Cranes, cranes, everywhere, but…

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Land tax, stamp duty, tenants. Sure, property is great, but there are easier ways to get your passive income, sometimes with franking credits. Through ETFs or exchange-traded funds, you can buy a basket of shares in many different companies in one trade. Beta shares offers Australia GPE's broadest range of ETFs, including income-focused funds, which aim to provide yield-hungry investors with attractive income streams. Discover the Bita ORG shares range of ETFs and how simple they can be to invest in by going tobeta-shares.com.com. Read the relevant PDS and TMD on the website and consider if the fund is

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right for you. This is a podcast by the Rask Group. It's for educational purposes only. So please do not make a financial, legal, investment or taxation decision based on solely what you hear in this show. Welcome to the Australia GPEn Property Podcast. We're on a mission to be Australia's most trusted

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property podcast. I'm Owen

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Rask, founder of the Rask Group. I'm Pete Worgant PERSON, author and buyer's agent. I'm Amy Lanardi

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and I am a buyer's agent. I'm Chris Bates PERSON, ex-financial planner and mortgage broker. Together,

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we'll take you through every step of your property journey. From first homebuyer to decades of

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property investing.

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Good-day, welcome to the Australian Property Podcast, our weekly two-cent segment.

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I'm Pete Warjian from Alan Warjian property buyers in Brisbane, and I'm here with Chris Bates from Flint Group ORG.

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Chris PERSON, how things?

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Life's good, Pete PERSON.

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Life's good.

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It's, yeah, another, a month of sickness is still kicking on.

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I'm sure everyone's sick of hearing it on this on every Sunday, but all the family's got RSV now. So it's got young kids, a little nuclear weapons.

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Other than that, we are moving into a new office this week, which is exciting.

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And, yeah, it's a really interesting policy that come out with the banks with one of the big four.

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We've got a 95%, Noel, the My deal that we're doing a pilot on, which is a bit of a crazy deal product, particularly for people who are earning more than 400,000.

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There's only obviously a subset of the market, but yeah,

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we're doing a lot of work in that space.

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But what's been keeping you busy?

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You can probably answer a question on this.

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So I shared a bit of that on social media as I want to do.

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And of course,

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light up the switchboards.

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It didn't go down too well.

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But my reading of that would be,

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I mean,

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who's going to qualify for a $2 million loan,

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no LMI 5% down? I mean, yes, trust fund kids and their parents, but it's obviously for the top end of the market, restricted to a couple of hundred blue chip postcoes largely. But is that something that would exist normally, or is this just a whole new space?

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No, it's, I guess the banks are looking at it and going like on higher incomes buying into lower risk suburbs and a higher price points, maybe we want to get bank those customers longer term. If we get them on a low LVR deal, they won't be able to refinance that loan for some time. And it's good money for us to make and they're good customer long term. And so what they're saying is that we think that's a really low risk bet if we doenough due diligence on them, making sure that credit needs to be squeaky clean, they need to have good saving history. They do put an extra few layers in terms of their checks, but they're also saying they're the type of customers they want to bank long term. And so it's really only for a subset of the market. But, you know, it does change the game for some people who do want to stretch,who you haven't got enough cash, because typically once you're borrowing more than, you know, four or five million dollars or purchase prices, you're not going to go into LMI territory. Even if you caught it, it would be just enormous. And so it just allows people to upgrade sooner or upgrade and still keep some money left over as buffers because typically you needed it 30% deposit once you started going over a few million dollars and that dropped to 20%, butwith this policy is potentially only 5%. So nobody people listening to this would probably qualify for that in fairness because it's only a small number of the population generally. However, it's just interesting when you're seeing bank innovation and I think we're going to start to see more and more policies like this start to come out where banks are able to target certain segments of the market and potentially start offering longer loan terms, etc, to increase borrowing capacity. And that's just

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the name of the game the banks try to play. This is what I think sometimes about unintended consequences. If you think about how bank executives are going to be remunerated and the targets for revenue and profit, they're going to find ways to lend. So if you shut off lending down here for first-time buyers and people at the lower income spectrums, then banks are going to come and lend over here. They're going to find a way. It's a bit like decades ago when they blocked off the Niagara Falls LOC.They thought, right, we're going to try and repair because there was the Tritus building up at the bottom of the waterfall. So they blocked it off. And then, of course, you know, you have unintended consequences downstream at the other waterfalls, which get completely wrecked by the flow of water. It's going to go somewhere. That's the way I look at it.And yes, you can shut off lending to people with this three percentage points buffer. But banks are going to find ways to lend. And if it goes into the top end of the market, well, that's not necessarily a good thing for the market or for society as a whole. So, yeah, anyway, it's what it is. Absolutely.

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That's the point, P, that is the point. You know, at the moment, you know, it's much harder for medium and lower incomes to borrow. All the lending data is showing that. And the story is absolutely getting out in the media more and more, that that's not, lending's not equal weighting to what it was in the past. It's heavily weighted to the higher and medium incomes. But, you know, the banks can't lend to the lower incomes rightnow just because servicing so tight, some of the higher income bill can't stretch because they've got the deposit. So what they're saying is, or maybe we can get around the deposit hurdle. And it's a good little risk bet for the banks because borrowing capacity is so tight right now that even if they are leveraging up, they're only leveraging up at four, four and a half times their income, not seven times their income. And so, and they're also leveraging up with three percent above six percent rates, right? So they are protected. The banks,you know, uh, assuming that person keeps their job or assuming their business continues to do quite well. So that's the risk the banks are taking, um, or assuming the property prices go back up. So I think you're right, though, the banks will always find a way to increase, um, their overall credit growth.

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Yeah, it's like whackamol, isn't it? You whack it down here, but it pops up there. Or if you think about a river or waterfall, you can block off certain parts of it, but the water's going to go somewhere. And, yeah, we're moving the flows now from lower income borrowers to just people who can easily afford the Touax or the Bellevue Hills LOC of the world.But is that a good thing? Well, no, not really in my opinion, but apparently it's all in the name of risk. So, interesting, you're like a bellwether for the office market, Chris PERSON. I read in JLL's report this morning that Sydney GPE is now actually recording the strongest net absorption rate for office space, but it's all prime grade. And the second grade,I says, are still languishing. Vacancy race is still pretty high, 15% nationally. But people are generally moving from poor quality office space into prime grade. And I think as well, a lot of businesses are pushing that return to the office rate higher now in 2024. So Sydney absorption, Melbourne as well. Also, CBD pedestrian activity in Melbourne is pretty much back to where it was, pre-pandemic. And Brisbane GPE's been recording net absorption for eight quarters in a row now, obviously booming in Brisbane. But yeah, I think if you look at office completions for the next two years, they're expected to be at about 50% of normal levels. So I think that is probably a goodnews story for the office sector space on the landlord side. I think it suggests that eventually things will rebalance, but it might take until 2007. So there's some pain in the post there. But if you're negotiating a lease happy times and you can move up to a nice harbourfront view maybe or somewhere a bit closer to the CBD LOC.

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Yeah, I think that's absolutely the, it does put a bit of a challenge on anyone who has got a commercial property that's a B or a C grade, right? And we've got a big residential shortfall and repurposing these towers. isn't as simple as it seems, right, moving at an office tower to residential. So what do you do? Do you refurb it? Well, even if you refurb it, you've got to spend a lot of money. Is it still going to lease out? Do you just have no tenant? You know, who owns it? You know, is it a super fund? Does it getrevalued? Is it in a property trust? So I think it's going to be playing out for a number of years. And there's so much new stuff still getting built that was just approved in the boom. And there's still going to hit the market. And so, yeah, absolutely signing leases right now. You can negotiate big discounts. But, yeah, I do think it's the best stuff because people are trying to get people back to the office.And people are saying, well, if it's not better than my home office, why would I want to come in? And I think that's the challenge for employers to.

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You're not going to go back and work in a chicken coop if you've been working from home for three

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years. So it'll be like Google ORG was ahead of the curve on this. Try to make the office space or

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the workspace somewhere where people actually want to hang out and that will help. So yeah,

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I'm heading down to the Gold Coast this week, talking about booming areas. That's probably the one part of the country where construction is really still teeing off, maybe Perth GPE as well to some degree. It'd be interesting to see, though, because I haven't been down there for a little while. And I'm speaking at a wealth retreat to Ben PERSON, I haven't, well, I've been speaking there for the best part of a decade now. It'd be interesting to catch up with some people. I've learned from one of the speakers there, Tom Corley PERSON, who wrote a book,Rich Habits WORK_OF_ART. He did this big study of US millionaires to try and work out one of the common threads. And I learned a lot from him over the years. So it'd be interesting to catch up and see what's happening down on the Gold Coast LOC as well. So let's rip into these top three stories this week then, Chris, 10 minutes in, we should probably get to it.So RLB ORG released their crane index. Crane count is off record highs, but it's still pretty high. If you look around the country, you can still see a lot of cranes. So I'll do a deep dive there into where is still seeing high levels of construction and where things are dropping off. Secondly, Arcadus ORG, this was another report on international construction costs.Race for capacity, you can see the pressures in the sector, as people are still building a lot of infrastructure and non-residential. Australia GPE's a big part of that story as well. And then thirdly, RBA ORG had a bit of a piece out or a publication in a bulletin saying that although the cash rate is on hold across the market on outstanding mortgage rates, still things are trending higher as more fixed rates reset.So we might just talk a bit about, as we already have, actually, who's borrowing, what type of questions and loans they're asking about. And Chris PERSON is obviously right to the cold face there. So Chris, let's start with the RLB ORG report. Crane count 869 in the first quarter of 2024. So it's not as high as previously, but it's the second highest ever reading.Gold Coast is absolutely booming, as I'll no doubt see over the next week. Half of the cranes are in New South Wales GPE. But a lot of this stuff is commercial, though. I think if you look at some of the biggest sites, Amazon ORG, building a massive commercial data center in Craigieburn in Melbourne, in Victoria GPE. I think actually, if you look aroundthe traps, there's quite a lot of stall projects as well in the residential space. In solvencies, I suppose, depending on how you look at it, are at 25-year highs. I think you could certainly argue that there's a percentage of companies registered there. It's not quite so dramatic, but certainly things are trending up. And yeah, well, I suppose if you looked at that, you would say, well, the construction sector is pretty healthy in terms of the pipeline, but actually starting to trend down now, especially for residential and especially in Sydney GPE.

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Yeah, I think that's if you look at the cranes around our city, you think, oh, wow, it's still booming. There's still lots coming. But I think a lot of these cranes are slowly going to go and they're not going to get replaced or at least for residential. So I was looking at the report, at least 60% are still in the resi space, but like you say, there's lots in, you know, infrastructure. I was in Melbourne a couple of weeks ago and there was like 10 cranes or maybe not that many,but on the northeast link there, it was crazy at that Greensboro sort of weeks ago and there was like 10 cranes or maybe not that many, but on the, uh, the northeast link there was, it was crazy at that Greensboro GPE sort of pocket there and, and seeing that. So yeah, I do think it's, when you're looking around,you're seeing all the cranes are in gold case, you think, oh, wow, it's boom time. But when you look at the figures like core logic and, um,you know, actual approvals coming through and, uh, actual sales, you would say that, you know,these cranes aren't going to get replaced. And I think that's a, it's a really good report to watch because I think you can see that, yeah, you know, and compare it to longer term standards. I mean, it is crazy how many we are at almost all-time highs versus, you know, and that that's just shows that, yeah, I guess how much development we've done in the last couple of years and how, not just in the resi space, but non-resi.It is.

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It's an interesting debate, actually. I was looking at the population clock earlier today for something completely unrelated, 27.2 million estimated residential population. If my memory serves, we only went through 27 million about January. So we're still running, at least on the estimates, a population growth of, well, 1,900 a day near enough. So that's what, 680,000 plusa year. And, you know, some people would say, well, you know, as a percentage of the population, that's 2.5%. So is that a problem? Well, I suppose it depends whether you're looking at percentages or absolute numbers. And obviously as the population gets bigger, then 2 and a half percent gets, well, the number is huge, 680 plus thousand. In some parts of the country like W.A. GPE, the population growth rate is near 3.5 percent, which is just, yeah, it's borderline out of control. Then you can't build for that. So, yeah, I think there's still some big numbers, but then we're trying to bill for a recordor unprecedented population growth. I saw the figures for Canada over the year to March. Again, another record high, or at least the highest in 66 years or something, up 1.27 million. It's a lot of people, and it's not just Australia GPE that's grappling with this. And yeah, I mean, we actually do need the number of grains to stay near record highs to account for that level of population growth. Yeah, I was actually looking at the CoreLogic Monthly

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report, you know, a couple of weeks ago and it was sort of showing the capacity of what we built in the detached housing and also, you know, in multi-res, you know, everything from townhouses to apartments. And you sort of look at those lines over 10, 15, 20 years. And, you know, what we were building 10, 15, 20 years ago was sort of similar to what we were building today. And I just sort of wonder, have we always just got a capacity of restraint, you know, maybe a lot of that's getting taken up in infrastructure and other segments now.So even though our population has, you know, risen, we're taking a lot of that's getting taken up in infrastructure and other segments now. So even though our population has risen, we're taking a lot of our labor into other markets rather than resi. But it just shows that, you know, how ambitious it was for the government to say, let's go and build 1.2 million homes over five years when, you know, that's just not what we've done in the past. It just feel like there's always just this natural capacity restraint, and let alone all thebuilding issues and material issues we've had over the last couple of years. And so that was an interesting thing. I mean, it's probably leading to story number two around construction cost speed.

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It definitely does. Yeah, budget night is coming up, actually. Well, I need just a few weeks away now. So it'll be interesting to see what announcements are made this time around because most budgets need a tagline or a big headline. Last time it was 1.2 million homes in well-located parts of the country.I don't know what we're going to get this time, but there's always an expectations management thing there to be resolved by Jim Chalmers PERSON. So that'll be an interesting one to watch. You're right, though. The second story, race for capacity was the subject of Arcadus ORG, their international construction cost report. So I think if you look at what the report says, reading through it, construction capacity is very tight.As you said, there's a few things driving yet. There's a big net zero push in New South Wales GPE that's going to come. We've got the Olympics coming up in Brisbane GPE, which preparations have barely begun, really, in that side of things. And there's a long way to go. I mentioned already data centers and non-residential tech developments.That's taking some of the capacity away from residential. I think if you look internationally, construction costs. It was interesting to see London top of the tree there. In Australia GPE, pretty high. Certainly if you compare it to a country like Malaysia or somewhere like that, because our labour costs are high.We don't have cheap labour in this country. Queensland GPE, we mentioned, I think, on a previous episode, a big push for construction wages increases. Well, yeah, some big numbers being thrown around, whether or not they're awarded is another question. But that is really one of the things that keeps construction costs in Australia GPE relatively high compared to some of our peers.I think cost pressures do seem to be easing back a bit. Looks like we might get around 3% inflation and construction costs in Australia GPE this year. But I think clearly there's no going back to that level of ultra-low funding costs and interest rates that we did see. And that's really what fueled the boom along with the home builder stimulus. So probably the new normal might be interest rates in the, well, probably 2 to 4% range, not zero.

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Yeah, I mean, I was looking at this report and I was a little bit optimistic, to be honest. I thought, well, hang on a sec. Yes, we're higher compared to our region, but when you compare us to around the world, like it's the same challenge that a lot of other countries are having in terms of actually building it. It's actually just really expensive all around the world.And if anything, we're actually a little bit cheaper. And so I thought it was really interesting just to do a global comparison when you are looking at, you know, the construction costs because, yeah, we can think how dire it is here. But if it's a global issue, then it's a little bit easier to sort of swallow.

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If you look at the location index, so London ranks at 114.

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So it's benchmarked to Amsterdam GPE, no idea why.

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Maybe something to do with the Herringraft Index or something. But if you look at Amsterdam as being a benchmark of 100, London is 114, most expensive cities are like Boston, Zurich, Copenhagen, Munich, San Fran, and Manchester GPE. Sydney's a bit further down the list, 97. So I guess, look, it's a bit cheaper than some of these other areas, but not massively. So I think there's some cities that are a bit cheaper again, like Dubai GPE, but they have,I suppose, imported labour in some of those cities, which we don't have to the same degree. So, yeah, it's interesting to look around the traps. Clearly, at the moment, the challenge is we're trying to build for a level of demand that we haven't previously had to tackle. And as you said, at the same time, we've got construction margins in the residential space. They're pretty thin anyway.

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We've got wages going up.

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We've still got shortages, trades, materials. I think I've lost count of how many insolvencies I've seen reported in the media this week, but it's a lot. And there's a lot of stuff that happens downstream from that, trades and creditors not being paid, people being laid off. I think the number of job applications per job advertisement is pointing towards a rise in unemployment because, yeah, the construction sector, especially in residential, is a big, well, has a verystrong multiplier effect across the economy. So, yeah, I think there's definitely challenges and we're seeing more insolvencies. But hopefully it looks like we might be through the worst of that cost inflation anyway.

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Yeah, I read another article on the urban developer, which made a good point around really the opportunity in somewhere like Brisbane GPE, where you are, to start to get really into this multi-res, the townhouse developments. You know, there was a huge boom in that, you know, circa five years ago, and there was just a lot of supply and maybe building prices are cheaper. But once house prices have gone back up, there's been this real lag in, you know, new townhousesgetting built. And, you know, a lot of developers aren't playing in that space because it's not big enough. But, but ultimately, if you can, you know, with the attack on sort of Nimbies and right, and more relaxed sort of, playing controls in Brisbane GPE are a bit more relaxed than say New South Wales GPE. But, you know, do you think that's, hey, you're going to start to see a bit of a mini boom of, you know, townhouses because, you know, another article which we read in Domain is he's sort of saying, well, the best streets, to get into the best parts of the best suburbs is quite expensive,but to get into the more cheaper parts or the poorer parts or the, you know, the cheaper parts of the suburb, that gap can be quite big, which is a great opportunity for, for people who, you know, can only enter at a certain price point but want to enter in a suburb. Maybe they can't afford a house and then knock it down and renovate it, but maybe they can afford a nice townhouse. And so I don't think there's a lack of demand there, but it's surprising we aren't seeingmore and more of that in the Brisbane GPE market.

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It goes right to the heart of the Nimbianism debate because in Brisbane GPE there was a ban on townhouse development in some of the inner suburbs. That was at a time when we were massively oversupplied. But now we're at the other end of the cycle. We've got a real shortage of housing, got massive net interstate migration to southeast Queensland GPE. I don't think citywide there's much of a restriction on where and where you can develop.If you look at a place like Hamilton, North Shore LOC, that area on its own could probably take 25,000 people when the time is right in the cycle, when the demands there for off the plan, apartment sales. But there's a few things holding the market back at the moment. Boring capacity is one. The surcharge on foreign buyers who tend to buy a lotof new apartments, that's another. There is that planning restriction in some areas on townhouses. So there's a few levers there, but obviously interest rates is probably the big one. And at the moment, it's pretty tough to see a lot of the projects stacking up. The margins are too thin. So probably need to see prices rise before you start to see that supply response. But I do believe, though, when the time comes, I think we'll see across Brisbane GPE, there's a lot of places that can be developed around train stations,a lot of inner suburbs where you can go pretty high on the tower blocks, Fortitude Valley LOC, South Brisbane, even around Tewong Station FAC. There's a lot of places that could be developed further, but at the moment, the appetite's pretty low. But I'm sure two or three years' time we'll be talking about a different stage of the cycle and a different story. Yeah, absolutely.

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I think it's a good opportunity, to be honest. I think both in New South Wales and up there in Queensland GPE for those developers that can build a high-end product that competes with the housing market and also targets the downsizer market. And I think you can see that in places like Double Bay in Sydney GPE, how the developers who have got a bit of cash who can get some good sites that are actually still findingthat the feasibility stacks up. And that's actually ultimately good for the whole market, right? If we can start to move people out of houses, particularly the downsizes, or reduce housing demand because they've, you know, more options for families, it does slow down the pressure on a small number of either apartments that suit downsizes that families also want. So we do really need to encourage this next wave of developments, assuming building standards are there,assuming they start to become family friendly and actually what we need. So I do think there's otherwise ultimately we're still going to see this, yeah, lack of listings, lack of supply and growing demand and demographics of population growth. So I do think we need to get on the development front foot. But I do think we need to do on the development front foot, but I do think we need to do it in a smart way that gives respects to the location, the nature, the community,and actually builds a quality product that's going to last and isn't just going to be looking older after a couple of years like what we've built in the past. And so it's going to be

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interesting to see how we pivot over the next few years. Defects are always a further, an issue with new apartments, or certainly they were in the previous cycle, hopefully better this time around. So third and final story this week, Chris PERSON, mortgage rates are still rising across the market is for outstanding loan. So the RBA ORG put this in its bulletin. I think we touched on this maybe a week or two ago. There's been a brutal increase in debt servicing for Australia GPE compared to elsewhere in the world. So somefixed rate mortgages are still resetting. So outstanding mortgage rates. If you look at Australia since the first rate hike, we've seen maybe close to three and a half percentage points across the entire market of increasing outstanding mortgage rates. That compares to the US, which is about 50 basis points. Canada, New Zealand and the UK are somewhere between the two. If you look at the change in debt service ratios, Australia is up nearly 6%.UK GPE's flat. So incomes are up in the UK GPE and people are by and large servicing their debt. And this is really about Australia GPE'sproliferation or variable rate mortgages. So there was a short period there where in2022 and you would know this as the broker, about 40% of loans were fixed ratemortgages as they were being written. But a lot of those have rolled off now.Normally in Australia only about 20% of mortgages, certainly pre-pandemic, were fixed rates. And this is, the knock-on impact of this is that Australia GPE's had a massive decrease in its household disposable income. If you look around the rest of the world, well, wages are up, earnings are up, yes, inflation's up and people haven't been too badly impacted in Australia versus the G7 ORG. We've seen a massive decrease, and it's takingits time to flow through to things like the retail figures, but you can see what's coming. And as the RBA ORG pointed out, even if the cash rate doesn't change, we've still got the average mortgage rate, still creeping up. So what are you seeing in terms of the cold face, Chris PERSON? What kind of questions borrowers asking? Are they more concerned about things like rental yields? Or they're worried about what's coming for interest rates? What sort of loans you're right, team? What sort of questions are you fielding? Look, I do think there's the demand

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for the opportunistic upgrader who hasn't really been in the market. You know, like a lot of the first-time buyers, they're either in or out, you know, whether they've got the deposit and enough cash to enter at the price point they want. Some of them are actually going, well, just buy an investor in property. I just can't see when my income's going to go up. My cash is going to go up enough to enter into a property that I want to live in long term.So they're going down that rent-fencing strategy, which is a bit dangerous because you've just got to be really careful on what you're going to do around your housing. You've got to think through your long-term lifestyle. But I do think there is that opportunity to see upgraded there. But usually they're in the market. I can think about one client today.He's just sold who's going to enter a house in the Central Coast LOC. They sort of want to get ahead of rate cuts or ahead of when borrowing capacities fall. So, you know, because they are headwinds at the moment, right? But they can turn to tailwinds if the confidence shifts. However, I would absolutely say that they're not gung-ho and they're not just rushing to buy any property.And that's why I think you're seeing very patchy results. And auction clearance rate starts to reduce a little bit. Because I think they're saying, well, look, I do want to get ahead of it, but I'm not so sure when it's going to happen. And I'm not that concerned, but any property is going to run on me. So I'm going to be really patient. And ultimately, though, I think what we're going to say, it's into May already, you know, next week. I don't think we're going to see many listings.I think, you know, a lot of people are going to see a real drop off in listings into winter. And I think you're going to see a real lag in listings in spring because people are going to rush to sell until they can find something. So I think this Mexican NORP sandals going to continue unless there's a real confidence around our inflation coming back and rate cuts are imminent. They've been pushed back out to 2025, right?And I think that's just going to hold off sellers in the marketplace. It's going to really reduce listings. So I would just say there's this nervous optimism there. I think we're not seeing major issues with debt stress. We're absolutely seeing, you know, people, you know, coming back to us with their fixed rates and making sure they're on the best rates and doing what they can to get through to the other side. But I do think,you know, a lot of first-home buyers are getting pushed out just because, you know, really what they want to buy at and where they want to buy and what they can borrow, it's just a mismatch. So unless they've got access to big deposits intergenerational wealth, they're just not in the market. And I think that's a real issue right now where, because borrowing capacity is so tight.But if you relax borrowing capacity, that will very, very quickly get factored into prices. Like it has in that long term correlation is really strong. But at the moment, that's not correlating. Borrowing capacity is down, but prices have gone back upbecause there's all this intergenerational wealth coming down to, because people, the parents, the grandparents are seeing it's a good time to buy for their kids. And so it's, yeah, the haves and have nots are really extrapolating out in downturns. And that happens in stock markets where, you know, the people who haven't got much money sell at the worst time, the people who have got money, put more money in. and they make money on downturns. And I think that's what's happening a little bit in the property market here is that, yeah,the mismatch between where the wealth's going is, unfortunately, not even. You're right.

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So we're actually, so we're recording this week a little bit early because there's Anzag Day on the Thursday and you'll be busy playing two up. We're recording this before the release of the latest inflation figures. Now, I guess so at the moment I'm flying blind, but it looks to me if you look at market forecasting, they're generally pointing towards that disinflationary trend continuing for Australia GPE.But if you look at market pricing for interest rates, probably no change until 2025. The RBA ORG bulletin looks at what's going to happen to mortgage repayments. So they're going to keep creeping higher essentially for the next four quarters or 12 months because of that cumulative roll off in fixed rate mortgages as they roll off and become variable rate mortgages. So if you look at a projection for housing mortgage payments as a share of disposable income,it's about 10% now, but it's going to creep higher to maybe 10.5%. And that will be higher, actually, than we saw, even at the previous peak in 2008, as a share of the overall market. So, yeah, it's very much a restrictionary setting for the economy in general. But I think you're right. Most people, it seems, they've acknowledged what's happened and they're taking correctiveaction, either only to get a cheaper mortgage rate, probably working a bit harder. I know a lot of people who are self-employed are just having to put their foot on the accelerator a bit just to keep up with the mortgage repayments. And as well, I think if you look at what the RBA ORG pointed out, if you look back over the past 15 years, we've generally been making a lot of extra repayments on mortgages, either into offset accounts or earlyrepayments. And I think that will cushion some of the blow. People will stop making extra repayments at the same rate. So those are obviously optional. It stopped during the pandemic for a short while as people were working out what the hell was going on. But then generally, over the past 15 years, maybe an extra 2% plus of household disposable income has been going into these extra mortgage repayments and building up buffers. So that does actually help to cushion the blow a little bit.And a lot of households have, of course, have been well ahead on that mortgage repayment. So I think you would have expected mortgage rates to kick up more than they have done so far.

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Yeah, and I do think there's people selling, you know, particularly investors. I can see that, you know, because if you have got a, what you thought would be positive, is now negative, you're not getting much growth. And I think that's going to, unfortunately, that's all people bailing at a time when we do need more investors entering than leading because they've also got a rental crisis. And so I think that's the thing to really watch over the next 12 months.Let's say we extrapolate out higher rates for longer. I think what you will see is more and more investors abandoning and, you know, a lot of home owners hanging tight and trying to get through this window. So listings will stay really low. And you may, you will see a little bit of downsizing, et cetera,because prices have been up. So that's creating a little bit. But yeah, that's this freeze of transactions at the middle to its higher end. But I think you've always seen a little bit of turnover. Sales numbers have been quite good over the last 12 months,really considering. But I do think it's heavily skewed towards the middle and lower end of the market, not the top end. And because the middle and top end is frozen because people can't afford to move. It definitely is. And that would be one thing to watch the regulatory buffer, the lending.

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So let's wrap up on those three stories this week. So crane count remains near record highs, but a lot of that isn't actually in the residential space. Second story, race for capacity and somewhat related story, really, that there's a real squeeze on the construction sector as we push towards net zero and some of these massive infrastructure projects and tech developments and data centers and so on. Construction costs, well, hopefully we're through the worst of the inflation, but still pretty high.And mortgage rates across the market are still rising, said the RBA ORG, largely with the fixed rate mortgages rolling off, and that's going to continue for another 12 months as people gradually get back to normal and variable rates. So that's kind of the main stories this week. Don't forget to keep an eyeout for my new book coming out actually over the next four or five days. So you're passing through an airport, the buy rights approach to property investing by Kate Beacost PERSON and Beauregen in all good bookstores, as they say. So grab yourself a copy. And Chris PERSON, what are your plans

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for the weekend? We're actually not playing two up, but we're going camping with a group of five families. So, yeah, we're getting better in hopefully two days and then probably destroy ourselves, you know, running around kids for four days on a campsite. But, yeah, up the coast, actually, somewhere in the southwestern, I'm not exactly sure of the spot, but it's meant to be beautiful. I sent some photos, and so I'll report on that next week.And, yeah, hopefully we get some good weather camping in good weather it's uh you know camping a bad weather it's a different game isn't it so uh

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yeah i've done it in the blue mountains and it wasn't fun so yeah i'll be i'll be the gold coast for the next week if you're around so you might see me around in a hawaiian shirt or something but definitely keen to see what's happening down there because all of the data is pointing to a boom down there, construction, apartment, pre-sales, everything. It's all happening. So, yeah, it'll be good to see it close up. And then the week after that, I'm over in WA first time in years, actually.So, yeah, traveling around a bit. So send us any questions. Always keen to cover whatever is hot and whatever is topical. So, yeah, do leave your feedback, sending any questions, links in the show notes. And Chris, I'll look forward to catching up next week. Thanks, Pete PERSON.Talk next week. Happy Sunday. Thanks for tuning into the Australian Property Podcast ORG.

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If you love the show, why not subscribe or leave us a review on Apple or Spotify ORG?

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And if you want to work with me,

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Amy, Pete or Chris PERSON, you'll find links in your podcast player to get in contact with us.

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Thank you for listening to this episode of the Australian Property Podcasts ORG. We're huge

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advocates of getting the right advice at the right time from the right people. That's why it's important to understand that this podcast episode contained general financial

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information only. It is not designed to be specific or personalized to your financial,

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tax or legal situation. With property, the check sizes are pretty big, so it's important you get advice from a licensed and trusted professional before acting on the information you hear in Russ podcasts. Thanks again. Thanks for listening to this podcast. Before you go, I wanted to share some things with you. Specifically, I wanted to tell you about the 10 ways that Rask ORG could help you in 2024. As many of you know, Rask has grown to become one of the biggest investing and finance platforms in Australia GPE. Across our podcast, our websites, our memberships, and so on, we now engage around 200,000Aussies, which considering we started in a humble lounge room on a Kmart desk, one of those old fake white wooden ones, I'm pretty ecstatic about where we are six years later. As part of becoming one of Australia GPE's biggest platforms for wealth creation and preservation, we now have a very special position in the country in that we can bring you some of the best, most thoughtful, expert-driven ways to protect and grow your wealth. And I'm going to share some of those with you now.I've got 10 ways that we can potentially help you or match you with someone who can. The first thing that I want to tell you about is the biggest step we've ever taken at RASC ORG, which is the launch of our RASC ORG invest platform. This is a platform that lets our team, led by me, invest for you, primarily through low-cost diversified ETFs. We'll have three strategies at launch, and every investor who comes through can pick one of the three strategies being a balanced strategy,a growth strategy, and a high-growth strategy. The balanced strategy focuses on passive income, and the high-growth strategy focuses on longer term compounding. You will find a link in your podcast player to register your interest. We will be taking off soon. Number two, if you prefer to DIY you're investing, you can join me and over 4,000 members inside RASCORE. That's our full ETF and ASX share research membership community.You can join now and you'll get updated ETF portfolio recommendations every quarter as well as ongoing ASX and global stock research. Every single month, we call them the all-star stocks. You get that alongside the ETF portfolios as well as other members-only content. It's called RASCOR ORG. Number three, our first ever partnership with abusiness other than our own was a business by the name of Blask, which has since become Flint Group ORG. Flint Group is led by Chris Bates and Christian Stevens, two of Australia GPE's most highly regarded mortgage brokers. Already over 200 RASC community members have begun the RASC plus Flint Group ORG mortgage-broking process. You can click the link in your podcast player if you're refinancing, investing, a first home buyer, or whatever. You've probably heard Chris PERSON on the show many times. Number four, you can connect with our most trusted financial advisors.Whether you're 25 years old, just graduated uni ORG and looking to set yourself up, or approaching or in retirement, and you've got that nest egg you want to protect and generate passive income from, you can get in contact with our trusted panel of financial advisors. You can find the link in your podcast player. It's there each and every week. Just click the thing that says financial planning. Number five, if you want specialist insurance advice, as Warren Buffett said, rule number one is don't lose money and rule number two is don't forgetrule number one. Insurance is vitally important, especially when it comes to your number one asset, you. Whether you're a single income household or a couple and you just want to protect what would happen if. You want to protect your family if something goes wrong. You want to protect your spouse if you lose your job. You want to protect yourself if you hurt yourself on the weekend at footy. Insurance is a way to do that. And I think the best way to do insurance is through a financial planner. And there's a few reasons for that,but one of them is sometimes some insurers will only work with financial advisors, but they can also be your companion as you go through the sometimes daunting process of getting insurance done properly. Sometimes you might not even know, but you're not even covered even though you think you are. So get the right advice. You'll find a link in the show notes to check that out. Number six, buying property.If you're like me and you're thinking of buying property in the next 12 months, or maybe you've already invested and you're looking to downsize, getting the right advice of being able to build wealth through property is a proven strategy. It might be one of the most contentious, but I think that we have one of Australia GPE's best property coaches in our ranks. That is Pete Warden PERSON.Pete is the host of the now super popular Australian property podcast by Rask ORG, and he's also my analyst team's macro consultant. So if you're a member of Raskor, you will have seen Pete PERSON's name around the traps. He's a property coach and buyer's agent, and he works with a select number of people each and every year. Just a note on this. This is not a commercial thing with Pete PERSON. Pete just has great services, so we offer them to the community. And when he fills up, he fills up. You can find outmore about Pete PERSON's coaching in the show notes. Next up, tracking your portfolio for tax? I think you are because I think you have to. So, we've partnered with Nevexa ORG to help you manage your share and ETF reporting, whether it's tax or performance, all Rask users get 20% off an annual plan with Nevexa ORG. You can sync your portfolio with Nevexa's software and it automatically tracks your dividends, your capital gains tax and more. Again, not a commercial partnership. We don't make anything from working with Nevexa ORG, but they docreate some great tools which the RAS community uses each and every day. Number eight, want to run your own business? Maybe you already do. If you want more profit, but less stress, less time consumed, and less energy lost, get in contact. We have a partner business called Inflection ORG. The Infliction Accelerator Program ORG is a complete online course that helps you and a community of members engage and follow a proven strategy for growing your business. I'm grateful to be one of the coaches inside the accelerator programhelping business owners right across Australia GPE. You can find more following the link in your podcast player. It's the one that says coaching. Number nine, if you haven't already checked it out, join over 20,000 other people who tune in to the Rask ORG YouTube channel. It is completely free and you get notified when we go live and when we publish podcast episodes. There is a podcast on the RAS ORG network each and every day, as well as bite-sized material that's less than 60 seconds, or those really punchy tutorials and webinars that are just 15 minutesthat take you through a really exciting topic, whether it's how to buy a property, whether it's how to pick a dividend ETF. Some of our most popular content actually just explains things like, what the heck is franking credits, and how do I calculate if I've got some? That's on our YouTube ORG. How to Pick a Dividend ETF. Some of our most popular content actually just explains things like, what the heck is franking credits?And how do I calculate if I've got some? That's on our YouTube channel. Number 10, if you want to be a better investor, a saver, a better partner with money, or just understand your own relationship with money, you can do that, all of that,by going to the Rask Education website and taking a free course. We've enrolled over 26,000 students at the time of this recording, and we're on a mission to get to 100,000 in the next few years. Rask ORG education is our mostly free education platform, covering everything from budgeting and automation to the, probably I would say, the best value investing program in the country. So whether you're in value investor, an intermediate investor, you want to know how to value Woolworth ORG shares, or you simply just want to understand what ethical investing is or buy your first property and what actually happens on Settlement Day, head to the Rask Educationwebsite and enroll in something today. It is free and it supports us because then I can come on here next month and I can say we've got 27,000 and hopefully we reach critical mass where we can help more Australians NORP manage their money better. Thank you for listening to this long-winded ad. If you want to get in contact with me, you know where to go.There's a link in your show notes. Basically, these 10 services, even though some of them we don't make any money from, support RASC ORG and allow us to produce these podcasts, attract the biggest and best guests from Australia and around the world, and bring them to you to answer your questions. Thank you for being part of the RASC ORG network, and thank you for your ongoing support. Bye for now.