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[Podcast] Have you heard the one about rising interest rates? With Dr. Andrew Wilson

[Podcast] Have you heard the one about rising interest rates? With Dr. Andrew Wilson
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If you’ve been following the Real Estate columns in the media recently it would have been hard to miss stories about mortgage stress and rising interest rates.

Of course, it’s the same property pessimist chasing a headline giving biased views based on the preconception that our property markets are about to crash and backed up by very small sample sizes of data.

So in today’s show, Dr. Andrew Wilson and I will discuss not just our views but those of the Reserve Bank – so at the end of our chat, you’ll have a good idea about the direction of interest rates in the medium-term. My Podcast 309 Interest Rates Rising

We’ll also discuss a comment by Assistant RBA Governor Luci Ellis who recently lashed out at the Federal Government suggesting negative gearing and Capital Gains Tax discounts essentially encourage speculative investment and are fuelling property price growth.


Now if you have been a subscriber to this podcast for a while or followed my blogs or YouTube videos, you’d know for the last 3 years I have recorded a weekly Property Insiders video chat with Dr. Andrew Wilson.

And his assessment of and forecasts for our economy and property markets have been remarkably accurate so whether you’re a beginning property investor or an experienced I’m sure you’ll benefit from my chat with Andrew today which is the audio of one of our recent Property Insider videos.

I’ll leave a link in the show notes so you can see all the charts that support the information we’ll talk about, but in general, that won’t be necessary – Andrew explains his position well.

I’ll also be sharing my regular mindset message where I’ll explain why being rich is a choice.

So welcome to today’s show.

Has unemployment really improved?

Officially Australia’s unemployment rate is at its lowest level in almost 13 years, despite half the country being in the grips of lockdown.

However, these figures don’t really reflect what’s happening on the ground where things have been getting worse for Australian workers.

The headline unemployment rate is no longer a good representation of the jobs market, falling in August despite workers doing it tough.

As lockdowns were implemented, more Australians worked fewer, or no hours and underemployment rose.

It’s not surprising that the labour market took a beating as businesses closed their doors.

In August, the participation rate dropped from 66 to 65.2 percent, with 211,188 fewer people in the labour force than in the June survey.

On top of people simply ceasing looking for work, those in the workforce are seeing their hours drop, particularly in locked-down areas like Victoria and New South Wales.

Hours worked nationally fell by 3.7 percent last month, though NSW bore the brunt of the losses, with hours, worked down 13 percent since the lockdown started.

Interestingly people working just one hour per week are technically classified as employed, even though clearly, they wouldn’t consider that to be the case if you asked them.

Rate hikes are further away than you think

A number of the regular property pessimists are doing the rounds of the media chasing headlines telling anyone who is willing to listen that many Australians will fall into mortgage stress when interest rates rise and that this will occur sooner rather than later. Interest Only Lending Australia

However, Governor Lowe once again asserted that this won’t happen any time soon.

He said he finds it difficult to understand why the market is pricing in rate action 2022 and 2023 and confirmed that interest rate will only rise when inflation hits the target of between 2.5% to 3% and stays there for some time.

Clearly, our rising house prices are not going to affect the RBA’s interest rate decisions and Governor Lowe confirmed that house prices and housing affordability are not the domain of the RBA.

Here’s what causing our property boom.

Assistant RBA Governor Luci Ellis recently lashed out at the Federal Government suggesting negative gearing and Capital Gains Tax discounts essentially encourage speculative investment and are fuelling property price growth.

These interesting comments at a time when the number of investors is below historical averages, and the government has supported first home buyers to get into the market.

Property Listings are rising

Watch this week’s Property Insider video as Dr. Andrew Wilson and I discuss the surge in listings of properties for sale that has suddenly occurred.

It will be interesting to see how these extra properties for sale will affect property price growth, however as most sellers are also buyers, I see significant market depth ahead and higher prices at the end of this year.


Michael Yardney

Dr. Andrew Wilson, chief economist My Housing Market

As our property markets move forward why not get the team at Metropole to build you a personalised   Strategic Property Plan – this will help both beginning and experienced investors.

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Some of our favorite quotes from the show: Melbourne Property

“That is interesting, considering how we are hamstrung, how well the markets have done.” –Michael Yardney

“I think there’s been a change in sentiment from vendors recently, and they’re now coming back to the markets.” –Michael Yardney

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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.

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