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Transcript

Property Cycles Explained. · The Curve

• 0:00
  If you've clicked on this episode, I'm assuming it's probably because you're sort of interested
• 0:04
  in investing in property. Maybe you own a house. Maybe you want to buy a house. There's so many
• 0:09
  different stages and a property portfolio that you may be in. This particular episode, we have
• 0:16
  researched and planned to try and help teach you all about how the property cycle works so that you
• 0:22
  can navigate maybe when you want to buy or sell or maybe just understand what is going on in the
• 0:27
  market right now. And whether we're in summer, autumn, spring, winter, and if you don't know what
• 0:32
  that means, we will explain it in the podcast. And if you want to see soap on top of a seashore
• 0:37
  in a bikini, you're the one in the bikini just so you know this will make more sense once you've
• 0:42
  listened to the episode. But essentially what we're trying to explain is how to understand summer,
• 0:47
  i.e. when property markets are booming and winter, when property markets are falling off a cliff.
• 0:52
  Hopefully you get lots of insights from this episode. And if you had any questions or anything
• 0:56
  doesn't make sense, please comment wherever you're listening to this podcast.
• 1:01
  Welcome to another episode of the property podcast. I am loving this series. It's so fun to be
• 1:08
  able to talk about a different asset class. I mean it's been years that we've spoken about the
• 1:12
  stock market. So to be able to really dive into property, I'm loving. The property podcast, if you
• 1:17
  have not listened before, is for anyone regardless of where you're at in your property journey. So if
• 1:22
  you have never bought a house before, if you're trying to buy your second house, if maybe you're
• 1:26
  looking at an investment property, this is designed to be super helpful regardless of where you're
• 1:31
  at in your journey. The housing market is shaped by complex cycles and global trends and BNZ
• 1:36
  home loan partners have access to economic insights, local market trends, and their own expertise to
• 1:41
  help you never get your own property journey with confidence. So thank you so much BNZ for helping
• 1:46
  empower this property podcast. I thought this would be a really good scene setting.
• 1:52
  Sort of, it's not a back to basics, but it kind of is in the sense that the property cycle is
• 1:59
  very different to the stock market. You know, like the way that, well, I mean, I'm maybe
• 2:05
  I'm about to find out that it's not, but you often talk about when you have a portfolio and the
• 2:10
  things that you choose to invest in, whether it's like stocks or property, and like the more that
• 2:14
  you can diversify into different markets, whether it's crypto or this or that, the better, because
• 2:19
  they all move differently. And so let's say the stock market is totally hitting a meltdown.
• 2:24
  Yeah. It doesn't necessarily mean the property market is also. And so today's episode really
• 2:30
  is just to understand a little bit more about how the property cycle works. Where is it similar to
• 2:35
  the stock market? Where is it different? And then when it comes like buying and selling property,
• 2:41
  how do we think about the cyclical nature of the market with relation to like decisions you're
• 2:47
  making when it comes to investing in this asset? Right. Lots of questions.
• 2:52
  Well, there wasn't a question. That was a rhetorical scene set. Don't you worry.
• 2:58
  Well, the reason I wanted to do this episode was just because for me, I've been really lucky,
• 3:03
  and then I've bought at the bottom of the market. Well, have I, right? It might go down again.
• 3:08
  And yeah, that's what we're going to talk about today, because I felt quite excited about the idea
• 3:13
  that I wasn't buying at a time that everyone was like, it's the top of the market. You're going to,
• 3:18
  you know, like I didn't have people saying that to me, and I know you did. But then it was also
• 3:23
  the top of the market for me. Yeah. And maybe it's not the bottom of the market for me. So I think
• 3:28
  the overarching education with this episode is to not time the market. As soon as you fall
• 3:35
  into that trap, whether it's investing in stocks, investing in property, because otherwise you could
• 3:41
  be like waiting and waiting and waiting and waiting and miss out on so many returns, we'll get into why,
• 3:47
  but the best piece of advice that you can take away from this episode is to try and not time the market.
• 3:53
  Okay. So let's wind it back to be very basic. Let's talk about how the property cycle actually works.
• 4:00
  And I know that the whole point of this episode is not to try and time the cycle, but I also think
• 4:06
  understanding how it moves can be really helpful. Well, a cycle with anything is just supply and
• 4:11
  demand, which makes things go up and down. So if we think of a jobs market, for example, so say there
• 4:18
  is tons of jobs available. It's an employees market. There is so many jobs for them to choose from,
• 4:25
  and there's only a small number of employees. I guess what I'm saying is that prices always adjust
• 4:30
  due to supply and demand. If there's more employers and less employees, then the jobs, the
• 4:36
  salaries of those jobs just adjust until we get to, like I guess, an equilibrium or a period where
• 4:43
  it levels out. Like say, we were hiring for a social media role. Yeah, hypothetically. We just had
• 4:48
  very honest one. And there was very few people looking for jobs. And we put our job out there.
• 4:57
  We would have to be like, gosh, no, there's no bites. We're going to have to increase the salary.
• 5:02
  Oh, there's still no bites. We're going to have to increase it more. And eventually you start
• 5:05
  getting people that may already be employed or you know, they're like fishing rod hang on,
• 5:10
  little bubbles from the cute little salmon. They're like hang on. This job actually looks attractive.
• 5:14
  Whereas if we put our job out there, and then we knew there was heaps of fish, we could be like,
• 5:21
  you know, let's loathe all the time. They're sorry, then worry about putting a bit of
• 5:23
  bread on them because we value our employers and our team and we value people. But we could be like,
• 5:30
  oh, you know what? Let's offer, yeah, we could offer 20 grams. This is an internship. Yeah.
• 5:35
  Who wants it? And you have 10 people lined up that are highly skilled. Eventually,
• 5:40
  they're kind of levels out and you get more employers offering jobs, less employee, anyway,
• 5:45
  and it evens out. But it does move in cycles. So it might be an employer's market and then it's
• 5:49
  an employee's market and employers and employees. Yeah. I've got another fun allergy. Imagine we are at
• 5:54
  single fin and barley. We are having a hot single girl summer and there is 50 really.
• 6:02
  Hot guys. Good looking woman. Actually, yeah, let's flip it. There's 50,
• 6:07
  really attractive male surfers that have just touched themselves up to, you know,
• 6:13
  I think I know where they're at. And they are dancing on the dance floor. They're getting
• 6:17
  their yoga bombs. You know, they're having a good old time. And then I, I am there on my yoga retreat.
• 6:26
  No, it's more like no way for it. I've got it. And I will come to the dance floor. And I think
• 6:32
  I'm single. I'm hot. I'm ready to go. Who am I interested in? And I get to choose from 50 different.
• 6:38
  I've got lots of choices there. So if someone doesn't buy me a drink or someone spills something
• 6:45
  down my front, you know, I'm like, next, next, it's more, it's more they would be like, I'll buy
• 6:49
  your drink. And the next guy goes, I'll buy you two drinks. And the next guy goes, no, no, no,
• 6:52
  I'll buy you three. And some of this is I'll buy single fin's restaurant for you. Okay, you
• 6:56
  solved. But then the other way is you, you text your friends going girls. There is so many hot
• 7:01
  guys here. Get your ass here now. So then love this way more. So then all your friends come.
• 7:07
  And then there isn't a guy buying you three drinks. There's only a guy going you one drink or two
• 7:11
  drinks because you've been such a good bitch and invited all your friends. Because the supply
• 7:15
  and demand is even down. So now the supply and demand is more equal. And then you say your teen
• 7:21
  friends invite another teen friends. All of a sudden, there's now less guys and more girls. And you're
• 7:26
  going, no, no, no, I'll buy you a drink. And the tables turn. And the tables turn. Yeah.
• 7:29
  So it's a fine balance. Supply and demand is a very fine balance. This is exactly what happened.
• 7:35
  And then you get to the point where you're buying these guys drinks and the guys text their friends.
• 7:40
  Then the guys text their friends going mate. There is so many girls here. They're buying
• 7:45
  us drinks. Get your ass here. So then there's another cycle. And then you text your friends and
• 7:50
  they text their friends. Okay. Okay. Okay. Well, you know, lots of people. Okay. I mean,
• 7:55
  this is obviously a very heteronormative example. But I guess the point that we're going with
• 8:00
  here is if there's an abundance of something that other people want, prices go down. Yeah. Whereas
• 8:08
  if there is not an abundance, let's use like a supermarket as an example. Small amount of supply.
• 8:14
  Yeah. People fighting over can of beans. Yes. One last can of beans. I was going to say a
• 8:18
  block of chocolate. Can of beans is real shake. There's also cans of beans. Yeah. Everyone's going
• 8:24
  to pay the price that's on the bean can. Yeah. Yeah. Okay. Okay. Okay. I think everyone gets it.
• 8:30
  So the idea here is that and it's the same with the economy. It's the same with the job market.
• 8:34
  It's the same with immigration. Like people coming here because there's it's a great place to live.
• 8:40
  And then if they can't get houses or get jobs, they'll go somewhere else where it's more exuberant
• 8:44
  and they're getting paid more. And it's part of economics and it's part of how the world works
• 8:49
  and it works in property. And also not to this doesn't need to be political. But obviously whoever's
• 8:55
  in power, whoever's either raising or shrinking things like interest rates or things like migrant
• 9:02
  visas or things like first home buyer, yeah, grants that that's all trying to pull different
• 9:09
  levers to control the amount of supply or demand for something, right? Like lever.
• 9:14
  Lever. Lever? What do I say? The lever. The lever. Oh, well. But you know what I mean? It's like
• 9:19
  they're trying to be the puppeteer with the and that's why they're interconnectedness between
• 9:25
  politics, money and the economy and asset classes is quite interlinked because the client demand
• 9:30
  is cyclical, but it's because of decisions that are made by policy makers. They're trying to not
• 9:35
  make the cycles massively in one way or the other. They're trying to keep like cycles that kind
• 9:43
  of move like this and those of you who are listening probably can't see, but I'm watching YouTube,
• 9:47
  watching YouTube. Yes, they're trying to make them little waves rather than big massive waves
• 9:51
  because that's when people get, you know, you fall into severe financial hardship and extreme
• 9:56
  extremes, yeah, extremes are not good. And this is why things like inflation, you don't want to get
• 10:00
  like cost of increases that hurt so many people because it was an extreme part of a cycle. So it's
• 10:08
  like we need to keep things when things are just squiggling around. It's good when they up and down,
• 10:15
  up and gyrate. I think lots of what a sexy word in there doesn't change. So let's
• 10:19
  zoom in then on what the cycle for the property market specifically looks like.
• 10:25
  Yeah, so the best way if we look at kind of like seasons, right? Let's say we are in spring.
• 10:32
  So spring is like the recovery. Everyone's getting a little bit excited. Things have been quite
• 10:36
  dire at the bottom for a while and they're starting to look good. We're in kind of a recovery
• 10:41
  phase where the flow is starting to blow. Everyone's like getting bit like jittery and excited
• 10:46
  because like summer's about to come. Then we head into summer, which is like the boom,
• 10:50
  everyone's like, woohoo, sun is shining, amazing. And then we head into autumn. It's like cool,
• 10:54
  it had so much fun. We're heading into a bit more of a slowdown. Everyone's like, oh god, winter's
• 10:59
  coming. Shit. And then we head into the doom and gloom of winter. And then everyone starts
• 11:05
  getting a little excited again. So if you think of like a season, there's probably the best way
• 11:09
  to think about it. And then, okay, so we're in spring. This is kind of the recovery. What does
• 11:14
  that mean? It means that house prices have been falling. And now they're kind of, they're kind
• 11:20
  of stabilizing a bit. So that supply and demand has got a bit more equal. People have invited more
• 11:24
  people to the party. Yep. Yep. It's either less people are selling or more people are buying. They're
• 11:28
  feeling a little bit confident. They know that property market works in cycles. So they're like, you
• 11:32
  know what? Maybe, maybe it's like, you're like, maybe it is the bottom. Maybe I should, you know,
• 11:37
  dig out my wallet and actually buy a house. I've been wanting to for a while. So this is
• 11:41
  the recovery price to start to stabilize things start to look a little bit exciting. Interest rates
• 11:47
  might still be still be pretty low, but it's all about, I guess, confidence by as a confident that
• 11:54
  the future outlook of the country or the economy or the region that they're looking at is looking
• 11:59
  pretty positive. So things are looking optimistic. It's spring. You're starting to see some activity,
• 12:05
  I guess. So in the doom and gloom of winter, it would be like no one's really selling houses. And
• 12:10
  if they are, they're selling for way less than they should. Yeah. Interest rates are really high.
• 12:15
  So no one can borrow. No one can borrow. House prices are low. And remember, interest rates and
• 12:21
  house prices move in opposite directions. So when interest rates go up, house prices go down and
• 12:28
  they've seen some form. Yeah. So that's all because it's more expensive to borrow, right? Most people
• 12:34
  fund the property purchase with a mortgage, which means taking on debt. So if the cost of debt
• 12:40
  is really expensive, cost price is generally lower. So in the slump of winter, interest rates
• 12:46
  probably are high. No one's really selling. There's not a lot of movement. Everyone's kind of in
• 12:50
  their houses and no one's doing anything about it. Yeah. The heading into spring. Yeah.
• 12:54
  Maybe there's a couple of houses that are starting to sell. Maybe interest rates are starting to
• 12:58
  be looking at it going. Oh my goodness. Interest rates are so high. Property prices are so low.
• 13:04
  It's like the stock market, right? If she prices are really low, you're like, no, I'm going to start
• 13:10
  nibbling. Or I'm going to start and be staying. It's kind of the same. You're like, house prices
• 13:14
  are so low. Interest rates are so high. The probability of them getting the interest rates getting
• 13:20
  higher and the house prices getting lower is probably less. So I'm just going to take a, you know,
• 13:26
  I'm going to maybe I'm going to actually look at buying a house now because I know interest rates
• 13:30
  are going to come down. And this is heading into the spring, like coming out of winter. Yeah.
• 13:35
  So when I was sitting there with my house in 2023 and interest rates were astronomical,
• 13:45
  I was like, they can't keep going up forever and ever. There has to be a point where it makes
• 13:51
  sense to start buying again. And if I've got that mindset, lots of other people have that mindset.
• 13:57
  And so it takes, you know, the first few people doing that, it's quite busy, you know, but me
• 14:03
  yes, so busy. And then we get into summer. Everyone's talking about the property market,
• 14:07
  you're at the local barbeque. It's like, oh, have you bought a house? Yeah, we've got a second one.
• 14:11
  Oh, yeah, yeah, you know, wankers. Just had it revalued. It's worth heaps. No, but seriously,
• 14:19
  imagine they had the local barbeque bought my fourth house. And I guess that is what I do on a
• 14:23
  public platform. People, honestly, I remember the frenzy just leading into COVID when everyone was
• 14:28
  coming home into New Zealand. And everyone wanted to buy houses was, honestly, you could not walk
• 14:35
  out of your house without having conversation about the property market. It was quite wild. And
• 14:39
  if I look at them now, this is summer, this is summer, that was pretty good summer. And then when
• 14:44
  took aim very quickly, yeah, do you think it was like that globally because people were fleeing
• 14:49
  home in a way? I know that haven't in New Zealand, but I wonder if like other parts of the world,
• 14:54
  people were coming home, do where they're from because everyone was sort of, there was all the
• 14:59
  border chat. Everyone said, you've got to be back. Are you going to get home? Yeah, yeah.
• 15:02
  There was also a lot going on in terms of people moving out of cities because they were like,
• 15:08
  you know what, if this is this lockdown is going on forever, I don't want to be stuck in an
• 15:11
  apartment in the city. I want a bigger house in the country, which there was a lot of demand. Yeah,
• 15:16
  there was a lot of that going on. But yes, a lot of people moved home, particularly to New Zealand,
• 15:22
  we saw it, the property prices went through the roof. And then they've come down. And now
• 15:27
  they started to recover again. Was COVID generally for most property markets around the world,
• 15:32
  hitting back into winter? Because no one was out doing anything. No one could be really selling
• 15:37
  or buying houses. I'm assuming it was probably pretty global. Yeah, most people were, it was a
• 15:42
  function of quite a few things though, because you didn't have migration either. So you didn't have
• 15:45
  new people coming into your country or your city to buy houses. You also had people not knowing
• 15:52
  their future in terms of their employment or their job. So like, you're not going to go
• 15:56
  and make a mess. You're not going to just upgrade. You're not going to do renovations. You're not
• 16:00
  going to do a huge expense like that. And you also had a lot of people spending more time in their
• 16:06
  houses. So they're not going to, they're not going to move like even having an open home. You
• 16:11
  know, yeah, you couldn't even go into anyone's house. I guess the supply coming onto the market
• 16:17
  was very low as well. And so then we slumped back into winter. Then we slumped back into
• 16:21
  winter. Yeah. So can we just for a second? So all countries see slightly different versions of
• 16:27
  the same seasons. It might be different times that it's summer. It might be different times
• 16:31
  that it's winter, but they all follow generally cyclical ups and downs. And there's things that like
• 16:36
  you said earlier, like there's things that can impact it, right? Like we're seeing in London
• 16:41
  that they have created some adverse tax policies for the ultra wealthy. And that has impacted the
• 16:48
  demand for property in London. So that has impacted slightly, not massively, we're not so
• 16:57
  seeing a fall off cliff. But it's sorry, it's tax implications for people trying to buy
• 17:02
  properties. It's taxing the wealthy. Yeah, tax migration, interest rates, supply, even things
• 17:09
  like tariffs, for example, could impact the cost of getting materials into a country to build
• 17:15
  houses. You know, I could send someone back at a someone cycle back into winter. No, summer,
• 17:20
  limited supply means they're not enough houses being built. Which means this. Yeah. So like,
• 17:26
  things getting more expensive means people want more of it, which means that the demand is going
• 17:30
  up, which means you're in summer, which means that houses are probably selling for hire.
• 17:34
  It's all keep going back to supply and demand. If there's something restricting supply,
• 17:39
  but demand is still there, we're heading into summer. If something is increasing supply
• 17:47
  or decreasing demand, then we're heading into winter. God, in terms of London, there was less
• 17:54
  demand, but the supply is still the same. So that means prices come down. Therefore, if you own
• 18:00
  a property in London, it's worth less. It's worth less. Yeah. On the whole. But that means
• 18:07
  that's exciting for us, because prices get to a level we might be like, oh, it's actually quite
• 18:11
  attractive to buy. And then we jump in, then that increases demand again. And then you know,
• 18:15
  it's just yeah, very hard to keep up, isn't it? But and this is the thing in New Zealand as well,
• 18:19
  is they stopped foreign investment into property. So they made that more restrictive, which again,
• 18:25
  you're cutting out a bit of supply. So therefore, house prices decrease. Yeah.
• 18:31
  It's fascinating. It's made the idea of like really, really wealthy people buying properties
• 18:35
  in different parts of the world and how that impacts the property market. I think it's so
• 18:38
  interesting. Like some of the other day, you said Taylor Swift had seven houses. And I thought,
• 18:43
  let's do a little celebrity do dive on the property market and both not just celebrities,
• 18:48
  but people. Have you tried to Google maps them? They're blurred out.
• 18:51
  There's a lot what I do in my spare time. No. Well, wealthy people's houses are blurred out on
• 18:56
  Google maps. Really? Yeah. They must have to pay Google so much to that. Yeah. My properties in
• 19:01
  Teowemotia were blocked out. So in summary, in the northern and southern hemisphere, where there is
• 19:08
  two different seasons, where quite literally I was on a call with someone in Australia. And they
• 19:15
  were saying, oh, it's amazing. This week, it's just warmed up a bit. And I was like, really? Because
• 19:20
  this week, it's literally just gotten really cold over here. And it was so bizarre how honestly,
• 19:25
  it just was like the sea sort of just switched. It's not like that when it comes to the property
• 19:29
  market. Every country is its own little micro climate. And there's different things that are impacting
• 19:35
  the prices of houses going up and down. So it's not just as simple as they're booming in the UK.
• 19:41
  They're going to be booming in Australia. And it's the same with the stock market, right?
• 19:45
  The US stock market is going gangbusters now because it's got a lot of AI companies and everyone wants
• 19:50
  to invest in AI companies. Whereas you look at the UK, it's just loading along. Nobody wants to buy
• 19:56
  pharmaceuticals and oil and gas companies, which is what makes up the most of that stock market. So
• 20:01
  you know, it's like asset at the price of assets or the price of anything is determined by
• 20:08
  supply and demand. Like if I wanted to buy your laptop, and then there's like, no, I want to buy
• 20:12
  your laptop. Line up. Who's paying me the money? So it's all it's all about looking at. If you
• 20:17
  were looking at buying a house today, you want to look at like, what is the demand like and what is
• 20:22
  the supply like? For supply, for example, if you are looking and it's not global, right? It's not
• 20:28
  even at the country level. It could be local. Like it could be really regional. If you're looking at
• 20:33
  buying an original town, it's actually such a good point. And all of a sudden, you know, there is
• 20:37
  council planning for 20,000 houses to go up in the next three months. Not a great time. Because you
• 20:44
  just, you've been, it's been flooded with supply. So you need to look at demand, supply and demand,
• 20:50
  and kind of what impacts that. The biggest one is interest rates. Because that is, that, that
• 20:57
  prices people out of buying a house essentially or encourages people to buy a house,
• 21:02
  depending on where they move. I do think what you've just said about the microcosm of where you're
• 21:06
  buying is such a good point. Because say, for example, we look at London and you were buying
• 21:12
  in an area that was about to get a tube station to learn. Yeah. Amazing. Like people are going to
• 21:18
  want to have a house there. Whereas the adverse, adverse, the opposite of that would be you're trying
• 21:26
  to buy in a small town in the middle of nowhere. With those no jobs. No, like, yeah. Let's say
• 21:32
  you're about to buy in the middle of nowhere and that the most, like maybe the biggest reason that
• 21:36
  people live in that particular town is because there's a energy station that 90% of the town
• 21:43
  works at and the energy station is closing down. Yeah. You're not going to have huge demand to
• 21:48
  live there. So it's just, it's doing your research on the, not only the country and like where you
• 21:53
  are on the market, but also zoom right on into the area that you're looking at. Is there a giant
• 21:58
  motorway that's about to be put in and is it going to be louder, no one's going to want to live there?
• 22:02
  There's so many things lifestyle-wise, not just interest rates that can impact whether someone wants
• 22:08
  to buy a house or even rent if you're trying to buy and then rent it out. And that's why you'll see
• 22:12
  on all of the listings, they're like, in the school zone, because schools are like so stable.
• 22:18
  You know, if it's a good school, there's lots of schools that creates a natural level of demand.
• 22:22
  And also things like, this is why you might see headlines of, you know, Amazon's opening a new
• 22:28
  office and governments are climbing over themselves to get that new Amazon office in their city
• 22:35
  or a new factory or because of exactly that. It not only brings demand for housing, but for
• 22:43
  restaurants, for groceries, for school, that all of that. So it's like, if you can move people
• 22:50
  on mess somewhere to be able to just be able to just be able to live. There's so much that
• 22:57
  goes on under the hood of economics and the way that it's all so interconnected. It's actually
• 23:03
  interesting. I never thought that I would say that about economics or the way that just generally
• 23:08
  the economy is it's fascinating. It's so much psychology. It's the idea of small changes here
• 23:16
  or there can have an enormous impact on the price of things, on the price of assets. It's quite
• 23:23
  interesting. I was out the other night and this guy was like, I was talking about the new
• 23:28
  reserve bank governor in New Zealand. Sorry, pause. What on earth were you doing out talking
• 23:34
  about that? Haven't they ever come up in conversation? I honestly can't remember, but
• 23:39
  and then he turns to me, guys, would you be reserve bank governor in New Zealand?
• 23:43
  Is that your dream? I was like, no, no offense. We're quite boring, but also having that much
• 23:50
  pressure on your shoulders, be accidentally bit fingered and dropped and frustrates a bit too
• 23:54
  low and then inflation sky rockets and everyone's like, you told us and I'm like, oh my god,
• 23:59
  yeah, it would help me. So much pressure. So just quite funny, just pausing on like,
• 24:04
  going out and then selling to talk about money. Because obviously everyone else around me,
• 24:08
  their eyes rolled. They were just like, oh, I was like, no, it's the first female reserve bank
• 24:14
  governor in the first one. Oh my god. Someone's like, put her in the corner. But we were on the dance
• 24:18
  floor, like, I don't know, maybe three weeks ago. Someone came up to me. No, you go. No, no, no,
• 24:26
  you're hot on the floor. I did that. Someone came up to me and was like, I love the podcast.
• 24:31
  Just wanted to let you know. I love it. This is also, I have to say, was a guy. This wasn't even
• 24:34
  a girl. So this was a guy. I was like, I love the podcast. And I was like, that's really sweet.
• 24:39
  You know, I had a chat for five seconds. And then it started rolling into pinch and chat.
• 24:44
  And where his pension should be on the dance floor, like, you cannot hear them. Like, it's like,
• 24:49
  and I was like, one second, one second. I was like, naive as I was. I was like, yeah. And then
• 24:57
  as soon as I had said years and walked over and you're exactly what was happening, you should
• 25:01
  talk to Vic about this. And then so scorn. And then all I hear is 10 minutes later, but going,
• 25:06
  well, you're showing off my own pension. Yeah. And I was like, trying to dance. You're like,
• 25:10
  well, if you're in a high grove and you're honestly, who's so funny. No, I love it when people
• 25:18
  talking about that. It's just like, I had a speech that like, not to say I don't want to talk about
• 25:22
  the curve out, but it was more just the context of music blasting. Everyone was drunk. And then
• 25:27
  there we were talking about West. And it's funny, if you're like, oh, do you want to go outside and
• 25:31
  have a chat about this? No, no, no, no, no, you know, it's okay. But yes, the reserve bank has a very
• 25:37
  tough job. Yeah. Oh, yeah. Any reserve bank needs the one thing that can really move supply and
• 25:43
  demand is interest rates. And actually, before we move on, this is a really good example of why
• 25:49
  everything happening in the US right now and Trump trying to control essentially was like
• 25:54
  the decision maker of the American version of a reserve bank will have such an impact on the
• 26:01
  entire economy. What's going on? And that's why it's so problematic. Because normally, let's say
• 26:06
  Vic was up in her corner being, you know, running the reserve bank, if any almost trying to get in there
• 26:10
  and tell her what so should be like, go away. This is not your business. Like there's too much riding
• 26:14
  on my shoulders. What you what you want for political reasons is not of interest to me. But what is
• 26:20
  happening right now in the US is because they're trying to deflect with Trump and not have
• 26:27
  him impact, he's kind of going around that and trying to impact their decision in kind of
• 26:33
  sneaky ways. Which is why it's a bit problematic. Okay, let's for a second, just really hammer home
• 26:39
  on the sea sore kind of concept of when interest rates do what? What happens to house prices?
• 26:44
  Yes. Okay, so when interest rates are low, there is more people willing and able to buy
• 26:50
  property because they can borrow money. Because what they're paying to borrow that money is a lot
• 26:54
  lower. They might be paying 2% versus, you know, 7%. So therefore, there's more people
• 27:03
  demanding properties. So prices go up. Yes. So you're on the bottom of the sea sore. It's
• 27:08
  summer time prices are up. It's summer. You're in summer. Okay. We just need to do a picture here.
• 27:13
  You're imagining a sea sore. You're straddling that thing wearing a bikini. Yeah, it's really
• 27:19
  hard. It's really hard. Yeah. Interest rates are low. Yep. And think low because you're at the
• 27:25
  bottom of the sea sore. And they maybe think get low interest rates, high house prices, high
• 27:30
  temperatures, high temperatures. Nice. Love it. And then the opposite of that is winter.
• 27:36
  Is winter. So you're in a puffer jacket. Yeah. You're wearing a beanie. You've got those hideous
• 27:40
  fungalous gloves on and you're at the top of the sea sore. And if you think of a sea sore,
• 27:44
  so you're like this and you're like at the top and you're bikini and you're like
• 27:48
  more people are like, oh my god, I want to get on board the property mark. So they get on the
• 27:51
  sea sore with you. You know, maybe you've just seen that. And I remember we were an audio
• 27:59
  platform. I know. I just gave the punchline in non-audible cues. Yeah, I know because I didn't
• 28:05
  jump on and the sea sore goes down, down, down, down, down. And the other end goes,
• 28:10
  yep, yep, yep. So, so winter to reiterate, you are wrapped up. You're wrapped up. There's lots
• 28:15
  going on. House prices are low. House prices are low. And temperatures are low. Low. So you're in
• 28:22
  winter. And house prices are also low. Yep. And that means. That's a really good thing about it.
• 28:28
  That means interest rates are high. Oh, yes, yes, yes. There's people can afford to buy. You've
• 28:32
  got a lot of properties for sale because we need a diagram. I think we need a visual here. There's
• 28:37
  got to be a visual. I shot on being winter. Vick is going to be summer. She's at one end of the
• 28:42
  sea sore in her bikini. House prices skyrocketing interest rates. Low. Yeah. I'm on the other end of
• 28:48
  the sea sore in my puffer jacket. Interest rates. High. House prices. Low. Winter. I think the
• 28:55
  best way to think about it is the seasons is that they give it its house prices. It's confusing
• 29:00
  we bring in interest rates, but that just impacts the seasons. But high house prices summer.
• 29:07
  Low house prices is winter. And then in between is kind of we're heading in that direction. But yes,
• 29:12
  cycles. They tend to last like we say probably like five to ten years for property. It really
• 29:20
  depends. We still haven't recovered to where we were pre COVID in New Zealand. And that's been
• 29:26
  four years. We're still in winter. Yeah. We're probably. We're in spring. I reckon we're spring.
• 29:32
  Yeah. I know. So people are hopping on the other end of the sea sore. Because interest rates are low.
• 29:38
  So people are selling to want to buy more interest rates are coming down at the moment across
• 29:41
  most countries. So in the interest rates are coming down. People want to borrow more, which means
• 29:46
  they're starting to buy more. They're taking off. Yeah. Okay. I think interest rates is the thing
• 29:51
  that moves us into different seasons the most dramatically, I would say. And like we spoke about
• 29:58
  tax, for example, you know, impacts demand around the edges. Migration is a bit really big one as well.
• 30:06
  And we saw that during COVID. Nobody could travel different countries. We've seen that a lot in
• 30:11
  Australia in New Zealand right now. You know, there's not a lot of good jobs in New Zealand.
• 30:16
  Well, the job, the economy is not looking good. So a lot of people are going to Aussie. That is
• 30:20
  pushing up house prices. So in Australia, in Australia. Yeah. And it's having a negative or just
• 30:28
  we're not growing. House prices aren't recovering as fast as they should. In New Zealand. In New
• 30:34
  Zealand, with interest rates falling. But yeah, most countries around the world are lowering their
• 30:41
  interest rates to help the Chinese economies and get people to get naked into summer months.
• 30:48
  Decade into Birmingham. Yeah. They're trying to reverse to get out of winter. Yes. And then if we
• 30:55
  look at the supply, yes, interest rates impacts demand and a bit of supply to be honest, but like
• 31:02
  if we look at supply, like building more houses, that's a big one as well. And in New Zealand,
• 31:07
  we literally cannot build them fast enough. We don't have the the people. We don't have the
• 31:13
  companies. We don't have the resources to do it essentially. Is that the same in other parts?
• 31:19
  Was there something to do with us being a little island in terms of getting resources there,
• 31:22
  which makes it more difficult? Yeah. And we also have a monopoly. So like one company, which owns
• 31:28
  that Fletcher building. Yeah. Most of. So if they hike out prices, hike up prices, it's now more
• 31:34
  expensive for property developers to build an apartment. Well, I'm here. There's a real
• 31:39
  opportunity in the construction space. Yes. I could like with that venture. I have actually
• 31:49
  nailed Gibb on a wall before. Oh, nice. Yeah. I did a habitat for humanity build. It was like
• 31:54
  building houses. It was like a charity. I realized in that moment how incredibly difficult it is
• 32:01
  to be a builder. It's so hard. Yeah. Also, to be able to know what goes where to build a foundation
• 32:08
  that's not going to collapse on someone quite amazing. I look at apartment buildings like there's
• 32:12
  one by my house right now in London that's being built. People in cranes. They say that's quite
• 32:17
  fascinating. What if you were the one person that forgot to put in a screw at the bottom? Do you
• 32:22
  know what gets me going? Well, it's not really in a sexy, cute way. But thinking about when you go
• 32:28
  through Europe and you see all of those insane churches that are so high and so beautiful and so
• 32:34
  intricate. How honestly did that happen? Thousands of years ago. It is beyond me. And then you look
• 32:41
  at these. I know. HDS apartment buildings that we're putting up now with all this technology.
• 32:45
  We digress. Yes. So yes, so supplying construction and yes, some places you just can't build things
• 32:52
  fast enough. And then also that's why cities spread right because it's cheaper in the outskirts
• 32:57
  and then that builds up and then more people buy in the outskirts and that's like this whole
• 33:01
  move to the city's thing. And that's when they talk about gentrification and getting people
• 33:04
  get priced out and priced out and priced out. I mean, city sprawl, right? So it's like if you buy
• 33:09
  in close to a major city, that's going to get gentrified eventually because more people move
• 33:16
  there and they have to live on the outskirts and then more people move and those outskirts become
• 33:19
  the inner skirts. But I said that's kind of makes sense. But you know, yeah, while you think
• 33:24
  you're buying on the outskirts and in 10 years time, you blink and you're actually in the city
• 33:29
  and then you go out again and so yeah. I also think an interesting way to think about this,
• 33:33
  if we're looking at freelancers, if we're looking for freelancers within London, they're really
• 33:38
  expensive because all of their living costs, everything, it's generally just the cost of freelancers
• 33:43
  is higher in London. Yeah. If you were to go to somewhere in the, you know, in the middle of nowhere
• 33:48
  and they lived in their living costs away lower, they can afford to charge less, which means that,
• 33:53
  you know, so it's just the idea of cities can demand more money, whether it's property,
• 33:59
  whether it's jobs, you know, everything is like driven up in price when people want to be in an
• 34:06
  area and it's quite centralised. Even if you look at salaries within big major cities,
• 34:12
  they're way higher than if you're working in a small town and that comes back to the jobs market,
• 34:18
  demand supply, all of that, it's in lots of different markets, right? But the other, I guess the
• 34:23
  other two things that impact the property market is government policies. So, you know, there's
• 34:28
  stamp duty on buying a house in London, there's not in New Zealand. That's basically like if you sell
• 34:33
  a house, you have to pay on the gains you've made, right? If you buy a house. Or is it on your buy?
• 34:39
  Yeah, when you buy. When you sell. Yeah. When you buy a house, you have to pay a percentage of the
• 34:43
  property price as a payment. Oh god, I didn't realise that. So essentially. And then there's also
• 34:49
  capital gains tax, which is at the other end when you sell it. When you sell it, yeah, when if
• 34:54
  you've made a hundred grand, for example, you might have to pay away 30% of that in tax. Whereas
• 35:00
  in New Zealand, we don't have that on your first house. So different markets have different policies.
• 35:07
  And then there's also the underlying economy. So New Zealand economy, not doing so well lately.
• 35:15
  The UK economy, post-Brexit, wasn't doing so well. So that also plays into how well house prices
• 35:23
  do and the property market. Because I guess if you look in Australia right now, where the economy
• 35:28
  is actually quite strong, people are probably feeling quite confident. They're being paid a decent
• 35:33
  amount. And their prices going up. Interest rates aren't even, they've stopped going down because
• 35:38
  they're like, you know, we don't even need to make it go down to encourage people to go and get
• 35:42
  debt because they're feeling confident anyway. So yeah, okay, that sort of makes sense to me.
• 35:48
  But I guess the key thing is like they like with investing in anything,
• 35:53
  prices do go up and down and they do move in cycles. And so that's why we say,
• 35:58
  you know, invest for the long term. And invest for as long as you can, right? Because you might
• 36:06
  go through, you know, property markets do tend to go up into the right over time, like the stock market.
• 36:12
  But there will be little waves in between. And so I mean, when I bought my house,
• 36:20
  the wave went up massively. I got told I was buying the top of the market. Then we had COVID.
• 36:25
  The prices went up massively. They've come down massively. Now they've gone back up again.
• 36:29
  If I sold now, I would still have still made again on my property. But I've, I've weathered this
• 36:36
  massive up and down throughout that period of time. And it's been ideas. So it's like, if I'd sold
• 36:42
  maybe a few years ago, I wouldn't have got as much as I would if I sell now. Maybe it might go up
• 36:49
  more in the future, but it kind of depends when I'm going to sell if that makes sense. There's so
• 36:53
  many things that come into it. It's not as easy as like, is it up or down? It's also your personal
• 36:58
  situation. And like, I went on a podcast a while back and they were like, what's one thing you
• 37:02
  wish you'd done differently before buying a house? Set your mortgage. And I was like, you know,
• 37:07
  I, I was that. But like, that's kind of, you never know, right? You never know. But I was like,
• 37:12
  I wish, when I did my numbers, I doubled interest rates and thought I was being like, you know,
• 37:18
  worst case scenario. This is what I'd have to pay. But really, I should have like interest rates
• 37:24
  to a level I hadn't even ever had in my life. So it was like this weird environment of like,
• 37:31
  oh shit. But I thought I was being conservative and what I was kind of putting in my numbers. But
• 37:36
  really, what my worst case was was not even the worst case. So it's like, I think it's just
• 37:42
  there's so much of a personal situation that comes into it as well. But I think the overarching
• 37:47
  thing is just if you're trying to time the market, there is so much you need to look at in terms of
• 37:53
  where you're going to buy, where interest rates are out, the economy, you know, the government policy,
• 38:00
  population growth supply, like all of that. Whereas I think, but you, you were like, I want to buy a
• 38:06
  house and I'm going to hold it for the long term or for a long period of time. So therefore,
• 38:11
  because I'm ready now, I'm going to buy it. Do you know what I mean? Like, you weren't being like,
• 38:18
  oh, interest rates are here. But I kind of was though. I was for your personal situation.
• 38:22
  You were like, okay, interest rates are here and I can afford it and XYZ is.
• 38:25
  Yes, but what I would say, and that's why I think maybe we might next to a part two of this
• 38:29
  conversation, because there's obviously a lot more to talk about in terms of what moves the
• 38:33
  property cycle. But I wouldn't have considered, I mean, I really wanted to buy a property,
• 38:38
  and I was super excited and really, I mean, I was trying for ages, anyone that listened to
• 38:43
  the podcast knew this was something I wanted to do for a long time. But I got my
• 38:47
  energy pretty quickly when I knew that there was, I was at quite an opportunistic moment in
• 38:55
  the property market and the property cycle in that for a long time, or we've heard, particularly
• 39:01
  in the New Zealand property market, is that prices are so high, we're at the top of the market,
• 39:05
  and all of a sudden we weren't. And it just felt like, oh, wow, like for the first time,
• 39:09
  I feel like this is an opportunity for me. I think it was different because I was doing an
• 39:13
  investment property rather than a lifestyle. It's super different if you're buying a house to
• 39:17
  live in. The time that you want to buy to live in it is dependent on your personal situation.
• 39:22
  For me, I could have done something else with that money instead of putting it into the property
• 39:26
  market if I wanted to. I guess what I'm saying is you can never time it right. Say house prices
• 39:32
  continue to fall, then you would have been better off to wait. There is always an element of
• 39:38
  your personal financial situation that comes into it. I guess I'm saying it's a combination
• 39:42
  of both, right? It's like making sure the environment is one or we're in the period of the cycle
• 39:49
  that you're happy with, but then also like, what is your financial situation? And for those to
• 39:54
  match up, that's when it's probably the most opportunistic time to buy. Oh, I'm excited to share
• 40:01
  what's just happened for my property journey, but I think it might be quite helpful to your part
• 40:06
  to this. I think there's a lot, I know you've done a lot of research. We've got a lot more
• 40:12
  research that we haven't gone into. So let's do a part two on this. We haven't even got to
• 40:17
  things like how long they are, where we are right now, and what you should be looking for if
• 40:22
  you're buying or selling in the property cycle. I think that we should do a part two of this.
• 40:27
  And in the meantime, if you have any other questions or topics that you would like us to cover
• 40:33
  with regards to property, property investing, please comment wherever you're listening to this
• 40:37
  podcast, because we want to make sure this is really useful. We obviously only have one property
• 40:42
  episode a month. So we want to make sure that whatever we talk about each month is super helpful
• 40:46
  for everyone that's interested in this particular asset class. So yeah, see you next month for part two
• 40:53
  of this chat. Maybe some a bit more excited. So see you next month for part two of this chat.
• 40:59
  Please leave both of those examples. Did you love the set of episodes? Yes. Have you got
• 41:09
  property, front and center in your mind? Yes. So I was like, you're a five-year-old.
• 41:14
  I know. Now could be the time to take the first step towards what it is that you're wanting to buy.
• 41:20
  Whether that's your first home, whether that's a new flat, whether it's, I don't know, buying
• 41:25
  another investment property. And thankfully, BNZ has the expertise and tools to help you get started
• 41:31
  and their home loan partners are ready whenever you are. You can book an appointment, you can ask
• 41:36
  millions of questions. Trust me, that is totally fine. And you can start turning the property
• 41:42
  dream that you have into a plan and hopefully soon into a reality. I know from experience that
• 41:48
  this can feel quite overwhelming, but when you're working with experts who can actually help you
• 41:51
  get there, it's such a burden of your shoulders. Know that you've got the advice and the tools
• 41:57
  that you need to actually make it happen. We know how hard it can feel and like overwhelming and just,
• 42:04
  you know, so like a fish out of water when it comes to buying properties. So we're so thankful
• 42:09
  to BNZ to be helping us create and empower this podcast so that people can learn and
• 42:16
  you know, we just want you all to succeed. We want you all to succeed. We're all in your corner
• 42:22
  and this is going to be such a game changing podcast series. Yes, and for anyone that has gone
• 42:27
  through the process of either buying a house or a flat or whatever it is that you're trying to do,
• 42:31
  please let us know because we would love to be cheering you on from the sidelines. But thank you
• 42:36
  so much again to BNZ for empowering this podcast. Okay, quickly, the curve was created to empower
• 42:41
  and educate you about investing, but we are not financial advisors. Our platform exists
• 42:46
  for educational purposes only and it doesn't provide personalized investing advice for your
• 42:50
  individual needs and should not be relied upon to make an investment or financial decision.
• 42:54
  And always remember to do your own research before making any investment or financial decision.
• 42:59
  We're here for any knowledge and support you need, but the final call is always yours.
• 43:03
  And thanks for being here. You got this. Yeah, we know you got this.