Good ones that is.
Of course, not all habits are productive ones.
Some are bad for us, they stop us from succeeding, and they reinforce negative patterns that we’ve picked up from parents, friends or colleagues.
No one is perfect, but I’ve found that the most successful people find ways to replace their bad habits with good ones.
A successful career, after all, is really just a series of good habits put into action over and over again.
But in order to eliminate our vices and form productive habits, we need to identify our destructive ones.
Here is my checklist of some of the all-time bad habits.
I can’t tell you how often I come across this one.
A lot of people are quick to blame others when things go wrong and they fail to take responsibility for the role they may have played in the situation.
Of course, sometimes people have a run of bad luck or are treated badly, but that’s different from playing the victim all the time.
Think about your social circle, your friends, and your family.
I’m sure there is at least one person you can think of who always blames others for their bad fortune.
Tiring isn’t it?
The fact is: that there are no rich or successful victims.
Setbacks will happen.
To everyone.
It’s easy to look at other people’s successes and think they got an easy ride.
Most of the time, they didn’t.
They just didn’t let setbacks stop them.
Depending on how you were raised by your parents, you will either take setbacks in your stride or you will let them crush you.
If you fall into the latter camp, then it’s time to try and change this “Poor Habit.”
Catch yourself every time you feel defeated or when something is not going your way, and change your thinking.
Do not give up on the first hurdle.
A small number of people have the opposite problem of giving up too easily: they don’t know when to give up.
They pour endless amounts of time, money, and emotion into a project despite endless rejections and knock-backs.
Rather than try a different approach, they continue to butt up against a wall that is not going anywhere.
This kind of blind pursuit is not resilience, it’s what I would call stupidity.
As important as it is to chase your dreams, it’s equally important to know when to stop, take a breath, and try something else.
Thinking you know it all and that you have nothing left to learn, is foolish.
This kind of belief system cuts you off from growing, it short-circuits the imagination and it stops you from developing new ideas.
Aim to be one of those people who ask other people questions at barbecues.
Don’t get so stuck in your own head, and your own career, that you forget that other people are leading interesting lives and may very well have a role to play in yours, too.
Always be on the lookout to learn more. It’s good for business, but it’s also good for your soul.
Speaking of soul, it’s important unhealthy lifestyle habits are ditched.
That means no burning the candle at both ends.
You may be busy — busier than you have ever been — but you need to find an exercise regime that suits you and one that you’ll stick to.
Eat well, try and get lots of sleep, and maintain a decent level of fitness.
Looking after your body will help ensure you’re in good shape when life throws those inevitable curve balls at you.
If you’ve got any bad debts, or some credit cards that are no longer serving you well, then get rid of them.
The ability to look after your finances is one of the best predictors of success.
If you can manage your money, stick to a budget and save, it shows you have the kind of self-control and maturity that is needed to be successful in life and to see something through.
Many of us have one or more of these bad habits that we need to work on, but that doesn’t mean we should be complacent.
Bad habits hold us back.
They stop us from reaching our goals and they often keep us poor, tired, and unhappy.
Reason enough to ditch them for some good ones.
]]>The Australian Competition and Consumer Commission reports that Australians lost a record $3.1 billion to scams in 2022.
This is an 80 per cent increase in total losses recorded in 2021.
This staggering loss highlights not just the cunning of scammers but also their ability to adapt to changing technologies and exploit new vulnerabilities.
So, in today’s podcast with independent financial advisor Stuart Wemyss, I want to ask him how to spot the signs of a scam.
Our conversation today is an eye-opener, revealing common tactics scammers use to exploit the digital landscape and deceive individuals.
We touch on personal experiences and the various types of scams, such as phishing and false billing.
Whether you're an experienced investor or a beginner, this episode is packed with practical insights and data-driven predictions to help you make informed decisions.
Amidst sharing these insights, we underscore the significance of safeguarding personal and financial information and discuss how banks' robust security measures, though sometimes inconvenient, are critical in protecting us from these fraudulent activities.
Scammers have always been out there, but the risk of being scammed has changed and increased in certain ways thanks to new technologies and tools.
In my chat with Stuart today, we talked about both of our experiences with scams and the types of scams you might be likely to encounter.
It’s increasingly important to be proactive in protecting your finances from the threat of digital scams.
By staying informed and implementing strategic safety practices, listeners can defend their assets and continue building wealth.
Links and Resources:
Stuart Wemyss – Prosolution Private Clients
Stuart’s Book – Rules of the Lending Game & Investopoly
Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us
Join us at Wealth Retreat 2024 – www.WealthRetreat.com.au
Some of our favorite quotes from the show:
“2 factor authorization is a nuisance but helped protect me.” – Michael Yardney
“ I find it interesting when I get phone calls from banks or financial institutions who ring me and then ask me to identify myself. Now I know why they're doing it, but I always love saying hang on, you contacted me.” – Michael Yardney
“I believe this wanting what you have attitude can be practiced whatever your current situation. So how do you do this? Well, I think the first thing you should do is practice noticing what's great about what you've got.” – Michael Yardney
PLEASE LEAVE US A REVIEW
Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how
]]>The depth of buyer appetite was again shown by this week's strong auction clearance rates despite 2,723 properties being put to auction as demand from buyers keeping up with the increased number of properties put to auction.
Easing inflation and the prospect of an earlier-than-expected rate cut are buoying vendor hopes and buyer appetites for property.
However beneath these headline results, housing market performance remains diverse around the country.
Moving forward, demand is going to continue to outstrip supply for some time to come as we experience high levels of immigration at a time when we’re just not building anywhere as many properties as we require.
At the same time, the cost of construction of delivering new dwellings will keep increasing not only because of supply chain issues and the lack of sufficient skilled labour but also because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market price,
It will be much the same for our rental market where the supply / demand equation is so far out of balance that we’ve experienced an unprecedented rental crisis with historically low vacancy rates and skyrocketing rents and this will continue into 2024.
On the auction front, with 2,723 capital city homes going under the hammer last weekend, it was the second busiest week of auctions so far this year.
The preliminary clearance rate held up well under higher supply, coming in at 74.0%, 1.2 percentage points higher than the previous week’s preliminary clearance rate (72.8% which was revised down to 68.0% on final numbers).
See Corelogic's full auction report below.
Overall, Australian capital dwelling prices increased by 0.6% over the last month and are now 10.2% higher than they were 12 months ago.
Clearly, the property cycle is moving on driven by an undersupply of good properties relative to steady demand from buyers.
Source: CoreLogic March 18th 2024
Of course, these are "overall" figures - there is not one Sydney or Melbourne or Brisbane property market.
And various segments of each market are performing differently.
The more expensive parts of our capital cities are likely to outperform this year as the local residence will, in general, have more equity in the properties they are selling, and they won't be as sensitive to high interest rates and the high cost of living as the outer and new suburbs.
To help keep you up-to-date with all that's happening in property, here is my updated weekly analysis of data and charts as of 18th March 2024 provided by CoreLogic, and realestate.com.au.
Property asking prices are a useful leading indicator for housing markets - giving a good indication of what's ahead.
Here is the latest data available for March 2024.
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,887.405 | -4.722 | -1.7% | 10.6% |
All Units | 793.750 | 0.850 | 0.0% | 5.1% |
Combined | 1,447.330 | -2.480 | -1.4% | 9.0% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,253.380 | 7.620 | 1.5% | 7.9% |
All Units | 605.689 | 1.311 | 1.2% | 2.0% |
Combined | 1,051.434 | 5.653 | 1.4% | 6.6% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,059.581 | 4.401 | 1.8% | 11.8% |
All Units | 580.478 | 0.822 | 0.5% | 15.7% |
Combined | 940.439 | 3.511 | 1.6% | 12.2% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 954.414 | -1.801 | 1.7% | 15.8% |
All Units | 497.004 | 6.496 | 3.0% | 16.8% |
Combined | 835.644 | 0.354 | 1.9% | 15.8% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 874.293 | 3.763 | 1.2% | 13.8% |
All Units | 443.387 | -3.087 | 1.3% | 16.0% |
Combined | 797.026 | 2.534 | 1.2% | 14.0% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,204.100 | 2.337 | 0.3% | 17.0% |
All Units | 598.427 | -0.052 | -0.7% | 0.7% |
Combined | 984.932 | 1.473 | 0.0% | 12.7% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 659.100 | 0.500 | -0.6% | -3.4% |
All Units | 378.168 | 0.165 | 0.7% | 0.9% |
Combined | 548.932 | 0.369 | -0.3% | -2.4% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 805.965 | 3.632 | 1.2% | 1.7% |
All Units | 505.110 | -1.474 | -0.9% | 2.0% |
Combined | 760.776 | 2.865 | 1.0% | 1.7% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 908.057 | -1.759 | 1.3% | 10.8% |
All Units | 534.897 | -1.282 | 0.5% | 5.9% |
Combined | 828.369 | -1.657 | 1.2% | 10.0% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,351.430 | -2.636 | 0.2% | 11.1% |
All Units | 669.278 | 0.083 | 0.8% | 5.7% |
Combined | 1,151.278 | -1.838 | 0.3% | 9.9% |
Source: SQM Research
The value of property asking prices as a leading indicator for housing markets is quite significant.
In fact it's more valuable than median prices which can be quite misleading.
Let's delve into why this is the case and how it impacts the real estate market.
However, it's important to note that while asking prices are a valuable indicator, they should not be used in isolation.
Other factors like actual sales prices, time on the market, auction clearance rates, and economic conditions also play crucial roles in understanding the property market dynamics.
READ MORE: The latest median property prices in Australia’s major cities
Preliminary clearance rate holds up under higher supply
With 2,723 capital city homes going under the hammer last week, it was the second busiest week of auctions so far this year.
The preliminary clearance rate held up well under higher supply, coming in at 74.0%, 1.2 percentage points higher than the previous week’s preliminary clearance rate (72.8% which was revised down to 68.0% on final numbers).
Sydney was the only capital city to record a lower preliminary clearance rate, with 74.8% of auctions returning a successful result so far, down from 76.2% over the previous week (revised down to 71.1% on final numbers) and the lowest preliminary clearance rate so far this year.
Although the trend in clearance rates has been softening across Sydney, the success rate remains above the decade average of 72.2% on the preliminary rate and 68.1% on the final rate.
Melbourne’s preliminary clearance rate recorded a solid bounce back, rising to 72.4% after the previous week’s long weekend saw the preliminary clearance rate drop to 66.2% (revising down to 61.9% on final numbers).
Last week’s early result was the second highest so far this year, after the second week of February (73.1%).
With 1,387 auctions held, this was also the second-highest number of auctions held so far this year.
The preliminary clearance rate was up across the smaller capitals as well, led by Adelaide with a stunning 92.6% preliminary clearance rate.
Brisbane’s clearance rate came in at 71.9%, while Canberra’s preliminary clearance rate came in at 69.9%.
There were 181 auctions held across Brisbane last week, 159 in Adelaide, 110 in Canberra and 19 in Perth.
Four of the eight auctions reported in Perth so far were successful, while we are yet to receive the results of the three auctions in Tasmania.
City | Clearance Rate | Total Auctions | CoreLogic auction results | Cleared Auctions | Uncleared Auctions |
---|---|---|---|---|---|
Sydney | 74.8% | 864 | 652 | 488 | 164 |
Melbourne | 72.4% | 1,387 | 1,067 | 772 | 295 |
Brisbane | 71.9% | 181 | 114 | 82 | 32 |
Adelaide | 92.6% | 159 | 81 | 75 | 6 |
Perth | n/a | 19 | 8 | 4 | 4 |
Tasmania | n/a | 3 | 0 | 0 | 0 |
Canberra | 69.9% | 110 | 73 | 51 | 22 |
Weighted Average | 74.0% | 2,723 | 1,995 | 1,472 | 523 |
Source: CoreLogic
Our rental markets have been tightening further over the last few months, with vacancy rates for both houses and apartments extremely low across the country and asking rents rising rapidly.
Asking rents across the capital cities for houses had been rising in annual terms in the “double digits”, while for units, new asking rents are rising at faster rates, at over 20% in Sydney, Melbourne and Brisbane.
The recently released National Accounts showed that Australia’s population has grown by around 620,000 people in the past financial year.
That’s the highest number in history and a hundred thousand more than what the May federal budget projected.
This record 2.8% expansion in the 15 plus age group of our population is placing a great strain on our rental markets.
The number of overseas students and also people on graduate visas in Australia has increased by just over three hundred thousand in the last financial year.
In particular rents have been rebounding across inner-city rental markets (popular with international students) after slumping during the pandemic when international borders were closed.
While the pace of rental growth is likely to slow down, with current vacancy rates rents will continue to increase as there is a minimal new supply of properties set to enter the market in the medium-term future.
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $1,054.16 | 4.84 | 1.3% | 11.9% |
All Units | $703.58 | 2.42 | 1.5% | 10.3% |
Combined | $846.03 | 3.40 | 1.4% | 11.1% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $741.14 | 0.86 | 0.5% | 15.1% |
All Units | $552.70 | 2.30 | 2.3% | 10.3% |
Combined | $630.36 | 1.71 | 1.5% | 12.6% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $713.73 | -3.73 | -0.7% | 6.9% |
All Units | $571.40 | 2.60 | 0.7% | 10.9% |
Combined | $649.68 | -0.88 | -0.1% | 8.5% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $778.11 | -1.11 | -0.2% | 17.4% |
All Units | $580.10 | 5.90 | 1.7% | 16.9% |
Combined | $695.35 | 1.82 | 0.4% | 17.3% |
Source: SQM Research
Property Type | Rent $) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $638.38 | -0.38 | -0.1% | 12.9% |
All Units | $457.72 | -3.72 | 1.4% | 12.7% |
Combined | $576.18 | -1.53 | 0.3% | 13.0% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $751.84 | -0.84 | 0.1% | -1.6% |
All Units | $575.89 | 1.11 | 1.0% | 2.1% |
Combined | $656.44 | 0.22 | 0.5% | 0.1% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $719.33 | 0.67 | -1.6% | 0.7% |
All Units | $492.08 | -0.08 | -2.6% | 9.4% |
Combined | $583.97 | 0.23 | -2.1% | 5.0% |
Source: SQM Research
Property Type | Rent 9$) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $543.75 | 0.25 | 0.3% | -1.3% |
All Units | $463.96 | 1.04 | -0.9% | -3.5% |
Combined | $511.69 | 0.57 | -0.1% | -2.1% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $688.00 | 0.00 | 0.0% | 8.3% |
All Units | $532 | -4.00 | 0.4% | 8.6% |
Combined | $615.48 | -1.86 | 0.2% | 8.5% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $834 | 2.00 | 0.8% | 12.1% |
All Units | $622 | 3.00 | 1.6% | 10.5% |
Combined | $721.10 | 2.53 | 1.2% | 11.4% |
Source: SQM Research
As the following chart shows, houses are still being snapped up quickly by eager buyers.
At a national level, properties are taking slightly longer to sell than they were during the property boom of 2020 and 2021.
However, the number of days to sell a property is still relatively low (a sign of the tight supply situation for good properties), and vendor discounting is still at very low levels.
In general, houses are selling quicker than apartments, but the shortage of good properties on the market is seeing A-grade properties selling quickly with minimal discounting.
Recent Ray White data reveals that time on the market (how long it takes to sell a property) is still significantly higher in most cities across the country compared to two years ago when the market hit its last peak in pricing following the end of the pandemic.
Nationwide, properties are on the market for sale for an average of 30 days, which is far higher than the 22 days recorded in the previous market peak in January 2022.
The data shows that Perth holds the record as the state where properties sell the quickest - at just 11 days.
Brisbane, Sydney and Melbourne follow next, with 22 days, 29 days and 29 days, respectively.
Meanwhile, Hobart has gone from the quickest selling state during the previous market peak to now being one of the slowest selling markets - at 36 days.
The key trend however is affordability, Ray White’s data reveals.
Both Perth and Adelaide have the lowest capital city medians and at a suburb level, low-cost housing is generally selling the quickest.
In fact, of the top 100 quickest-selling suburbs in Australia, 84 are located in Perth, the data reveals.
Properties in Seville Grove, in the city’s southeast, and the outer southern suburb of Cooloongup are among the fastest-selling, with the average time on the market standing at just five days.
Both suburbs have medians under $500,000.
Almost all of the quickest selling suburbs had a median under $750,000 (86 of the 100).
The most expensive of the top 100 quickest selling was the Perth suburb of Mount Claremont which has a median price of $1.78 million.
At a capital city level, it is also apparent that anything that is below the city median is selling a lot quicker.
For example, Sydney’s St Clair and Werrington Downs are listed as the state’s fastest-selling suburbs at 11 days each, and both have a median property price far below the city’s $1,128,155 median.
The same is true of the fastest-selling suburbs in Brisbane.
Properties in Leichhardt and Raceview are the quickest to sell, at 9 and 11 days respectively.
The median property price in these suburbs sits at $450,000 and $530,000 respectively, which is far below Brisbane’s $805,593 city median.
Meanwhile, the exception is Melbourne where properties in Skye and Kilsyth, which have a hold time of just 14 days, have median property prices close to, or just above, below the city’s $778,941 median.
As always, these tightly-held suburbs aren’t necessarily the suburbs I would recommend investing in.
That’s because when it comes to property investment, it's most important to look for an investment-grade property in the ‘right area’ rather than chasing ‘top hotspots’ or growth areas.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
You see…property investing is a process, not an event.
Things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
The fact is, the property you will eventually buy will be the result of a sequence of questions you will need to ask and answer and a series of decisions you’ll need to make before you even start looking at locations.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
]]>So it’s no wonder that housing affordability (or unaffordability) is such a popular topic at the moment.
There's no denying it has become a lot harder to make the first step, mainly due to the hurdle of saving up a big enough deposit to meet the bank’s requirements.
Especially when it comes to questioning how our younger generations will ever be able to make their first step on the property ladder at a time when the crippling cost of living and rising interest rates push home ownership out of reach for many.
But parents have been helping their children buy properties for generations and many will be happy to do the same to help their children in future.
The Bank of Mum and Dad provided nearly $3 billion worth of funding to adult children in 2023, the AFR reports, making it one of the nation’s largest residential property lenders.
Such support has increased fivefold in the past five years to assist about 60% of first-home buyers.
But while it’s great news that there are several ways that parents can help their kids onto the property ladder, the bad news is many generous parents are unknowingly creating a minefield of problems for both their own futures and that of their families.
Here are 7 steps to help your kids onto the property ladder without detonating a legal, tax or financial minefield that could sabotage your (or their) future.
Generally, there are two ways a parent can help their kid buy property - a guarantor loan or a cash gift.
One of the most common ways that parents help their children is by agreeing to a guarantee loan.
A guarantor loan is a loan product that offers up some of their equity to their child or children to assist with the deposit.
For example, perhaps your daughter could only save $30,000 but needs $60,000 to qualify for a home loan.
If you're thinking about guaranteeing a loan, make sure you understand the risks.
Take the same care as if you were taking out a loan for yourself.
For example, if you apply for a loan in the future, you'll have to tell your lender if you're a guarantor on any other loans.
They might decide not to lend to you, even if the loan that you guaranteed is being repaid.
It's important to recognise, however, that while you may not have ownership rights over the property, you may be wholly responsible for the entire loan if your daughter or son defaults.
In fact, lawyers say a growing number of court cases involving bitter family disputes about what was agreed and who is responsible for outstanding debts underlines the need for any loan or gift to be carefully documented.
With loans, the minimum a parent should do is register it against the title of the child’s property to make others aware of their interest.
Alternatively, you could lodge a caveat on your child’s property to protect your “equitable mortgage”.
And always have a written loan agreement, even if asking your child to do this might feel a bit awkward at the time because it is so much safer for you to have evidence of a loan agreement.
If you're considering this option, you should access expert advice before proceeding.
As a parent, we all want our children to have good lives and to be successful if that's what they desire to do.
But does that mindset extend to giving them a financial gift to buy a property?
In my opinion, it really is a personal decision and will depend on factors such as your child's capability to manage a home loan.
If your son or daughter has been spending every cent that they've earned for years, which is why they haven't saved a property deposit, is it really a good idea to just give them a handout?
Will they have the necessary financial discipline and know-how to not default on their mortgage repayments?
Perhaps a better idea could be to suggest a financial gift that matches their savings.
So, if they knuckle down and save $25,000, then you will tip in an equal amount to bump it up to $50,000.
That way, your child will learn how to save and you will be more confident that they're not taking on more than they can financially handle.
But parents need to be very clear about whether they’re providing their children with a gift or a loan.
If the money is a gift, this should be made clear in writing to avoid confusion down the track.
If the money is a loan, as mentioned you should write up a loan agreement detailing the size of the loan, the term and how it will be repaid.
So, before you decide on a strategy to help your children buy property, you must ensure you have accessed expert advice from a qualified wealth strategist.
That way, it reduces the chance of any ugly fallouts which could totally undo your original good intentions.
Parental contributions vary according to state and territory property prices, with an average of about $92,000 in NSW and $34,000 in Western Australia, according to Jarden Australia, an investment bank and wealth manager.
The national average is about $70,000, and nearly 5% receive more than $200,000, its analysis shows.
Larger assistance is generally provided in NSW and Victoria where property prices are the highest – typically about 10% of median dwelling values.
Parental assistance in Western Australia, where property prices are the lowest, equates to about 6% of dwelling values.
Making sure a loan is fair for lenders, borrowers and all family members – particularly siblings – can make or break a transaction, lower the risk of damaging disputes and maintain harmony, specialists told the AFR.
This includes ensuring parents can afford to subsidise their child’s purchase and that other siblings are comfortable with the amount of a gift or loan (plus repayment terms), which might mean amendments to parents’ wills to ensure equal treatment.
Parents first need to assess the impact of a loan on their own finances by calculating the amount of money they will need in retirement and whether it will affect their access to other credit.
Here’s an example of how the type of help parents give affects their own finances.
Source: AFR
Craig Hollett, a director of Solomon Hollett Lawyers told the AFR of cases where some children are increasingly helping themselves to their parents’ wealth, creating potential problems with siblings.
For example, children are using enduring powers of attorney, authorising them to make legal and financial decisions when parents no longer can, to claim they have the authority to cash in their inheritance early.
Alternatively, they pressure elderly parents to forgive debt.
“This can become sinister when one child gets more than others,” says Hollett. “Wills should make provision to ensure that all children are treated fairly.”
For this reason, it’s vital that all you write the agreement down, including terms of what has been agreed and what should happen should circumstances change.
This should include everything that has been discussed, with details of who has agreed on what and an idea of the timeframe.
Remember, verbal agreements are as legally enforceable as written ones, but you will have problems when you need to prove they exist.
Australians on part-age pensions, or other Centrelink benefits, need to ensure these are not jeopardised.
Remember that the government includes gifts over $10,000 a year or $30,000 over five years as assessable assets so retirees should look carefully at the assets test used to calculate the rate of age pension.
Source: AFR
There are no tax implications for either the giver or receiver for cash gifts but capital gains tax needs to be considered when gifting other types of assets… such as property.
So that means a property inherited by, or given to, children from their parents or other family members may come with an attached capital gains liability.
Generally, CGT does not apply when you inherit property but it may apply when you later dispose of or sell it.
That’s because, in the case of an inherited or deceased estate, the transfer of ownership to you (i.e the inheritance transaction) isn’t considered a CGT event.
And if the transfer isn’t considered a CGT event, there is no capital gains tax liability.
However, if you decide to sell the property, CGT on the inherited property may apply.
There are ways for a receiver to reduce their capital gains liability on the sale of the property, but to avoid creating more problems down the track the process needs to be thoroughly researched and planned.
About 1 in 3 parents guarantees a loan, which could expose them to extreme financial risk if the child defaults, including the possibility of losing their own home.
That’s because, as I mentioned above, the parents agree to take responsibility for mortgage repayments if the child is unable to make them.
And this can extend right into their retirement.
So parents should specify whether the loan guarantee is partial or full - even a partial guarantee of the first 25% of a loan reduces exposure and limits risk.
Loans are expected to be repaid at a specified interest rate, with terms and conditions setting out the lenders’ rights on default.
Therefore, parents offering a loan should set out a loan agreement specifying things like the interest rate, term and the lender’s rights in the case of default.
This helps to lower the risk of expensive legal fees and damaging credit scores, which affects the future capacity to borrow.
A loan is preferable to a gift where the child is in a relationship and there are fears a partner could walk away with family money.
Parents gifting money have different risks to look out for - a gift is seen as something where there is no expectation of repayment.
This still needs to be documented, including how much was gifted, to whom and for what purpose, including a statement saying it doesn’t need to be repaid to avoid confusion down the track.
Several lenders provide incentives for family members to assist in buying property, according to Canstar.
These help buyers avoid LMI with a lower deposit, increase their buying budget and access lower interest rates but those considering a deal need to compare terms and conditions which differ for each lender.
]]>A big part of that is because more of us have been able to work from home than ever before.
The proportion of Australians in paid work climbed above 64% in May last year and has stayed there since.
At the same time, unemployment has hovered around a half-century low of 4%.
In April last year, female unemployment fell to what is almost certainly an all-time low of 3.3%.
It’s working from home – actually, working from anywhere – that has been the game-changer, as the most enduring change to the way we work to have come out of the pandemic.
Before the pandemic, in 2019, the share of the workforce who usually work at least partly from home was 25%.
Three years on in 2022, it was 36%.
These numbers from the latest Household, Income and Labour Dynamics in Australia (HILDA) Survey show there’s also been a shift in who’s working from home.
Before the pandemic, a greater share of men than women worked from home.
Now it’s a greater share of women.
Among both women and men, the biggest jump has been among parents with young children.
The proportion of mothers with children under five working at least partly from home has leapt from 31% to 43%.
The working-from-home rate for fathers with children under five has jumped from 29% to 39%.
Before the pandemic, managers and professionals were the workers most likely to work from home.
They still are, with up to 60% dialling in from the home office for at least part of their work week.
But it’s clerical and administrative workers – occupations that are about three-quarters female – who had the biggest jump in working from home.
Their pre-pandemic rate of 18% has soared to 42%.
In terms of industries, finance and insurance led the pack before the pandemic and still do, with rates doubling to 85%.
Working from home is now also the norm in information media and telecommunications (74%) and public administration and safety (72%).
In the traditionally male industry of construction, women’s working-from-home rates have soared from 34% to 45%.
It’s well above the men’s rate of 24%, which is largely unchanged.
While this reflects the different types of jobs that men and women do in construction, it also suggests working from home is a way to boost women’s involvement, even in this industry.
The benefit of working from home for the economy has been fewer obstacles getting in the way of matching job seekers to employers.
Distance and location are no longer the deal-breakers they were.
Better job-matching means less unemployment, and the heightened prospect of finding a good job match encourages jobseekers who in earlier times might have given up.
In finance and insurance – the industry with the biggest and fastest-growing rate of working from home – the proportion of jobs that were vacant fell from 2.5% before the pandemic to just 1.7% by the end of 2023.
Making workers return to the office for jobs that can be effectively done from home would unravel the economic benefits that have been achieved.
Fewer people, especially women and parents with young children, would put themselves forward for work.
The pool of skills that employers are looking for would shrink.
And job-matching in the labour market becomes less efficient.
The result would be more Australians unemployed, and more Australians dropping out of the paid workforce, than if we had continued to embrace working from home.
Working from home still comes with challenges.
Workers who are less visible in the office are more likely to be overlooked.
But it has a wider economic benefit we have a chance to hold on to.
The extraordinary transformation of our labour market means it shouldn’t be seen as a “favour” to workers but as a favour to us all.
Guest author is Leonora Risse, Associate Professor in Economics, University of Canberra
This article is republished from The Conversation under a Creative Commons license. Read the original article here.
]]>I firmly believe that experience is the key factor in preventing costly investment mistakes.
Hence, I dedicate time each year to ponder the lessons provided by the market in the preceding year.
These important lessons are available to those who actively seek them out.
In 2021 and 2022, I cautioned that interest rate expectations can change on a dime.
In the second half of 2023, many commentators forecasted that interest rates would need to rise to such an extent to tame inflation that it would cause a global recession.
As such, markets declined significantly in September and October.
However, by year’s end, there was a significant shift: the market anticipated that inflation could be tamed without a recession and even started pricing in a series of interest rate cuts in the US, and possibly one or two in Australia.
Market expectations changed dramatically over the course of 2023.
The key takeaway is that forecasts and expectations often feel very compelling at the time.
So much so that they resemble certainties more than educated guesses.
The truth is, that short-term outcomes remain unpredictable.
No existing methodology reliably predicts short-term market movements.
Consequently, it’s wise to disregard forecasts that don’t align with our long-term investment goals.
For instance, if we’re investing for 10+ years, only long-term forecasts merit consideration.
Focusing on short-term forecasts may lead to costly errors, bringing us to the second lesson of 2023…
In both 2021 and 2022, bonds experienced their most significant declines since the inception of indexes in the 1970s.
This outcome might not be surprising, considering the substantial monetary support deployed by central banks and their persistent message that interest rates would remain low for many years.
Despite being considered a safe asset class, as taught in textbooks, bonds didn’t exhibit the expected characteristics during these years.
Normally, their capital value isn’t as volatile as stocks.
Additionally, bonds are usually negatively correlated with shares which means when shares fall, bonds should rise in value.
However, in 2021 and 2022, these norms didn’t hold true.
This deviation challenged our belief in the traditional role of bonds within a portfolio.
It was tempting to perceive these changes as permanent and seek alternatives to bond investments.
However, 2023 presented a more “typical” performance for bonds, showing modest positive returns.
Chris Joye, Australia’s preeminent fixed-income investment manager, anticipates that bonds will outperform in the next 2 to 3 years, although it’s worth noting his role as a fixed-income manager can influence this prediction – he has a vested interest in promoting fixed-income investments.
That being the case, I do respect his work.
The lesson here is about maintaining confidence and resilience.
Extraordinary market occurrences are not uncommon, and while the triggering factors may seem unique, the market has navigated similar situations before.
Investors must have the discipline to not react to these market events.
This sets the stage for the third lesson…
As 2023 began, most economists held the belief that a global recession was all but inevitable.
Surely a staggering 5.2% hike in interest rates in the US would damage the world’s largest developed economy.Given this outlook, I considered what adjustments we should make in client portfolios to brace for this seemingly certain recession.
Despite extensive contemplation and discussions, we ultimately opted for no changes.
Our existing strategy had already skewed portfolios towards higher quality companies (quality factor indexes) and investments that were relatively undervalued (value indexes), which theoretically offer better resilience against the impact of a recession.
The crucial lesson learned here is the unwavering importance of sticking to a long-term investment approach.
Regardless of the severity of an event – whether it’s a global recession, financial crisis, pandemic, high interest rates, or wars – studies consistently demonstrate that investors who make fewer changes tend to yield higher returns.
Assuming your investments are fundamentally sound, the only justifiable reason to modify your strategy should stem from changes in personal circumstances or goals.
Otherwise, staying committed to your strategy is key.
As 2023 began, I held the belief that higher interest rates would weigh negatively on growth stock valuations.
Over the last decade and a half, growth had outperformed value (measured on a 5-year rolling basis) since around 2007.
My expectation was that an increase in interest rates would trigger a resurgence in value stocks, which are the cheapest they have ever been in history relative to growth, according to Research Affiliates.
I was wrong.
Surprisingly, the seven largest growth stocks were the primary drivers behind the S&P500’s impressive 24% return in 2023.
These seven stocks now constitute about 25% of the total index, posing a significant concentration risk.
The central investment theme revolves around the impact of AI.
Of course, AI is likely to be positive for the economy and stocks, but I think its upside is well and truly reflected in current prices!
Quoting the renowned economist John Keynes,
“the markets can remain irrational longer than you can remain solvent.”
This underscores the idea that betting against rising markets, even when they appear irrational, can be risky.
A stock’s potential to ascend is limitless, while its downside is finite as it can only fall to zero.
Despite nearly a century of data indicating that value stocks historically yield better long-term returns, the timing of their resurgence remains uncertain.
We understand that value appears “cheap” and should eventually revert to the mean, leading to significant outperformance compared to growth.
The uncertainty lies in predicting when this shift will occur.
The takeaway here is to avoid betting against the market’s trajectory.
Embrace a long-term approach while acknowledging that reaping the benefits might necessitate several years of patience and adherence to this strategy.
Journalists and forecasters will fill your ears but never your wallet
The subheading above is adapted from a quote by Warren Buffett.
While you may absorb market insights, forecasts, predictions, and advice, the reality is that much of this information doesn’t significantly aid in making sound, long-term investment decisions.
Most commentary tends to be rooted in negativity or focuses excessively on short-term perspectives.
Recently, I read an interesting book titled Factfulness.
The book discusses why our instincts about data often lead to misconceptions.
The author cites many facts which are contrary to popular belief, such as:
The author cites many reasons why most people think the world is in a lot worse shape than it is.
This book reminded me of the importance of always looking at the data.
It’s evident that relying on media for investment decisions is unreliable.
Much of the “news” we receive is not only short-term but also lacks reliability.
When it comes to investments, often the best course of action is to do nothing, especially if the original investment decision was well-founded.
This serves as a significant reminder I’ll carry into 2024 and beyond.
What investment lessons did you learn in 2023 and how will you use these learnings in 2024?
]]>Of course, they also get things wrong, mess up and do things they wish they hadn't done.
But when things go wrong they tend to handle the situations differently.
Lifehack shares 10 things successful people do wrong when things go pear-shaped:
Successful people are not going to give up that easily.
They are adaptable, resilient, and determined to go on.
That means having a plan B ready.
They know that optimism is what counts and their glass is always half full.
Research suggests that the realistic optimist is more likely to be successful
In addition, they are grateful for what they have achieved and will concentrate on their successes.
“When you lose, don’t lose the lesson.” – Dalai Lama
If successful people fail, it means that they were prepared to:
When and if they fail, they are able to sit down and assess calmly what went wrong.
There is a lesson from every failure and they know how/where to find it, accept it, and above all apply it to future projects.
“Success is moving from failure to failure without loss of enthusiasm.” – Winston Churchill.
It is interesting to note that Churchill was defeated in many elections until he finally became Prime Minister at the age of 62!
Michael Jordan kept at it and made sure that he perfected his technique. he said:
“I have missed more than 9,000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot, and I missed.
I have failed over and over and over again in my life. And that is why I succeed.”
You can do the same by assessing your skill set and seeing how it can be improved.
Or maybe you need to spend more time on networking and building relationships.
Many entrepreneurs were able to crawl out from the ruins of failure and start again.
But some were wise enough to seek advice from friends or mentors.
Obviously, these have to be the kind of people you would trust your life with.
They are also upbeat, and confident, and can boost your morale.
Those who make it to the top also know how to get help from their networks and connections, when they want to start over after failure or setbacks.
Thomas Edison failed over 6,000 times when inventing the light bulb.
The courage to go on is essential.
All successful businessmen, inventors and politicians have one thing in common.
They never quit.
When asked about success and failure, Robert Kiyosaki, author of ‘Rich Dad, Poor Dad’ said that successful people are always pushing their boundaries.
They are the ones who know how to invest in what remains after failure so that they are always growing.
Very often, entrepreneurs are slow to admit their failure and make things worse by trying to backpedal and recoup losses.
The secret is to know when to let go if you have failed, sit back, slow down, and regroup.
When successful people fail, they know where to lay blame – on themselves.
“Carpe diem (seize the moment).” – Horace
The great successes of our time in inventions, research and finance were all achieved because the entrepreneurs never thought for one moment that the ‘time was not right’.
They went ahead and did it.
]]>Well... this monthly collection of charts from CoreLogic paints an interesting picture.
After outperforming through much of 2023, upper quartile home values are now recording a slower quarterly rate of appreciation compared to the broad middle and lower quartiles, CoreLogic’s March Housing Chart Pack shows.
Historically, the upper quartile of the housing market tends to lead the cycles, both into the upswing, but also into downturns.
This trend has once again played out through 2023 and early 2024, with the upper quartile of the market leading the upswing through the first seven months of 2023, but slowing more sharply through the second half of last year and into early 2024.
This trend is most evident in Sydney, Melbourne and, to a lesser extent Brisbane, where upper quartile values clearly led the 2023 upswing through the first half of the year.
The trend hasn’t been evident in Perth or Adelaide where lower quartile home values have consistently recorded a faster pace of capital gains through 2023 and the first two months of 2024
The shortage of dwelling both for sale and for rent, at a time of skyrocketing population growth is going to continue throughout 2024.
And as buyers and sellers realise that we have reached a peak of interest rates and that inflation is coming under control and consumer confidence returns, buyer and seller activity will pick up.
So I currently see a window of opportunity to get into the property market before "the crowd" does.
The lower quartile across every capital city has recorded a stronger outcome for housing values relative to its upper quartile counterpart over the past quarter.
Perth has the largest gap between lower and upper quartile based on the change in dwelling values over the past three months, with a 2.2 percentage point difference, followed by Adelaide (1.6pp) and Brisbane (1.5pp).
Sydney and Melbourne have a 0.7pp difference, followed by Hobart and Darwin (0.6pp), while Canberra has the smallest growth gap (0.4pp).
The following chart shows how various segments of each capital city market are performing differently with median priced properties performing well.
Another star performer was Brisbane where property values increased 15.6% over the last year and are currently at a record high.
And Sydney property values which performed strongly over the past year (+10.6%) are now only -1.9% below their record high reached in January 2022.
Here's how the Adelaide property market performed.
The Canberra housing market languished last year
Similarly the Darwin housing market underperformed in the last year.
We update the weekly auction clearance results here each week.
Source of charts: CoreLogic Chart Pack, March 2024.
Well, now that we've got a few months of the year under our belt it's clear that many markets around Australia are likely to experience significant growth over the year driven by a confluence of factors that will underpin strong demand for well-located properties.
It is now clear that our housing market has defied many doomsday forecasts and has moved into the recovery phase of the property cycle, making the 2022 property downturn one of the sharpest but shortest ones in history.
Currently, Australia’s housing is so horribly undersupplied that I've rarely encountered a supply-demand inflection point like this that requires such attention.
Locating an available property is already more elusive than finding the missing car keys.
And it’s only going to get worse.
Of course, this offers an astounding real estate investment window.
Sure there are unknowns and risks ahead, but there are also five certainties for our housing markets now:
These 5 profitable real estate tailwinds create a window of opportunity for investors before falling interest rates, create a property market reset later this year, but let's look back at the history of property prices to help you look forward.
Firstly it's important to recognise that property is a long-term investment and value growth compounds over time, so it’s fair to say that the sooner you start investing in property, the better you’ll end up financially.
Now that’s not fair!
This is what I can hear new investors say.
Of course, I can understand your frustration if you see our property markets surging ahead and you don't have the funds to get a foot on the property ladder.
And to compound it somewhat, I’ll share with you this titbit of information one of my mentors taught me many years ago...
The best time to get into real estate was 20 years ago.
However, I would add:
The second best time is today.
Of course, who wouldn't like to buy their parent's house for the price they paid for it years ago?
Until we master the scientific breakthrough of time travel, it’s not possible to go back in time and buy property while it’s still “cheap”.
But if that were possible, we could snag some absolute bargains.
If we take a look back at what real estate prices were like a few decades ago, the facts and figures are eye-wateringly appealing.
In 1973, the median house price in Sydney was just $27,400.
Renting would cost you an average of $26 per week, and according to the Australian Bureau of Statistics (ABS), the average weekly wage was $111.80.
Buying a house at this time in Brisbane costs $17,500 and in Melbourne, it would set you back $19,800.
The first property I bought in Melbourne in the early 1970's cost me $18,000.
I went halves with my parents and we got $12 a week in rent - and we were excited!
And if you were to purchase the average house in Canberra back then, it would cost you around $26,850, whereas a house in Hobart would’ve seemed a steal at the low median of $15,200.
As for Perth and Adelaide, the housing market was affordable with a median of $26,850 and $16,250, respectively.
Compare that with the pricing of houses these days, and it’s a vastly different story.
According to housing data from CoreLogic, median house values at the end of December 2023 were:
The first thing we can deduce...
In the space of 50 years, all capital cities have recorded massive price growth.
Some have performed better than others, clearly.
But the fact remains that anyone who bought a property in 1973 and still owns it now, has profited very handsomely from their investment.
The second thing we can deduce?
Time in the market, not timing the market, is a surefire strategy for success when you’re building wealth for your future.
There are a number of factors that influence property prices, but in particular, our population growth, the increasing wealth of our nation, and falling interest rates over the years (excluding the last couple of years) have driven up real estate values.
But things have changed recently...
That's a good question, considering there are still many economic headwinds that will affect us as some parts of the Australian industry.
But there will also be a combination of growth drivers that should lead to a period of strong property price growth in 2024 with a confluence of the following:-
Thinking strategically, this means that now, at the early stages of a new property cycle will be a window of opportunity for savvy investors to really amplify their wealth position.
I went on record late in 2022 saying that our property markets would reset in 2023.
In fact, it happened a little earlier than I anticipated and property values have been steadily increasing month after month since early this 2023.
In fact, we're already experiencing FOMO (fear of missing out) in some markets which is pushing property values even higher.
And for those worrying can property values keep increasing remember how Sydney property prices increased from around $27,000 in 1973 to over $1.1 million in 2023 — can you imagine where they will be a few decades from now?
Note: For many. now could be the best opportunity in decades to get into the property market!
It is likely the confluence of multiple growth drivers will lead to continued property price rises throughout 2024, but price growth is likely to be a little slower than the double-digit growth many markets experienced in 2023.
While average capital city home prices are likely to rise by around 7% this year and a little less next year, making such broad-brush statements can be misleading.
It is likely that houses will outperform apartments, and while currently, all segments of the market are performing strongly, higher-end, more expensive properties are likely to outperform the cheaper segments of the market where high-interest rates, the cost of living and low wages growth will bite..
Investor interest is already picking up, and as they return to the market, as they always do as the cycle moves on, this will extend the length of our property price boom.
As the news gets better for property and the media reports rising auction clearance rates, rising house prices and increasing consumer confidence, a whole group of new buyers will also enter the property market, buoyed by a strengthening economy, growing employment, and renewed confidence in the direction Australia is heading.
This will serve to increase competition for property which will potentially drive up prices and most importantly, absorb quality stock, making it harder for you to secure a solid investment.
This is likely to happen for two main reasons:
1. Confidence. When we are more confident about our financial future, interest rates, inflation and our jobs we make big buying decisions such as purchasing new homes or investments.
2. Competition will increase as buyers return to the market.
Now don’t get me wrong. Not all property markets will rebound strongly this year.
Properties located in the inner and middle-ring suburbs, particularly in gentrifying locations, will outperform cheaper properties in the outer suburbs.
The reason is, that the rising cost of living, higher mortgage costs and rents have adversely affected low-income earners to a greater extent than middle and high-income earners, while many affluent Aussies who have paid off their mortgage have not been hit at all.
High-rise apartment towers which were already suffering from the adverse publicity of structural problems prior to COVID-19 will now become the slums of the future as they are shunned by homeowners and investors.
And like after every downturn, there will be a flight to quality properties and an increased emphasis on liveability.
As their priorities change, some buyers will be willing to pay a little more for properties with “lifestyle appeal” and a little more space and security, but it won’t be just the property itself that will need to meet these newly evolved needs – a “liveable” location will play a big part too.
To many, liveability will mean a combination of:
The bottom line is that for those with a secure job and who have their finances under control, now could be the best opportunity in a decade to set themselves up for the opportunities that will present themselves as our property market heads into a perfect storm with a confluence of growth drives in 2024.
It should come as no surprise that getting a good team around you will be an important investment and not an expense and should allow you to build a property portfolio that will go a long way to replacing their income in the future.
At the same time, you must learn that property investing is not a get-rich-quick scheme and to achieve your future financial goals you will have to slowly build a substantial asset base and not chase short-term cash flow as many beginning investors do.
The property doesn’t discriminate; it doesn’t care who owns it.
The residential property market is worth well over seven trillion dollars today and over the next decade, it will increase in value by billions and billions of dollars.
If you get it right, you can have your share.
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