She's On The Money - Quarterly Market Update

Episode Date: July 2, 2024

It's Q1 of the new financial year, but are we starting this new year with a financial hangover, or are we refreshed and ready to go? Join Bec and Victoria as they dissect where things are at in the economy, from inflation to housing, employment and wages and oh so much more. Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements. The advice shared on She's On The Money is general in nature and does not consider your individual circumstances. She's On The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD and obtain appropriate financial advice tailored towards your needs.  Victoria Devine and She's On The Money are authorised representatives of Money Sherpa PTY LTD ABN - 321649 27708,  AFSL - 451289.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kurni, Wolperi and Awadjuri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjuri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money. She's on the money.

hello and welcome to she's on the money the podcast for millennials who want financial freedom welcome to the first quarter for the new financial year and our quarterly market update. That's very exciting for me. Very exciting. I want to obviously know a few things but I just really want to get this kind of right because in my mind there's a first quarter of the year. Yeah. And there's a first quarter of the financial year. New financial year. So if you are like me and you only recognize financial years instead of real years. Of course. You would say that this is the first quarter and a quarter is three months of the new financial year because the end of financial year is June 30. And so new financial year starts on the 1st of July.

Happy New Year. Thank you. New year, new me. I have no resolutions, but that's okay. You get what you get. You're already goals. Oh no, because I've come to the very sad realization that I never stick to them. Oh, that's also true. Yes. They're like, why bother? But onwards and upwards, most people would celebrate the new year on the 1st of January, but we have a calendar year and a financial year. And today we are talking financial year so you are correct it is the first quarter of the new financial year

and as you said off air you're physically present but not mentally present for this episode is that right oh yeah i should preface it by saying i am really going to struggle with this one uh because i you're like this looks boring yeah i can already feel a lot of numbers coming my way and you know how i get with numbers you know and you know what i think it's an exciting episode let me try and reframe it for you quarterly market update does sound bland it sounds like some financial newsletter that you'd click delete on immediately. But I promise I'll try and make it as interesting as possible because it's actually in our best interests to be aware of what has happened in the financial markets. So I'll try and explain it in as simple a terms, but also as engaging

a terms as possible. Because I want you to understand what's going on with the economy. Why the heck is inflation still so high? What does it mean when we're talking about cost of living like how do these things actually happen in our market so that you sound really educated at brunch next week whoa okay better book a brunch for two we can if I should be so lucky so I just I guess like taking a look at the whole year it has been rough cost of living all these things are we kind of coming into this new financial year with a financial hangover or are we refreshed and kind of like ready to go you know I feel like we all have a financial hangover right? Like I'm seeing it in the industry. I'm seeing it on social media as well. I think we're

just frustrated financially. And it's so fair given the current state of the world. So maybe, Bec, we are a little bit hungover, maybe a little bit sluggish. Maybe it's like day two hangover, you know, when they linger. One out of 10. But the global economy is still recovering, but inflation seems to be lingering, I'd say. At home, inflation continues to move down towards the target, but the progress is slower than expected. So I feel like a weatherman explaining this to you. I'm like, but the progress is slower than expected. Like the rain is like moving or something, but it's true, right? We're all hoping that inflation goes down at a quicker rate. And at the very start of this year, economists said, oh my gosh, it's going to fall down.

And it hasn't been, it's definitely been going in the right direction, but it's taking a lot longer. and then the domestic outlook, so Australia's outlook, remains positive, but economic activity in Australia does continue to weaken as the years progress. So with GDP growth during the December quarter, so 2023, slowing down to 0.2% from 0.3% in the preceding quarter. So that just means that things are slowly slowing down over time. So we know that inflation is going down and that's good, but it also means that we're exporting less. So we're sending less products out of Australia, which means our profit overall for what the country is making from exporting stuff is going down. And that is good for us? It's not good for us. It's not good for us. We want to have high

levels of export. We want our country to be making a lot of money. So while you're not personally profiting off that. If our services and the goods and services that we sell as Australians are high and doing really well, our economy is usually reflective of that. However, if our economy is going down and there's less being shipped out, there's less money coming into the country. Okay. When you're saying that the December quarter 2023 is slowing down to 0.2% from 0.3% in the preceding quarter, is that saying that basically like right now the price of everything, the cost of living, it kind of like is still kind of going up, but not as high as it once was? It's not that related. So it means that economic activity has weakened. So things that are being

sold outside of Australia are not as popular right now. But inflation is sort of linked to that, but not super strongly sure so a little bit but not really okay and we hopefully will see this kind of change hopefully we want to see it increase like we want lots of cashola coming into australia from the stuff that our local community produces okay i see um okay it's good to know that's very good to know i mean it doesn't look great right now but no it doesn't look great and i know that the difference probably in people's heads of 0.2 percent from 0.3 percent seems really small, but we're talking about the entire economy. So for that market to change, there has been a definite difference between what is being exported. Does that make sense? So like

0.2%, it doesn't sound like a whole heap, but it's actually a difference that we need to be aware of. Okay. Now just kind of shifting gears a little bit today, we'll obviously be talking about like wages and employment and spending and saving as well, which is something that I really struggle with. We're going to get on that. I think you and I, we're going to do a Bex budget breakdown. I would really, really like that. We're going to. We're going to do it at that brunch you promised me before. That's right. Yes, the brunch we're going to this weekend. So let's start off by looking at what's happening with inflation and interest rates. All right. Very sexy. I like this. And I feel like people are going to be more interested

in wages and employment and spending and saving than they are GDP. So I'm glad we're segwaying away from that. At the end of June, a key measure for inflation actually jumped. So it climbed to 4% in May after edging up from a recent low of 3.4 in February. The Bureau of Statistics, so the ABS, monthly consumer price indicator produced an annual inflation rate of 3.6 back in April, which is very sexy because I think you would remember that last year it was up past seven. disgusting. This was the same as the longer established Bureau of Statistics quarterly measure, which produced 3.6 in March. So that's good. She's consistent. We love to see it. But the question is, what's the RBA actually going to do with interest rates? If you've got

a mortgage, you're thinking, B, what's going to happen with my mortgage? Well, the Westpac Banking Corp economics team has been one of the most accurate interest rate predictors in recent times. So personally, I have been looking towards them each time we have this conversation, and they were not surprised by the inflation rate coming in hot. And they have said that they are still holding firm with their predictions for an interest rate cut at the November RBA meeting. So that is good to know. The caveat though, is that the decisions are based on available data. And we need to remember that past performance is not a reliable predictor of future performance. And if the data for this quarter gets ugly, then the RBA is going to update

their prediction, if that makes sense. So I think the caveat here is what I keep rolling off every time we talk about investment, every time we talk about the markets, it's that past performance is not a reliable predictor of future performance. And I know that that seems like I'm trying to caveat it, but you can't guarantee what's going to happen in the future just because you've seen some stuff in the past. Yeah, for sure. For sure. It's like investment. It's like spending. It's like saving. We know that historically we can see what happens after a global financial crisis. We can see what happens to an economy who is in distress. However, we cannot predict how in a different economy, because everything has changed, that will impact us long-term. So we can only

guess. And I think that they are very, very educated guesses. And as I said before, Westpac has been, I would say, the most bang on. So that's why I'm relying on their data at this point. But as things stand, Bec, Westpac has forecast the following from the RBA for interest rates from 4.3% today. They're saying that potentially in November, it will drop down to 4.1%, which is very sexy. Then March next year, it will drop down to 3.85%. June will drop down to 3.6%. 66%. September, we're in 2025 still, 3.35%. And then December next year, right in time for Christmas, will be 3.1%. So that seems, it just seems a lot more palatable than what we have been dealing with. Yes. And this I'm guessing is more so for people with mortgages and things like that.

Yeah. It's also important for your savings because we know that every time someone's interest rate increases on their mortgage, which at the moment, this is really relevant for you actually, because we know you don't have a mortgage. So you're watching all these people with mortgages increasing and you're probably going, not me, sir. A little bit. And that's really exciting for you because you're not experiencing that. But what this means is that you should basically be thinking about seizing the opportunity on a savings account. Right. Because usually the interest rate that is being charged on mortgages is often reflective of what you can make in a savings account so if you haven't reviewed your high interest savings account recently

because historically and if you listen to old episodes of this podcast I'm like like it's not even worth it you won't even make like two percent on a savings account and also we do need to remember that you will be paying tax on any amount of money that you make even if it is the interest rate on your savings account tax time comes you'll be paying tax on that. So like making 2% on a savings account, you're like, oh, what's the point? Like, you know, even if I've got two grand of savings, like sometimes you're just like, literally not worth my time to even consider swapping and changing. But now interest rates are high, which means your savings accounts could also be high. So now's a good time to check if your money is making money.

So for you, Bec, if you've got any savings, now would be the time to go, hmm, is it working or Or is it just sitting there being a little bit lazy? Sure. Okay. Well, that takes me to my next question. So I guess for people with mortgages, it's kind of like you're spending more on your mortgage. And then for people like me who don't have a mortgage, I'm hopefully saving a little bit more. But in general, how are households spending their money?

I would like to answer that question in 0.2 seconds. Please. Because I think I also need to address, yes, you'll be saving your money. But, Bec, I think you and I can both agree that any additional money you had to save has been going towards your grocery bill or your electricity or your housing. So, like, don't for one second think that I don't comprehend that life is a bit tougher now. It's very sexy to have savings. And if you're in that very fortunate situation to have savings, like, I'm very proud of you. but I also don't want people to think, oh, V said that you should be saving right now

because that's actually not feasible for most people in our community. Like life is tough right now. Everything is so expensive, but I think that what we want to do with stuff like this is do a market update so that we understand where we are right now. Cause it is kind of doomy and gloomy at the moment. Like mortgages are crippling people. We are looking at our savings accounts start to dwindle because we didn't realize that, you know, for our electricity bill, which we all know is probably coming up really soon because we've just started to crack into winter properly, we know it's going to be higher. So you might have to dip into savings for that. And that, let's be honest, sucks. Like I'm so happy that you have access to savings. I'm

so happy that is there, but there is a light at the end of the tunnel. And I think that when in doubt, and I say this all the time, zoom out and we can look at the bigger picture. Like how can we support long-term wealth creation for me while still, you know, being a little bit pissed off about groceries? Yeah. Like side note, now's the time to check in on your superannuation to make sure that that is still making money. Cause like Beck, I'm pretty sure most of our community couldn't contribute more to their savings or investments right now, but let's just make sure that our savings and investments are working hard for us while we aren't contributing to them so that we aren't falling even further behind. Like how do we create a light at the end of the tunnel

so that we aren't feeling so bogged down. Does that make sense? Yeah, definitely. But back to your question, I'm sorry. I just felt like that was really necessary. You asked me how households are spending their money and boy, let's talk about it. So retail trade in March fell by 0.4% over the month after the increases in January and February. And that's pretty normal. So we often see increases in spending in January and February because post-Christmas, new year, new me, lots of people are feeling really optimistic and when you're optimistic you often are a little bit tap happy but consumers pulled back on spending due to high costs of living this taylor swift effect uh on spending in february has proved to be temporary so do you remember when people

coming out being like taylor swift's booming our economy i like wrote a whole piece for the age in the sydney morning herald about it and the mediocre middle-aged white man came for me Of course. And I was like, I know, it was a really good piece. You like read it and Craig's like, Victoria, this is the worst piece of writing I've ever seen in my life. And I go, thank you so much for the positive feedback. But household final consumption expenditure in quarter four 2023, so the last three months of last year, rose a little by 0.1% over the quarter, following a slight reduction of 0.2%, which was revised, in quarter three. so I know that these things don't seem really big because I think in the grand scheme of things most people aren't used to talking in 0.1% because if I said Bec your salary is increasing by 0.1% you'd be like what do you do yeah I'm like oh that's one dollar a year it's not even one dollar a year like do you know what I mean it like means nothing like it's actually so menial to you but what we need to remember is these 0.1 and 0.2% changes, because they're on the grand scheme

of millions and millions of people here in Australia, they are actually impactful and they are actually reflective of how our economy is working. So you might go, that's not much of a difference from 0.1 to 0.2, but it actually is in the grand scheme of things. So the other things I wanted to point out, rises in spending. So across Australian households, we saw that electricity, gas and other fuel, the price of that and the amount that we were spending on that increased by 6.9%. You know how I said 0.1% was impactful? 6.9% scooped. I'm kind of like not shocked. No, because we're experiencing it, right? Yeah, like it feels, it's just so much. Petrol's more expensive, our electricity bills, you know, they're coming in. I know that you've got

housemates, you're probably going, oh, I'll budget, you know, 50 bucks for that next month. And then it comes in you split it and you're like oh it's like 90 what like I didn't see this coming yeah and I think that that's true even gas is more expensive I was doing a bit of budgeting over the weekend because our house has gas heating and I was looking at it because our gas heater is broken at the moment and I was trying to work out do we just install another one or do I swap to like an electric one because you know everything is quite expensive but gas I feel like is exorbitant like it's it's crazy at the moment that used to be the cheaper one too yeah yeah like remember anyway rent and other dwelling services that rose and i want to say only by

that rose only by 0.4 percent but i feel like we're all feeling that a little bit harsher than what it actually yeah like 0.4 percent like i feel like rent and other dwelling services increased not for me personally but for our community and what I'm seeing more than your electricity bill I just feel like that feels that way apparently according to the data that's not true food increased by 0.9 percent health spending increased also by 0.9 percent and furnishing and other household equipment increased by 1.1 percent which I just think that that's interesting across the board we're seeing an increase but I feel like the most important thing is just to address the fact that the cost of living right now is cooked, Bec. Yes, yes. Like just putting

food on our table, more expensive than it was last year. I know. And we all know that we haven't had increases in our salaries to the same extent that inflation has impacted us, which means ultimately your savings or your ability to save if you are saving at the moment has gone backwards. And that just feels trashy, hey? It does, it does. And you can really feel it, like it's not like super obvious like maybe like a loaf of bread is a dollar more or like here and there but you know it's there you can feel the pinch exactly which is why i don't think you're going to be surprised by the next pieces of data i've got for you so those increases offset a fall in discretionary spending so discretionary spending is like the spending money you have

on the fun stuff in life luxuries luxuries and some of the things that we saw was a step back in people spending on hotels cafes and restaurants of course that went down by 2.8 percent purchasing vehicles went down by 3.6%. Clothing and footwear expenditure has gone down by 2.5%. And then cigarettes and tobacco has gone down by 6.2%. So we know that all of those things are luxuries. I mean, I'm going to be really selfish or maybe inject some of my opinion where it's not needed, but I'm kind of glad that people are spending less on tobacco and cigarettes because I mean, that's good for their health. But that is telling us that people are definitely feeling the pinch because at the end of the day that is a luxury and you and I both know that cigarettes and tobacco

are so expensive in Australia now like exorbitantly so so they have been something that people are going can't afford this habit I'm stepping back from it totally I do feel for those people because literally like as you know I've been very very very poor recently and when you're stressed about being poor the other way couldn't buy a vape which is I know I shouldn't be like no but no no I'm not condoning it i'm saying it's good for health but for you to do that and like i'm just gonna make a grand assumption here when you purchase a vape it's got nicotine in it right yes and people who purchase vapes or cigarettes or tobacco have an addiction to that substance and that is absolutely fine it is you know your choice but to be cutting back on something that your body craves yes means

that we are impacted financially like significantly oh absolutely i i the only reason i mention it is just to shout out to all the people that are stressed about money and then also can't reduce their stress by their usual means. Exactly. That would be really trash. It is. But, you know, I guess, yeah, in a way, I mean, not in a way, we're definitely, like, helping our health.

Yeah, I know. It's like a rock and a hard place and that's not me being like, you shouldn't smoke. No, no, no. I think everybody who does knows that that's not a habit that they would love to have long term because they're like, I understand the implications here. But for me, I think that really draws attention to the fact that,

finances are tough for a lot of people because we're now spending significantly less on the things that our bodies crave. And during a stressful period of time, like, isn't that what you fall back on? Exactly. Okay. So we're talking about spending. Are we at all managing to save any money on average? On average. All right. So when it comes to what we are saving, we've actually seen an increase in gross disposable income, which was driven by a rise in compensation of employees, social assistance benefits and interest received, and a decline in income tax paid. I feel like you all will love that because you're paying less. So that's kind of sexy. This has boosted the household savings ratio from 1.9%. So historically people were able

to save 1.9%. And now we're talking 3.2%, which is, I think, very, very sexy. But can we talk about that percentage because I've said a million times before on the podcast, I do not believe in percentage-based budgets because budgeting for someone who earns $40,000 and going, Bec, you should be saving 10% and budgeting for someone who earns $400,000 and saying, Bec, you should be saving 10% is unreasonable. Because if you earn 400 grand, I'm telling you right now, if I was still a financial advisor and I sat down with you, I would be trying to take way more than 10% off you to save and invest. I'd be like, all right, well, what are you spending? How does this work? Like I would be trying to maximize that. Like most of your income

would be going to savings and investments if it was up to me. But if you take a single person on $40,000, saving 10% is unreasonable and unfeasible. And a lot of the popular spending people in the world, so we're talking not to call them out specifically, but we've got like Barefoot investor, we've got Dave Ramsey, we've got, you know, all of the big hitters, they have percentage based budgets, which I think make you feel like trash. Like imagine, and don't get me wrong, I am obsessed with the barefoot investor because he was the one who kind of championed that financial literacy rise in Australia. He's the one that like really got budgets into people's household conversations. He's the one that when I was back in my retail jobs, I would see people tapping

their cards that had written in text stuff splurge on them, like obsessed with people taking control of their financial literacy. But in an economic crisis like we're in today, Bec, if you were like, I don't know where to go, I don't know what to do, and you picked up a Barefoot Investor book and saw that he expected you to save 10%, you'd be like, I can't even adhere to that. Like, I'm not doing well. I'm not doing the right thing. I feel like trash.

Don't get me wrong. I'm not saying it's a bad thing because the Barefoot Investor has changed people's budgets and people's spending and people's money story for the better. There are so many people in our community who have benefited from him, so it's not bad. But I know if someone told me I needed to be saving 10% and I couldn't, I'd feel like trash. This data tells us that historically, especially over the last few years, people have only been able to save 1.9% back.

Like 1.9%, but all of these budget and cash flow gurus are telling us that, oh, you should be saving 10. Yes. What? And then it kind of like ruins your motivation. It'd be like, oh, I can't save 10. Makes you feel like trash. Let's actually zoom out and look at the big picture.

Are people able to save? Yes. Some of them are able to save 3.2% now, and that's very sexy, but that's not what a lot of people set as their goals. So I think that we need to see that it is hard for everyone. So in addition to that, as of the 1st of July, the Stage 3 tax cuts are coming into effect, which I think is very sexy. And while this isn't a lot of extra cash, it will affect everyone across the board,

especially in that space where you are kind of scrambling even to save that 3.2%. Yes. So tax cuts, sexy. Yeah, very nice. I love, I love EOFY. You just love getting more money. I do. You love your tax returns so that you can blow it.

I'm obsessed with you. It's one of my favorite things. You're like, I'm going to get my tax return. And I'm like, what are you doing? Establishing an emergency fund? And Bec's like, I know vapes. Vapes, many vapes. Yes, many vapes.

I do have a long list of things that I don't think that I'll even get. Vapes at the top. Oh, absolutely. Always at the top. You know what? I just love that we are so different. But like genuinely, I could not care less what you spend your money on as long as I've given you the education that you need to make the right decision for you. And if you go, well,

this is my values. I'll be like slay queen. I love it. I really appreciate you. You always give me the information I need and I do nothing with it, but one day I will. I like that you've got it. And it's funny because like, let's go back to like baby Victoria. You all know I got into like 40 plus thousand dollars worth of personal debt and that sucked. But I had financial literacy back then. My dad was an accountant. Did I listen to him? No. What would he know? Like, why would he know anything about money? And here's my dad going, look, Victoria, if you at the very start of your career start saving 10%, you'll never feel it. It's great advice. I never did it. It's never going to happen, dad. But it took me going through

significant financial trauma because to me that was quite traumatic. It was a really hard period of my life because money is so stressful and I guess that's why I'm so passionate about what I do today. I had access to that literacy and I didn't want to use it. I think someone has to be ready for it and at a stage in their life where they want to take charge of that, some people don't. Some people are going to be listening to this podcast being like, that is great, Victoria. No intention of taking it right now. And that's okay. We're just gifting you with this information that you can use or not use. I don't mind. And when you're ready, you'll get there. if and when. I'm still on your team. Exactly. We're here cheering you on. I just want to be

friends, guys. So, V, you mentioned before wage growth, but I'm not seeing it. You're not seeing it? I'm not seeing it. What's happening? Who's getting that money? Where is it going? Who's getting the wage growth? Yeah. So, wage growth in both the public and private sectors were driven by organisation-wide annual wage and salary reviews. So, annual wages growth in the private sector softened slightly to 4.2% from 4.3% in the September quarter, but wages in the public sector increased by 4.3% throughout the year, up from 3.5% in the previous quarter. So that's nice to see that public rolls are being paid more. We love to see it. But I think this is a good reminder that just because we're hearing that other people's wages grew by this doesn't mean that

ours would have. And this is a really good time, I think, to remind you to advocate for yourself. If you haven't spoken to your boss in a while about a salary increase, now's the time. You know, Bec, that we have done a whole heap of episodes about negotiating your salary or chatting to your boss. In fact, on our website, I have literally put a free script. You can download it. It's a PDF of how to have that conversation with your boss and all of the responses that they might give you so that you can be prepared so that you can go, well, actually, here's my value. Here's what I should do. Here is, you know, the template. I've done it for you so that you can negotiate your own pay rise with a little bit of help in the background. You don't have to tell anyone. It's

all good. But if you're not seeing that and I want you to see that, now's the time to kind of maybe be reminded that sometimes these things take a conversation because sometimes employers get a little bit lax and they're like, hmm, Bec hasn't mentioned it so I'm just going to not do anything about it. Cheeky, cheeky. Rude. But I mean, they're a business. So if you haven't asked, maybe you're really happy with your salary

and we don't need to address it, Bec. Exactly. Is that the case? Maybe not because if I've been on the same salary for more than a year, I think you need to be having a conversation about what that looks like. Okay. Well, maybe let's go to a really quick break while I go and ask for a pay rise. You're going to download that thing on my website first, though.

I might put you in my little earpiece in my ear. Is that okay? Yeah, that's absolutely fine. In fact, I'll come as your support person to the meeting and I'll be like, right, let's talk. Let's talk. What's Bec on right now? What's she going to be on? Nope, she's more valuable than that.

Oh, my God. I need you. Okay, let's go do it. See you soon. Welcome back, everyone. We are chatting all things tax. So, so exciting. so fun. We've been talking tax. We've been talking market updates. We've been talking about

the vapes. We've been talking about vapes. We've been talking about salary growth and how much people are spending on hotels and restaurants. But we haven't talked about unemployment, Bec. True. So what do we know about how many people are in employment? Okay. So the unemployment rate increased slightly to 3.8% in March 2024 from 3.7% in February. and that is roughly similar to the levels recorded in October 2023. So the employment outcome in March followed a larger than usual flow of people entering employment in February and smaller than usual flows in December and January. Things have returned to a more usual pattern in March which is interesting to see. Looking over I guess the past three months though the average employment

growth is around 40,800 people, which is softer than the momentum that was seen during 2023. So less people are finding jobs better. Sure. The strength of the labour market is actually expected to gradually weaken until the end of the year, given there is often a lag between economic slowdown and then labour market conditions. So what we see often, Bec, is we see the economy starting to be a bit rocky. You know, during COVID, I think that's a really good example. We started hearing on the TV what was going on with COVID overseas. We started hearing what was going on with COVID in Australia. We're starting to see all of our friends and family work from home. And it wasn't until a few months later that people started to be made

redundant. It wasn't until after that businesses started going, hold on, hold on. This is actually impacting us. This is impacting me. This is going to change things. So there's often a lag or a bit of a gap between when we see the economy slow down and when people start to become unemployed because of that economic slowdown. Does that make sense? Yes. So leading labour market indicators like the Sikh Job Ad Index are indicators of a softening in labour demand. So less people are needed at this point. Adding to this, the increase in migration would continue to help to address some of the tightness in the labour market. As a result, we're expecting the unemployment rate to actually gradually rise from its current low levels to reach the natural rate of unemployment

by mid 2024. So Bec, we are always going to have an unemployment rate in Australia. It's not necessarily an awful thing. That does not mean that people are homeless. It actually is the percentage of the population that do not work. We're not talking about retirees. We're talking about people who are not in employment and that is always going to happen out of choice. Obviously, we don't want people in the unemployment basket who don't want to be in the unemployment basket, but we need to be aware that people are in that and that is very normal for a healthy economy. Sure. It could be like stay-at-home parents, maybe like someone who's just turned 18. Yep. And it could be people between jobs. It could be people that are, you know,

in that bucket either by choice or maybe not by choice, but there's always people in that and people come and go. It doesn't mean that that same person has been in that bucket for the last 50 years you know yep yep yep so it's important to go oh we want that to zero it's not going to be because we always actually need some people who are unemployed because they come and go from jobs right otherwise there's no flow there's no wiggle room i never thought of it like that so it sounds bad but we want it to be at a stable rate right now we are stabilizing sure sure okay good to know good to know so what's the update on like the great australian dream like residential housing costs. What's going on there? Everything is cooked. So the pace of residential

property price growth in April continued to be diverse across capital cities due to differences in affordability, population growth and the housing supply. So significantly stronger gains were observed in Perth, Adelaide and Brisbane. So not our main property players. While at the other end of the spectrum melbourne recorded a slight drop of 0.1 okay dwelling interest payable continued to increase by five percent this is the softest growth in dwelling interest payable since june 2022 as interest rates have plateaued so interest rates are now kind of consistently steady and while dwelling interest payable has increased and five percent sounds terrible i did that on purpose to make you go, oh, it's actually much nicer or 5% is much nicer than what it has been

historically. Sure. Okay. Nice and soft, nice and gentle. Nice and gentle. Hopefully things are getting a little bit more achievable. I mean, the great Australian dream is not what it once was, and that I don't think is ever going to change, but the way we get into property is going to have to. So looking ahead, it seems that property growth will be slower in 2024 than it was in 2023. in saying that there's going to be persistent strong demand for housing and limited new housing construction these factors will likely lead to further price gains so when less dwellings are being built there's an increase in what people are willing to pay for things that already exist okay regardless the existing high house prices will impact affordability having a cooling effect

on the market and partially offsetting the gains so we're all good when it comes to that i said before that the house and market is cooked. That's just personal opinion. So the economy is going to tell us one thing, but I think our want for being in property and our need for being in property, it just looks a lot different to what it used to. Totally. I'm really, actually, this is quite a side note,

but my partner is looking for an apartment. No, are you marrying rich? I'm marrying rich. I'm marrying up. I love this. That's how you got to do it. You got to job hop and you got to marry up. Yeah, marry up.

I once got the advice, marry first for money and then second for love. I've screwed that up by marrying first for love. But if anyone's taking this advice, also men, can't recommend. My husband is the only one I would accept. Yeah, we were talking about this off air. We were. You think straight is a choice? True.

I mean, I'll try not to fall into the lap of a handsome man. Don't. Don't. But no, she's trying to buy an apartment and she's obviously, you know, got conditional approval, all this kind of stuff. Slay queen. It keeps getting outbid by, I'm assuming, people who already have a million investment homes and just buy them because maybe they're bored or they just want to add to their investment portfolio because they have no conditions. They're paying with cash. And I just feel really sad for the people out there.

If there's anyone out here listening who has just a small deposit. It's the hard slog. Yeah, it's a hard slog. And I just think let the little ones have it. Let the little guys have the little apartment, you know. I feel like this is really common. and again, we're staying on this side note. I think it's relatively interesting. We're seeing an increase in what properties are going for at auction. So if, you know, let's pretend for a hot

second, your partner is buying at $500,000 and that's what she's been pre-approved for. So we know that she's been pre-approved for 500 grand and she's going shopping at that level. When that happens, often you'll find that a lot of people are being approved for $600, but they're shopping at that lower level. So what I would say to her is while you've been approved for that $500 and let's pretend it's all just clean and she's happy to spend that, I often give the advice, as you guys know, I own a mortgage broking company. I do this day in, day out. When I'm not on the pod, I am in the office talking about home loans. I would suggest that even if you're approved for $500, looking at your budget, making sure that that actually makes sense because lots of you

might not want to buy at that price. But having a look on realestate.com or domain or wherever you're shopping at what properties have actually sold for and then what they were listed for. And more often than not, you're going to see that a property listed for maybe $430 is going for $500, which means that your partner might want to reset what she's actually looking at and start to shop low because you might end up at that same 500 amount, if that makes sense. Whereas if she's just looking at what properties are listed for and she goes, great, going to this auction and currently it's valued between 480 and 500, that's within my budget. There's a very high probability that auction day comes and someone's willing to pay 510 or 520 for that property, which wipes

her out because she's only pre-approved up to 500. So we need to sometimes reset our goalposts and look at, well, if she's like shopping for an apartment in Richmond, can we look on realestate.com.au and have a look at what those properties have actually sold for instead of what they're listed for? Because what they're listed for, while a good indicator, people are hungry at the moment for property. We know the interest rate has gone down. People are getting really optimistic at the moment because they're going, all right, well, the interest rate is making me feel a bit ick. But I also know if we go back to that Westpac data that I was talking about before the break, we also know that interest rates are probably going to go down. So short-term pain,

long-term gain, I'm happy to buy into the market right now before the market increases. Because what we know to be true is that when interest rates go down, people's tenacity for purchasing and they're willing to take on more debt goes up. So once interest rates come down a little bit, people are going to go, all right, the pressure's off again. I'm happy to pay. What's another 10 grand? So they're more likely to pay more. So right now, I think that you've got a few people who are probably shooting her in the feet, but we need to have a look at what your property shopping strategy is and go back to the drawing board. We can take this conversation offline, but I think it's relatively interesting irrespective because this is how it works.

we talk to, or I talk to so many people every day. And so to my team about, all right, we've been pre-approved for 500. What does that actually look like for you? What are we shopping for? And I think if someone is a good broker, I mean, I'd love it if you used us, but if someone is a good broker, they are going to have a conversation about what that actually means for you. So like if you are pre-approved Beck and you came into me and said, oh, but they like, what am I approved for? We go through everything and I say, you could borrow up to 500 grand. You go, fantastic fee. I'm going to go shopping. My team are going to go, wait, wait, wait. What are we shopping for? How are we shopping? Because I don't want my clients and

my community to be disappointed or be in that game for a really long time. I don't want you to be frustrated by that process over and over. And how many people do we hear that are like, oh, I've been shopping for a property for a year. I often want to go, all right, Bec, we need to go back to the drawing board what does this look like yes this is very very helpful completely off offside so beck as i was saying before in my rant when interest rates go down demand for property increases so into 2025 anticipated lower interest rates and the fact that the government is probably going to introduce a whole heap of initiatives to boost supply and let's be honest improved conditions for builders we are expecting to drive a bit of

a rebound in dwelling investment. So you won't be surprised to see that maybe mid next year we'll have a lot more millennials shopping for property. Great. Okay. Things are looking up. Things are looking up. Things are looking up meal house. Things are looking up meal house. You're so cute. That's almost the correct saying. Now there have been some changes made. You get what you get and you don't get upset. No, I love it. I actually prefer that way. Thank you. There have been some changes made to the marginal tax rate, like our superannuation rates and also some other so sexy. You get more super. You get more super. I'm very excited about that, actually. But it doesn't change the amount that we take home from what I hear, which is great. So our superannuation

rates have obviously gone up. And also some other initiatives labelled by the government to support the cost of living crisis, finally, thank goodness. Are these things to consider when looking at what will happen in this quarter? Yes, I want you to take them into consideration because for most of they are going to be beneficial. So if you, Bec, earn between $18,000 and $45,000, pre-July 1, your tax rate would have been 19%. Your new tax rate is now 16%. That's great. Which is great, but how are we factoring this into our budget? Is this an opportunity that we can take to maybe put a little bit of cash aside to take the pressure off? Or if you're

like me, it's not going to take the pressure off. I'm just glad that there's a few extra dollars going into your account each and every single month, right? The other change that has happened is if you were in the tax bracket of $45,000 to $120,000, your tax rate used to be 32.5%, which for me, understanding our community, is the most common tax bracket for you guys to be in. That tax bracket's actually changed. So instead of going up to $120,000, it now goes up to $135,000. So a heap of people have dropped down a tax bracket, which is very, very sexy. And the tax rate has changed from 32.5% down to 30%, which is very, very sexy. The old tax bracket used to be 120 to 180, which must have been nice if you're in that tax bracket.

Joke's on you, though. You're not getting a tax break because you probably don't need it. Do you know what? Someone's going to come for me and be like, V, I can't believe you said that. We are under a lot of stress. We definitely earn a lot of money, but we're under a lot of, I get it, but like I would actually much prefer people who are earning less than 120 to get the tax breaks here today. But that bracket is changing now.

So instead of from 120 to 180, it's now 135 to 190. So it's bumped up a little bit. Tax rate is the same though, which I kind of agree with. Sure. If I'm being honest, you were being taxed at before and now a lot of people have dropped out of that and a lot of people have been added to that. So historically, if you earned 190, you would have been on a higher tax rate of 45%, which for you, now you're on 37%.

So money win. But the old taxable income rate of 45% used to be 180 plus. It is now 190 plus. Yes. So I think that that is, to me, quite sexy. But it means that some of us are going to be earning a little bit more, taxed a little bit less. Super, super sexy.

The other thing is superannuation changes, which I think are very exciting. Concessional contribution cap used to be $27,500, which is the most amount of money that you can contribute to get that 15% tax rate. Right. Okay. That's now increased to $30,000. Great. The max five-year carry forward contribution, which means that if you weren't contributing

for historical years, you can kind of go, hey, I know I didn't contribute last year. Can I use that so that I still get my 15% tax rate? can I use that? Yes, you can. It used to be $130,000. It's now $132,500. Very nice. Superannuation guarantee, which directly impacts you, Bec, and every single person in our community who earns income that gets paid super. It's gone from 11% to 11.5%, which I think is very, very sexy, but it's also a really good conversation to have with your employer if for some reason they've decided to take that out of your take-home pay. Oh my goodness.

Yeah, that's not allowed, right? No, no, no. It is allowed. It's going to be based on your contract. So some people's contracts are going to be salary plus superannuation. So if you're on a contract that stipulates you get paid salary plus super, it should not have impacted your take-home pay. However, if you have a package and they say, Bec, you're on a $70,000 package, well, they're

still only going to pay you $70,000 and that 0.5% is going to come from your take-home pay and go into your super, now's the time to have a conversation with your employer and say, hey, Cozzy Libs, babe. Hey, that hurt my feelings. Hey, that was really me. But having a conversation with them and saying, hey, I know that that made sense and I'm on a package, but I'd really like to talk about getting 0.5% paid into my super in addition because I don't think it's fair for it to have been taken out of my take-home salary.

Great, great advice. Go listen to all our negotiation episodes and go to our website and download that free PDF of how to have that conversation. Yes, and future you's gone, thank you. Exactly, and we're cheering you on. I love it. I think we're done for today, though. I think so.

So many numbers, so many statistics. Bec, at the start you said that you were going to be physically present but mentally not here. Was it as bad as you thought it was going to be? Honestly, no. I feel like mentally I've been here the whole time. oh thank you that's actually a massive compliment i'm gonna take it and run with it let's get coffee guys have the best day thank you for tuning in for a market update i'm proud of you bye guys

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