Property Investment & Wealth Creation Australia | The Michael Yardney Podcast

The property industry, and investors in general, welcomed the Labor party's announcement that they won't change the rules of negative gearing if they got into power. So, is this the end of the debate? Not necessarily according to Stuart Wemyss who still has some concerns that we're going to talk about today. We'll also discuss the concept that sophisticated investors shouldn't have to jump through the same hoops that beginning investors do. Then, in my mindset message, we're going to talk about the fears that may be holding you back. Is this the beginning of the end of negative gearing despite Labor's promises? One of the aspects of finance I discuss with Stuart is negative gearing. What is negative gearing? Negative gearing allows investors to offset property investment losses against other taxable income (such as employment income) to reduce their tax liabilities. Why do people negatively gear? The only reason that you would negatively gear is that you anticipate that the property's capital growth will eventually dwarf its income losses. Is negative gearing at risk? There are three main reasons why tax benefits resulting from borrowing to invest in property will not be as substantial as they have been in the past. As such, investors should not rely on negative gearing tax benefits when making investment decisions. Reason 1: Government will probably (eventually) limit negative gearing The expansion of federal government debt to over $1 trillion dollars means the government must generate more revenue to service and eventually repay this debt. One way to do that is to grow the economy (GDP) which will generate more tax revenue, even if tax rates don't change. Another way is to raise taxes or limit deductions. Reason 2: Persistently low interest rates reduce tax savings Gross property residential rental yields typically range between 2% and 3.5%. After allowing for expenses (such as management fees, maintenance, insurances, and so on), net rental yields typically range between 1% and 2.5%. With interest-only investment rates starting at 2.5% p.a. (fixed rates), a property's pre-tax income loss can range from nil to 1.5% of a property's value (being net yield less interest rate). This means if your property is worth $1 million, your pre-tax loss probably won't exceed $15,000 p.a. Consequently, your tax benefit (savings) won't be more than $,7,050 (being 47% of the loss). Reason 3: Stage 3 tax cuts will reduce tax savings It was reported last week that the ALP will likely support the government's stage 3 tax cuts which are set to become effective in the 2024/25 financial year. This means that there will only be two tiers for taxpayers that earn in excess of $41,000: $41,001 to $200,000 = 34.5% tax rate including Medicare; and Over $200,001 = 47% tax rate including Medicare. Sophisticated Borrowers Shouldn't Have to Jump Through the Same Hoops Anyone who recently made an application to get more finance would have realized how much harder it is, how many more questions you have to answer, and how much longer it takes today. Stuart recently wrote a great article where he suggested that sophisticated, more experienced borrowers shouldn't be required to jump through the same hoops to get finance that less experienced borrowers need to. What do you mean by that? We discuss the retail versus wholesale investor rules The Corporations Act makes a distinction between wholesale and retail clients (or "sophisticated investors" if being offered bonds or direct shares). A wholesale client is someone that meets either of the below two tests: Asset test – having a net worth of over $2.5 million; or Income test – having a pre-tax income of at least $250,000 in each of the past two years. The Act also includes other exemptions in addition to the above including professional investor test, product value test, and small business test. These asset and income hurdles were struck back in 1991 and are now vastly outdated. Adjusting for the impact of inflation, the income threshold should now be over $490,000 and asset value over $4.9 million. Wholesale clients are assumed to be financially savvy enough to make informed decisions and are able to protect their own interests. In short, they can decide whether an investment is appropriate so there's less onus on the provider or advisor. Also, there are fewer obligations (on financial advisors and product issuers) when dealing with wholesale clients such as there is no need to provide a Financial Services Guide, Statement of Advice, Product Disclosure Statements, etc. The current system is broken The fact that someone with several millions of dollars in the bank is subject to the same assessment as someone with very little financial resources highlights that the current regulations are inadequate. Banks must be given a robust framework but enough discretion to operate within that framework to achieve acceptable outcomes. Distinguishing between retail and sophisticated borrowers seems to be a logical step in the right direction. Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Collect your bundle of eBooks and reports here: www.PodcastBonus.com.au Stuart Wemyss – Prosolution Private Clients Stuart's Book – Rules of the Lending Game Shownotes plus more here: Is this the beginning of the end of negative gearing despite Labor's promises? With Stuart Wemyss Some of our favourite quotes from the show: "Finance is going to be critical for us as property investors – property investment is a game of finance with some house is thrown in the middle." – Michael Yardney "In this environment, fear is not unusual. It's not uncommon. In fact, I guess it's normal." – Michael Yardney "Fear of change causes some people to become stagnant, and they miss out on a lot of the really great opportunities." – 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

In a time of lockdowns, thinking 40 hours ahead is sometimes a challenge. Now try thinking 40 years ahead. Well, that's what the Federal Government has done when it recently released its fifth Intergenerational Report. It has taken a 40-year view on where we'll be in 2061 and forecasts that Australia will be older, smaller and more in debt than previous Intergenerational reports suggested. Predicting anything 40 years out is a challenge. But predicting what will happen to something as unpredictable as our economy, and the budget settings it generates, requires the most adept of crystal balls. And as with any such exercise, the predictions are completely meaningless without understanding the assumptions upon which they are based, so today I unpack this report in my regular chat with leading demographer Simon Kuestenmacher and ask him what do the findings mean for our economy and our property markets. What's ahead for Australia? Our property markets don't work in isolation – they're driven by our demographic changes and according to the latest Intergenerational Report in 40 years' time Australia will be smaller and older than previously expected after the first downward revision of official projections in an intergenerational report in 20 years. The purpose of the intergenerational report: Show everyone what Australia could look like in 40 years under the current policy settings Help treasury understand how much money it can spend Help politicians consider the long-term effects of their policies In the current intergenerational report: The Australian economy is projected to grow at a slower pace over the next 40 years than it has over the past 40 years. Real gross domestic product per person is expected to grow at an annual average of 1.5 percent The pandemic has interrupted heavy population growth. Growth has been buoyed by government stimulus, but that can't last forever. The previous Intergenerational Report in 2015 projected an Australian population of almost 40 million by 2054-55. The 2021 update projects 38.8 million by 2060-61. That's less growth, but it's still a monumental trend. City and town planners will have a lot to do in coping with the growth. This will impact property investment choices, but strategic knowledgeable investors will be well-placed to capitalize on the changing trends. In 2060-61, about 23% of the population is projected to be over 65, up from 16% at present and 13% in 2002. Health improvements suggest that older Australians will be able to remain active longer However, they'll also need to work longer to self-fund retirement. As a consequence of the low birth rate, aging population, and decline in migration, over the next decade, we will lose out on over a million people in Australia who could have added to our GDP. Resources: Simon Kuestenmacher - Director of Research at The Demographics Group As our 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. Get a bundle of eBooks and reports www.PodcastBonus.com.au Shownotes plus more here: Should we be scared by the forecasts of the 2021 Intergenerational report? With Simon Kuestenmacher Some of our favourite quotes from the show: "In the next 40 years, our population will increase by 13.3 million they're saying. In other words, increase by over 50%." – Michael Yardney "Some people would also say another way is to import these higher-skilled people from overseas." –Michael Yardney "There's a long list of people who'd rather complain than actually do something about it." – 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

While it's not rocket science, it's not easy to research our property markets given the array of jargon and information and the many mixed messages that are out there. So, in today's podcast, I would like to chat with you about some of the many sources of research data that we look into to ensure we make good investment decisions for ourselves and our clients at Metropole. You'll hear me explain the importance of data but also how even more important is the ability to put the plethora of information into perspective, as I share with you several metrics that we look at when deciding where to invest. And just as importantly, I'm going to share with you one very commonly used data metric that most investors use but at Metropole we almost totally ignore. And I'll explain why you should also. 5 Metrics You Should Use and 1 That You Shouldn't If you're looking to assess a property's investment potential, use these 5 metrics work as a starting point. Past sales history We look at past capital growth to give us an indication of future growth potential. While past performance is obviously not a guarantee of future performance, the fundamentals rarely change. Days on market Days on Market is a measure of how long it takes to sell a typical property in a particular suburb. This statistic helps investors to identify those locations that are strengthening so they can buy before the masses and therefore make the most of the price uplift as the time on market decreases. Depth of Market What we're looking for here is an assessment of the supply vs demand balance within a particular market. This is a measure of how long it will take for the current inventory to be absorbed completely based on the current rate of monthly sales, assuming there are is no more new inventory being added to the market. Ratio of owner-occupiers to renters. While many beginning investors have their prospective tenant top of mind, an important strand of Metropole's Six Stranded Strategic Approach is to buy a property with an owner-occupier appeal. This is because owner-occupiers "make the market" and add stability to property values in those suburbs where there is a predominance of established owner-occupiers b who bought their homes many years ago and have significant equity in their properties. Above average wages growth vs state average Since property investment is a game of finance with some houses thrown in the middle, it's important to find locations where the local residents have higher disposable income than average and suburbs where wages are growing faster than the state averages; as in these locations people will be able to afford to, and usually be prepared to, pay more to buy new homes or upgrade their homes. You'll often find these suburbs are going through gentrification. Here you want to focus on the trend of how the wages growth in a particular suburb is trending against the state average. The faster at which it outpaces the state average, the better. What we don't rely on – Median prices Most beginning investors use median price growth as their guidance for suburb selection How is median calculated Be careful – observing the change in median property prices may not be as useful as you think. While median house prices are one of the most cited property market statistics as with any single measure there are some shortcomings that investors need to understand in order not to be misled with what's really happening to house price values. How is the median price calculated? The median house price is essentially the sale price of the middle home in a list of sales where the sales are arranged in order from lowest to highest price. This is different from the average, which would be the total value of all the house sales, divided by the number of homes sold. Technically speaking, the median is more accurate than the average because it is less affected by a few unusually high or low sale prices. A change in the median price does not necessarily mean a change in your property's value While median prices are a useful tool for understanding the price changes of properties that have transacted in a market, a 10% increase does not necessarily mean that your property is worth 10% more. What it does reflect, however, is activity in the market. Median prices are a more valuable indicator in some areas than in others Changes in median price statistics are more meaningful in determining property price growth in some areas than others. For instance, suburbs where many properties transact on a more regular basis will be more statistically meaningful than in areas where homes are tightly held, sell infrequently, and are significantly different from another. Different data providers measure different statistics Ever wondered why different data providers' median prices are different? That's because there are three key differences between all the providers. The data they collect, The time frames they report on – daily, monthly or quarterly The accuracy/complexity of the index methodology they rely on. One way around this shortfall in median property value changes is to use data sets like the Corelogic Hedonic Index which seeks to overcome some of these issues by measuring the attributes of properties that are transacting as part of the analysis. Statistics are more reliable if looked at over the long term. Be careful relying too heavily on the data. You're probably aware that property investment is part science and part art. The art component is the market intelligence that comes from decades of experience in buying and investing on the ground. And this is crucial because relying solely on the scientific approach isn't enough. What I'm getting at is that while you need the data in the research phase of your investment journey, to be a successful property investor you need much more – you need on-the-ground experience and perspective. Data will only get you part of the way, you must complement data with local area knowledge and expertise. That's why our buyer's agents at Metropole are ex-selling agents who understand the local market drivers. They understand why one side of the road is more valuable than another or why one part of the suburb is more in demand than another. This is the type of perspective that money can't buy. Property investors who only do their research on the Internet but don't have the on-the-ground expertise or context have the "science" part of the investment equation covered but miss out on the "art" part of investment smarts. Don't get me wrong, doing your research is a critical step in getting ready to invest, but it is only one of the many important steps. There is no substitute for practical, on-the-ground experience. Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Get a range of my ebooks here: www.PodcastBonus.com.au Shownotes plus more here: How to use property data to your advantage Some of our favorite quotes from the show: "Once this property boom ends and the impetus of low interest rates has worked its way through the system, we're going to end up at a time where affordability will be stretched for many people." –Michael Yardney "If there's minimal market depth, there's going to be more volatility." – Michael Yardney "Let's be frank, you can make the data say almost anything you like." – 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

If you invest in residential property, how can you be sure that it's going to work out for you? That's what we discussed in today's show, because if you're going to borrow money to invest and take on the risk of investment you need to ensure that you're going to get wealth-producing rates of return, not just during this boom, but over the long term. Today I'm chat with Brett Warren and we give you some insights to ensure you make the most of this property cycle. To increase the probability of being a successful investor, or put it differently, to reduce the risk of being unsuccessful and ending up with only one or two properties like 92% of those you get into property investment do, you need to focus your energy on only investing in quality assets. Drivers of this boom: Low-interest rates leading to people upgrading, which creates demand Tenants upgrading to be owner occupies – first homebuyers established homeowners upgrading to better accommodation other homeowners upgrading their lifestyle to 20-minute neighborhoods or regional locations baby boomers upgrading their lifestyle moving to family-friendly apartments or townhouses rising consumer confidence pent-up demand supply versus demand demographic changes Millennials moving to family formation stage how and where we want to live – Home versus an apartment, the right neighborhoods. infrastructure improvements What's going to happen in 3 or 5 years? Property values will have risen significantly – in many cases 25 to 30% over this cycle. The economy will rebound Wages and inflation will rise The RBA will push up interest rates just a little. Property will become unaffordable for many Australians The gap between the rich and the poor average Australian will keep increasing. You have to ensure you own the right property, yet FOMO means many investors are making poor investment decisions currently and will lose out in the future. Locations where you could invest. The "established money" suburbs, where many established owner-occupiers have limited debt The aspirational suburbs that are gentrifying – where there are high-income earning Millenials The outer, cheaper, less affluent suburbs which are unlikely to gentrify in the medium term as that's not where the wealthier people want to move into and live. (Avoid these.) The problem is during this current property boom, almost all properties are increasing in value, so people who have bought the wrong properties will still think they're doing well. They won't realise their mistakes until they wake up in 5- or 10-years' time and realise the huge opportunity cost – what they have lost out on - because of owning the wrong property is in the wrong locations What Happens Next? Property prices will not continue to rise at such a rapid rate. As a part of any normal property cycle, there will also be a downturn in our property markets. But in a rising market and in the heat of the moment, this can often be forgotten. In Summary The current market tide will certainly lift our property market causing prices to rise. Some investors buying on a whim and with emotion buy into this and think that any property will likely do well in the short term. They do very little research and give into confirmation bias These investors do not understand that they are likely making a medium to long-term decision based on only the short-term outlook, instead of making the decision that will move them closer to their longer-term goal. Understanding their reason for investing and then understanding longer-term fundamental data should be a priority. Following a process is critical otherwise, you may be caught swimming naked once the tide goes out. Resources: Michael Yardney Brett Warren – National Director Metropole Property Strategists Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Get a bundle of free eBooks and reports at www.PodcastBonus.com.au Shownotes plus more here: This is no ordinary property boom, where will you be when it ends With Brett Warren Some of our favorite quotes from the show: "In my mind, the intensity of this boom is a once in a generational opportunity, and it's not too late to get into the cycle." – Michael Yardney "Buying the right property now is not only going to help build your asset base but should set you up correctly to establish intergenerational wealth." – Michael Yardney "Successful people have a long term perspective. They have the ability to work hard to accomplish something which isn't achieved for a long time." – 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

Are we heading for the biggest crash since the Great Depression? Is it just around the corner? Well according to Harry Dent, we are and it is. He is telling anyone who is prepared to listen that we are heading for a stock market crash, and the value of your house will drop by up to 40%. Today I to chat with economist Harry Dent about his views, and then Pete Wargent and I give you our thoughts on what's ahead. Now a word of warning before we get into the interview, especially for the faint hearted. There are some scary predictions made by Harry, so please listen to his whole interview and don't sell up your assets before you have my views and those of Pete Wargent. Subjects I Discussed with Harry Dent Harry is a Harvard MBA graduate, a Fortune 100 consultant, and his demographics-based approach to economic forecasting has helped him correctly predict many major economic events, including Japan's 1989 economic collapse, the 2000 dot-com bust, and the populist wave enabling Brexit and Donald Trump's election. Harry believes that an economic winter is coming that will be worse than the Great Depression. He believes that the governments are using stimulus to keep economies alive, and that this is bound to not end well. Harry's biggest surprise about COVID was how much the governments stepped up and created stimulus. He believes that the biggest sign of problems in the US is that the home sales are going down while housing prices go up. He believes that rates are artificially low because governments are printing money out of nowhere and using it to do things like buy bonds. His line in the sand is 2022, which is when he believes the lowest point will occur. Harry says that hitting the limits wall cause the bubble to explode. He says that China has the biggest bubble, and because they're Australia's biggest export, their bubble bursting will hurt Australia. Harry believes that Australians who think he doesn't understand Australia's markets just don't understand the world. He would advise people to reassess their assets and sell what they don't need. Harry explains that the upside of a burst bubble is that it will get rid of bad companies being artificially propped up and make way for new ones. Harry also discusses how he would explain his views to someone who visited his seminars and did what he suggested years ago but didn't see it work out for them. Bursting the Bubble with Pete Wargent According to Pete Wargent, we're not in a bubble, and there isn't necessarily a big explosion coming Australia is seeing record-low mortgage rates A typical response to low mortgage rates is more people getting into the housing game. More people getting into the housing game is basically what is happening right now. The current housing market is underpinned more by owner-occupiers than investors This makes a bubble less likely. Australia's government has been prudent, and there are not high levels of government debt. What's more, the interest rates are low. Australia's banking system is sound. The majority of the debt is in the hands of people who have the means to service it. Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Harry Dent's newsletter: www.HarryDent.com Pete Wargent Next Level Wealth Pete Wargent's new book Low Rates High Returns Shownotes plus more here: Harry Dent says Australia's property bubble will burst, but Pete Wargent bursts his bubble Some of our favourite quotes from the show: "As an investor, I believe it's important to listen to others views." – Michael Yardney "In my mind, a bubble is an economic cycle characterized by a rapid escalation in asset values, then it's followed by contraction." – Michael Yardney "From what I can see, the debt that's out there is in the hands of people who can manage it." – 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

I hope you're taking advantage of the current property boom. I haven't seen conditions like this since the early 1970s when I first started investing. Now you won't find charts of that particular boom in the various research house statistics, because they weren't keeping those types of records in those days. Back then, the boom in property values was in part related to the very strong inflation we were experiencing, and at the time the booming markets of the early 70s and that of the late 80s and the boom of the early 2000's twenty years ago created a lot of Real Estate empires. I know the boom of the 70's got me off to a great start and the subsequent booms grew the value of my portfolio allowing me to continue growing it, but I also know there were others who invested through the various property booms who haven't had the success they hoped for. Even though initially it seems they were heading in the right direction. So, my chat with you today will be to help you understand the type of property that you should be buying at this stage of the cycle to take advantage of the current conditions that see you through for the rest of your investing life. Today's podcast will be in two parts, I'll initially give you my thoughts and then I'll have a chat with independent financial strategist financial adviser Stuart Wemyss who will share his thoughts on a big mistake he's seeing investors make – in the hope that you don't make the same mistake. Here's how to invest in our booming property markets I'm continually being asked questions like: What's the right property for this stage of the property cycle? Is this the right or wrong time to invest in property? Is it too late to invest this time round – prices have grown so much? Where's the best place to invest in 2021? First, let's take a look at what is happening. What's driving Australia's property boom? Low interest rates – Low interest rates are facilitating change from all types of prospective property buyers, many of who are starting to experience FOMO (fear of missing out) and are pushing prices higher and higher. Rising consumer confidence -- The combination of improving economic conditions, increased jobs security plus the sense that we're getting Covid under control is lifting consumer confidence, which in turn has created continued strong demand for housing. Supply versus demand – Buyers are snapping up properties faster than vendors can list them for sale at present which puts further pressure on prices. Pent-up demand – Buyer demand is particularly strong at the moment because it has been pent up for a number of years. Demographic changes – Changes in demographics, the structure of family life, and what we want out of our home also shifted during the height of pandemic lockdowns. The desire to live in a 20-minute neighborhood shone through. Fast forward 3 years - what can we expect next? If we fast forward another 3 years or so, I expect we'll find that property values have risen significantly - as much as 25-30% higher than at the beginning of this current property cycle. By then our economy will have rebounded even further, wages will have increased, and inflation will be starting to rise. This means the RBA will most likely have stepped in and raised interest rates, but only a little. Make way for a 2-tier property market When this property cycle ends, I believe we'll be left with a 2-tier property market. This is because on one hand there will be the more affluent people who will be able to afford to live in the more expensive discretionary, established money suburbs or the up-and-coming gentrifying aspirational suburbs. On the other hand, we'll have the majority of Australians who will find property unaffordable as they've only experienced slow or stagnant wage increases. This means moving forward we're likely to find see a larger percentage of Australians unable to enter the property markets as owner-occupiers and those who can get a foot on the property ladder will be flung out further and further from the center of our capital cities. The key takeaway is that if you want to ensure you end up owning the right type of property when this cycle comes to an end, you'll have to make the right investment decisions today. So where should you invest? It will be important to invest in the type of locations where not only more affluent owner-occupiers live, but where more affluent tenants will want to live because they'll be able to pay increasing rent over time. So I suggest investing in: The "established money" suburbs This is where many owner-occupiers have been living for 20, 30, or even 40 years and have "old debt", and in fact, minimal debt against their homes. The aspirational suburbs This is where higher-income earning millennials are moving to, with new money and in turn are upgrading, improving, and gentrifying these locations. Don't invest in outer suburbs Stuart recently wrote about why investing in outer suburbs is likely to lead to underperformance. Some buyers' agents promote investing in more affordable locations (i.e. outer suburbs). I can understand why some investors might be attracted to follow their advice. But it's not until you delve into the theory and evidence that it becomes blatantly obvious that such investments have a high probability of under-performing. Attractions of investing in the outer suburbs: The price point is a big attraction for some investors. That is, houses are substantially cheaper. That means that people can spread their eggs across multiple baskets i.e. invest in multiple properties. It also means that people that cannot afford a house in a capital city, can still "invest" in property. Secondly, because properties in outer locations tend to have a lower land value component (land is cheaper than the building), rental yields are higher. This makes property more affordable to hold, particularly while interest rates are so low. Investment weaknesses of outer-suburban locations: The first thing to recognize is that the supply and demand fundamentals are significantly different compared to blue-chip locations. The supply of vacant land in the surrounding locality is typically infinite. Whereas the demand for property reduces the further you move away from blue-chip suburbs. The second consideration is the tenant profile. Tenants in these locations are more likely to be lower-income earners. That can include young families, often with pets that create a lot of wear and tear on your property. Lastly, it is incredibly important to recognize the impact that increasing borrowing capacities have had on house prices over the past 3-4 decades, even in outer suburbs. The average Australian's borrowing capacity has increased by 2 to 3 times since the early 1980s. Borrowing capacities have peaked. They will only rise in line with incomes. That means the buying power of low to middle-income earners will not increase by the same rate as it has over the past 30+ years. Putting aside affordability considerations, most people desire to live near the CBD (not in it but surrounding it). These locations tend to offer a greater array of employment opportunities and better amenities such as entertainment, schooling, medical and pastime activities. The richest 20% of Australian's own 64% of all household wealth. And between 2003 and 2017 this top 20% grew their wealth by 68% (compared to 6% for the least wealthy 20%). It is this cohort of Australians that can afford to (and will) drive blue-chip property prices perpetually higher. Investment principles must never be compromised: It is probably tempting for some buyers' agents to buy property at any price point. Because, of course, not everyone can afford to spend over $500k on an investment property. However, the only way you can do that is if you compromise sound investment principles. And that is a slippery slope and is a sure-fire way to make costly mistakes. Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Stuart Wemyss – Prosolution Private Clients Stuart's Book – Rules of the Lending Game Shownotes plus more here: The right and wrong things to do to secure your financial future through property, with Stuart Wemyss Some of our favourite quotes from the show: "While a rising tide may lift all ships, investing in the current market may not be as straightforward as you think." – Michael Yardney "Buying the wrong property now not only affects your investment purchase today, but it will affect your capacity to create wealth over the next 5, 10, or 15 years." – Michael Yardney "While you need cash flow to stay in the game, it's really only capital growth that's going to get you out of the rat race." – 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

What does the Uber Eats app have to do with the skills shortage? What does walking down the cereal aisle in the supermarket have to do with our economy and our property markets? In today's show I chat with leading demographer Simon Kuestenmacher, who uses a number of food metaphors to help explain what's happening in our economy, so if you're a lover of food as I am, and more importantly if you're interested in the property or business, I'm sure you're going to get some great insights from my chat with Simon. I'll also share a mindset moment about failure with you. Topics that Simon and I discuss: Australia is facing a skills shortage This is happening because of low immigration. Without overseas migration, the country doesn't have enough workers to meet its needs Businesses "raided the pantry" by hiring from the pool of unemployed workers, but the pantry is nearly empty now Because skilled migrants aren't available, full employment is near Even some long-term unemployed workers have returned to the workforce But some sectors, like tourism and hospitality, are still struggling to find enough workers Competition for workers may drive some wages up However, not all businesses will be able to afford to raise wages. And in some cases, wages might not be the reason they're having trouble finding workers Australia needs to get to work on creating its own skilled workers to fill positions, since skilled migrants from overseas are unavailable This involves removing barriers to upskilling Companies will need to choose where they fall in the "cereal aisle" – expensive cereal on one side, cheaper brands on the other, and a basic brand square in the middle Resources: Michael Yardney Simon Kuestenmacher - Director of Research at The Demographics Group As our 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. Get a bundle of eBooks and reports www.PodcastBonus.com.au Shownotes plus more here: There's no UberJobs app to solve the problem. It's time to try something else with Simon Kuestenmacher Some of our favorite quotes from the show: "One of the ways one can have a better GDP and improve your economy is becoming more productive." – Michael Yardney "We choose to target areas where there's more skill level 1 and 2 workers, where there's more established money suburbs because that's the premium end of the Weet-Mix market." – Michael Yardney "I think failing is overrated." – 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

What's a better investment in today's market - apartments or houses? That's the topic of today's show. Now I could give you a simple answer, but I thought it was better to help you understand the thought process behind my decision than give you an immediate answer. Of course, I'll also be sharing my mindset message for today before the end of the show. So is it better to invest in a house or an apartment? The change to a new working and home life prompted by the COVID-19 pandemic, combined with a loss of confidence thanks to some shoddy high-rise apartment buildings during the last building boom has seen investors increasingly shy away from investing in apartments. It seems that more investors are now asking if apartments are still a good investment in the current market. Well… my response is… it depends. I remember times when apartments outperformed houses, but for the last decade or so house values have risen at more than twice the rate of units. And the current property boom widened what was already a sizeable difference in prices. Of course, historically apartments have been cheaper than houses but the gap in prices has grown particularly wide in the past year. Some apartments, especially family-friendly low-rise apartments in lifestyle neighborhoods have still performed well and are likely to remain in continuous strong demand. The Numbers of Apartment Living The 2016 Census of Population and Housing found that 10% (2,348,434) of all people in Australia spent Census night in an apartment. This meant that there was around one occupied apartment for every five occupied houses in Australia - compared with one to every seven, back in 1991. While the number of vacant rental listings has fallen significantly in Brisbane, Darwin, Perth, Adelaide, and Hobart over the past year, Sydney and Melbourne continue to bear the brunt of closed international borders that has left many inner-city apartments without tenants. Data from Domain showed Melbourne's vacancy rate sat at 4.7 percent as of February 2021 — a massive spike from the same time last year when the vacancy rate was 1.6 percent. Choosing the right neighborhood Sure, last year offices were shut and lockdowns were in place but moving forward more of us are likely to continue working flexible rosters and working at home more than ever. This means gone are the days where our 'home' was simply the place we rest our heads and enjoy some downtime between work and our social lives – the coronavirus crisis has put an end to life as we once knew it. If you can leave your home and be in short 20-minute proximity – whether that is on public transport, bike ride or walk - to a great shopping strip, your favorite coffee shop, amenities, the beach, a great park, that's the new gold standard of where people want to live. What matters in a home? And it's not just the importance of neighborhood that has shifted Australians' views. The legacy of the lockdowns and the work-from-home-movement have made many Australians reevaluate what exactly they want in the home itself. All of a sudden people were trying to find space to be able to work, study, and also relax all under one roof - and in many cases, this hasn't gone well. Prior to COVID-19 more Australians were trading space for place and were embracing apartment living, trading their backyards for balconies and courtyards in inner-city locations. Now we want more space – a zoom room, a bigger yard, and a garage that can be converted to a gym. High rise apartments: The slums of the future It's worth pointing out that while large well-located suburban medium-density apartments will make great investments increased substantially in value over the long term, many of the high-rise towers built in the last fifteen years will continue to underperform with poor, if any, capital growth in the foreseeable future. Of course, these cookie-cutter-style apartment blocks never made good investments. The sad reality is that today, in light of the many media reports of structural problems in some of these high-rise towers, there is a crisis of confidence. This sector of the property market has lost the trust of the buying public and confidence will take quite some time to restore as various stakeholders including state and local governments as well as the construction industry including building surveyors and certifiers scramble to shore up the building sector. Investors are shying away Historically, a significant volume of apartments were bought by local and overseas investors. But as I explained, now many of these investors are shying away from apartments, due to increasing concerns about vacancy rates, capital growth, and also because of COVID-19 related concerns. Highly-publicized failures and defects in high-rise apartments, such as the Opal Tower in Sydney, are also playing their part and dampening demand. But it's important for investors to remember that not all apartments can be lumped into the same category. While many new homes are being constructed, the pipeline for new apartment complexes is very thin meaning when our borders eventually reopen and demand for apartments increases from the many new migrants and students returning to Australia, apartment prices will start increasing again as the cost of constructing new projects will be considerably higher than previous building costs. This will of course push up the price of new apartments and with it drag up the price of established apartments. Remember, property markets are cyclical In the short run, returns can be inconsistent, but it's well documented that investment returns eventually revert to their long-term averages. That is, periods of below-average growth tend to be followed by periods of above-average growth and vice versa While houses outperformed apartments with regard to capital growth over the last decade, for the 10 years prior to that many well-located apartments grew in value as much as houses did. The fact the houses have displayed strong capital growth rates over the past 10 years due to appreciating land values, interestingly implies that apartments are currently intrinsically undervalued. But comparing apartments to houses is unfair Of course, if your budget allows you to buy a house or townhouse in an A-grade location, that's first prize when considering an investment purchase, but our booming property markets mean that more and more investors will be unable to afford a house in an investment-grade location. Fact is, the rich are getting richer and they don't want to travel further out and I believe the gap between values in our established inner suburban locations and the outer suburbs will only widen. Australia's apartment market: The outlook In the short term…. Over the next year or two, it is likely that there will be less demand for apartments while first home buyers continue to prioritize houses and investors remain wary. In the long term…. Over the next 10 years, I think we're going to see a shift in Australia's apartment market and a much more substantial increase in capital growth. Why? While currently around 10% of our population living apartments, this is significantly lower than the percentage of people living in apartments in similar size western cities to Sydney and Melbourne, where it's not unusual to find 20 to 30% of the population living in apartments. Then, in light of structural and building problems in recent years, the next round of apartments will cost significantly more to build as builders and surveyors will be forced to avoid cutting corners and risking further scrutiny. This will, in turn, push up new apartment prices and therefore values of good established apartments. Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Get a range of my ebooks here: www.PodcastBonus.com.au Shownotes plus more here: What makes a better investment in today's market – a house or an apartment? Some of our favorite quotes from the show: "There's not one property market, so we can't even say there's one apartment market." – Michael Yardney "These days, the place people want to be is not near the CBD, but in lifestyle neighborhoods where all the amenities are close by." – Michael Yardney "Watching a movie that excites you, inspires you, makes you laugh, takes you away to another place, that's a good way of turning off your stress." – 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

We're well into the second half of 2021 now so it's a good time to reflect back on the year so far and then look forwards to what's ahead. Property values across our capital cities have experienced double-digit growth already this year. And despite the Covid concerns we're experiencing, there's plenty more growth to come. Clearly, buyers are still out in force – owner-occupiers, investors, and first home buyers – at a time when available supply is struggling to keep up, keeping pushes prices higher. While much of the commentary is about the micro factors – what's happening on the ground in our property markets – I like to regularly get together with property commentator Pete Wargent in these Big Picture podcasts to look at the macroeconomic factors affecting our economy and the property markets to help give you some more clarity about what the future holds so you can make better investment and business decisions. Since we spoke last month Australia's economic recovery has continued to unfold, more jobs have been created and our property markets keep surging. Australia's Property markets All our capital cities have already experienced double-digit growth this year other than Perth. Homebuyers and property investors who took a long-term view have already enjoyed significant capital growth. The higher-end, more expensive end of the market is outperforming the cheaper end. Investors are back in the market. The pace of growth will slow but property values are likely to increase another 10% this calendar year. Rental growth is slowly starting to pick up as vacancy rates fall. Australia's households just keep getting richer. Australian household wealth grew more in the last year than it did during the preceding three years combined. Much of our wealth is due to ownership of property A new report from Credit Suisse estimates as many as 1.8 million Australians are millionaires today based on net household wealth (defined as the value of financial and real assets minus debts). And over 3 million Australian adults could soon be millionaires, according to the report. A lot has to do with property and super The RBA and interest rates Governor Philip Lowe's announcement telling us that the economy is doing much better than previously forecast resulted in speculation that an interest rate increase may come sooner than expected Latest housing finance figures The value of new home lending has almost doubled since May last year. New home lending increased by 4.9% from the month prior and a whopping 95.4% or $15.90 billion from May 2020. While the value of owner-occupier lending only saw moderate month-on-month gains, investor lending has gone way up Investor lending has now hit the highest level since June 2015 with $9.13 billion of new loans in May, more than double the value in May last year when COVID was in its early stages. However, the investor surge comes at the cost of first home buyers, with the number of owner-occupier first home buyer loans dropping. While first home buyer numbers are down, the value of first home buyer lending is up, reflecting Australia's rising property prices. Jobs The jobless rate has fallen to its pre-pandemic level of 5.1 percent after the creation of 115,000 jobs in May. The underutilization rate is the lowest since February 2013. With international borders shutting out foreign labor and fuelling skills shortages in some industries, job ads at a 12-year high, and jobs vacancies soaring, the local labor market could reach full employment sooner than expected. Population Australia's population increased by 136,300 people in 2020. This was the slowest population growth since ABS records began in 1982. There were 294,400 babies born in Australia last year, the fewest births in 13 years. And there were 161,400 deaths in the past year down by 3.4% over the previous year. Over the next 40 years, Australia's population is expected to age and become smaller than expected. Resources: Michael Yardney Metropole's Strategic Property Plan – to help both beginning and experienced investors Get your bundle of eBooks and reports here: www.PodcastBonus.com.au Join Michael's Property Update private Facebook group by clicking here Pete Wargent Next Level Wealth Pete Wargent's new book Low Rates High Returns Shownotes plus more here: The Big Picture | Economic & property trends you must understand – July. With Pete Wargent Some of our favourite quotes from the show: "The markets turned in October last year, and they've gone gangbusters ever since." – Michael Yardney "We've never had as many first homebuyers, so housing is affordable. Maybe not right in the centre of Sydney or Melbourne, but there are still opportunities." – Michael Yardney "I can see an employment rate with possibly even a 4 in front of it, moving forward." – 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

My special guest for today's show is Robert Kiyosaki of Rich Dad Poor Dad fame. I spoke with Robert on my podcast last year at the beginning of Covid when he warned Australians about the challenges for our economy ahead and the opportunities that he felt would come at the other side of the downturn. Now I didn't agree with everything he said, but I respect that he has taught not only me, but millions and millions of people about the basics of financial literacy, so I was keen to hear his opinions. Fortunately, Robert's dire predictions didn't come to pass, so I was pleased when he reached out to me again recently to be on my podcast so I could ask him what the biggest surprise was for him over the last 12 months. You'll hear how Robert's teachings challenge conventional thinking about money and he suggests that you should be doing what the 99% are not doing. You'll hear Robert speak positively about Australia's opportunities, but you may be shocked by some of his predictions of what will happen before these opportunities arise. As I said, I don't agree with all of Robert's thoughts, his ideas about real estate, and his forecasts for what's ahead for the economy, but rather than debating him, I gave him the airtime he deserved, and then after our chat, I'll share my views. So don't panic if you hear some of Robert's extreme thoughts, but please listen to the whole show including my thoughts, and then you'll have both sides of the discussion argument to make your decisions on. My Chat with Robert Kiyosaki For many years Robert Kiyosaki has been one of the most respected voices in the world on growing wealth. He is best known as the author of Rich Dad Poor Dad which is the #1 personal finance book of all time and Robert has challenged the way tens of millions of people around the world think about money. Some of the topics Robert and I discuss: Robert's background and credentials What surprised Robert over the past 12 months He believes the United States is desperate and dumping money straight into the economy, rather than through the banking system Why real estate is Robert's preferred investment vehicle He likes being able to use debt to buy real estate and lower tax obligations He believes that his concepts are applicable to Australia as well as the US because he's made money in Australia using his concepts Robert's investment philosophy hinges on self-education rather than trusting the government Robert's explanation of his Cash Flow Quadrant The Quadrant uses the letters are "E", "S", "B" and "I". "E" stands for Employee. "S" stands for Self- employed or Small business. "B" stands for Big Business and "I" stands for Investors. Why Robert believes that the world's biggest financial crash is on the horizon He believes that we're in a bubble because the US has been printing money instead of fixing mistakes He does not believe the bubble is likely to deflate slowly Robert believes that it's difficult to know what will cause the bubble to burst, but that it will probably be something small added on to a pile-up of things He believes that Australians should not be complacent about their susceptibility to a bubble Robert also believes that a home is not an asset This is because he believes that assets bring in cash, while liabilities cost money, and a home costs money Robert will be doing a live event with Harry Dent while he will explain more about what he believes will happen and what opportunities will arise from it. My response to Robert's thoughts In the show I give you an alternative view on 2 of Roberts assertions: What's in store for our economy and His concept of what makes a good property investment. Property. Robert clearly knows a lot about United States Real Estate – where the rules are very different, the tax regime is very different, the markets are very different and the way to invest is very different to Australia. In fact, if I think about it the way I would invest in real estate in New Zealand is very different from how I would invest in Australia even though our countries and economies are more similar than Australia and the USA. Our property markets are underpinned by the fact the 10.6 million properties around Australia are in general owned by homeowners – in fact, 70% are owned by homeowners and half of these homeowners don't have a mortgage against that property. And for the other half that do you have a mortgage, many of them are ahead in their payments while others are using the mortgage to support the purchases of investment properties. There is not a real property debt problem in Australia. How I see it is that the way you get income from your investment properties is in 4 ways. Capital Growth Rental returns tax benefits Accelerated/ manufactured growth. Unfortunately, too many people look for cash flow from their residential real estate investments in Australia and that's just not how it works. Our economy When I spoke with Robert last year, he was concerned that Australia would fall into recession as with most countries around the world. And that prediction came true, but the recessions weren't as deep voice disastrous as he expected because our governments have learned they can buy their way out of a recession by spending money. Australians perform better than most advanced economies and of course, we are still susceptible to coronavirus-induced problems and I won't even discuss the potential geopolitical problems with China, but I see a number of reasons to be optimistic about the future. Global economic growth is recovering rapidly Australian consumers are going to keep spending. Fiscal stimulus will continue Monetary policy remains ultra-easy New migrants will flood into Australia when the borders open Your home as a stepping-stone In this new age of property investment, when interest rates are accommodatingly low and mortgages so cheap, present-day homeowners are actually sitting on a potential goldmine. Far from being a drain on the household coffers, many of us are taking the opportunity to reduce our mortgages faster, contributing extra to our continually shrinking monthly repayments. In turn, some property owners are building up equity at a considerable rate, with the help of the long-term appreciation of well-located property. Take select pockets of the Melbourne, Sydney, and Brisbane property markets for instance, where homeowners have enjoyed significant growth on their principal place of residence over the last few years without lifting a finger. Some of them are leveraging the hundreds of thousands of dollars worth of equity they're literally sitting on (or in) to invest in further high growth assets, while others are cashing in on a rapidly moving rental market and erecting granny flats in the backyard to create quick (and lucrative) accommodation. Now more than ever, your home can and should be an integral part of your investment game plan. Resources: Michael Yardney Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us Robert Kiyosaki's Australian Virtual Event – www.robertandharry.com Shownotes plus more here: An eye-opening interview with Robert Kiyosaki – the economic shock ahead in 2021 Some of our favourite quotes from the show: "I think it's important to not go forward with blinkers on, to listen to people with various opinions, especially from people who've got a track record." – Michael Yardney "Our property markets are underpinned by the fact the 10.6 million properties around Australia are in general owned by homeowners." – Michael Yardney "First of all, it's not just Australia – global economic growth is recovering rapidly." – 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