Property Hub - Investment Insights & Inspiration - Get Invested: Bushy Martin: Property bust or bull?

Episode Date: August 12, 2022

Bushy Martin talks about the fate of interest rates and property prices, when we can expect to go from 'nuts to normal' and what it means for you. In an insightful deep dive on the Australian property state of play, Bushy takes on the sensationalism and fearmongering of mainstream media headlines to provide clarity on: - The truth about what is really happening in Australian property - What it really means for everyday Australians and investors, and; - What to do about it This is an important episode for any potential buyer, seller, owner or investor, so be sure to share it with your friends and network - and tag Bushy Martin on social media with your thoughts! Realty Talk And if you want to hear more on property and finance along with all of Australia’s leading property investors and independent professionals, join me and the other 120,000 plus regular listeners every week as I anchor host the country’s most popular and longest running property show, Kevin Turner’s Realty Talk.  Listen and subscribe here channels.realty.com.au/realtytalk where we share short and sharp take home tips and tricks on all things property. And while you’re there, make sure you don’t miss another episode of Realty Talk by signing up  on the realty.com.au home page, so you get every show and all of the leading property insights in your inbox, every week. Deep Dive Blockbuster Meeting with Bushy If you’d like an hour of power to talk with me personally on any questions, queries or issues you’d like to discuss about your investment strategy, finance or property portfolio delivery, whether you’re a potential investor who doesn’t know where to start or an experienced multiple property investor who is stuck and looking for ways to improve or grow your property investment journey, just jump on knowhowproperty.com.au, hit the purple ‘Book Appointment’ button in the top right hand corner, then click on the 'Property Pathway' option to book in your preferred time and for the princely sum of just $295 you can ask me anything you want for a full 60 minutes.  For more free investment insights, join the Get Invested community: If you want to continue investing in your knowledge, join me and many other like minded investors in our Get Invested community right now. I send a free and exclusive monthly email full of practical ‘Self, Health and Wealth’ wisdom that our current Freedom Fighter subscribers can’t wait to get each month. It’s full of investment and lifestyle tips, my personal book recommendations, apps I use to enhance life and so much more. Just visit bushymartin.com.au and sign up at the bottom of the page … because this is just the beginning! Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Remember to subscribe on your favourite podcast player, and if you're enjoying the show please leave us a review. Find out more about Get Invested here https://bushymartin.com.au/get-invested-podcast/  Want to connect with Bushy? Get in touch here https://bushymartin.com.au/contact/  This show is produced by Apiro Media - http://apiropodcasts.comSee omnystudio.com/listener for privacy information.

Welcome to the Get Invested Podcast, where we share great conversations with experts from all walks of life to uncover their secret know-how and where they invest their time, their skills, and their money, and the benefits that this has created. You see, the truth is that everyone invests. Every minute of every day, we're investing our time, our skills, our energy, and our money in something. Some of us are investing consciously, some unconsciously, sometimes for good, sometimes for bad, sometimes for no impact. Get Invested will help you to start living by design, not by default. I'm going to help you to make it happen, not let it happen. You'll hear the top tips on how you can live with conscious intent so that you can live more, work less, and leave a living legacy by investing now.

Listen to the show to discover the top tips on how to get started, make the most of your investment journey, and ultimately, to be living your dream, not someone else's. More episodes can be found on iTunes or at bushymartin.com.au forward slash getinvested. Thanks for listening, and now, let's get invested. Hi, Freedom Fighters. Let's start with a roundup of recent news headlines. • Terrifying signs for Aussie mortgage payers • Horror interest rate hike prediction • Mortgages increased by 60% • Home prices tipped a dive in the wake

of RBA rate hikes How much lower could property prices fall as interest rates rise? property prices tumble at rates not seen since the global financial crisis. Housing prices fall at the fastest rate since 2008. House prices crashing at record pace. Housing prices see worst falls in 40 years. The scary truth behind the RBA's big gamble. Total failure. The nation's experiment backfires. Home prices tumble. Worrying graph shows Australia is screwed. House prices to crash by 30%. Seriously, I shake my head when I hear or read this sensationalist, dramatic, scaremongering clickbait. And no, they're not a joke. But I've got to admit,

they really make me laugh and surprisingly these horror movie opening credit headlines are not some conspiracy theory rag from the gutter press or fake news although i'm going to prove that they are fake news today they're actually from supposedly reputable sources like the australian financial review the abc news limited the guardian and the channel 709 news desks oh how the mighty have fallen the sad thing is that if you hear something often enough regardless of whether it's true or false you start to believe it and it embeds in your psyche and what you think about is what you bring about and as i've always said if you swim in a sewer for long enough, you always get a head full of S-H-I-T. It appears that now that we've become

numb to the constant 24-7 fears perpetrated by the horrors of climate change, COVID, the Ukraine war and floods, the only thing left to keep us scared are rising interest rates and falling house prices. It never ceases to amaze me how consistently the press generates these fear campaigns over the dire prospects for housing market predictions. And yet history repeatedly tells us that there's nothing to fear but fear itself. As Mark Twain reportedly said, I've had a lot of worries in my life,

most of which never happened. But unfortunately, this housing hysteria hysteria becomes self-perpetuating and self-fulfilling. Media commentators put a negative, over-dramatized, scary slant on everything to grab and maintain our attention, which in turn attracts self-professed experts who are desperate to get media attention to pump up their profiles, that they'll say just about anything to get exposure. So the fear-feeding frenzy self-perpetuates. it's almost like a perverse form of self-cannibalism where the media have become like a rag bag mixture of dung beetles who feed on feces spiders who eat their young

black swallow a fish that eat themselves to death octopus who eat their own arms sea squirts who eat their own brains and constricting snakes who start eating themselves when they smell the odor of prey on their bodies i actually feel sorry for the mainstream media journalists today can you imagine spending all of your time looking for the absolute worst in everything and everybody what a miserable existence and i don't know about you but if i'm ever stuck in a room with someone who always sees the negative side of everything and always thinks the worst I make myself scarce and avoid them like the plague. And I suggest you do too.

And when it comes to housing, there are 25 million property experts in Australia because we all live in a home, so we all think we're experts. Just about everyone has an opinion on the subject. But as the famous basketballer Shark O'Neill once said, opinions are a bit like belly buttons. just because everyone has one doesn't mean they're all that useful now in recent times i'm starting

to feel a bit like the property version of the abc's media watch because again just like i did recently in response to overinflated inflation reports i'm going to separate the media's fascination with fear fiction in favor of the facts to spell out what's really happening behind the headlines when it comes to the future of property prices so that you can hear the truth in order to make much better informed decisions. So what's really happening? Are interest rates going to go through the roof and are property values really about to crash around the country? Or are we just returning from the radical to the regular, from the nuts to the normal? Today, I'm going to give you a proper property price perspective.

And to do this, I'm going to answer your following three key questions. What's really happening with interest rates and property values? What does it really mean? And what can you do and need to be doing, if anything, about it? And as I answer these questions, I'm going to show you why we're not going to see property values crash, what it would actually take for property prices to crash if that was to happen, and what do we expect to see with house prices in the foreseeable future. And to do this justice, I'm going to draw on research and insights from reputable and

proven property analysts and fellow property contrarians, including Simon Presley, Michael Yardney, Dr. Andrew Wilson, and Pete Wardgen. So let's start by asking what the hysterical headlines from the so-called experts are trying to lead us to believe. The fear factory's false logic is trying to scare us that interest rates are rising rapidly through the roof, and because we won't be able to afford the repayments, this will cause widespread mortgage stress and loan defaults, and as a result, the property market bubble will burst and home values will crash, and life as we know it will come to an end. Seriously. So let's start by breaking down these dire predictions and

exploding the myths contained in this fear-factor fiction, along with the meaningless, misconstrued and misleading approach that it creates. Because from where I sit, this all has a distinct smell of lies, damn lies and statistics. But before we do this, we need to ask who is making these predictions? Why are they doing it? And are these self-professed experts actually qualified to comment. Unfortunately, most of the commentary is coming from journalists, banks, and economists who are assumed to be property experts. And while they've obviously got advanced knowledge in relation to the economy, business, and financial markets, very few of them have actually studied and analysed Australian real estate history. So they're actually not property experts.

The reality is that there's nothing more complicated than trying to understand property conditions, given that there are so many dynamic, constantly changing, irrational and imperfect moving parts to the property puzzle. So when it comes to property, you really need to be careful about who you're listening to and where you're getting your information. Now, back to the statement that rapidly rising rates are going to crash property markets. Let's start by questioning meaning, are interest rates rising through the roof to unaffordable levels? The unequivocal answer is no, when you look at specific evidence rather than relying on rampant speculation.

And to put current rate rises in context, we need to take a walk back through recent history to see where interest rates have been tracking and why they're now rising. As I detailed my recent episode on inflation, interest rates and their impacts, So if you haven't listened to this episode, it's worth revisiting the scene. Here's a quick summary of interest rate averages and movements. The RBA's official cash rate in Australia averaged about 3.88% in the three decades from 1990 until 2022, which equates to an average bank variable home loan rate of between about 5.9% through to about 6.4%.

Now, for the three years prior to COVID, the cash rate sat steady at the current level of 1.85%. So the recent successive rise in rates of 1.75% from the historically low temporary emergency COVID setting of near zero at just 0.1% since April has just taken us back to where we were in 2019. Now, that isn't sounding like they've gone through the roof to me. but how much further are rates likely to rise and can we afford it given the complex dynamic mix of variables from global macroeconomics down to local conditions that actually affect rate decisions this is anyone's best guess including the RBAs but if history is any indicator the cash rate is likely to rise to somewhere between two and a half to three percent

over the next 12 months before plateauing and potentially coming down again as our spending reduces, inflation falls back within the target 2% to 3% range, and the economy stabilises in the healthy incremental growth zone. And a cash rate of 2.5% to 3% is still a long way below the 3.88% 30-year average. So again, does this sound like rates are skyrocketing to the stratosphere? Not from where I sit. This means that current average variable bank home loan rates will rise from their current level of around 3.2% to between 4.5% to about 5% during the course of the next year or so, which is still about 1% to 1.5% below the long-term average. So are you still worried? The reason why there's so much fuss being made about rate rises is that we now have very short

memories due to our constant 24-7 deluge of digital distraction and negative noise on top of our very hectic, always active lives. In many ways, I fear that we now have the collective memories of goldfish, which is about three seconds. And the media likes to keep it this way so they can continue to keep us scared without time to reflect. Because without memory and a long-term perspective, it's very easy to keep us paralysed with fear,

like rabbits in the spotlight. And if we add to this in the shorter-term context, over the last 10 years we've seen nothing but interest rates falling from a cash rate of about 4.75% down to the lowest level ever at 0.1% during COVID before rates started to rise again in May of this year. So in effect we've enjoyed an interest rate holiday for eight years followed by an artificial COVID manufactured honeymoon for the last two years. So if now if we narrow our memories to this short timeframe, recent rate increases actually appear high. But if we look back to 1990, when the cash rate was nearly 18%, and between the mid-90s through

to 2007, interest rates went up and down between about 7.75% down to about 4.25%. So over this horizon, today's cash rate movements actually look minuscule. So if you look through a short-term microscope, things look pretty bad. But if you use a telescope, you wonder what all the fuss is about because we're still way below regular settings. The bigger questions to ask are why is the Reserve bank or RBA rising rates, what does it mean and can we afford it? Because the answer to these questions will also have an indirect influence on property price movements. And the answers to these questions are simple. Rates only rise when the economy is doing too well and growing too quickly. And the fact that rates are rising rapidly from a very low base is evidence that

we're actually doing too well. So to calm the jets of rising demand at a time of low and restricted supply, increased home loan rates mean that many have less to spend on other things. So that demand and supply starts to equalize, prices start to stabilize, and inflation falls back within the small two to three percent growth target range. So looking at things this way, we're all actually doing extremely well financially and economically, and rising rates are like a backhanded compliment that things are actually going too well too quickly, and now the volume needs to be turned down. And given that we're now in good shape, the RBA now quite rightly considers that the massive levels of short-term monetary support through money printing, stimulus programs,

and the lowest ever interest rates offered during the pandemic is no longer needed, given the evident strength of the economy and the current inflationary growth pressures. In addition, the labour market's strong, as employment has grown, workplace participation is at record high levels and the jobless unemployment rate is at its lowest level in nearly 50 years.

And despite media claims to the contrary that are doggedly holding on to the RBA governor's throwaway line, taken completely out of context, that the cash rate wouldn't move until 2024, the RBA has always and repeatedly made it clear that it will only do the minimum that it has to do in order to keep inflation at bay and to return the cash rate to a more normal setting as soon as the artificial and abnormal COVID threat has largely passed. And that time is well and truly now. So why are interest rates rising? Well, On simple terms, with a booming economy, interest rates are only rising to quell spending, reduce

demand, calm inflation, and slow the economy down to a rate of steady sustainable growth, where demand, supply, inflation, unemployment, and wage growth are all at healthy levels and in a state of equilibrium without wild disruptive swings either up or down. The next part of the question is, can we afford rising interest rates? Now, before we answer this, we need to set the context. Because while there's been a lot of overblown talk in media on our high debt levels, this disregards the fact that property price rises on anywhere between 20% to 50% over the last two years has seen the total value of Australian homes rise by $2 trillion in the last two years.

Now, that's $2 trillion with a T in front of it, not a B or an M. that's two trillion dollars which is two million dollars multiplied by a million or 1 000 billion in other words it's got 12 zeros after it not just six now that's incredible growth and as a result total australian property is now well well worth over 10 trillion dollars And importantly, there's only about $2 trillion of debt against this. So the ratio of home loans to total property value is only 20%. And it's also important to note that approximately 40% of the population are renters that aren't directly affected by interest rates.

And of the remaining 60%, around half of homeowners have no debt at all. Their homes are totally paid off. so interest rates mean nothing to half of our homeowners and according to RBA figures only around one-third of all households have home loans so yes mortgage repayments are increasing for the 30% of home borrowers but rates are only getting back to where they were prior to the pandemic and the remaining 70% of property owners aren't affected by rising rates at all So overall, Aussies have never been wealthier and there's no signs of mortgage stress.

So now that we have a proper perspective on the relatively low proportion of property owners that are affected by home loan interest rates, let's consider if we can afford rising rate repayments. And based on the RBA's own intensive and extensive research that was reported in a recent speech by the Reserve Bank Deputy Governor, Michelle Bullock, the answer is a resounding yes.

because the vast majority of Australian households are in very good financial position and we're wealthier than we've ever been. This is for three main reasons. Firstly, the majority of us have never been wealthier, have never had so much in savings, nor been so far ahead on our home loan repayments. Secondly, higher bank lending standards and significant increases in loan servicing buffers mean that new borrowers have been stress tested at interest rates that are two and a half to three percent higher before loans can even be approved which means that the affordability of higher rate repayments has already been built in. And thirdly significantly across the board house price increases of between 20 to 50 percent plus

over recent years has strongly improved our equity positions and lowered loan to valuation ratio risks. To substantiate all of this, Michelle revealed that hard-working Aussie families have put an additional $260 billion into savings since the onset of the pandemic, and even though our spending on goods has increased, we're still spending less than we were prior to the pandemic, which has also contributed to these large savings buffers. This has been helped by the very low interest rates during the COVID, which has helped many who have home loans to add to our savings through reduced home loan repayments. For example, since the start of the pandemic, payments into offset and redraw accounts have been substantial, totalling around three and a half percent of our

total disposable income. And the accumulation of these savings war chests will also help to transition to higher mortgage repayments as rates return to normal. So among families with variable rate owner-occupied home loans, around half have accumulated enough prepayments to service their current loan repayments for almost two years or more. This has all been assisted by extremely strong growth in housing prices of anywhere, as I've said a couple of times already, between 20% to 50% over 2021 and early 2022, which has significantly boosted asset values for many homeowners with housing now comprising over half of our household wealth. As a result the ratio of our savings and liquid assets to our incomes has increased substantially among those who have home

loans in recent times and RBA analysis shows that borrowers with the most debt also tend to have the higher savings buffers. This combination means that the share of home loans and negative equity where the loan balance is higher than the value of the house was only around 0.1% in May 2022 which is way down from the two and a quarter percent prior to the pandemic. So while some house prices in some areas have started softening in recent months as they always do which I'll explain later, home values across the board would have to fall a long way for negative equity to become a concern. RBA modelling shows that a decline in housing prices of 10% would raise the share of balances in negative equity to just 0.4%, which is still eight times lower

than its peak of three and a quarter percent back in 2019. And even a fall of 20% in housing prices across the nation, which is extremely unlikely if not impossible, would only increase the share of homeowners in negative equity to 2.5%. Now, this is a very low incidence of negative equity, and this reduces the likelihood that borrowers are going to enter into default. So anywhere between the unlikely worst case of 97.5% of borrowers and up to 99.6% of borrowers are in positive equity.

Now, this doesn't remotely look like a forced mortgagee sale, bloodbath and as we all know as long as home loan borrowers have a job and can make repayments they're more likely to survive on a diet of baked beans and dog food than be forced to sell their home and with unemployment at the lowest level for nearly 50 years with more jobs vacant than we have workers to fill them wages on the rise and the good old bank of mum and dad sitting on the sidelines ready to support their kids if they get into trouble then you can be really comfortable knowing that our finances and properties are in good shape to weather the return to normal property cycle conditions. In further support of this strong position, RBA research also confirms

that if we look at the third of households with home loans, almost three quarters of the total debt outstanding is held by households in the top 40% of high incomes, while home loan borrowers in the bottom 20% of income levels only carry less than 5% of total home loan debt. Furthermore, RBA research reveals that homeowners with high debt-to-income ratios, known in the industry as DTIs, who you might expect to be most affected by interest rate rises, also tend to be on high incomes. So higher income households can typically devote a higher share of their incomes to home loan repayments because their other living expenses tend to account for a much smaller share of their income. This suggests that a large number of home loaners are likely to be able to

handle somewhat high interest rate repayments. Now it goes without saying the size of saving buffers along with the income and wealth of the home loan borrowers impacts the riskiness of loans and the probability of borrowers ending up in financial difficulty. But RBA data reveals that Investors with high debt-to-income DTI loans are more likely than other borrowers to have high savings and high equity buffers. They also tend to be wealthier and have higher incomes. And high DTI investor borrowers have historically been less likely to experience mortgage stress than other borrowers. On another note, the RBA data suggests that over one-third of variable rate borrowers have already been making average monthly repayments, including irregular payments to redraw and offset accounts, sufficient to meet the resulting rise in required repayments. They also confirmed that the data indicates that just under 30% of borrowers would face relatively large repayment increases of more than 40% of their current payment levels.

but it's also worth noting that the share of fixed rate borrowers doubled from 20% at the start of 2020 to a peak of nearly 40% in early 2022 given the historically low fixed rates that were on offer at the time. This means that the majority of fixed rate home loans aren't due to expire and roll off to higher rates over the next two years with the highest concentration of fixed loans due to expire in late 2023. So these borrowers are protected and shielded from interest rate rises as the repayments are fixed at low levels until this occurs. And who knows what's likely to be happening with rates at that time, because there's a fair chance that rates may actually start declining again by then.

To give you an indication of home loan repayment impacts, assuming that all fixed rate loans roll on to variable mortgage rates that are priced by current market projections. RBA estimates suggest that around half of fixed rate loans in number will face an increase in repayments of at least 40%. So borrowers with fixed rate loans that are due to expire by the end of 2023 may experience a median increase of around $650 in their monthly repayments, which is about 45%. and while percentages can make numbers appear scarier than they are this level of repayments are still a long way below the 30-year average and with employment growing strongly and unemployment at its lowest level on nearly 50 years with wages starting to increase having

and keeping a job is the best way to ensure that you can continue to meet your home loan repayments So in summary, how are we placed to handle interest rate increases? Well, as you've heard, the majority of Aussies are actually in a good position. A lot of people have large saving buffers. Most households have substantial increased equity in their homes and their investment properties from strong value rises. And the bank's 2.5% to 3% loan servicing buffers in recent years have built in the affordability of interest rate increases. In addition, much of home loan debt is held by high-income households that have the ability to service their debt, and many borrowers are already making repayments well above what's required and are months if not years ahead of their repayments. And finally, the higher majority of home loan borrowers who are on low fixed rate loans have time to prepare themselves for higher interest rate repayments.

So in simple terms, a great majority of Australians have never been wealthier and our economy is in great shape and booming, which is exactly the reason why interest rates are rising. So rather than being criticised, castigated and crucified in the press, the Reserve Bank Board and the Governor Philip Lowe should be celebrated and applauded for the incredible job they've done to navigate us through a very complex, constantly changing and very challenging period, using the very limited historic rearview mirror and tools at their disposal to position Australia and our economy as the envy of the rest of the world. But unfortunately, media commentators and a lot of Australian armchair critics aren't prepared to do anything themselves, but are very quick to criticise anyone who does do something, and they'll find fault in order to distance themselves from the blame. And on this note, the new federal government is endeavouring to do exactly that with the RBA by wasting, in my opinion, millions of dollars on another costly and pointless review in the old game of pointing the finger at others to deflect attention from themselves. It's the old pass the parcel trick of avoiding criticism by being seen to do something without actually doing anything. It's another classic case of Australia's favourite sport of scapegoating. where you find a convenient donkey to pin the tail on like the RBA then get an independent panel of experts to fire the bullets

so that the politicians still look squeaky clean but have the excuse to get rid of the RBA governor and replace him with someone of their own choice. In my view, if it ain't broke, you don't need to waste time and money trying to fix it. And my only hope for the RBA review is that they end up getting more support, more resources and access to current and leading indicator data

to further improve the record of stellar performance. Why is it that we seem to have such an aversion to any form of negative impact or bad news even when we know it's good for us, like taking cough medicine? We all know that the last two years under COVID has been totally artificial and unprecedented. it. We've enjoyed record low interest rates, lots of money being printed, and billions of stimulus dollars sloshing around the economy, without much to spend it on other than a second

property, a tree or sea change, or home upgrade. So when things start to return to normal, why are we and the media so hell-bent on painting the picture that the world as we know it is coming to an end when all that's happening is that everything is returning to where it should be and has been. Unfortunately, because fear and misery grabs our attention and attracts dwindling advertising dollars. But I digress. Given the strength of our growing economy and the recent rapid increases in our home values and personal wealth, alongside historically low unemployment and growing wages, we should be applauding and celebrating the fact that we're in such good shape, especially so soon after the pandemic. And the RBA confirms that they

now have the confidence to get the lowest ever level of interest rates back up to a reasonable level. These responsible increased interest rate return decisions are also building in an improved insurance policy into our economy, so that if Australia and our economy are hit by other unexpected shocks in the future, we've got this safety net and ammunition left in the barrel to accommodate them by reducing rates when and if necessary to weather future storms. So we can now be confident that we can accommodate interest rate rises as they return to normal without major financial impacts. So let's return to the central thesis of the media's current claims,

that interest rate rises will create a financial crisis and that the property markets will fall through the floor. The next thing I want to pick up on here is that there is actually no such thing as a property market or property markets. The term's actually an oxymoron with an emphasis on the moron. A market is normally a place where buyers and sellers can transact and exchange the same goods

where you can compare apples with apples. But unlike share markets where everyone has instant access to the same information, unlike shares that can be traded instantly at the press of a button, comparing properties is like comparing an apple with every other known fruit and vegetable, because every property in every street in every suburb is different to every other one of the 10.8 million properties spread across the 15,353 suburbs around Australia. and because homes are a tangible need asset that we need for shelter safety and security property decisions are often driven by our emotions needs and desires not by rational logical thought processes so throwing a simple convenient blanket over very different things leads to mistaken signs and misleading conclusions joining the dots when the dots don't even exist or at best are very different and are more like a random collection of unique dashes,

asterisks, full stops, exclamation marks, question marks and over 10 million other symbols in different shapes, colours and locations is like trying to simplify and make sense of riddles wrapped in mysteries embedded in enigmas. You just can't simplify complex dynamic and differing variables down to a homogenised model and then make sense or meaningful conclusions.

Yet this is exactly what a lot of uninformed commentators and nightly newsreaders like to do. It maintains our fascination and fear without really meaning anything. And this then leads to the next related layer of error. Trying to use a single indicator to read complex and constantly changing tea leaves. In the case of property, the main metric that's relied on is historic median property prices. So in the case of houses, median home value and price figures are used to try and capture all shapes, sizes, colours and locations of homes. So median house prices are aggregated regardless of whether a home is a one, two, three or four bedroom, has one or two more living areas, has one, two or more bathrooms, none, one, two or more car parking spaces, carports or garages. and then we have small blocks large blocks and then we have different designs layouts materials

ages the list of variants is endless yet every one of these gets lumped together under the description of a home and reported on as a homogeneous market when it's actually nothing of the kind and when you then aggregate median property prices at the suburb region state or national level the numbers become even more misconstrued and more meaningless and a median value is even an appropriate measure because a median value is very different from an average value. The median is the value in the middle of a data set meaning that 50% of data points have a value smaller or equal to the median and 50% of data points have a value higher or equal to the median. So let's look at an example that clearly illustrates the difference between median and

average and why medians aren't a reliable indicator of what is actually happening. Let's say that you look at five recent house sales with properties selling for $300,000, $350,000, $700,000, $1.85 million and $2 million. The median price for these is $700,000 while the average is over a million. Yet four out of the five properties were either much lower in value or much higher in value than the mean or the average. So does this sound like representative

and meaningful information to you on property prices? And it gets worse when you compare one month's figures with another. Let's say the following month, only three properties sell in the area at prices of $300,000, $300,000, and $2.5 million. The median here is $300,000, which is a 42% drop in median value from the month before,

which would mistakenly lead you to think that property values are dropping through the floor. So in this fashion, as Michael Yardney is famous for saying, a median value is a bit like burning one hand by putting it in a bucket of boiling water while getting frostbite on your other hand as you plunge it into a bucket of ice and then concluding that overall you're okay. So the number of sales and the median value are clearly not representative and can totally distort what is actually going on.

And this is not even taking into account the variables in house size, configuration and location. now admittedly my examples are small and a very large number of sales would tend to smooth things out somewhat they still don't account for the massive differences in size configuration location and appeal between say a bed sit a family home and a muck mansion that greatly affects property price decisions but are all lumped together as houses let me give you another example of the danger of relying on medium property price movements over time aggregated over a large area. A couple of years ago before COVID, the capital growth based on medium price movements for houses across Adelaide was just under 6%. Yet there were areas in the eastern suburbs that were experiencing

in excess of 18% value growth on a sustainable basis. What I hope this demonstrates is that trying to draw similarities between very different things and then using a single measure to track changes and draw conclusions is at best meaningless and misleading and at worst, downright dangerous because oversimplification and overgeneralisation makes this convenient for us to try and comprehend but can lead to very wrong conclusions.

So when you hear that medium Sydney property prices are falling by 2% per month while Adelaide is up 1% per month and that overall property prices across the nation have dropped by half a percent, you need to read this with a huge grain of salt because of the micro local or individual property level, what's really happening can be completely different. They may provide a very general indication of the direction

of a trend, but you'll need to dig a lot deeper to understand what's really happening on the ground. And here lies one of property's greatest opportunities because if the stampeding herd are reacting to news headlines that report property market movements at the city, state or national level and they respond accordingly, you can be sure that at the macro local level, there are still bound to be good opportunities

where you can swim against the tide of popular opinion to continue to do well with your property values and opportunities. As always, the devil is in the detail, not in the broad assumptions. So it's fair to say that I get very annoyed and frustrated with the constant media talk of property markets that don't actually exist and median prices that don't actually tell the true story. Yes, it makes for great engaging and entertaining listening and can make so-called experts sound intelligent by quoting figures and percentages. but at the end of the day, for the large part, it's just another example of lies, damn lies and statistics. As I've already alluded to, given the complex and dynamic list of constantly changing variables associated with property, which is more combinations than a Rubik's cube

and it's a bit like trying to read and predict the weather, simplifying property down to just a few metrics and measures has the potential to lead you down the garden path, particularly when you're trying to predict the future and all of this discussion flows to the dangerous reliance on what I like to call the indicator of the hour. So discussing property markets that don't exist using large area meaningless median prices is not much better than misleading and this flows through to the current indicator of the hour assumptions that rapidly rising interest rates are going to cause property markets to crash. Just because the response to COVID

led to artificial manufactured dramatic drops in interest rates to their lowest levels ever and property prices have risen sharply across the nation by 20 to 50% or more where the rising tide has floated to all ships to result in what's actually been the second biggest property boom in the 230-year history of our nation,

this doesn't actually mean that one directly caused the other. because there are many other factors at play. But this is the simple conclusion that median commentators have made. So now that interest rates are rising sharply and quickly, they automatically conclude that property prices will plummet.

Now, this is a very dangerous oversimplification and misreading of what's actually happening that conveniently ignores other influences on property price movements. For one thing, history shows that it's not the cost of credit that has a big influence on property prices but access to credit that influences home values in a bigger way. A quick reflection on what happened in 2017 to 18 when median property values dropped

in Sydney and Melbourne revealed the bank credit squeeze with multiple limitations on the ability to secure loans at all with caps on investors, dropping loan limits, the retraction in interest only loans and a much bigger focus on living expenses all significantly reduce property buyers ability to secure credit and medium property values soften. So it's not just the cost of credit a la interest rates that impacts on property prices. It's also important that we look back in history at other times when interest rates have gone up to see what impact they have on property prices because they've gone up all the time. It's just that they haven't gone up in this country for about 11 years and people have forgotten. So Simon Presley has presented a heap

of evidence that clearly demonstrates that in the six-year window between 2002 and 2008, the standard variable home loan started at 6.5% and went up 22 times over that period to end at 9.5%. Now during that six-year period, six out of eight capital cities saw their medium house prices at least double, while among our 200 individual regional towns and cities, they did even better than those six capital cities that more than doubled. So while interest rates rose multiple times by a total of 3% over this time, Australian property prices enjoyed a boom. So clearly, interest rate rises don't automatically result in property price falls. Yet, it never ceases to amaze me that whenever there's something topical that's going to have

an impact on property prices, if that indicator of the hour is something that's not going to have a positive influence, the property pessimists and self-proclaimed experts all jump on the bandwagon of that one thing and blow it out of all proportion. Because that one thing is not going to have a positive influence and therefore prices are going to decline. But what they never do is step back and take a balanced assessment and question, well, that one thing isn't going to have a positive influence currently, but what are all of the other things that now and always have had a positive influence? So if the one thing is negative, and in the current case, it's rising interest rates, they conclude that if the cost of repayments goes up and

buying capacity comes down, then the non-existent property market median prices must fall. And yet again, this is a massive oversimplification that simply ignores all of the variable factors that combine to influence property price movements. Because the reality is that home loan values are driven by a complex combination of drivers that revolve around demand, supply and sentiment. And I don't just mean the simple definition of demand and supply that a lot of commentators tend to focus on. Many economists justify and supply as the total number of residential properties and demand is restricted to population numbers. But this is also missing the mark because there's much more to demand, supply and sentiment than this. They're part of

equation, but there are many other lift and drag factors that affect property values in different areas at different times for different reasons. And Simon Presley from Propertyology has encapsulated these extremely well. On the demand side at the local and regional level, they include things like new infrastructure, major projects, industry and employment diversity, income levels, affordability, immigration, population, births and deaths, transference, and lifestyle amenity attractiveness. On the supply side, they include things like rezoning, gentrification, land releases, building approval levels,

property taxes, government incentives, and the availability of credit. Then comes the often forgotten but increasingly important sentiment influences. Sentiment includes political stability, job security, government policies, interest rates, and the growing influence of the media. and it's fair to say that the current media focus and scare tactics in relation to perceptions of

property price falls are creating an increasingly self-fulfilling crisis of confidence that's resulting in softening property price expectations for sellers and buyers and these influences can exert a dragging or lifting influence on property values dragging influences include affordability inflation, rising interest rates, tighter bank credit assessment policies, skilled labour shortages, political rhetoric, and property pessimist media commentary. Lifting influences include overseas migration, wage growth, rising rental incomes, home equity increases, home upgraders, lifestyle buyers, investors, international tourism, household saving levels, infrastructure project spending building approval limits and construction material supply constraints

and they need to be considered what I like to call the macro micro and micro level all these all vary in a very fragmented out of sync way by location so one area can be experiencing growth while another can be experiencing plateauing property prices because history again demonstrates that each and every area moves through a spring-like cycle that resembles an s-curve formation over an 8 to 15 year period where a location will experience a 2 to 5 year period of very strong growth after which property values will often come back 5 to 10 percent before flatlining for another 5 to 8 years before the area then goes through its next growth spike. So property values follow a repeated peak and plateau step-like cycle

over the long term. And I stress that each area is generally in a different part of the cycle than others. And when I say area, I'm talking about precincts, neighbourhoods, and maybe suburbs, but definitely not regions, states, and nations. So again, aggregating median price movements over regions and states is inappropriate and misleading if you're trying to really understand what's happening with local property values. The real takeaway here is that property is complex, dynamic, and local, and you need to be very careful about where you get your information and who you listen to. For my money, it's not the paper, it's not the nightly news or general media, it's not self-professed overnight generalist experts it's not economists it's not the banks

but you need to turn to proven property market analysts like simon presley dr andrew wilson michael yardney and pete wargent these are independent professionals who've been active in property themselves and studied property market history for decades not just minutes or hours and they're good communicators of evidence-based facts not speculative fiction or their own opinions. So what's really happening in property at the moment and the foreseeable future? Now that we better understand the machinations of property price movements and the complex interaction of their many moving parts, in simple terms, property dynamics are shifting back from the artificial COVID radical back to the regular and from the nuts back to normal property conditions.

So, if property is returning to normal, let's quickly summarise what normal is. Bank loan interest rates are in the mid-fours to high 5% range, noting that current variable home loan rates are around the low 3% mark. Secondly, annual property capital growth is close to the long-term 25-year average of about 6.8% nationally, and it fluctuates in a band between the mid-5s to low-8s. This compares with the capital growth spike, again, of between 20% to 50% that we've experienced over the last 12 to 18 months. Now, next, every location is at a different fragmented stage of the 8-15 year S-curve

peak and plateau growth cycle based on varying mixes and intensities of demand, supply, sentiment, lift and drag drivers. Compare this to the very unusual and unprecedented period of post-COVID where the growth meant that the rising tide has floated all property ships. So to put the short-term unusual COVID catalyst in context, collective responses to the pandemic have resulted in recent property activity that's akin to throwing petrol on the fire. The rapid national response of money printing, dropping interest rates to the lowest level on record

and multiple stimulus packages, all at a time when we couldn't travel and have been actively seeking safety and security with very little to spend our growing pile of money on. So with all of this happening, what did we do? We bought property. We've upsized, right-sized, tree-changed, sea-changed, and bought second homes. Our homes have become our fortress haven and led to an exodus to lifestyle right across the country.

And as the stimulus petrol has burned out and the bellows of low interest rates have reduced the oxygen supply as rates rise, the bursts of property flames are now dying back to the slow-burn embers. so we've effectively seen anywhere between four to eight years of property capital growth brought forward in the space of just 12 to 18 months so b-grade locations and b-grade properties are likely to come back in value before flatlining for an extended period of time unless they're going to experience new growth drivers in the form of committed new infrastructure technology rezoning new industry and employment diversity and strong growing incomes accompanied by limited new housing supply in tightly held locations with lifestyle amenity attractions

and good school catchments. Now using another analogy, the pandemic period has caused property prices to perform nationally a bit like a compressed spring. And what happens when you let a compressed spring go? It very quickly extends way beyond normal and then comes back a bit before oscillating into a state of equilibrium. So if average annual capital growth historically has been 6.8% and property prices have risen by 20% to 50% across the nation over the last 12 to 18 months, and B-grade location of properties now come back by 5% to 10%

in the short term, then as we expect them to, as they follow the S-curve cycle of growth, then surprise surprise we're still 15 to 40 percent in front so what's all the fuss about to me a predicted property bust is is looking a lot more like bull so what does this all really mean with the so-called property markets not sorry will the so-called property markets crash and will prices plummet by 30 percent well again to put some context around this, let's take a quick walk through the recent history of property price

predictions to see how accurate they've been. And we don't need to look back very far. Just over two years ago, when COVID first hit Australia, we closed our international borders and all of the so-called experts predicted that property prices will not only decline by 20 to 30%, but it would be the single biggest decline in real estate that the country's ever seen because we no longer had any population growth. Now, this was the indicator of the hour, and it didn't happen. Within fast forward a few months, the indicator of the hour shifted to JobKeeper. When that stopped, no one was going to be able to afford to pay their mortgage,

and the entire property market was going to crash. Again, it didn't happen. about six months later the property pessimist doomsday topic shifted onto the new indicator of the hour which was the loan repayments deferral scheme the theory was that as soon as everyone was going to start paying their mortgage again they wouldn't be able to afford it everyone would default and property prices were forecast to crash well strangely enough it didn't happen Now, can you hear a bit of a pattern developing here? Because the reality is that in the 40-odd years I've been involved in property,

there hasn't been a single year that's passed by when there wasn't some doomsday prediction that the property markets are going to crash. It never has. And about the only thing I admire about the growing crowd of property pessimists is that they don't give up, despite never getting it right. and i strongly believe they're going to be wrong again this time now i'm not saying that property prices don't soften and fall they do and they will b grade locations and b grade properties as they follow the normal and expected drawback in prices by five to ten percent as they come

off their growth spike stage of the s curve cycle growth before they then plateau for a period in readiness for the next growth uptick. This is normal and expected. Let's now turn to the question of why I don't believe that broad scale property markets are going to crash with price falls of 30% or more. And again, I'm going to start by looking back at the history of property price movements. Now, the past isn't necessarily a predictor of the future, but it certainly contains clues and it leaves lessons. And in this regard, Michael Yardney has uncovered that since the Australian Bureau of Statistics started tracking figures over 42 years ago, the Australian property market, and remember there isn't one, has seen property prices go up by 540%. Melbourne has

been the strongest city with annual capital growth of about 8% per year compounding. Sydney and Brisbane have experienced a little bit less annual growth at around 7%. And during this time, we experienced wars, recessions, dot-com crashes, GFCs. We've had high interest rates as well as low interest rates. We've had multiple governments and a constant succession of natural disasters. But despite all of this, property prices have continued to increase in Australia, which in fact has been occurring since federation where property values have kept rising due to a host of reasons and some of them I've already mentioned but they don't rise continuously in a straight line as there are periods when the property values in different locations go up

come back slightly and then flat line as they follow the different stages of that s-curve peak and plateau growth cycle that I've already talked about. Now let's turn our attention to the history of actual property price falls that have been experienced across Australia to see if anywhere has experienced value falls in the order of magnitude that the negative Nellies and Neds are predicting for this year, e.g. 30% or more. Now, property analyst Dr. Andrew Wilson has done some great research on this because if we go back in time, we look at the record falls over a year in house prices, the highest national annual fall from December quarter to December quarter, recorded in the modern era since 1987, which is over the last 35 years,

was 5.5%, which occurred in 2018, which was experiencing very similar circumstances to our current conditions. At that time, there was also a sustained media fear campaign, which affected sentiment and consumer confidence and sidelined buyers and sellers. On a state basis, the highest annual fall over a calendar year we've seen was 9.9% in Sydney, and that was also in 2018. And when we return to peak to trough declines in housing values, which runs from the peak of the market cycle until it finally bottoms out, The record peak to trough on a capital city basis was between June 2017 and June 2019, which is a two-year period where Sydney medium house prices fell by 18.2%, which over that two-year period averages out at around 9% per year.

Melbourne's record peak to trough decline was between March 2018 and June 2019, which resulted in a 14.1% decline. And when we look at the other major capitals, Brisbane's record peak to trough decline was a 7% between June 2010 and September 2011, and over a similar period, Adelaide's record decline in median house prices from peak to trough was just 4.5%. And for Perth, its record peak to trough decline was 8.4% between December 2008 and March 2009. So clearly, these numbers are nowhere near the doomsday forecast scale of the 30% falls. And it's important to note that with the exception of 2018, when median values dropped 5.5%, the conditions are very different at the moment.

During previous times, we had credit squeezes, recessions, DFCs and other economic challenges. Now, this is very different to our current situation where the economy is booming, households are in the strongest financial shape that they've been in for decades, and we've never been wealthier. Unemployment is at nearly 48-year lows,

wages are on the rise, we have a strong shortage of housing supply, and our international borders are opening up to allow the floodgates to open to return to in excess of 200,000 skilled migrants a year to live and work in what has proven to be the best and safest country in the world. So there's a lot of positive housing uplift drivers at play

and few dragging deterrents. So, as I've said many times before, what we learn from history is we don't learn from history. In fact, we now completely ignore history because we're drowned in a deluge of negative news and as a result we make no time to reflect and contemplate on what has happened in the past and how this should colour our thinking in the present. Let's now turn our attention to the future and what reputable property analysts believe is actually going to happen with property

prices over the next year. And to capture this I'm going to share well-researched forecasts offered by Dr Andrew Wilson for 2022 to 23. He believes we'll certainly continue to experience a media-fuelled crisis of confidence that will continue to evolve and create self-fulfilling negative property sentiment, despite very strong property and economic fundamentals, similar to what was experienced in 2018-19, but this will tend to be short-lived. In his view, opening of the borders to increasing numbers of skilled migrants and students will put additional pressure on rents in a very undersupplied environment. Skyrocketing rents and extremely low vacancy rates will attract more investors back into property, and our full

employment economy will maintain pressure on rising wages, which has already started to occur. So projecting forward in the short to medium term, Dr. Wilson predicts that it's likely that Melbourne and Sydney will record around about 6% falls in their median house prices over the course of the next year, which will still be ahead of where they were three years ago, with Sydney still up 30% and Melbourne up 20% on where prices were in 2020. Now, it's important to remember that there's not one Melbourne or one Sydney property market. High-end, high-priced properties that led the boom are now leading prices down. And there are also going to be some issues in the lower-end properties where wages haven't gone up as much as house prices have. So overall,

while the Sydney and Melbourne market is going to drop around 6%, some locations, sectors and property profiles will drop more, while others, like the sweet spot affordable properties that attract first-home buyers and investors, are likely to hold steady. Brisbane is on track to record a 11% increase in the median house price this year. Adelaide is projected to be up 12%.

And Perth, which is enjoying quite a sustained revival in its property price growth, is likely to be 9% higher. And applying a weighted average to all of these major capitals, Dr. Wilson projects that the median national house price will be just above the line, with growth of around about 1% over this year. Now, of course, these numbers don't include

some of the ongoing rises that we're seeing in the regional hubs and regional cities. So it's very clear that all of these figures a mile short of a 30% price fall predicted by hordes of hysterical headlines. And if history is any indicator of the future, I'd definitely lean towards Dr. Wilson's projections far more than I would the mainstream media.

And with all the positives I mentioned in terms of demand over supply, eventually the media-generated fear factor sentiment will lose its edge, as it always does. And as we saw in 2019, when even though we're plagued by a lot of bad news stories early that year with the prospect of tax changes for investors, the Royal Commission and the banking sector,

along with all of the same hysterical headlines regarding house price crashes at that time, the buyers started to work their way back into the market as they recognised that there were good value opportunities resulting from the many that were sitting on the sidelines due to the media-induced lack of confidence and gradually property prices turned early in 2019, even before interest rates cuts were even started. And with much stronger economic conditions at play currently, similar results are likely to

occur moving forward. Now, it's important to stress that given the continuously changing and wide-ranging dynamic variables affecting property values, that even educated guesstimates are still just that. So I suggest you plan for the worst and then expect the best and you'll come out in good shape regardless. Let me now tackle the question of property prices from another angle. What would it take for property values to actually crash? For property to crash like the headlines are suggesting, we need a huge mass of people to have to sell their properties at almost any price, with nobody there to buy them so they'd have to give them away. And for that to happen, there would need to be mass unemployment, along with significant

drops in wages and significant increases in interest rates, resulting in a very large number of home loan borrowers not affording to make their home loan repayments and defaulting on their loans, leading to widespread forced mortgagee or bank in possession sales. but sellers become buyers they're not going to give it away because they've got to live somewhere else and housing's a fundamental need we all need a roof over our head and we'd rather eke out an existence on a diet of toast and two minute noodles than be forced to sell our homes and be out on the street so as i outlined earlier australians being wealthier than we've ever been employment at its lowest level for five decades and wages on the rise and only about a third of

households having a home loan with half of homes owned outright this is not likely to happen. So given everything we've covered today and the strong position that the vast majority of us are in what does a return to normal conditions with interest rates increasing back to regular levels alongside an expected softening and plateauing of property prices in some locations and property types what if anything can and should you consider doing about it well for most of us it'll be business as usual and you don't need to do anything different just get on and enjoy your life but make sure you stop watching listening and reading to reading the mainstream media and be careful and be selective about where and who you get your information from before you make decisions

if you're worried about cost of living rises and home loan repayment increases as interest rates return to normal levels do yourself a favor and reduce your costs firstly by negotiating with your existing bank to reduce your rates because the banks are also experiencing drops in home loan business and a lot of them are very keen to retain good customers with many of them actually sweetening the deal by offering cash payment incentives of anywhere between $2,000 right up to $5,000 for you to stay on top of reducing the rate. Then reach out to a good mortgage broker to further restructure and reduce your costs. As an example, our know-how finance team is saving an additional $400 to up to $1,200 a month or more

just by refinancing to another lender who's hungry for new business. Now, I'm going to challenge you on this. because it's likely that you won't consider doing this until it's way too late. Because with every rate increase, your borrowing capacity drops considerably. As an example, on an average home loan of about $600,000, for every 1% increase in rates,

your borrowing capacity drops by $100,000. So if you leave it much longer, you won't even be able to refinance and you'll be left paying the bank's loyalty tax because unfortunately the longer you're now with a bank the less likely they are to look after you and you'll be stuck paying much higher repayments

than they offer their new customers and if you're worried about the hassle and headache of the whole changing banks process good brokers will do most of the heavy lifting for you and can organise the paperwork and all of the signing digitally without you needing to meet anyone or leave the comfort of your own home. So you've really got no excuse. And if you don't move quickly, you've got no one to blame but yourself.

So challenge on and prove me wrong. When it comes to the property side and potential property price softening or flatlining, it's important to remember that your property price and value is only important at three times, when you buy, when you refinance, and when you sell. The rest of the time, as long as you can afford to make your loan repayments, property value is irrelevant. So just keep enjoying your life and ignore the news. Now, let's dig a little deeper on these three important property price times. firstly when you go to buy property we're moving into more of a buyer's market so now is a much

better time to have more time to negotiate better terms on your property purchase while the spooked sams and sallies sit on the sidelines remember it's never a question of when to buy property because the best time is always now if you can but the real question if you're serious about securing a quality property that's going to weather the inevitable storm of fluctuating price growth over the long term is where to buy. So it's never when, but always where. And it's always about A-grade quality properties in A-grade quality locations. By looking beyond your backyard and becoming borderless to secure the highest quality, unique scarcity home with high owner-occupier appeal and a popular tightly held lifestyle area

that's about to enjoy the positive change growth drivers of new infrastructure or rezoning, new industries and employment diversity supported by strong and growing income demographics. You're giving yourself a property price protection insurance policy and optimising your opportunity to grow your wealth. Now I'm going to devote a future episode to drilling down into defining exactly what an A-grade location and an A-grade property is. So more on this later and keep an eye out for it. The key here is a flight to quality, which is always important,

but it's going to become even more so, as only about 5% of properties qualify as investment-grade properties that also have to have owner-occupier appeal. So regardless of whether you're an investor or an owner-occupier, this is the type of property that you need to be buying to reduce your risk and optimise your opportunity. And as I've said recently, you currently have a small and rapidly diminishing window of opportunity

to secure properties while you still have the capacity before ongoing interest rates rises, drop your buying capacity to a level where you're no longer actually able to buy. And you need to do this while everyone else is sitting scared on the sidelines or on the fear fence as they listen to the hysterical ongoing headlines. For investors, rental yields are rising strongly, vacancy levels are at historically low levels, and with overseas migrants starting to flood back in over the next couple of years, creating

increased demand with limited supply, there will again be significant upward price pressure. So don't dally, do. the second time the property price is important is when you need to refinance because you need the bank to value your property as high as possible firstly in order to be able to refinance because the bank needs to value the property high enough for your loan to fall within their loan devaluation or LVR limits and secondly because in the current lending environment the lower the loan to valuation ratio, the better the rate a bank is going to give you because lenders are now offering much lower rates for low LVR loans. And again, I strongly urge you do this sooner rather

than later because as property values soften and pull back following the recent boom, the higher your loan to valuation climbs, the higher the interest rate you're going to pay. So again, Don't delay, do it today. The final time that your property price is important is when you have to sell. So if you're at this stage, I wouldn't be delaying as the sooner you get it on the market, the better the price you're likely to achieve

in the short to medium term. But if you're going to delay, depending on the location and the profile of the property and the local stage of the S-curve cycle of growth, I look to put off the sale for at least a couple of years or more. When the current negative sentiment has faded, an upward price pressure from increased immigration demand is likely to start kicking in. So if you don't need to sell, don't. And if you do need to

sell, do it now or stop and prop for two to three years. So before I close, let me summarise and reinforce the key points. Despite all of the media gloom and doom, property conditions are just returning from nuts to normal and from radical to regular. Interest rates are not rising through the roof and property prices aren't going to crash and fall through the floor. We're simply returning to normal property and finance conditions now that the COVID-induced honeymoon period is over. Increasing interest rates are actually a backhanded compliment that our economy is going too well and the vast majority of Aussie households are in a good financial position to afford incursory payments without stress or difficulty. Property prices for

some B-grade properties in some B-grade areas will soften as the COVID-induced petrol on the property fire burns out and the resulting compressed spring of unprecedented property price growth that has been three to eight times higher than the average now returns to normal. But ignore commentary on property market movements based on medium house prices because aggregating this data into regional, state or national indicators of the hour is almost meaningless and generally misleading, as every property in every street in every suburb is different to every other of the 10.8 million properties spread across the 15,353 suburbs and locations across the nation. Increasing interest rates don't directly correlate with

property price reductions because property values are driven by a complex array of dynamic variables spread across demand, supply and sentiment factors alongside a multitude of property value drag and lift influences. Stop listening to news headlines, be careful where you source your information, refinance now if you need to reduce costs, if you need to sell your property do it now or wait a few years and take advantage of the quickly disappearing window of opportunity to buy quality property now while you still can before the next upswing kicks in as a flood of skilled migrants drives up demand. That's more food for thought and if this has raised any queries or questions that you'd like to investigate feel free to reach out to me direct

or book in a bushy blockbuster for an hour of power by following the book appointment prompts on the knowhowpropertyfinance.com.au website. And for just 295 bucks, you can ask me anything that you need for a complete hour to help you with your specific needs and situation. Remember to always get invested and I look forward to talking with you again next week.

To get a summary of all this investment gold in the show notes, just email me on hello at khgroup.com.au. That's H-E-L-L-O at khgroup.com.au. Or check us out at www.bushymartin.com.au forward slash getinvested. I look forward to joining you next week for another episode of the Get Invested podcast. So thanks for listening. And as always, dream as if you live forever and live as if you die tomorrow.

Thanks for watching!