Your Property Success Mentor Call February 27-02-2021

Hello, hello, it is Jane Slacksmith here and it is February 2021 and welcome to the your Property Success Monthly Q and A call. We have been doing these for over eight years. There is plenty of these that you can go back to and watch from all the previous years and months. And boy what a month it has been now. I just wanted to make sure that and you can hear me or if you are having any difficulties in seeing me, let me know, type it in chat. And as you can see above this, I would love to connect with you and see your comments and see who I am commenting with using this software. I need you to click on that link so that I can actually see who you are. Facebook gives me permission to do that. So let's just get going. Let me know if you can see me and if you can hear me. It's great to be here. As with all of our calls, this is general information. I don't know your specific circumstances. I'm not a real estate agent or a financial planner, but I am here to help and answer your questions as they come up, as we have done for many, many months in the past and will continue to do. What a incredible month it has been. There is so many things going on at the moment and it is really difficult to keep your mind around everything that is happening. We've obviously come through 2020. It has been significant. We are not going to go back to the old normal, we are going to continue with the new normal, which at the moment means interest rates are predicted to stay where they are for the next few years. We're talking about 2024 is the latest prediction of when rates are going to start having any movement. I was just on a lender panel update this morning and I was hearing around interest rates for loan to value ratios of less than 80% owner occupied, 1.9% fixed with some lenders. So some extraordinary interest rates out there, I think. You know what we've seen, which has been quite an amazing situation through 2020, is that a lot of people's bank accounts have gone up so they haven't been out there spending the money. They've got a lot of stimulus. That's not to say that there's a lot of people hurting out there. I'm coming to you from Melbourne and the shock lockdown within five days that went ahead just last week was quite considerable. In actual fact, I spoke to someone when I had my haircut, a hairdresser who was tell you that there was three brides that she was working on for weddings on Saturdays and two of them within six hours managed to bring their weddings forward to the Friday night. So, you know, that was quite extraordinary in itself. And the final one had actually already postponed her wedding from last year. So I think she was just weeping so much. Anyhow, that's not. We're here to discuss. We're here to answer your questions. If you have any questions, please put them in chat or, or click that link and come online and chat to me. And if you do so, then you agree that we can use your image and your face and your video because I do not have those editing skills to edit you out. I think what's really important that we do talk about is what's happening in the market and all predictions. And I've got a little bit of a presentation for you to discuss that. Things are moving very, very quickly. As I previously said, when it was almost a year ago today that everything shut down. I know my husband had his first art exhibition that was going to go ahead on the 21st of March, 2020, and he was told that that was not happening and subsequently things stopped. So we're around that date right now and has been definitely a strange year at that stage. My private clients, my mentoring clients, I put them all on hold and was just waiting and seeing what was happening in the market and was doing a lot of analysis of what was happening overseas as well, which I want to share with you today. What's really interesting in looking around the markets and looking at the different, what would you say, the different real estate markets that have been through lockdown and come out. We've definitely seen them, you know, come back and flourish. New Zealand is probably the prime example. We've seen other markets that have, you know, gone through lockdown and come out but now have gone back into lockdown. So, you know, what I was watching with their markets are not as relevant now, but New Zealand definitely is. And I've got some interesting insights there around what's happening in New Zealand. I guess what also is happening is that we've also seen that with my private clients, you know, September, October, I really activated them to get back into the market. And a number of them have bought strategically really well since then. But in the last few weeks, we have definitely seen, you know, especially in Sydney, that the sale prices are going about 20% over what the upper end of the quoted range is. So they're really definitely in a boom market there. A few auctions were thrown out of sync in Melbourne, which was interesting to see a lot of. I Think there was over a thousand auctions in Melbourne last week with a very high clearance rate. You know, it's interesting to see that fear of missing out. I know, you know, one of my mentoring students, we did a significant amount of analysis around what the real median price was because you know, we're always working with data that's two months old and was around 860 for this suburb. The reserve price was 8 for the property. We looked at the property in comparison to other properties and what the opportunity was and had come up with a maximum lend. Sorry a maximum bid for the auction strategy that we came up with just over 900 and that property went well over a million. A million fifty. So from a reserve of 830 to over a million and fifty, it just goes to show you there is this kind of fear of missing out. And you know, looking over the Queensland market, wow, those guys are really taking an advantage And I know a lot of people are looking up there and seeing all the opportunity in moving to the sunny state and the Sunshine coast and the Gold coast are really getting a great lot of attention at the moment, which is fantastic to see. Will it be sustainable for the long term? If you're investing for the long term? I think that is a question that anyone who's looking even at the predicted growth the Perth and Darwin also has to ask themselves. So look, if anyone doesn't have a question straight up, I might just run straight into sharing my screen and showing you my presentation because I think it's, it's going to give you an idea of, you know, what is happening out there at the moment. And you know, I really, I think it's a, a great opportunity for us to really see the market and what that looks like. So hopefully you can see my screen at the moment. And you know, it really comes down to what is happening in the property market. COVID 19 and beyond. And the really interesting thing here is I pulled up an old presentation to start going through the conversation about that and what I found was that in actual fact showed me that there wasn't really anything that was that I'm just going to turn off my video so you can see my screen which is now really scary, right? But there wasn't really anything that was going on in the October presentation that I put together compared to what I'm putting together in February that was a whole lot different at the same talking points, you know, so I kind of looked and went well, I can almost use the same stuff. So if you see any pictures that you think are the same. There you go. I've used the same presentation because really there's not a lot different to tell you. I was walking around the streets this morning and saw this picture of a Mack truck and it really hit home that, you know, for a lot of us it feels like we have been hit with by a Mac truck in the last 12 months. There has been a lot of questions about what is happening out there and where we're going to end up. And you know, a lot of people have had their livelihood and you know, the consistency of expectation of income, etc. Really taken out from under them. But there's a lot of people who have had good Covid and you know, have had an opportunity to save money and have had an opportunity to grow their businesses or grow their income. And now that all the kids are back, they can really to school, they can really focus on the next step. As always, we have a look at the RP data, early market indicators and this really gives us an idea of, you know, what was happening. And we look at the top line, the blue line. What's happening compared to 12 months ago in the pre listing activity. Now what's really interesting here is the pre listing activity is actually a measure of how many real estate agents are getting the CMAs or the comparative market analysis reports done for people who are coming and asking about listing the properties. And we're really seeing that spike and in actual fact, you know, greater than it was last year. We're also getting newly advertised properties for sale coming back on the market. So this is a really good measure as well because they have the pre listing activity very high which results in properties coming onto the market. Now what I expect we are in like in Melbourne in particular, we're in a position where there has been some hesitancy in returning to putting stock on the market. People who want to sell their properties are looking around and wondering should I do it now? The agents are getting these amazing prices and this is happening in Sydney as well. And their agents are going to people who have been on their watch list of I might be listing my property and going we can get you 100, $200,000 more than what you thought. Let's list now. So I expect that what we'll see is a huge wave of newly advertised properties coming on the market which hopefully will stem a bit of that supply issue so that we're not overpaying for properties. Obviously mortgage activity is up as well. First, home buyers and owner occupiers in particular. Now let's Just have a look at some of the predictions because I think the predictions are really interesting in respect for, you know, last year there was a lot of the banks came out and expected a 10 to 20 to 30% drop in house prices. At that time, you know, I predicted that there would actually be no change in house prices because I didn't believe there would be a market that would be actually sell able to sell properties which is kind of, you know, I hate it when people look in retrospect going I got it right. But it's kind of what's happened, you know, there the market was closed down so prices went nowhere. What's come to light now is, you know, four years of almost promised low interest rates, savings in the bank, people in a more confident position. We've got a vaccine that's just started to be rolled out this week and now we have the banks and research experts coming out and saying there will be growth. Now as you can see, Perth and Darwin definitely leading the way there. Now what's interesting, you know, as I said, is that a lot of expectations is that the market will be taking off in the future and that we're definitely going to see, you know, some of these states having a lot of interest. I still think Darwin and Perth have too reliant on the mining industry for them to be anything other than a short term blip, which is good because they deserve it because they've had negative growth for so long. I have seen FIFO operators had to move to Perth because Western Australia because obviously of due to lockdown, you know, they couldn't fly home and see the family for a week and then fly back because of quarantine issues. So a lot of those FIFO operators have moved to Perth which makes me wonder when I look at the statistics of where people are moving to if it really is realistic or not or if it's just the fact that there's these operators that have moved there for the short period of time. So let's just have a look at, you know, the other things that are going on here. And we've got the lifestyle markets. So we have a look at Hobart and Adelaide. You know, obviously there's been a lot of run on those areas, especially Hobart in the last few years. You know, it looks like there's due to affordability, there's going to be more people buying there. Sydney and Melbourne, you know, they're not going to predict it to have the same growth as the other air capital cities have in the next few years. But I think from A population point of view and employment point of view going forward. If you're looking to invest for 15 years, then you really should consider those areas and look at those areas for long term growth because it has happened in the past and it will happen again. Here's a really interesting graph that I found which is just around that real estate agent activity. And at the moment, and we know February last year we were still pretty much okay. We're now 13% above the 2020 levels of real estate activity. And this is as measured by RP data. So it's really interesting to see that, you know, the market is back and what, you know, happens with the agents is that they go and tell the people on their watch list that maybe you should list your property because we're getting some really good prices. Those people bring their properties on, supply goes up and if demand doesn't go up, then prices should stabilize. But there's a lot of people taking opportunity to get into the market. Lots of first time buyers buying at the moment and I have a lot of my private clients who are just missing out on properties. So, you know, and a lot of properties aren't even going to auction. So I did speak to someone this week. I've got someone buying in the Inner west in Sydney and the price guide was up to 1.2. And when we inquired about what would take it off the market before auction, they said 1.4. So that just gives you an indication of what's happening out there. These are a couple of photos that I took whilst I was walking around again this morning. And you know, I think it's, it really kind of sums up the Melbourne real estate market. You know, we did have lockdown for like 112 days or something and subsequently the last five days. But you know, I think it's really interesting to have a look at it and just see the fact that Melbourne was predicted to have the biggest population by 2030 in Australia. It's probably going to be 2033 now. There's a lot of advocates out there trying to get the overseas students back into Australia. What is really interesting, I've spoken to three lecturers from different universities in the last two days and all of them have said that they do not want to return to Face to Face at the moment. Whilst they're online, all they're doing is working from 10 to 2 and their normal day when face to face is 9 to 5 and it will increase because of the 1.5 meter distancing rule. They have to run two lectures of the same lecture because they can't fit all of their students in the one auditorium. So we're going to. It's going to be an interesting dynamic. There's going to be a lot of advocates of the universities to try to get the international students back, but I think the people who are out there going to educate them are going to resist that. So interesting dynamic, the one that we'll watch. Look, I just want to take you around the world and show you some of the things that are happening as well. This is really interesting and this is one of the things that I often look at and that is, you know, what's happening in New Zealand. So what I've seen that has happened in New Zealand over the previous years is that they are usually six months ahead of Australia. And you know, obviously they have had a very good management of the COVID crisis and they have had an opportunity to really, you know, recover quite quickly. Where they are at the moment is, you know, the value to the income ratio of their major cities. They used to save a deposit is still like 10 years. The share of income needed to make repayments around about 30% on loans and the rent to income, you know, they need about 25% to of your income to cover the rent. So it still seems here that it's cheaper to rent than it is to have a mortgage. But, but at the moment the value to income ratio is back to the 2016 kind of boom areas. What's really interesting about the New Zealand market and why I watch it is that when we had all of the restrictions from APRA and ASIC in 2017 and they came back and said we want you to restrict the number of investors that can invest. The loan to value ratio was changed. They changed the difference in interest rates depending on whether an investor or an owner occupier. All of these things were happening. Now at the moment I put on my mortgage broking hat. At the moment we have a lot of first home buyers buying, owner occupiers buying and all of these people who are buying, they're really concerned concentrating on that home or the next home. But the investors are back and they're coming in strong and the market won't show those numbers for another three months and then the lenders are going to get worried and then APRA and ASIC are going to get worried and I think there'll be a constraint on investor funds that will come in before the end of the year. You need to watch this. And if there's anywhere that's going to Give us an indication of what going to happen. It's New Zealand, so check out the Kiwis because they're going to give us an indication of what's going on over there and they'll give us an indication before anyone else. And I think it's really important that we do look at that. Let's just jump over and have a look at remote work as well. I think it's really important to understand about this regional boom. I was really reluctant to go with the whole regional boom kind of mentality and everyone was going to move out to the country and, you know, there was going to be this huge change. But having said all of that, you know, there is and there has been some significant changes to the what's happening out in the country. It's really interesting to see, you know, where the regional areas are growing. So I'm going to put this into the report. But, you know, this area, like Dubbo, just some anecdotal information. You know, my parents have a little unit they inherited there today. They're having an open home for renters and apparently the rents have gone up over a hundred dollars a week. People are moving out there. Orange has obviously had a large increase as well in values, you know, so we've got a lot of these areas that are regionally. So, you know, we're watching. I think it's really interesting that we continue to watch what's happening in that market and continue to see, you know, what is happening regionally. So really important to do that. Interest rates and lending. You know, this is a really interesting little graph as well. I just wanted to show you. It's interesting to see, you know, what is happening in the market and what's happening with interest rates. As I said earlier, there's some fantastic interest rates that are out there. What you'll see is that we've got owner occupiers and investor lending here separated. As you can see, the majority of investors are buying with interest only and majority are going with variable loans. Investment lending is all interest only and variable. What I found really interesting with the new loans there, a lot of these are interest only as well for people buying their own home. And, you know, we know that strategically that by doing that it's a clever option to, you know, build up your cash so that you can pay it off when you want to pay it off, but you've got that buffer of cash there. So I think it's really interesting to just look at that and look at it in context of what's happening in the market, as we know long term, when we look at how all of the other markets respond and where you could put your money and where you can make some money, it's interesting to see that the share market and residential property are pretty much par to par. So if you're looking at investments in the long term, they're kind of like a proven opportunity. So I'm sorry for the technical problems today. I thought after 10 months of being away from the office that we could get back in and everything would work beautifully, but apparently not. But I think the messaging that I really want for you to take away from this is that yes, there is opportunity out there at the moment. Yes, I think there will be restriction of lending for investors going forward by the end of the year. Yes, interest rates are going to remain low. You know, as I was in a presentation this morning, and you know, 1.9% for loans for owner occupiers, principal and interest under 80% and that's just amazing. Two to three year fixed loans. You know, I know in my mortgage broking business, Investors Choice Mortgages, we had to turn off our ability to take on new clients the last four weeks when we caught up due to the demand and happy to say we're taking back appointments at the moment. So you can make an appointment, just go to investorschoice.com bookacall and you'll get an opportunity to chat to me in the next couple of weeks. But here's the thing, you know, I know all the mortgage brokers that I've spoken to are just flat chat. We've had. I was on a presentation this morning and first thing you manage, if you Westpac gone online and apologised for the fact that it was taking 45 days for them to assess a loan. Up until recently that was the case and now they're back to 10 days. So if you found a property and you want to go to market and buy on the weekend, that assessment time is taking ages with some lenders. So if you are going to a bank and they're kind of giving you the run around, know that the brokers have access to 30 plus lenders that will be able to ascertain what's in your best interest, which might be that you can get a loan within two days or two hours, which can happen within some cases. So just be aware that the market is back, the market is moving, there's going to be some good growth for the next two to three years. In some of the markets that haven't traditionally had the Growth and as I mentioned brisbane long term 10 year growth is 2%. So I think in the next few years there's going to be some opportunities. But if you're a long term value investor then the opportunities to look further afield to where the major performers have been Sydney, Melbourne and their satellite cities, Geelong, Newcastle, wollongong with over 6% growth. There's those opportunities. There is going to be some rise of the regional areas as well. And you might get a 10% growth in an area that has a median house price of $300,000 with some risk of the rentability of that property and continued growth. Or you might get 5% growth in an area that has an $800,000 median price and some consistent proof and patterns of rentability. And so you know, one may not actually give you a better equity gain to your bottom line, but the growth number is going to look great on some of those lower priced areas. And I think, you know, the affordability issue is really relevant especially for first Home buyers. There's some amazing deals on the first home loan deposit scheme that has come out. I've spoken to a lot of first home buyers and you know, they spent a lot of time. There was a 10,000 of the first home loan deposit scheme where the government, you know, kind of backed a 5% deposit from first home buyers so that they didn't have to get mortgage insurance. That came out before in January or early last year and then another 10,000 came out in July. There's going to be another 10,000 that come out in July 2021. There was 1800 that were re released two weeks ago and they were all absorbed within two, within seven days. So you know, there are still a lot of first home buyers out there taking this opportunity at the moment, which is fabulous to see. And go over to firsthousebuyer.com if you want some more information. All the updated grants book that I've put together on the grants for First Home buyers and I think that we're going to see a lot of those first home buyers getting to the market and potentially turn those properties into investments in the future as well. I know I'm talking to a lot of rent vestors who are looking at that opportunity and head over also to the Borrow my brain interviews that I've done with some of the first home buyers because there's some of those people who are really looking at buying a home that could be an investment in the future, which I think is a really clever strategy and just to wrap up the market has been really, really vibrant. It will continue to be vibrant. Know that the investors are back. There is still some vacancy rate concerns, especially in Sydney but at the moment, you know, I know that there's a lot of the universities out there campaigning to try to bring international students back and it'll be something to watch. The rise of the regionals is something to watch the remote working. A lot of people still aren't back at work five days a week and quite comfortably working from home two to three days a week. So that's probably going to be something that we continue to see as well. But I don't think we've got got any questions. If we do have some questions, type them in now. More than happy to address them for you. I know most people watch these calls on replay so I look forward to any comments that you make regarding the presentation and we'll have a look at those and I'll get back to you. We do have a question here that says what do you think of the more affordable areas of Melbourne and Sydney for long term growth? I think that rise of the remote work and thank you for the question is something that's really something that we should be mindful of. The fact that people only need to go to work maybe two to three days a week or once a week or once a fortnight. Miriam means that some of those more affordable areas that are in the outskirts of the large capital cities will actually become commutable because we know that people with the ripple effect, they're always trying to be close to where those employment hubs are and that's not going to be such a big dynamic. However, it does structurally take demographics, structurally take a significant amount of time to have significant changes. So all although we might see some gradual movement, I don't think it's going to be a complete exodus from the inner ring suburbs at all. We know that the higher ends of the markets, the 3 million plus kind of properties are selling very, very well, which is always nice for people who can afford those. But it shows the confidence of the larger corporates giving out bonuses and encouraging their senior executives who can usually afford those properties. And that filters down through company companies as well in income. So I think that some of these regional, not regional, sorry some of these outer suburb areas that have not necessarily had the growth opportunities in the past because it was more of a bit of an affordability push. I think you'll start seeing people, you know, moving to those areas and being closer to family and as well, you know, going back to the family stomping ground. You know, they might have been in eastern suburbs in Sydney and now they're going back to the shire or back to the northern beaches. And you know, that's commuting distance is not such a big deal when you only have to do it one or two days a week or one or two days a month. But I think we'll definitely, it will be a new normal which is going to be really interesting in the years to come to try to look at how that's affecting prices. And even if the ripple effect is still relevant, which is something I'm looking at all the time when I'm looking at the markets as well. So there's really some new times ahead when it's coming to looking at the property market. But the fundamentals still stand, which is look at what people want to buy, look at where they want to live and look at the typical properties in those areas to reduce your risk. But at the moment the market is hot. The market is continuing going to be hot. If you're thinking about buying, don't jump out of the market quite yet and wait until it will go down because I don't think it will. And especially with interest rates so low, you know, and will be low for a long period of time, there's going to be cheap money on the market and people are going to take advantage of it. So that's where I think we are going to be. It's an exciting, vibrant time. As I said, you know, when I put my mortgage broking hat on, you know, this is, we are really putting a lot of resources into the investors choice mortgages at the moment to make sure that we can, you know, continue that high level of care and attention that we give our clients, but also that we can handle the incredible workflow that we have of new clients and new inquiries. And you know, we're not, we're not Robinson Crusoe here. Most of the banks are the same, hence why they've had their time frames blow out. And also good brokers have had the same experience. So it's interesting times ahead. But I do think we should be mindful of fact that we might have some restrictions on investor funds in the latter part of 2021. And if you're thinking about getting in and investing, do so I know that my mentoring students at the moment, you know, I've got three of them in the market putting in offers that we're reviewing, you know, weekly catch ups every week and looking at properties and coming up with, you know, auction plans and negotiation plans. Etc. There's a lot of opportunity out there but gee, there is a lot of people also to compete against. So you know, buy well, buy strategically and I think you'll be in a good place but exciting start of the year. And yeah, there's going to be a lot of wait and sees. But don't wait if you want to get into the market right now. Anyhow, I'm going to wrap it up. It has been lovely to speak to you and give you a bit of an update what's happening in the market. Please put your comments below. I'll be editing out any tech issues that have happened and putting this video up so people can watch it as a recording and put your questions below that and I'll come back to you. But you know, get into the your property Success club. There's a lot of new members in there. Share your stories. People who are renovating at the moment or buying at the moment or have questions. We're here to help ask you questions. And we will be back next month, March 2021 pre Easter. And I'm thinking that I'll be telling you the same story, which is the market is booming and people are out there buying, buying well for the long term. So as always, I wish you a great month ahead. And here is to your property success. Bye for now. Sa.