll give YOU 4,000.

What kind of restrictions around the refinancing at the moment Jane? Is it similar to new loans or is it, you know, around industries and so on?

Yeah, so refinancing is essentially a whole new application. So all it is is a new loan application. And with all new loan applications what you will find is that what do I say this? They're being very, they're looking with a lot of vigour into the industries that you're in now. Some lenders like ING have said they're not even considering giving any self employed person a loan at the moment. So they've just pulled out completely. Some lenders are restricting the cash out that you can get so there's all those restrictions. But around industries a lot of the lenders at the moment are giving us heads up almost daily on they will take a jobkeeper allowance. So if you're getting a jobkeeper from your employer, fine. But a job seeker, which is similar to, like a Centrelink payment, they're not taking that. So some lenders are taking it, some lenders aren't taking jobkeepers.

That's a big thing for people, isn't it, that if they're tossing up between jobkeeper and job seeker.

For instance, if you try and buy something, refinance.

Yeah. Because from an employee's point of view, the option is, well, you know, I could go on the dole and get $200 less and do nothing, or $300 less and do nothing, or I could get $300 more and continue to be committed to the work. It's a big difference. If you can't get finance based on that.

Absolutely. And, you know, the other thing is, there's ways, like, as I said, you know, the big four banks, compare those against each other. If you're going to try to go and negotiate pricing, Amp and MA are in the next kind of level. So just know that, you know, when you're comparing, you know, you're going to ring up the retention line and say, by the way, my broker says if I go to Macquarie, I'm going to get 3.2 or I may get a cheaper rate. If you saying that to Amp, they're going to be listening. If you say it to Westpac, they're not going to listen so much. And just a heads up, also, I spoke to someone yesterday who was. Whose parents have got themselves into a bit of a timing issue and needed a quick bridging loan. It turns out that they're supposed to settle and they need quite a large amount of money next week and they're not selling till the following month. And now we're talking to Westpac. Westpac at the moment is currently at assessment timeframes of 28 days. So the reason around that is that they are still and now the only lenders who, if you do put in a hardship claim, they are actually ringing and having to interview every single person. Whereas if you put in a hardship claim for like, Amp, it's a tick and flick. So because they're ringing, they've taken all of the assessors off the assessment team and put them on the hardship team to do those interviews. So just be aware of that. But pricing request. Can I just show you? You know, I'm. We've been encouraging our clients to do it. We had one client, we work through a kind of an innovative way for them to get a, a discount on their interest rate. So that was just a complete comparison against another lender. Also they actually had some funds that they could put into Redraw which reduces and with CBA is the only lender that does this, actually reduces the repayments but they can still take the money out. So normally if you put money in Redraw, your repayments to stay the same. And we combined that with. Also it was going to be investment property and was set up as an investment loan and they've moved into it. They saved $6,000 a month, 72,000 a year. And then I just had an email from Chris. He's just gone and used our tactics to negotiate and he got with NAB. Well, he's, he's saving 1750 a year. And I personally, I'm with AMP and I just got a letter saying your five year interest only rate, 4.5% has been. Is going to go to a principal and interest rate of 5.53% in May and went back and did a pricing request and they came back with a 3.14%. So I'm saving 2.18% by asking for it. Right. So just don't be scared. Ask to speak to the retention teams. They're going to be out there and they're going to be keen to keep your business. Just make sure you compare. So there is a way forward if you need to, you know, save some money. So just be aware of those things.

You talked there a little bit about different industries. What are the industries that are actually in really good shape at the moment in terms of the best. You know, if you're in this industry, it's a good time for you.

Let me actually, I, I have been attending quite a few talks recently and I. Which I'm really happy to share with you guys, but I just attended a talk from David Robinson from Bendigo bank on behalf of Benjo Bank. I don't know how that works but. And this is what they shared, which I haven't seen before. And what this shows is the share of what each industry have. So if we think of this great big square, all of the business population in Australia, the majority of people are in construction and then in professional, scientific and technical services and then in rental hiring and real estate services and then in financial insurance services and then in. So you get the idea. The bigger the square, the bigger amount of the industry is a population he works in. Now this number in the square is the proportion of businesses that are currently operating. So we can see down Here it's a small amount of the Australian economy but. And there's. But there's 47% so you know, half the people in arts and recreational services have. Are not operating at the moment surprisingly mining down here. A small percentage once again of the population involved in this. But you know, maintaining 85% of employment rates up here in accommodation. Quite a significant amount but not the biggest of what people are employed in. And there's been a significant amount of reduction in income and the people or businesses that are operating there. So this is. I found this a really interesting slide to kind of give us some scope.

About snapshot just about economy in general. It just. It's what a service economy looks like.

Exactly. It is manufacturing.

Yeah.

And if I just jump onto what did I have here? I had two other things that I thought might be interesting. No. Unemployment rate. Yeah. The business is most impacted or needing to hibernate and this is as of 21st April. So can you see that? So this is kind of interesting because it's like food and accommodation, arts and recreation, mining. This is a lot to do in Northern Territory as well. Real estate, technical services, blah blah blah. So this is what we've seen now interesting enough education and training is still down here. So this is kind of still being supported as industries, health care, everyone but accommodation, food services, arts and recreation, etc. They're the ones that have really had that, that big change. So something interesting. But yeah, I'll go in and jump into some of those presentations later if we don't have any questions. Let's just see if have any questions.

Nothing so far Jake.

I'm glad. Well, I know most people watch this on replay some other interesting things. So hardship. Actually I might just. I'll put in the comments, the link to the hardship page, investorstoys.com hardship go and check that out if you want the contact details for your specific bank and for COVID 19 as I said, get out there and do some pricing negotiations which is really clever. Keep up to date on what's happening with the rental market in each state and any kind of big rulings that come out I think would be something that's really important to maintain at the moment. And as we discussed last time, just be aware that if you have got a rental agreement for $500 a week and you do have landlord's insurance, that landlord's insurance is based on that agreement. If you go and negotiate down to 450 a week then what might happen is that voids your landlord's insurance and the landlord's insurance that most of us have will cover for 10 to 12 weeks with your tenant doesn't pay. So just be aware that that could be something you need to be mindful of as well at the moment. Look, you know I did a borrow my brain with one of our community members last week who's looking to buy in the Central coast and she was saying that the real estate agents are saying the properties are being snapped up really quickly and that's pushing the prices up. We haven't seen. I haven't seen anything on pricing pressure downwards in Melbourne or in. But I'm not aware what's happening in Brisbane at the moment. I know that there was some positive shoots for Perth before all of this happened.

Seems like a long time ago.

A lot of people are saying Canberra is going to respond the fastest. You know, most of them are government employees and have, you know, jobs for life kind of thing. But. So there's an anticipation of Canberra being in a good place now. Now, John, I do want to share with you. I did.

I was going to look up. I've been talking to Scott the from hello House and he gave me a bit of an update on the. On Gold coast but I can't find it there easily. But he said he was starting to see some stock come on.

Yeah, and he's, he's got a development that he's at the moment trying to market as well. So he's, he's interesting updates now. Ripe House Advisory. Oh, here we go. Got a. So what we have here is the Australian Euro investment. No, not your investment. Australian Property Investor magazine ran with Ripe House, who owns Australian Property Investment Magazine, a bit of a questionnaire of a number of property experts. Recently, 146 people see my smiling face there. So Reiq Reinsw, you know, Reiwa buyers agents, Peter Kalezas from PIPA etc. So they had a bit of a chat to people about what they thought was happening in the market. So this was last week and there was a understanding that over the next three months that, you know, was when we'll probably see some recovery. We've also what I think was really interesting here that they talked about the middle ring and the lower socioeconomic ring. So the lower socio economic ring is the ring that is the one that most of the experts believe are going to have the biggest effect on housing prices. I still have the notion that if there is no market, there won't be a market to reduce property prices. So, you know, I'm just waiting to see what happens. Obviously we have very low stock at the moment and difficulty in people getting into properties. Where do we see property prices in 12 months more than the current values? Most of the people were at this was 90% of current values and 100% of current values. So very optimistic as we are in the property industry and where also what was also really interesting here is the suburbs that people expected to be most highly affected. Now a lot of these were suburbs that were affected by travel and tourism, affected by spiking vacancy rates, mainly from like Airbnb areas as well. And there also areas, there were tracking areas that had a reduction in rent. So what was really interesting is they. So go and sign up to this so you can get a copy of this. This is really hard to read, but have you seen this yet, John?

No, no, but it correlates. I was just. I found that message from Scott and he was saying there on the Gold coast that the short term market is killing the rental market.

Yeah. So. And that's. Yeah. And also you've got a lot of people in that area around tourism as well. So now this is interesting. Of the 15,296 strange suburbs that they looked at, 918 were highly impacted by travel and tourism. So that was kind of like the Gold coast suburbs.189 Highly impacted by spiking vacancy rates. And this is also the airbnb and these were 66 had a highly reduction of rent per week. So I know it's hard to see this, but what's interesting here is what they've done is they've pulled out these suburbs and they're actually putting down the percentage of Airbnb in each suburb. Right. In itself, this is a fantastic little resource. Heads up. I don't even know where Egg was Dale is in. In New South Wales, but it's got 19.55% of all its rental concentration and they only have 530 dwellings in the whole place. But 20% of those, 100 of them are Airbnb.

Wow.

And they're asking rent down 18% at the moment. So Healesville apparently down 43%. So this is just a really interesting information. Now this table here shows us those that have the suburbs highly exposed to an at risk employment. So this is the Entertainment retail and 69 suburbs reduced rent per week. And this is if we have a look at these, you know, we've got the number of dwellings and the change in vacancy rates, but the change in asking rent. So do know that these numbers are Skewed a little bit by how big the suburbs are. But main beach, Queensland, Surfers paradise, you know, we're talking about 6,000 residences and there's a 20% reduction in rent there at the moment. So just, you know, I think it's really interesting to look at this information and just get a feeling for, you know, what's safe and what's not. And if we have a look at the suburbs that are safe, these are the ones with the diverse economies. So we're talking about not the abattour, only in the region, in the regional area, or not the mining town that's only got mining going for it, not impacted by Airbnb at all. So very low percentage of Airbnb, healthy rental markets and a low new supply in the pipeline. So we're not about to have a huge amount of developments come on to the market. House and land packages OR units, and 55 suburbs were above average project value per capita. So there was a lot of development going on as well. And we just have a look at this. And this is the Dwellings Ashfield in New South Wales. 15,000 dwellings, low vacancy, low rent, change, you know, low new dwellings. So this is, bears in mind, you know, something that we talk about often, John, which is the tried and true, you know, what are we looking at? We're looking at the typical property in the area. We have a multi economy, so that we've got multi ways that people can be employed. We don't have a reliance on one economy. We have just a meat and potato type of strategy. Typical property, established property. And, you know, maybe you can renovate it, but we're not talking like fancy Airbnb or any of those other kind of strategies. So, you know, I guess the thing is that what this verifies is what they consider the safe havens are really what we've been teaching for the last 15 years.

Yeah. And it's. It's a hard thing to sell. Low risk. Like, it's not. It's not particularly attractive because we tend to be optimists and we think, well, bad things are never going to happen. But if we've proved anything in the last couple of months, we've proved that bad things can happen. And if you don't have that safety net of all those ways of minimizing your risk, then you are pretty exposed. So, yeah, it pays to play it safe. And how does the saying go? If it's exciting, you're doing it wrong.

Yeah, Warren Buffett. Exciting and doing it wrong. Now, I just want to show you also. We don't have any more questions coming through. No, you can probably hear that I have a very active child in the background who's on his lunch break. So this is really interesting. This is the Anz economic update from last week. The reason I just want to go over this because they wouldn't give us the slides and let us record this. So I did slide capture really quickly so I could pass it on. But this is what they're expecting. So this is interesting. They're Talking about a 9.5%, they're expecting unemployment rate and then a response. Now they're talking to about Australia getting back to the economy or level of economy that we have now back in 2022.

Right.

So this is really interesting.

To like, if you look at, you know, the boom years that have followed recessions, they're, you know, some of the biggest booms have followed some of the biggest, you know, think of the Roaring Twenties following the Depression.

Yeah, absolutely. And actually we've got, I've got some data here too. This is the gdp, so huge reduction, but then recovery. So, you know, we've got some interesting data. The thing about the Australian response to COVID 19, we got onto it pretty fast. We learned from the others, but we have actually got the highest level of household debt of most of the countries in the world, which means that although we're ahead, we're not going to escape in a recession or have no economic effect on us. So this is something to be really mindful of. Bear in mind also over the last 20 years, just the things that we have to pay for like our health insurance, our utilities, you know, education, etc. This, these have all gone up in value that cost us a lot more than what CPI is. So our basic needs have gone up in costs. This is interesting here. You know, food prices have actually been accelerating as well. And one of the reasons behind that is we've been in drought. Our poor farmers have had, you know, not just drought, but then bushfire that have come through. So, you know, it's this, it's interesting to look at some of these observations. You know, some of the biggest industries that have been affected, like fashion, etc. But as you said, John, you know, just we've got here, you know, 30 or 40 years of what's happening in the economy. The Anz guys looked at the $130 billion of stimulus that was announced when they did this two weeks ago. So there's more since then. And you know, we can see what they have actually looked at. Is that if we didn't. This significant amount of contribution of payments out this $130 billion, so much more than we've seen given out in any other time. But what they've said is that this is so important that they've done this because they believe that to get businesses back up again and running after they've closed costs 10 times this. I'm going to say 10 times, a lot more. So it's better to actually pay this and keep businesses going.

Yeah, it makes a ton of sense. It's very hard to reopen anything, isn't it? That's the similar line that they're running with the schools too, which you can. And you can see there's so many wheels in motion that once you close it down, it is a huge effort to start up again.

So we're looking here at housing construction. You know, one of the interesting things, she was saying that there had been like a turnaround where we'd actually had a period of increased construction, construction and also some renovations, but it started to decline at the beginning of the year. And one of the things is, you know, it's. When it's hard to get finance, it's hard to then continue on your construction development programs. But this had already started dropping off. And I think one of these stimulus packages that the New South Wales government has announced about buying up properties at the moment so that the construction industry can keep going is an interesting, you know, wait and see how that turns out. But, you know, the construction industries we saw earlier seems to be unaffected at the moment, but they might need their own little stimulus coming along and allowed.

To continue to work. I guess it's the, the private building. Like, there's a. There seems to be a bunch of projects even being pushed here. Like, even if you drive around and look at the, the work going on the roads at the moment, seems like every road and you know, wherever you drive, there's witches hats and every road's under repair because everything's, you know, pushing into those. Those projects. Yeah, but yeah, it's, it's. I could see why the, when new homes, the. There'll be a lag time, of course, but as people aren't building new homes and as the finance tightens up, then, yeah, there's gonna be a big, big hole to plug.

Yeah, absolutely. I think that's a Watch, watch and see that we need to do as well. And I think also if we just look at this, you know, she's saying that this is the graph that's really interesting. The actual, the orange is, you know, people searching. So they search and then this is the dwelling prices, they start going up. So the search is, they usually working the search as a precursor to the prices going up. So this is a kind of, you know, they've saw the searches coming down so they're expecting the prices to start coming down. Now depending on, you know, if we've got this under control, according to Louis Christopher, we've got, we could expect a 5 to 10% reduction in house prices. If we don't get this under control and we just let it get out of control, then we're talking about 20 to 30%. So it is important to know what's going on there.

Now I did also in the Last correction, the 10%.

Yeah.

Sydney and Melbourne.

Anyway, this is that David Robertson from Bendigo bank. As I mentioned, this is really interesting, these flattening of the curve, these little gray, can you see these gray lines? This is the death rate if it doubles every day. And this is every two days. And this is the death rate if it doubles every three days. So this is, you know, it's doubling every three days is what we're seeing in the United States and Italy as of beginning of the week, every five days, every 10 days. So Australia's, you know, you really kind of flatten this out, which is good. As we can see, China flattened completely. The other interesting graph here is just looking at the daily confirmed COVID 19 deaths per million. So we once again per million. We're actually bringing this down quite quickly as well. So not to get complacent and head out to the beach, but just to be aware that we are getting ahead of this bit of a tongue in cheek message here from Donald Trump which was in March about a month ago, he said, think about it, we only had 22 people die of coronavirus so far and lots of people died last year of the flu. How bad could it be? Well around about a week later there was 3.3 million people claimed unemployment benefits and it was normally about 4 to 500 new people, usually jobless. Claims come in. Now to put this in perspective, that means that they now have 22 million unemployed people in the US and they created 22 million jobs in 10 years. So they've wiped out that 10 years of new jobs.

Yeah, it's frightening. It really is.

Look, the good news here, iron ore, thermal coal, our prices are holding up and we are a commodity kind of industry. The watch this base precursor to this cursory tale, I guess I'd put on this is that SCOMO has called out China to do a. Please explain. And these are the biggest purchases of these products. So let's just hope that our relationship does get better. Inflation, you know, I'm not, I don't understand quantity vising very much at all. But essentially the government and my husband who's an economist tried to teach me this yesterday. But the government got on the front foot and tried to push up the three year bond rate by buying the bonds to get the bond rate to the point to 5% cash rate. Essentially what we've got at the moment to give their long term kind of confidence in, in our interest rates. So they're going to own the bonds, but essentially they're printing money to buy the bonds. So it's a whole little vicious thing that it's going to cause some inflationary problems. But I'll show you some of the inflation modeling in a moment. Stock market, the sad thing about the stock market, you know, we can see it's gone up, it's gone down, blah, up and up and down. It's gone down 39% in three and a half weeks. During the GFC it went down 55% but that took 18 months. So this is substantially a big change. And the really scary thing about this is that mid last year the financial planners are out there telling all the pension holders that 2% return on their cash is not good. Why don't they get into the share market? So I think we're going to have a huge increase in the number of our older generations which, let's just face it, that's why predominantly we're in lockdown to save them are going to face economically coming out of this, not to mention if we don't, you know, continue on flattening this curve, the property prices of their homes could also deteriorate. So watching I, I'm going to make a prediction here. It might be like what the hell is Jane doing? But hey, you know, we've done that before and that is if people's, you know, pension funds go down and their property prices go down, it's probably a whole lot cheaper for them to buy a Winnebago and go traveling and around Australia and living that way. So I reckon the rise of the Gray Nomad, that's what I'm predicting.

John, I was just about to leave. I've got, I've got the car warmed up out the front.

I'm gonna say, interviewed Caitlyn and Cassidy Murray and you know, they've seen a hundred countries you know, seriousness.

I wouldn't be surprised, like, if you look at the. The famous example of the kind of a nomadic generation is between the wars, which were called the Lost Generation. And they're all the people that, you know, between the First World War and the Second World War, they just went, you know, bugger this. I can't live my life. And I wouldn't be surprised if you're right, that that happens at the other end of this. The people go, all right, I've. I bought into it and now I'm opting out.

And I think the other thing is interesting is, you know, we haven't even questioned really, whether we have to turn up to work every day. We've been forced not to now. And we've actually responded really well. You know, we've got Zoom, there's an unofficial. Mark Zuckerman made an announcement on Tuesday to say that they're going to create their own Messenger, Facebook, Zoom, kind of competitor. But, you know, we've all gone digital and we have to question, are we less efficient in not turning up to work every day? And then could there be the rise of the Digital Nomad, which is, you know, I couldn't believe. Believe. You know, when I went to Mindvalley University in Estonia in 2018, I'd say half of them were people who were traveling the world and working from hubs and enjoying themselves, experiencing the life, but actually still keeping it like a 9 to 5 job or keeping a job that allowed them to make the contribution that was expected of them. Grown gray Nomad. And I think a lot of us are going to sit back and go, you know what? I think I want to spend a little bit more time with my family as well, even though we may have had a lot of time with our family recently, but maybe go and you know, enjoy ourselves and. And get out of, you know, where we are at the moment. So I think we're gonna, I think, travel, domestic travel. I've already planned two of my trips.

Yeah, me too.

Where are you going?

Around. It's exactly what you said. I'm gonna buy a van and do the Digital Nomad.

Fantastic. Well, we might cross paths. I plan to take the family to the Pinnacles and Monkey Mire. And I got ripped off on my Versace weekend in the Gold coast last year when the doctor wouldn't let me fly. So I think I did that and then swim with dolphins at SeaWorld. So I'm going to swim with dolphins on both sides of Australia. That's my latest. Let's Just get back to this.

At the moment I can't even go.

To the park.

In the park seems a long way off.

I know we will be doing this soon. Yeah. Long term trends. This is interesting. This is the property market. Sydney and Melbourne peak to trough for Sydney. Melbourne recently with the reduction that we had from 2018 to 2019, 18 months for some of the states was the largest peak to trough that we've had since World War II. Now we kind of came through this okay, if you think about it, not so bad. And you know, the fact of the matter is, if you don't have to sell, the fact that your Property went down $50,000 last year and came back $30,000 this year, you know, it doesn't really matter in the scheme of things. And if we're talking about investment properties, the fact that you got $500 a week and you're repayments on your loan were $700 a week 18 months ago and now they're $600 a week, you're actually in a better position.

Yeah. So that only hurts you when you sell.

Yeah, exactly. Okay, so let's have a look at this.

Now I've got about seven minutes, Jane, just to let you know.

Yep. Unemployment rates once again been significant reduction. Australian dollar is low, which is actually going to help us. Now here's this modeling I was talking about of the exchange rates. The depression in exchange rates actually leads to an increase in GDP because makes our stuff cheaper, people buy our stuff. We've got growth of jobs and wage growth as well. So these are all good things that we should look for. And as you said, John, recessions are recovered are always followed by recoveries from 1920 to 2008. Recession, recovery, recession, recovery, recession, recovery. Interestingly enough, this is from Goldman Sachs. This is about the US GDP. They're predicting a 24%.

What's the red one at the far left, Jane? I can't quite read it here. Yeah.

On the 10% around 2008, this is the GFC recession in the US and.

The bigger graph down the bottom and.

This one is 24% this year. But look at the recovery they're expecting. So you know, as I said, you know, there's always things that can go wrong. Amazon, Netflix, Zoom, heading up all the oil companies down and you know, we could probably gonna see the highest rate of unemployment that we've ever seen. We'll probably have that V recovery. And you know, I think China and our iron ore and coal and all of those things are really going to keep Us on track. So a lot of positive stuff that's come out of this, you know, positive things as well, John. You know, we've got things like lowest crime we've ever had. We've got, you know, the fact that population, we've got people trying new things, which is always interesting and I think a sense of community. We've got, you know, all of the things that are positive, they're coming out of this. I really encourage people to sit back and go, you know, we have had bad things in the past, we have recovered from them. We have had recessions. We haven't had a recession, What, John? Since 80.

93.

93, yeah, yeah. So 30 years, you know, we've been. Usually they come every 10 years. So, you know, and if you think.

About it, it was quite, it was quite a common thing. Like up until that point we were just used to just going through the cycle of boom, reception and you know.

We'Ve got this pandemic, you know, 165 AD, Marcus Aurelius, you know, he had a 15 year pandemic and lost half of his population. He ended up dying of it. You know, we had 18, 20, we had 18, 19, 20, Spanish flu, we had 20, 20. You know, these things come around every hundred years, we recover. So, you know, I just encourage you to have a look at your property portfolios at the moment, have a think about what potentially could be, you know, the gray nomads, the digital nomads, you know, how potentially you might consider changing your properties up, that you might invest in the future to allow for people to have extra space in their properties for the Home Office that's out of the home, you know, I think this is a time for us to actually look at what, what the possibilities are. I think we've gone through the real hard yards in the last six weeks and we've got another six weeks of, you know, hard yards. But I think there's optimism and it's not that far away. According to the Queensland Research Department this morning, they think that they are going to have a COVID 19, you know, vaccine by September.

So things are getting better already, relaxing some of their restrictions. Have a friend round, why not be good?

So guys, no questions, which is always very good, doesn't put us under any stress. But I hope you've enjoyed the Q and A and for those of you who are new to the club, you know, please tune in every month, ask your questions, come into the club, look around. If you're actually going through the modules and getting prepared for what happens on the other side of COVID 19. If you've got any questions, jump in here. A lot of people have questions about the dot map or those kind of things. If you go over to the unit section on the left hand side, you'll see there's a whole section on dot maps. You'll see this whole section of people's renovations, the before and afters and the costings, which is always really interesting as well. So, you know, there's a lot of property information in here. I know we've been concentrating on other things. John. I know I've kind of twisted your arm on this and I haven't prepared you for this, but you know, John, over the last eight years has been absolutely foundational. I can see his mind going, where is she going? Foundational in assisting us to put all of these courses up and available for people. And we had a chat around, you know, our experiences over the last eight years of putting courses together, some of the mistakes we made, what we would do again. And I've had the opportunity over the last three weeks to talk about to many experts, which has been an absolute pleasure. But hopefully, John, we can convince you to help others next week and maybe give them some information about ways that they too might be able to share their expertise.

Most definitely. I think it's a good time to have a look at what skill sets that you've got and go, how can I apply them to help other people?

Yeah, absolutely, because it's always a joy. But guys, thank you so much for joining us today. If you're watching the recording, know that we're in the club often and we will answer your questions or there'll be a lot of supportive people in there who will. If you have any questions and any final messages.

John. No, that's it for me. I would just say what works for me is a cold, cold shower. In my case, it's a cold dip in the morning and a walk around the park at lunchtime. So that's about the best tip that I could give in the social isolation.

Absolutely. And look, you know, some of the tips and some of the things we've been sharing over the last few weeks, you know, check out Anthony's talk around, you know, mental health and just some of the things you can do around sleep and eating. Right. And he also shared, you know, some of those cold bath tips, etc. You know, talking to Amanda about having a morning ritual, having some meditation or quiet time or reading time or prayer time or whatever you want to call it. Having some exercise time, having something that heightens patterns, you know, your emotions. I've been journaling which I'm finding really interesting. I'm on day 37 of lockdown so you know just, just to actually find I guess some joy and some something in this time so that you can take this away. It's not such a bad thing in memories but something that you took as an opportunity to grow yourself or get to know people better or contribute more. Well that's it guys. I really encourage you, Please download the COVID19 app. The quicker that we can recover means the quicker that our property prices will recover and that we can all get back into the norm of talking about how we can we can actually get to our long term goals of financial security. So as always, stay at home, wash your hands, don't touch your face and be kind to each other. Here's to your property success. Bye for now.

See ya. Bye.