Weekend reads – Must read articles from the last week

There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.

Each Saturday morning I like to share some of the ones I’ve read during the week.

The weekend will be over before you know it, so enjoy some weekend reading.

Australian home prices have fallen for 11 months – and it looks like it will be 12

Australia’s property prices continue to fall – with no sign of a change.

According to an article on Business Insider we’ll be heading into a 12 consecutive month of price falls.

Australian home prices fell for an 11th consecutive month in August, according to data released by CoreLogic. Sharper Fall In Prices

It looks like that stretch will extend into a 12th month in September based off information released by the group today.

Last week, prices across Australia’s five mainland capital cities — Sydney, Melbourne, Brisbane, Adelaide and Perth — fell by 0.2% in average weighted terms, leaving the decline over the past four weeks at 0.5%.

With just six days left in September, that all but ensures another month of national price declines in the absence of an unexpected spike in valuations.

Year-to-date, prices across these capitals have fallen 3.2% in average weighted terms, extending the decline over the past year to 3.7%.

CoreLogic

By individual capital, prices fell by 0.2% apiece in Sydney, Melbourne and Adelaide last week, while valuations in Perth fell by a smaller 0.1%.

Brisbane, at 0.1%, was the only mainland capital to register an increase in median values from one week earlier.

Identical results were also recorded across the capitals in terms of monthly movements with values falling in all locations except for Brisbane over this period.

Perth’s median value slipped 0.7%, outpacing further declines in Melbourne and Sydney which fell 0.6% and 0.5%. Adelaide prices dipped 0.1% while Brisbane’s increased by the same margin.

CoreLogic

Helping to explain the national 3.2% decline in valuations so far in 2018, prices in Sydney and Melbourne have fallen 4% apiece.

These markets account for around 40% of all Australian homes, and make up around 60% of Australia’s total housing wealth. 

Reno-Workshop-2017-small-ad

Perth valuations have also fallen 2.8% this year.

In contrast, prices in Brisbane and Adelaide have managed to buck the overall trend, increasing 0.4% and 0.6% respectively.

Over the past year, Sydney values have now fallen 6.1%, more than double the 2.9% and 2.6% declines registered in Melbourne and Perth over the same period.

Prices in Brisbane and Adelaide have risen 0.8% in contrast.

Tighter lending standards, particularly for high debt and loan to income borrowers, along with an increase in property listings, reduced foreign investor activity.

And souring in sentiment towards the outlook for prices has contributed to recent divergence between Sydney and Melbourne — where home prices are significantly higher than in other pasts of the country — and more affordable capital city markets.

Read the full article here

Armageddon looming for Australia?

Is it all doom and gloom for Australia’s economy?

This Blog by Pete Wargent looks at what you really need to know.

Revenues boom

Some folks are trying ever-so-hard to convince everyone that Australia is heading for an economic collapse.

Nothing new there, of course, but unfortunately for the gloomers nobody seems to have told the economy itself, which saw growth accelerate to a 6-year high of 3.4 per cent in FY2018.

Meanwhile the resources boom is now paying serious dividends with annual exports booming to a record high of $406 billion.

A2

And despite the disruptive Tropical Cyclone Joyce having lurked over the Pilbara – leading to the blip over the back end of 2017 – we’ve racked up a cumulative international trade surplus of some A$25 billion over the past 21 months.

More records.

Read the full article here

Property expert hits back at Labor’s controversial negative gearing policy

As we head closer toward an election year, policy’s from both sides are coming under the magnifying glass.

But when it comes to Labor’s controversial negative gearing policy – few are holding back.

In this article for news.com.au one property expert hits back.

IT’S been touted as the solution to our crashing housing market — but critics say it could be “an economic disaster in the making”. Negative Gearing

ONE of Australia’s most outspoken property experts has issued a dire warning for Labor, insisting the party could “destroy the property market”.

Last week, Prime Minister Scott Morrison told news.com.au the ALP’s vow to limit negative gearing to newly built homes would actually “invite a housing market crash”.

The policy is at the core of the Labor’s housing proposals — and negative gearing policy is expected to be one of the major issues at the heart of the next federal election.

Now, property investor and author Bushy Martin has weighed into the divisive debate, claiming Labor’s plan could end up decimating our already ailing housing market.

“This is an economic disaster in the making and is the only real current threat that has the potential to destroy the property market and slash the value of everyone’s homes,” he told news.com.au.

“Given that over 50 per cent of the average Australian’s wealth is in their home, this will kill the long-term financial future of most hardworking Aussies. negative gearing

“The naivety of Labor … is staggering in its ignorance — this is more surprising given that former Labor Prime Minister Paul Keating made the same mistake in removing negative gearing back in the ’80s only to overturn and reinstate it 18 months later when property values fell and rents started rising rapidly.

It appears the only thing we learn from history is that we don’t learn from history.”

Mr Martin said the policy would have serious consequences for the majority of Australians.

“I implore the Labor Party to stop pursuing ill-conceived kneejerk policies aimed at satisfying the squeaky wheel few that will have unforeseen impacts on the many,” he said.

“The Labor Party needs to stop dancing to the tune of the politically correct vocal minority and get out and actually talk to a broad cross-section of the industry which will quickly educate them on the myopic madness of their proposed tax changes which will be equivalent to a tax revolution.

“If the Labor Party pursues this kamikaze path, property values will plunge and trigger the economic ‘recession we did not have to have’.”

Read the full article here

Is it safe to get a loan from a small lender?

When it comes to loans – is it safe to deal with a smaller lender?

In this article for Switzer, John McGrath looks at what you should consider.

Borrowers have more home loan lenders to choose from than ever before, so why do the Big Four banks dominate the market, especially when the smaller lenders offer cheaper interest rates? Home Loan

Alan Hemmings, General Manager of McGrath’s mortgage broking division, Oxygen Home Loans, says many borrowers simply don’t know how much choice they have; and they might also be worried that the small no-frills brands are not as safe as the big guys.

So, let’s get over that hurdle now.

The most important thing for you to know is that APRA supervises all of Australia’s small banks, which include credit unions and building societies, in exactly the same way as the Big Four.

They’re all playing by the same rules and APRA is there to make sure every one of them is operating soundly.

This alone should give you confidence to consider the small banks and there’s heaps to choose from, with APRA monitoring 143 in total at the moment.

On top of this, you also have a bunch of high quality non-bank lenders to choose from.

They’re not regulated by APRA but they all have a credit licence from ASIC and get this – many are actually backed by the big banks. Big For Banks Australia

“UBank is the online lender for NAB, Tic:Toc is backed by Bendigo and Adelaide Bank and Edge is underwritten by NAB,”  says Alan.

So, is it safe to borrow with a small lender?  

Alan says: “Generally speaking, it is safe to borrow from the small banks.

They have the same responsibilities as the large banks and capital requirements that help protect their customers.

The non-bank sector is also safe – as we saw during the GFC, clients did not lose their homes through banks ‘calling in’ mortgages.”

Some examples of small banks include Heritage Bank, Bank Australia, Bank of Sydney, IMB Bank, Greater Bank, Beyond Bank, Bank of Queensland and Newcastle Permanent Building Society. You can view a full list here.

Examples of non-bank lenders include Virgin Money, Pepper and Liberty.

Alan says: “We use these lenders as they might have a niche that the big banks do not provide.

For example, some of them offer a bit more flexibility when it comes to assessing clients’ affordability.”

This has never been more important given today’s credit squeeze where even good quality applicants are being rejected by the Big Four on technical grounds. Hands of businessman

Alan says this is prompting mortgage brokers to recommend small banks and non-banks more often to their clients.

“The biggest driver for our business at the moment are clients who have been knocked back by their existing bank, which is generally a big bank,” says Alan.

“More often than not the recommendation is a smaller bank or non-bank lender.

This doesn’t mean smaller lenders are taking on riskier loans, they just look at customers differently.

“Five years ago, our business settled over 80% of loans with the Big Four and their subsidiaries.

Last financial year, that number was below 60%.”

Why can the small lenders offer cheaper interest rates? 

They’re cheaper to run – it’s that simple. Interest Only Lending Australia

Alan says: “The big banks have large networks of branches, call centres and expensive operational areas and they need to factor this in when pricing their home loans.

They also have to provide a return for their shareholders, whereas small lenders can be profitable on smaller margins.”

Let’s do a test run to see how much you could save.

Using comparison site, RateCity, I requested a quote on a $640,000 loan to fund an $800,000 purchase (LVR 80%).

The best rate available was 3.54% with offset and redraw facilities with a non-bank lender. The best offer amongst the Big Four was 3.99% with redraw but no offset.

That’s a saving of almost $2,000 over the first year of a 30-year loan, without considering any offset benefit.

Read the full article here

Science has discovered the formula to having good luck

Is there really a formula to having good luck?

This article from Executivestyle.com.au looks at what makes up a wining formula.

Worrying about other people’s stuff is a trap in life worth avoiding.

The elusive pot of gold

And there we have it. Luck.

Coins 1300354 1280

He was born into it.

If he had to fight in the real world he’d be pulling beers if he was … lucky.

Jealousy can evoke such unpleasant thoughts.

We look around us each day, at people with cool businesses and lifestyles propped up by family money, and shake our heads. Damned good luck.

Let’s define success in a narrow way here.

I’m talking people who have achieved wealth and power, those lucky with a buck, their snouts greasy with filthy lucre.

The science of luck

The good news is that not achieving a bulging bank account or high-status job is hardly linked to our effort at all.

There is a scientifically proven luck component.

It’s true the homeless are as intelligent, as creative, as emotionally sensitive, and as capable, as any of us.

It could be you, or me, shoved out onto the cold dark street by bastard bad luck.

It’s reassuring to know, then, that we can maximise our chances of getting lucky.

The luck skill set  Luck Skill1

In the Scientific American this year psychological science writer and speaker, Scott Barry Kaufman, wrote there is a set of characteristics – “skill, mental toughness, hard work, tenacity, optimism,” a growth mindset and emotional intelligence – that can help us see an opportunity, and have the foresight and ability to grab it by the neck.

Those things are what we see as “talent”.

While it may help, there’s a whole lot of variance, studies show, left creepily unexplained.

The Pareto Principle tells us, that about 80 per cent of effects come from 20 per cent of causes. Put another way, 80 per cent of our effort results in absolutely nothing.

That’s drifting scarily close to a notion I personally abhor, “whatever will be, will be.”

The 80:20 rule

It exists in nature and business.

Italian economist Vilfredo Pareto showed that 80 per cent of Italy’s land was owned by 20 per cent of its population.

Eighty percent of revenue comes from 20 per cent of clients.

Twenty per cent of computer code has eighty per cent of errors. Gehälterverteilung

The world’s richest 20 per cent of people hold eighty per cent of its wealth.

Food and diet for weight loss? 80-20.

Studies show the 80-20 rule will establish itself in models again and again.

Maybe they’re worth it?

It’s a truth that a majority of my personal activity results in absolutely no productivity.

Indeed, I often make things worse.

Now wrap your brains around this.

If success is just blind luck, then do the rich deserve their spoils?

It’s not good people, but good luck, their sense of entitlement unearned.

DIY luck

Luckily, the idea of “making your own luck” is an achievable feat.  Business People Climbing A Flight Of Stairs, Stepping Up A Stairway Career Ladder With Idea Light Bulb On A Top

Talent, as we’ve seen, is simply having the skills to spot and maximise an opportunity.

You can increase your knowledge and understanding of the world.

Those with greater “talent” have a higher probability of achieving success because they’re best at opening the door when opportunity is fiddling with the front gate.

10,000 hours

“Talent” is a set of skills you can give yourself. Opportunism, positivity, communication, and a work ethic can be learned.

The writer Malcolm Gladwell, in his book Outliers: The Story of Success, argues that the 10,000-hour rule is the secret to success.

Those who have practiced a skill for 10,000 hours, from The Beatles to Bill Gates to ice hockey players born early in the year (they’re bigger, get more game time and it becomes a self-perpetuating loop), become “experts.”

So, get out there and work to create your own luck. It’s in the science.

Read the full article here

Weekend video: 7 Simple Tips To Reduce Your STRESS Right Now



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About

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 his opinions are regularly featured in the media. Visit Metropole.com.au


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