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Property Pressure: Buy Now Or Wait? · She's On The Money

• 0:00
  Speaker 1: Just before we get started, we'd like to acknowledge and
• 0:03
  Speaker 1: pay respect to Australia's Aboriginal and torrest Rate islander people's.
• 0:07
  Speaker 1: They're the traditional custodians of the lands, the waterways and
• 0:10
  Speaker 1: the skies all across Australia. We thank you for sharing
• 0:13
  Speaker 1: and for caring for the land on which we are
• 0:16
  Speaker 1: able to learn. We pay respects to elders past and present,
• 0:19
  Speaker 1: and we share our friendship and our kindness.
• 0:22
  Speaker 2: She's on the Money, She's on the Money.
• 0:45
  Speaker 3: Hello, and welcome to She's on the Money, the podcast
• 0:48
  Speaker 3: for millennials who want financial freedom. My name is Georgia King,
• 0:52
  Speaker 3: and joining me as she does each and every Wednesday,
• 0:55
  Speaker 3: is Victoria Divine V. How are we doll?
• 0:57
  Speaker 1: Hello? Thanks for having me today.
• 0:59
  Speaker 3: Are talking buying property? Some cold and hard stats to
• 1:04
  Speaker 3: kick us off, I'm ready. Did you know there were
• 1:07
  Speaker 3: almost five hundred and ninety eight thousand house and unit
• 1:11
  Speaker 3: sales across Australia over the year ending August twenty twenty one.
• 1:15
  Speaker 3: What That's the highest number of annual sales since two
• 1:18
  Speaker 3: thousand and four, and it's a forty two percent lift
• 1:21
  Speaker 3: on the annual number of sales over the previous twelve
• 1:24
  Speaker 3: month period.
• 1:25
  Speaker 1: That's a feisty stat I reckon, that's fisty, big. I
• 1:29
  Speaker 1: was trying to be cool with my language.
• 1:31
  Speaker 3: I love it and I welcome it. But that's that's
• 1:33
  Speaker 3: a lot of sales considering how expensive everything is at
• 1:36
  Speaker 3: the moment.
• 1:37
  Speaker 1: But I'm sad about it. But at the same time,
• 1:39
  Speaker 1: it kind of makes sense. We've all heard how crazy
• 1:41
  Speaker 1: the property market has been recently, so I think it's Yeah,
• 1:45
  Speaker 1: I don't think it's a bad thing at the same
• 1:47
  Speaker 1: time as being absolutely terrifying for anyone wanting to enter
• 1:50
  Speaker 1: the market.
• 1:50
  Speaker 3: And I guess it's supply and demand, right, Like, that's why.
• 1:53
  Speaker 1: Exact prices exactly. Gee, all of this is exactly why
• 1:57
  Speaker 1: I thought it was super important to talk about this today. Look,
• 2:00
  Speaker 1: today's episode is basically another pep talk from me to
• 2:03
  Speaker 1: you and to everybody who listens, and a little bit
• 2:06
  Speaker 1: of a values check in. It's so easy to fall
• 2:09
  Speaker 1: into other people's value systems and then out of our
• 2:11
  Speaker 1: own completely. It is also way too easy to buy
• 2:14
  Speaker 1: into what the media are saying to Please don't forget.
• 2:17
  Speaker 1: Do you remember it, like mid pandemic, they were like
• 2:21
  Speaker 1: talking about our housing price is post pandemic absolutely going
• 2:24
  Speaker 1: to go through the floor. It was plastered across the
• 2:26
  Speaker 1: front page of literally every major publication news publication that
• 2:30
  Speaker 1: is in the country. And then now they're like, oh,
• 2:32
  Speaker 1: what do you mean, we didn't say that. I don't
• 2:34
  Speaker 1: know what you're talking about. Market is wild, Millennials can't
• 2:37
  Speaker 1: get in and they're eating too much avo toast. Again,
• 2:40
  Speaker 1: like it's just the media likes to hype things up,
• 2:43
  Speaker 1: and at the end of the day, the market comes
• 2:45
  Speaker 1: down to two things. Supply demand. That's it. You hit
• 2:47
  Speaker 1: the nail on the head before. Supply is low, demand
• 2:50
  Speaker 1: is high. We all want the same thing, we're all
• 2:53
  Speaker 1: working towards similar goals, which shifts the price of those
• 2:56
  Speaker 1: things up right, And it just makes logical sense. Things
• 3:00
  Speaker 1: are more expensive if there's only one on offer at
• 3:04
  Speaker 1: the moment. Cost of can of coke going to be
• 3:06
  Speaker 1: the same whereof you go because it's in abundance. Cost
• 3:09
  Speaker 1: of a very expensive fancy bottle of Grange wine, well,
• 3:12
  Speaker 1: it depends where it is and how many are out there.
• 3:15
  Speaker 1: Is it on a corner block like who knows? But
• 3:18
  Speaker 1: it's one of those things where I think too often
• 3:20
  Speaker 1: we play too much into what the media is saying,
• 3:22
  Speaker 1: but then also take it too seriously, like the media
• 3:26
  Speaker 1: is there for entertainment purposes, Like, obviously there's some level
• 3:29
  Speaker 1: of truth to it, But do you really think they're
• 3:31
  Speaker 1: reporting on housing prices because they're just so worried about
• 3:34
  Speaker 1: your personal education? Georgia King, Well, they probably want your
• 3:39
  Speaker 1: eyeballs for that reason to sell advertising. Ah haha, same page.
• 3:45
  Speaker 1: Keep listening to our podcast and listen to our ad
• 3:48
  Speaker 1: So today we are going to talk about our values
• 3:50
  Speaker 1: and how they align with external pressures in society and
• 3:53
  Speaker 1: the media, and what is happening in the market. And
• 3:55
  Speaker 1: we're going to give you some things to consider when
• 3:57
  Speaker 1: deciding whether you're going to purchase a property or do
• 4:00
  Speaker 1: you do it now or do you wait and save
• 4:02
  Speaker 1: for a bigger deposit. We're going to talk about inflation,
• 4:04
  Speaker 1: We're going to talk about available grants, increasing land value,
• 4:07
  Speaker 1: and so so so much more. G King, Are you
• 4:09
  Speaker 1: ready love it?
• 4:11
  Speaker 3: It's been a while since you and I have done
• 4:12
  Speaker 3: a property Podvase, so I am quite excited for this
• 4:15
  Speaker 3: to pepper my questions your way.
• 4:17
  Speaker 1: It's almost like we stopped doing property podcasts when we
• 4:20
  Speaker 1: got our own property podcast.
• 4:22
  Speaker 3: On that v is the property playbook coming back anytime soon.
• 4:25
  Speaker 1: It'll be back second half of this year. But don't
• 4:26
  Speaker 1: tell anyone I told you fabulous.
• 4:28
  Speaker 3: Okay, let's begin today's potty by discussing a few common
• 4:32
  Speaker 3: catch phrases or mabercard if you like, well, yes, myth,
• 4:35
  Speaker 3: I want you to respond to the following. Here we go.
• 4:38
  Speaker 1: Okay, I'm ready.
• 4:39
  Speaker 3: Rent money is dead money, No it's not. It's a
• 4:41
  Speaker 3: lifestyle expent brilliant. The Australian dream, No.
• 4:44
  Speaker 1: Sir, not a thing. Who's dream? Your dream? The Australian dream?
• 4:48
  Speaker 1: What about Georgia's dreams? What about her dreams?
• 4:51
  Speaker 3: Man?
• 4:51
  Speaker 1: You look pressed. We will take this offline later. But
• 4:53
  Speaker 1: in the narrowest sense, the Australian dream is literally the
• 4:56
  Speaker 1: belief that in Australia, home ownership can lead to a
• 4:59
  Speaker 1: be life and is an expression of success and security.
• 5:03
  Speaker 1: Owning property, at the end of the day, is not
• 5:05
  Speaker 1: security if it messes over your finances, and rant can
• 5:08
  Speaker 1: often be better in some personal circumstances. I think it's
• 5:12
  Speaker 1: quite interesting as well, because you know, we just talked
• 5:15
  Speaker 1: about having your own values and aligning to your own things,
• 5:18
  Speaker 1: and then we're like, but it's the Great Australian dream like,
• 5:21
  Speaker 1: let's just stick to our own dreams, not like the
• 5:23
  Speaker 1: Great Australian or Great American dream like. Unfortunately, everything in
• 5:28
  Speaker 1: the entire world has changed since that was the reality,
• 5:31
  Speaker 1: and we can't expect the values of somebody in the
• 5:34
  Speaker 1: literal fifties to be guiding what we want today.
• 5:38
  Speaker 3: What is the current state of the market, Like, is
• 5:41
  Speaker 3: it still pretty grizzly on perspective?
• 5:44
  Speaker 1: Buy it's not that bad, look, it's pretty grizzly. In fact,
• 5:48
  Speaker 1: I attended an auction last weekend last weekend a couple
• 5:51
  Speaker 1: of weekends ago, and the house that was being auctioned off,
• 5:54
  Speaker 1: which was around the corner from my parents, and obviously
• 5:56
  Speaker 1: we were all pervy whent four hundred thousand dollars over
• 5:59
  Speaker 1: what they said it was going to go over, Like,
• 6:02
  Speaker 1: let's contextualize that for a moment. That's literally someone else's house,
• 6:06
  Speaker 1: Like somebody paid for an entire other house. They were like,
• 6:09
  Speaker 1: it was so nice they needed to buy it twice,
• 6:11
  Speaker 1: like insane to think obviously it was a bit more pricey,
• 6:15
  Speaker 1: Like that's why all there, because we were all herby,
• 6:17
  Speaker 1: but four hundred thousand dollars over what it was worth
• 6:21
  Speaker 1: Like that to me sounds insane. So they did say
• 6:24
  Speaker 1: that the property market would actually end up bottoming out,
• 6:27
  Speaker 1: but it hasn't happened yet. It is actually starting to boom.
• 6:30
  Speaker 1: In fact, in the quarter up to December twenty twenty one,
• 6:33
  Speaker 1: so the last three months of last year, the weighted
• 6:36
  Speaker 1: average of the eight capital cities residential property price index
• 6:40
  Speaker 1: rose four point seven percent that quarter and rose twenty
• 6:44
  Speaker 1: three point seven percent in the last twelve months. That
• 6:47
  Speaker 1: means property in general g increased by twenty three percent,
• 6:50
  Speaker 1: which pretty good investment if you have the ability to
• 6:53
  Speaker 1: actually get into that investment asset class. The total value
• 6:57
  Speaker 1: of residential dwellings in Australia rose five one hundred and
• 7:00
  Speaker 1: twelve point six billion dollars to nine thousand, nine hundred
• 7:04
  Speaker 1: and one point six billion dollars this quarter, and the
• 7:07
  Speaker 1: mean price of residential dwellings actually rows forty four thousand
• 7:11
  Speaker 1: dollars to nine hundred and twenty thousand, one hundred dollars.
• 7:14
  Speaker 1: Like that is so far out of the scope of
• 7:17
  Speaker 1: so many people's budgets, it's not funny. Like let's break
• 7:21
  Speaker 1: this down a little bit more. G you want to
• 7:23
  Speaker 1: buy a million dollar property great, that seems like a
• 7:26
  Speaker 1: wild number, but in most capital cities, a million dollars
• 7:29
  Speaker 1: is the mean, right, you want a full twenty percent deposit.
• 7:33
  Speaker 1: How long is it going to take you to save
• 7:34
  Speaker 1: two hundred thousand dollars the rest of my life? Yeah,
• 7:38
  Speaker 1: But like that's just it is so far out of
• 7:41
  Speaker 1: touch with what is actually achievable, especially when the average
• 7:45
  Speaker 1: salary is eighty two thousand dollars a year in Melbourne, Like,
• 7:49
  Speaker 1: eighty two thousand dollars, What can you save each and
• 7:51
  Speaker 1: every single month. Maybe if you're lucky, you're saving like
• 7:54
  Speaker 1: two thousand dollars on that salary. That's assuming that you
• 7:57
  Speaker 1: don't have any dependence, no personal debt, and the ability
• 8:00
  Speaker 1: to save, which is a privilege that is denied to
• 8:03
  Speaker 1: many of us. Like so many of us have financial
• 8:06
  Speaker 1: commitments or think about the amount of people who are
• 8:09
  Speaker 1: in our community who have to spend money on medical
• 8:11
  Speaker 1: expenses and medications, and like it's just so crippling to
• 8:16
  Speaker 1: me mentally to look at that and go, that's just
• 8:18
  Speaker 1: so unachievable.
• 8:19
  Speaker 3: It is extremely intimidating looking at that as someone who's
• 8:23
  Speaker 3: not yet in the market fee And we've spoken about
• 8:25
  Speaker 3: this on the podcast before, and I mean, I don't
• 8:27
  Speaker 3: think we've spoken about this in probably six months or so,
• 8:30
  Speaker 3: you and I, I mean on this podcast, and the
• 8:33
  Speaker 3: fact that the numbers are still so far out of reach.
• 8:37
  Speaker 3: It's in this house went four hundred thousand dollars over reserves.
• 8:40
  Speaker 1: But the facts not encouraged to have that disposable capital.
• 8:43
  Speaker 1: You just look at it and you're like, what, but Sane.
• 8:46
  Speaker 3: Has that because it's obviously not first hold bias.
• 8:48
  Speaker 1: No, absolutely not. And I'm assuming I don't know this
• 8:51
  Speaker 1: for sure, but I'm assuming that the property that I
• 8:53
  Speaker 1: saw go four hundred thousand dollars over was brought by
• 8:57
  Speaker 1: a developer because it looked like, you know, was down
• 8:59
  Speaker 1: in my parents place near the beach, and it looked
• 9:01
  Speaker 1: like one of those properties that they'll probably stick to townhouses
• 9:04
  Speaker 1: on and disappoint every other resident in that suburb, you know.
• 9:07
  Speaker 1: So it's it makes sense, but it's just really, I
• 9:10
  Speaker 1: guess disheartening to see as somebody who you know, I
• 9:14
  Speaker 1: run this community and I want all of you to
• 9:16
  Speaker 1: be successful, and so many of you have the value
• 9:19
  Speaker 1: of purchasing a home. It breaks my heart to think
• 9:21
  Speaker 1: that you know you're not going to achieve your goals.
• 9:24
  Speaker 1: But at the same time, it doesn't necessarily mean that
• 9:26
  Speaker 1: you're behind financially. And I'd hate for you to think that,
• 9:29
  Speaker 1: oh my gosh, if I can't achieve this goal, i
• 9:31
  Speaker 1: haven't been able to make it or I'm not successful,
• 9:33
  Speaker 1: because that's not the case at all. I think we've
• 9:35
  Speaker 1: defined success based on somebody else's history, and now owning
• 9:39
  Speaker 1: property is more of a luxury than a necessity or
• 9:42
  Speaker 1: a hygiene factor as it used to be. In the
• 9:44
  Speaker 1: same way that you joke about, you know, owning a yacht,
• 9:47
  Speaker 1: like it might become the norm to not be able
• 9:49
  Speaker 1: to afford it. And there are actually lots of cities
• 9:51
  Speaker 1: around the world where owning property that's not normal. Like
• 9:55
  Speaker 1: you look at New York, basically nobody there who is
• 9:58
  Speaker 1: living there lives in a property that they own because
• 10:00
  Speaker 1: they genuinely can't afford it. So it might be becoming
• 10:03
  Speaker 1: our new norm, and that, you know, it's disappointing when
• 10:06
  Speaker 1: accessibility was so accessible historically. But I just, yeah, breaks
• 10:10
  Speaker 1: my heart a little bit. But let's get into a
• 10:12
  Speaker 1: little bit of the background of what has actually been
• 10:14
  Speaker 1: happening up until now. And I've got a few dot points,
• 10:18
  Speaker 1: So let me run through those for you Gking. First
• 10:20
  Speaker 1: things first, is that housing turnover, which is the annual
• 10:23
  Speaker 1: amount of homes that are for sale as a percentage
• 10:25
  Speaker 1: of the total dwellings that exist, trended lower from late
• 10:29
  Speaker 1: twenty fifteen as credit and lending conditions ended up tightening.
• 10:33
  Speaker 1: You know how we had the whole Royal Commission and
• 10:35
  Speaker 1: we looked into it, and therefore it was harder to
• 10:37
  Speaker 1: get a home loan, and then housing affordability became more
• 10:40
  Speaker 1: challenging and transaction costs like stamp duty actually became increasingly
• 10:44
  Speaker 1: expensive as prices rose. Then national turnover reached a record
• 10:49
  Speaker 1: low in June twenty nineteen, when only three point seven
• 10:52
  Speaker 1: percent of Australian homes transacted over the year. Since the
• 10:55
  Speaker 1: credit policies have now loosened and mortgage rates have now
• 10:58
  Speaker 1: reduced a record lows. Thank Fully, this has encouraged Australians
• 11:02
  Speaker 1: and you know, our community to participate in the housing market,
• 11:05
  Speaker 1: which has been good. So it's not as though it's
• 11:07
  Speaker 1: just like the last twelve months that have been hard.
• 11:09
  Speaker 1: It's actually been the better part of seven or eight years.
• 11:12
  Speaker 1: And then, to add insult to injury, a higher rate
• 11:15
  Speaker 1: of household saving since March twenty twenty has boosted consumers
• 11:19
  Speaker 1: deposit levels, which is really good, but it's also boosted
• 11:22
  Speaker 1: their mortgage serviceability, which means they're over paying for property
• 11:26
  Speaker 1: because they just want to get in. While government incentives
• 11:29
  Speaker 1: like the stamp duty concessions that are currently on offer
• 11:32
  Speaker 1: and deposit guarantees have also supported demand, so it makes
• 11:35
  Speaker 1: sense that people are trying to pay more for properties
• 11:38
  Speaker 1: because they're like, Wow, I've got this extra casholder that
• 11:40
  Speaker 1: I've saved over the panide and now I want to
• 11:42
  Speaker 1: put it towards a house. And if there are enough
• 11:45
  Speaker 1: people doing that, that's obviously going to boost prices up
• 11:47
  Speaker 1: and change the way, you know, supply and demand works.
• 11:51
  Speaker 1: And then by the end of August twenty twenty one,
• 11:53
  Speaker 1: housing turnover had reason to five point six percent, which
• 11:56
  Speaker 1: is the highest rate since December two thousand and nine.
• 11:58
  Speaker 1: So all of these base is saying that it's not
• 12:02
  Speaker 1: slowing down. Unfortunately. Sorry sorry, sorry, but imagine if just
• 12:08
  Speaker 1: not eating smash diver was actually the answer, that podcast
• 12:11
  Speaker 1: would have been like three seconds.
• 12:13
  Speaker 3: Imagine. So they riddled me this through the pandemic or
• 12:17
  Speaker 3: the Panini Panini, You're still trying to push that and
• 12:20
  Speaker 3: coin that, and I love that. No respect that.
• 12:22
  Speaker 1: You don't though, there's not a lot of respect to
• 12:25
  Speaker 1: this table right now.
• 12:27
  Speaker 3: The pandemic, a lot of people lost their jobs, they
• 12:30
  Speaker 3: took pay cuts, they were greatly impacted financially. It follows
• 12:34
  Speaker 3: as the media assumed, and we all assume, that the
• 12:36
  Speaker 3: market would crash. I just don't understand why it's gone up.
• 12:40
  Speaker 3: I guess as you just outline, like supply and demand
• 12:43
  Speaker 3: and all of these different things have happened, but I'm
• 12:47
  Speaker 3: just confused as to who is buying these homes.
• 12:50
  Speaker 1: Look, I think that we really need to look at,
• 12:52
  Speaker 1: you know, what happened during the pandemic in a little
• 12:55
  Speaker 1: bit more black and white term. So I think that
• 12:58
  Speaker 1: the media really played into what we visually saw as
• 13:02
  Speaker 1: the pandemic, because if you look at it, yes, thousands
• 13:05
  Speaker 1: of people lost their jobs. I am not underplaying that
• 13:08
  Speaker 1: there was job seeker, there was job keeper, Like this
• 13:11
  Speaker 1: was hot on either politician's minds. It was on the
• 13:14
  Speaker 1: media like that's what we were talking about, because the
• 13:17
  Speaker 1: media didn't have heaps of other content to push. But
• 13:20
  Speaker 1: also those stories are far more interesting than you know,
• 13:23
  Speaker 1: Victoria Devine who got to work from home and now
• 13:26
  Speaker 1: just couldn't go to the office. And I think that
• 13:28
  Speaker 1: there are so many stories similar to mine where you know,
• 13:31
  Speaker 1: and I feel massive guilt for that because I'm like
• 13:33
  Speaker 1: far out, like I, you know, and I tried to
• 13:35
  Speaker 1: do as much as I could. But I was okay
• 13:38
  Speaker 1: through COVID and arguably was in the incredibly privileged position
• 13:43
  Speaker 1: of being able to save a little bit more during
• 13:45
  Speaker 1: that period of time because it wasn't paying for parking,
• 13:47
  Speaker 1: wasn't catching the train, you know, I wasn't having to
• 13:49
  Speaker 1: put fuel in my car because I was working from
• 13:51
  Speaker 1: home and the type of job I have is online
• 13:53
  Speaker 1: in your ears, Georgia, and it meant that I got
• 13:57
  Speaker 1: to work from home. But that privilege wasn't something everybody experienced.
• 14:01
  Speaker 1: And the fact that so many people were, you know,
• 14:04
  Speaker 1: unable to work doesn't take away from the fact that
• 14:07
  Speaker 1: there were so many people who just had corporate jobs
• 14:09
  Speaker 1: who you know, maybe were planning on buying a house
• 14:11
  Speaker 1: in the next five years. Their additional savings meant that
• 14:14
  Speaker 1: they were able to buy it three years early. So
• 14:16
  Speaker 1: I think once we weren't stuck in our homes anymore,
• 14:19
  Speaker 1: people were like, you know, what, I've got so many
• 14:21
  Speaker 1: different values now. I think there was a massive increase
• 14:24
  Speaker 1: in the amount of people who were like, no, I
• 14:26
  Speaker 1: actually do want to buy a house. I didn't think
• 14:28
  Speaker 1: I wanted to, Now I do. I don't want to
• 14:29
  Speaker 1: live in an apartment. I want space, I want land,
• 14:31
  Speaker 1: And that seems to be for a lot of people
• 14:33
  Speaker 1: buying property far more preferable. People are now buying further out,
• 14:37
  Speaker 1: pushing out regional property prices because they're like, now I
• 14:41
  Speaker 1: can work from home. G I've learnt so much about it.
• 14:44
  Speaker 1: So I think that as much as we visually see
• 14:47
  Speaker 1: so many people who had suffered through that, and like,
• 14:49
  Speaker 1: there's no downplaying that, it's absolutely messed up when it
• 14:53
  Speaker 1: comes to the property market. There are so many people
• 14:56
  Speaker 1: who are first home buyers or second home buyers or
• 14:58
  Speaker 1: even third home buyers who got to sit in that
• 15:01
  Speaker 1: little white collar bubble where they weren't actually financially impacted
• 15:05
  Speaker 1: in any way, shape or form. In fact, they were benefited,
• 15:08
  Speaker 1: you know, not in general because I think a played
• 15:10
  Speaker 1: on everybody's mental health, but financially benefited from staying home.
• 15:13
  Speaker 3: Yeah, right. It disproportionately impacted the lower income work.
• 15:17
  Speaker 1: Yeah, disproportionately so and it's so unkind and so unfair,
• 15:21
  Speaker 1: and I do think we should have done so much more,
• 15:23
  Speaker 1: but unfortunately I'm not a politician. But what I can
• 15:26
  Speaker 1: do is look at what economists are saying and how
• 15:29
  Speaker 1: that's working. And basically what happened is there were just
• 15:31
  Speaker 1: a whole heap of people who were saving a whole
• 15:33
  Speaker 1: heap of money, and even if they weren't saving money,
• 15:35
  Speaker 1: they were just coasting along and still able to buy.
• 15:38
  Speaker 1: So people who were lower income earning or you know,
• 15:40
  Speaker 1: front facing or didn't have white collar jobs ended up
• 15:43
  Speaker 1: suffering far more than those of us who were, you know,
• 15:46
  Speaker 1: in jobs where we weren't very lucky to be able
• 15:48
  Speaker 1: to carry on business as usual from home.
• 15:50
  Speaker 3: Okay, well said, there v with this increased value of
• 15:55
  Speaker 3: property pretty much across the board, that means then that
• 15:58
  Speaker 3: land is going to also be higher in value at
• 16:01
  Speaker 3: the moment.
• 16:01
  Speaker 1: Yeah, yes, in general across the board. So when you
• 16:05
  Speaker 1: have a look at land, and I mean there is
• 16:08
  Speaker 1: obviously always the risk of buying overvalued land, you need
• 16:11
  Speaker 1: to look at a few things. So you need to
• 16:12
  Speaker 1: look at one, how long you're willing to buy it,
• 16:14
  Speaker 1: and it goes back to our friend Warren Buffett's quote
• 16:16
  Speaker 1: that you said on another podcast very recently, if you
• 16:19
  Speaker 1: wouldn't consider holding it for ten years, you shouldn't hold
• 16:21
  Speaker 1: it for ten minutes. I think the same applies for
• 16:24
  Speaker 1: property as well. So you don't actually want to look
• 16:26
  Speaker 1: directly at the price and be like, oh my god,
• 16:28
  Speaker 1: like that's going to go down twenty or thirty thousand
• 16:30
  Speaker 1: dollars in the next few years. You actually need to
• 16:32
  Speaker 1: look at it over the long term and go, well,
• 16:34
  Speaker 1: what's just going to be worth in ten years? What's
• 16:36
  Speaker 1: my actual intention on purchasing it? And I have lots
• 16:39
  Speaker 1: of conversations with my clients about this because so often
• 16:43
  Speaker 1: they go, vi, when's the best time to buy property?
• 16:45
  Speaker 1: And the answer to that question is when you are
• 16:47
  Speaker 1: personally ready. It's not when the market is ready. It's
• 16:49
  Speaker 1: not when the market is low, it's not when the
• 16:51
  Speaker 1: market is high. It's actually when you personally have the
• 16:53
  Speaker 1: financial stability to service alone and actually take that on
• 16:57
  Speaker 1: with minimal risk. So from my person perspective, I have
• 17:01
  Speaker 1: told clients before buying the peak of the market. Are
• 17:04
  Speaker 1: you saying you're ready right now? Yep, great, no problems,
• 17:06
  Speaker 1: let's go because even if you are paying twenty or
• 17:09
  Speaker 1: thirty thousand dollars over what you feel like it should
• 17:12
  Speaker 1: be worth, you're securing the asset that you wanted for
• 17:15
  Speaker 1: the long term and that's going to pay off over
• 17:17
  Speaker 1: the long term. So from my perspective, like there is
• 17:20
  Speaker 1: a risk of buying overvalued land, But the real question
• 17:23
  Speaker 1: is like how long are you planning on buying this,
• 17:26
  Speaker 1: and should you really be buying an asset that you're
• 17:28
  Speaker 1: planning on disposing of after two or three years, Like
• 17:31
  Speaker 1: is that actually a good idea for you in your
• 17:32
  Speaker 1: personal situation? And maybe it is, I don't know. But
• 17:36
  Speaker 1: at the end of the day, land value is always
• 17:38
  Speaker 1: going to be higher because it has far more potential
• 17:41
  Speaker 1: and ability to grow assets, essentially than an apartment.
• 17:45
  Speaker 3: So you can add more value to a piece.
• 17:47
  Speaker 1: Add your value to a piece of land you actually
• 17:50
  Speaker 1: own it, and there's no like other tenants or other
• 17:53
  Speaker 1: people to take into consideration. We're making that decision unless
• 17:56
  Speaker 1: you're buying like subdivided land, and there might be a
• 17:58
  Speaker 1: body corporative there's three or more properties, but let's not
• 18:00
  Speaker 1: get into that. So it's interesting to actually see how
• 18:04
  Speaker 1: it's valued. But essentially, if you're buying a block of land.
• 18:06
  Speaker 1: It's you and only ug king who makes the decisions
• 18:09
  Speaker 1: about that block of land, pending council approval obviously, But
• 18:13
  Speaker 1: if you went and bought a one bedroom apartment in
• 18:15
  Speaker 1: the Melbourne cbit, like, really, how much can you sell
• 18:18
  Speaker 1: that for when there's such a saturation of similar offerings
• 18:22
  Speaker 1: on the table at that point in time to your offering? Yeah,
• 18:25
  Speaker 1: does that make sense? So like there's volume, but then
• 18:28
  Speaker 1: there's also the inability. You can't just put another bedroom on.
• 18:30
  Speaker 1: What are you gonna do? Knock into somebody else's kitchen,
• 18:33
  Speaker 1: Like rude, don't do that. It's rude, It is illegal,
• 18:36
  Speaker 1: but like mostly rude.
• 18:37
  Speaker 3: Really interesting there V I feel like that's a question
• 18:40
  Speaker 3: that I hear a lot is why because people kind
• 18:42
  Speaker 3: of know at exotally that buying an apartment isn't as
• 18:46
  Speaker 3: financially beneficial as buying a home, but they can't necessarily
• 18:49
  Speaker 3: put their finger on why.
• 18:50
  Speaker 1: It's land. Yeah, the end series always yeah, it comes
• 18:54
  Speaker 1: back to land, And like I mean, at the end
• 18:56
  Speaker 1: of the day, it's also not a bad thing to
• 18:58
  Speaker 1: buy an apartment. And you know, I've done some research
• 19:01
  Speaker 1: and there's a lot to say that Buying land in
• 19:04
  Speaker 1: a not very well developed suburb or a suburb that
• 19:06
  Speaker 1: doesn't have access to good infrastructure or has no real
• 19:10
  Speaker 1: capital growth potential is worse than buying an apartment in
• 19:14
  Speaker 1: a really high yielding area if it's an investment, because
• 19:18
  Speaker 1: you could release it out, like, there's obviously pros and
• 19:20
  Speaker 1: cons to both, and like, you know, if you ask
• 19:23
  Speaker 1: someone who grew up in the fifties, they'll be like,
• 19:25
  Speaker 1: buy land, son, Like, that's a good idea. That's the
• 19:28
  Speaker 1: only way you go. Well, it's not the only way,
• 19:31
  Speaker 1: But what I want is to be educated and understand
• 19:33
  Speaker 1: why one might be valued at more than the other,
• 19:36
  Speaker 1: and then make an educated decision as to which is
• 19:38
  Speaker 1: most accessible for me in which is going to work
• 19:40
  Speaker 1: for my situation. For a lot of us, an apartment
• 19:42
  Speaker 1: might be the perfect fit. It's not to say it's bad.
• 19:45
  Speaker 1: There's just a number of things that I would take
• 19:47
  Speaker 1: into consideration, and if that's a decision that you personally
• 19:49
  Speaker 1: are making. There's an entire episode on the Property Playbook
• 19:53
  Speaker 1: about land versus apartments, So go and listen to that
• 19:56
  Speaker 1: because I've got a few tickets on myself. I think
• 19:58
  Speaker 1: that's a pretty good podcast as well.
• 20:00
  Speaker 3: A lovely little plug there. We are going to go
• 20:02
  Speaker 3: to a quick break now, guys. But on the other
• 20:04
  Speaker 3: side we will be talking about inflation, lender's mortgage insurance,
• 20:08
  Speaker 3: and plenty more. So please don't go anywhere straight back
• 20:16
  Speaker 3: into it, vickid. I'm ready a lot of people at
• 20:19
  Speaker 3: the moment are talking about lm I, lm I, LM ILMAFO.
• 20:25
  Speaker 1: Okay, rocks in this, Okay, moving on lm I. Let's
• 20:30
  Speaker 1: talk what is it lender's mortgage insurance. Please do not
• 20:33
  Speaker 1: be deceived. If you are in the position where you've
• 20:37
  Speaker 1: been speaking to a broker, which you should have done.
• 20:39
  Speaker 1: You should not be organizing alone on your own, because
• 20:41
  Speaker 1: I just feel like having a professional on your team
• 20:44
  Speaker 1: is going to put you in the best possible financial position.
• 20:47
  Speaker 1: But if you're talking to your broker and they're like, look,
• 20:49
  Speaker 1: you're going to consider LMI, it's not an insurance for you.
• 20:52
  Speaker 1: It doesn't protect you. Gee, You've got to pay for
• 20:55
  Speaker 1: it because it protects the lender. Like it's lender's mortgage
• 20:58
  Speaker 1: insurance that they're based asking you to take out because
• 21:01
  Speaker 1: you're not paying a full deposit. And when we say
• 21:04
  Speaker 1: full deposit, it means that you're not paying that full
• 21:07
  Speaker 1: twenty percent that most banks ask for when it comes
• 21:10
  Speaker 1: to mortgages. And do you know, there are actually a
• 21:12
  Speaker 1: fair few people who don't actually have to have a
• 21:15
  Speaker 1: full twenty percent deposit, like dentists and doctors and accountants,
• 21:18
  Speaker 1: like they can actually get home loans without having to
• 21:21
  Speaker 1: pay a full twenty percent because they have like a
• 21:23
  Speaker 1: fancy profession. So if that's you, talk to a mortgage
• 21:26
  Speaker 1: broker sooner rather than later because they can work that
• 21:28
  Speaker 1: out for you. So fancy right. I did not make
• 21:31
  Speaker 1: the cut because financial advisor is not nearly as legitimate
• 21:34
  Speaker 1: as an accountant, just so you know. But essentially, l
• 21:38
  Speaker 1: am I, it's the lender taking out any insurance policy
• 21:41
  Speaker 1: against you for the risk of not recovering the full
• 21:44
  Speaker 1: outstanding loan balance if you gking can't pay all your
• 21:47
  Speaker 1: mortgage back, which makes a lot of sense as to
• 21:49
  Speaker 1: why they would want it. But let's do a little example. So,
• 21:52
  Speaker 1: as I said before, if you're borrowing more than eighty
• 21:54
  Speaker 1: percent of the purchase price, so you don't have it
• 21:56
  Speaker 1: the twenty percent deposit, that's the flip side of the
• 21:58
  Speaker 1: coin you're going to need to usually pay LMI except
• 22:02
  Speaker 1: if you're fancy pants. To calculate an LMI premium, it's
• 22:05
  Speaker 1: so simple, Gking, it's not. Actually, you can just google
• 22:09
  Speaker 1: LMI calculator and then your state and it will come
• 22:12
  Speaker 1: up and you can just do it yourself. But to
• 22:14
  Speaker 1: summarize it, you're going to multiply your lm I rate
• 22:17
  Speaker 1: by your loan amount. So if you want to buy
• 22:19
  Speaker 1: a house, G that's worth let's say five hundred thousand dollars,
• 22:22
  Speaker 1: the bank is typically going to make you pay that
• 22:24
  Speaker 1: twenty percent deposit, so of five hundred thousand dollars, that
• 22:27
  Speaker 1: would be one hundred thousand dollars. But let's say you've
• 22:30
  Speaker 1: only saved fifty grand. You're like, look, I have fifty grand,
• 22:32
  Speaker 1: but I really want to get into the property market,
• 22:35
  Speaker 1: and you've got sufficient income, so they're like, look, looking
• 22:37
  Speaker 1: at your income, you can pay back that mortgage. You
• 22:40
  Speaker 1: might be able to get LMI and actually take out
• 22:43
  Speaker 1: this insurance, pay fifty grand, which is half the deposit
• 22:46
  Speaker 1: that you would have usually required, and then they would
• 22:49
  Speaker 1: lend you the four hundred and fifty thousand dollars that
• 22:51
  Speaker 1: you would need to purchase your home. So G, you've
• 22:54
  Speaker 1: got your fifty thousand dollars deposit right, and you need
• 22:56
  Speaker 1: to pay LMI on a five hundred thousand dollar property
• 23:00
  Speaker 1: you're going to end up in Victoria. I have calculated
• 23:03
  Speaker 1: the costs to be twelve thousand, one hundred and ninety
• 23:06
  Speaker 1: two dollars. You would then need to pay thirteen hundred
• 23:09
  Speaker 1: and seventy three dollars in government fees. There's like a
• 23:12
  Speaker 1: few optional costs that I would recommend budgeting into that.
• 23:15
  Speaker 1: So I'd probably budget about one thousand dollars for a
• 23:18
  Speaker 1: conveyancer and then maybe like four to six hundred dollars
• 23:21
  Speaker 1: for a property inspection. You know how I always talk
• 23:24
  Speaker 1: about building and pest inspections being really important. And then,
• 23:26
  Speaker 1: because you are purchasing under five hundred thousand dollars, so
• 23:29
  Speaker 1: you're taking four hundred and fifty thousand DO loan, you
• 23:31
  Speaker 1: don't have to pay any stamp duty at this point
• 23:34
  Speaker 1: in time, which is very sexy. Whereas if we compare
• 23:36
  Speaker 1: that and you're buying the million dollar property because that
• 23:38
  Speaker 1: seems to be the average here in Melbourne and in Sydney,
• 23:41
  Speaker 1: and you've got one hundred thousand dollars in savings, you'd
• 23:44
  Speaker 1: actually pay fifty five thousand dollars worth of stamp duty
• 23:48
  Speaker 1: and then forty three thousand, seven hundred and ninety eight
• 23:52
  Speaker 1: dollars in LMI, and then you'd have twenty five hundred
• 23:55
  Speaker 1: dollars worth of government fees, and then from my budgeting
• 23:58
  Speaker 1: or high level budgeting, you still have legals and conveyancing
• 24:01
  Speaker 1: at one thousand dollars in property inspection between four hundred
• 24:04
  Speaker 1: and six hundred. Right, So the amount is massive and
• 24:07
  Speaker 1: elm I can obviously creep up. But the thing about
• 24:10
  Speaker 1: el am I is so many people scoff and go,
• 24:12
  Speaker 1: oh my god, Victoria, I'm not going to pay forty
• 24:15
  Speaker 1: three thousand, seven hundred dollars in LMI, that's insane. You go, yes,
• 24:19
  Speaker 1: but like, what does it mean to you to be
• 24:22
  Speaker 1: in the market earlier? And would you pay that amount
• 24:25
  Speaker 1: of money to not have to spend the next you know,
• 24:28
  Speaker 1: ten years potentially saving up another one hundred thousand dollars
• 24:32
  Speaker 1: to have that full twenty percent? Like is this worth
• 24:34
  Speaker 1: it for you? And at the moment if you see,
• 24:37
  Speaker 1: you know, doing some not so complex but quite straightforward
• 24:40
  Speaker 1: calculations we've seen over the last twelve months. We said
• 24:43
  Speaker 1: it earlier, twenty three percent property growth twenty three percent
• 24:46
  Speaker 1: return on a mortgage, which on average at the moment
• 24:50
  Speaker 1: is two point five percent. That's pretty good numbers. So
• 24:53
  Speaker 1: I feel like too many people look at ELMI and go,
• 24:56
  Speaker 1: oh my gosh, I'm never going to pay that, it's
• 24:58
  Speaker 1: a waste of money, whereas some other people look at
• 25:00
  Speaker 1: it and go, no, that's the cost of me getting
• 25:02
  Speaker 1: in the market today, and I can make money laiter
• 25:05
  Speaker 1: down the track and I can make it back, and
• 25:06
  Speaker 1: it might be okay for some people. It's just far
• 25:09
  Speaker 1: more feasible because that l am I you don't have
• 25:12
  Speaker 1: to pay it upfront. It can actually be rolled into
• 25:14
  Speaker 1: your mortgage, which means that paying it off is much
• 25:17
  Speaker 1: easier than often saving for a lot of people, because
• 25:20
  Speaker 1: mortgages often act as like a forced savings plan in
• 25:23
  Speaker 1: a way. I'm not here saying that, oh my gosh,
• 25:25
  Speaker 1: you absolutely should be paying l am I or not, because,
• 25:28
  Speaker 1: to be honest, it's personal preference, Like it makes me
• 25:30
  Speaker 1: feel arguably quite uncomfortable paying for something that you know,
• 25:34
  Speaker 1: Steve and I could save for and if it took
• 25:36
  Speaker 1: us a little bit longer, which it did, g to
• 25:39
  Speaker 1: save for a property, that's what we wanted to do.
• 25:43
  Speaker 1: But as a financial advisor, if I weigh up the
• 25:45
  Speaker 1: pros and cons, there are absolutely circumstances where for clients
• 25:48
  Speaker 1: paying l AM I was absolutely in their best interests.
• 25:51
  Speaker 1: And then there are circumstances where I'm like, no, mate,
• 25:54
  Speaker 1: your cash flow is so good, just save for a
• 25:55
  Speaker 1: few more months and you won't have to pay it.
• 25:57
  Speaker 1: So it's really really personal. But if I was you
• 26:00
  Speaker 1: and I was thinking about using LMI, I would be
• 26:03
  Speaker 1: googling an LMI calculator and how that works in my
• 26:06
  Speaker 1: particular state. Most banks have them, so use whatever one
• 26:09
  Speaker 1: works best for you.
• 26:10
  Speaker 3: What if you're someone v who only has say a
• 26:13
  Speaker 3: five percent deposit available to them, and they're not on
• 26:17
  Speaker 3: a cracking salary, say they're beneath the national average, would
• 26:22
  Speaker 3: you say that lender's mortgage insurance is not a good
• 26:25
  Speaker 3: option for them because it's just providing them with a
• 26:27
  Speaker 3: mortgage that they can't necessarily afford, or would they not
• 26:30
  Speaker 3: be given that anyway?
• 26:31
  Speaker 1: No, you can absolutely do it with a five percent.
• 26:34
  Speaker 1: It depends on what bank you're going to as well.
• 26:37
  Speaker 1: And to be honest, this is where the best port
• 26:39
  Speaker 1: of call is going to be a broker, not a
• 26:41
  Speaker 1: financial advisor. So a mortgage broker is going to go, yeah,
• 26:44
  Speaker 1: all right, ge, if you've got five percent, these are
• 26:46
  Speaker 1: the banks that'll lend you, these are the ones that won't. Like,
• 26:49
  Speaker 1: mortgage broking can actually be relatively complex, especially when it
• 26:53
  Speaker 1: comes to the semantics of one the loan, but then
• 26:56
  Speaker 1: to the loan functionality, like do you want offset or redraw?
• 26:59
  Speaker 1: How do you want at to work? Are you buying
• 27:01
  Speaker 1: the property outright for yourself you're buying it in a trust?
• 27:04
  Speaker 1: Like what does this actually look like for you? And
• 27:06
  Speaker 1: then to add insult to injury, it's obviously far harder
• 27:09
  Speaker 1: for people who are self employed or have just started
• 27:11
  Speaker 1: their own businesses to get loans, and there are far
• 27:14
  Speaker 1: less banks that are willing to lend you in that
• 27:16
  Speaker 1: situation as well, So it can be really frustrating. And
• 27:19
  Speaker 1: that's why I think getting involved with a mortgage broker,
• 27:22
  Speaker 1: even if you're not ready to buy, I think is
• 27:25
  Speaker 1: really smart. Because I've had a couple of clients, and
• 27:28
  Speaker 1: I keep saying clients g because I have a mortgage
• 27:31
  Speaker 1: broking company now and spoiler, we are having two very
• 27:35
  Speaker 1: gorgeous women join the team as of the first of July,
• 27:38
  Speaker 1: who I can't wait to introduce to you. So I
• 27:40
  Speaker 1: have had clients come to me g and go, oh
• 27:43
  Speaker 1: my god, Bee. I wish I'd spoken to a broker earlier.
• 27:45
  Speaker 1: I have been busting my life away trying to save
• 27:49
  Speaker 1: for another two years when I could have just paid
• 27:51
  Speaker 1: l Ami and I worked it out. That would have
• 27:53
  Speaker 1: been better for my situation. So it all depends on
• 27:56
  Speaker 1: what you know circumstances you're in. But I genuinely believe
• 27:59
  Speaker 1: in having a chat with a broker earlier and establishing
• 28:02
  Speaker 1: that relationship up front. Like we've spoken about it before
• 28:05
  Speaker 1: on the podcast, but I think when was the last
• 28:07
  Speaker 1: time we spoke about the Hour of power? George King
• 28:09
  Speaker 1: would have been it's been a while, but that still exists.
• 28:13
  Speaker 1: You're breaking it back. No, it's still been okay, well
• 28:16
  Speaker 1: when anyway, I just stopped talking about it. But the
• 28:19
  Speaker 1: Hour of power essentially is this hour where you get
• 28:22
  Speaker 1: a dedicated hour with a mortgage broker to sit down,
• 28:25
  Speaker 1: do your serviceability, do a savings plan, organize your budget,
• 28:29
  Speaker 1: organize your cash flow to make sure that you're in
• 28:31
  Speaker 1: the best possible position to purchase a house without feeling
• 28:35
  Speaker 1: like you're overwhelmed or just trying to get that fifteen
• 28:38
  Speaker 1: minute free conversation with a broker that'll actually sit you
• 28:41
  Speaker 1: down and be like, right, this is exactly the plan
• 28:44
  Speaker 1: you need to follow to get into your first home.
• 28:46
  Speaker 1: This is what we can do, and this is how
• 28:47
  Speaker 1: we can do it. But the hour of Power is
• 28:49
  Speaker 1: basically like the spoon fed version of getting into your
• 28:52
  Speaker 1: first property with a broker on your team. But you
• 28:54
  Speaker 1: do pay for that session, and I think that is
• 28:56
  Speaker 1: absolutely worth its weight in gold. Like everyone who's done
• 28:58
  Speaker 1: it has always said like, I am shocked that this
• 29:01
  Speaker 1: is so good. But back to your question before, when
• 29:05
  Speaker 1: you're saying can you get in with five percent, Yes,
• 29:07
  Speaker 1: you'll just pay more el am I so on that
• 29:09
  Speaker 1: five hundred thousand dollar property, instead of paying that twelve
• 29:12
  Speaker 1: thousand dollars in l AMI, you'll now pay sixteen. That's
• 29:15
  Speaker 1: anous So it makes sense, right, not too shabby, Not
• 29:19
  Speaker 1: too shabby, according to g Okay.
• 29:20
  Speaker 3: Good rundown of al Ami there V. Let's move on though,
• 29:23
  Speaker 3: and chat about guaranteurs.
• 29:26
  Speaker 1: The privilege is showing from the worst exactly right.
• 29:30
  Speaker 3: It is a bit of a should not be one.
• 29:32
  Speaker 3: What are your thoughts on guaranteurs and also can you
• 29:34
  Speaker 3: explain them for anyone who's not across them.
• 29:37
  Speaker 1: Okay, so first thing, first, we have an entire episode.
• 29:39
  Speaker 1: This is just like a property playbook pitch right telling
• 29:42
  Speaker 1: you how good the property playbook podcast is. But there's
• 29:45
  Speaker 1: an entire episode on guarrant tour loans and how they work.
• 29:48
  Speaker 1: But summary is guarantor loan works as a way to
• 29:51
  Speaker 1: get you into the property market sooner, and you might
• 29:54
  Speaker 1: need a small light and in some cases no deposit
• 29:56
  Speaker 1: at all if you have a guaranteur that has enough
• 29:59
  Speaker 1: equity in their property. A guaranteur usually a family member
• 30:03
  Speaker 1: here in Australia. It usually has to be like a
• 30:05
  Speaker 1: mum or a dad. It can't be a sibling or
• 30:07
  Speaker 1: an aunt or an uncle or even a friend who
• 30:10
  Speaker 1: is really kind that can't work. It has to be
• 30:12
  Speaker 1: a family member and they offer up the equity in
• 30:15
  Speaker 1: their own home as additional security for your loan. So
• 30:19
  Speaker 1: it might be you know, one hundred percent security if
• 30:21
  Speaker 1: you know they are boomers and brought their house for
• 30:24
  Speaker 1: the twenty two thousand dollars in nineteen sixty eight. Now
• 30:27
  Speaker 1: it's worth three million dollars. But a guaranteur is essentially
• 30:30
  Speaker 1: going to guarantee that you'll pay the money back, because
• 30:34
  Speaker 1: as much as they're offering up their equity, they're also
• 30:36
  Speaker 1: putting on the table that if Georgia King doesn't pay
• 30:39
  Speaker 1: off her loan, they'll take the brunt of that and
• 30:42
  Speaker 1: take over the repayments before they have to recover it
• 30:45
  Speaker 1: from somewhere else. So it is a lot of responsibility
• 30:47
  Speaker 1: and you do need to think about it. A guarante
• 30:50
  Speaker 1: loan is a privilege that most people don't actually have,
• 30:52
  Speaker 1: but if you're in the lucky position of having it,
• 30:54
  Speaker 1: please don't feel guilt. Like this community is not about going,
• 30:58
  Speaker 1: oh my gosh, I can't believe they have it's so easy,
• 31:00
  Speaker 1: because you never know somebody's circumstances and just because they
• 31:03
  Speaker 1: had the property thing down pat does not mean their
• 31:06
  Speaker 1: entire life is sorted on the flip side. And this
• 31:08
  Speaker 1: community is all about lifting everybody up. So like, I
• 31:11
  Speaker 1: want to celebrate if you've got a guarant tour loan,
• 31:13
  Speaker 1: even if it's not something that's completely accessible to me.
• 31:16
  Speaker 1: I think it's important to understand it. But I do
• 31:18
  Speaker 1: feel like there has been some very unnecessary commentary recently
• 31:22
  Speaker 1: about people calling other people who have guarant tour loans
• 31:25
  Speaker 1: entitled or it was easy for them, because just because
• 31:28
  Speaker 1: the deposit part we're skipped does not mean that paying
• 31:31
  Speaker 1: off a mortgage for anyone is easy. So to summarize
• 31:35
  Speaker 1: all of that, a guaranteur can be a very good
• 31:37
  Speaker 1: way to get into the market. Again, it means that
• 31:40
  Speaker 1: you do have to have a parent in your life
• 31:42
  Speaker 1: that is financially secure enough to be able to offer
• 31:45
  Speaker 1: that up. It does mean that they can't sell that
• 31:47
  Speaker 1: property while being a guaranteur. But the cool thing that
• 31:50
  Speaker 1: I think a lot of people don't realize about guarant
• 31:53
  Speaker 1: tour loan is they're not the guaranteur on that loan forever.
• 31:57
  Speaker 1: That the guaranteur on that loan until you pay enough
• 31:59
  Speaker 1: off to meet the deposit, and then they can be
• 32:02
  Speaker 1: released as a guaranteur. So I've seen a lot of people,
• 32:05
  Speaker 1: especially my clients who get guaranteur loans, create like a
• 32:08
  Speaker 1: little contract with their parents to say, all right, in
• 32:11
  Speaker 1: two years, once I have paid down X amount, you
• 32:15
  Speaker 1: can be released as a guaranteur. Because the parents are like, look,
• 32:17
  Speaker 1: I just don't want this going on forever because I
• 32:19
  Speaker 1: might need to retire, or I might want to access
• 32:22
  Speaker 1: the equity for my own wealth creation. So I think
• 32:25
  Speaker 1: that that's pretty cool. But then the other important thing
• 32:28
  Speaker 1: to note is that the guaranteur has absolutely no requirement
• 32:31
  Speaker 1: to make any repayments on that loan on your behalf.
• 32:34
  Speaker 1: But if you're not able to make repayments and the
• 32:37
  Speaker 1: bank's been chasing you, Lalenda will then turn to the
• 32:39
  Speaker 1: guaranteur to make repayments, which kind of makes sense because
• 32:42
  Speaker 1: they said Gking was good for it, and then maybe
• 32:45
  Speaker 1: Gking was being a bit naughty, so they're going to
• 32:47
  Speaker 1: go to the person who said she was good for it.
• 32:49
  Speaker 1: But in this way, it is completely possible to get
• 32:51
  Speaker 1: a home loan even when you have a small or
• 32:52
  Speaker 1: maybe even no deposit.
• 32:53
  Speaker 3: There are also lots of first home bias schemes floating
• 32:57
  Speaker 3: around at the moment, aren't there.
• 32:58
  Speaker 1: Be, oh my gosh, so many? And if you are
• 33:00
  Speaker 1: a first home buyer and you have not been looking
• 33:02
  Speaker 1: at these schemes, please do. I know a lot of
• 33:05
  Speaker 1: people don't realize that they might be eligible, but you
• 33:08
  Speaker 1: totally are. But essentially four major national government schemes and
• 33:13
  Speaker 1: at the beginning of the financial year of twenty twenty
• 33:16
  Speaker 1: two slash twenty twenty three, the government is planning on
• 33:19
  Speaker 1: providing a total of fifty thousand places each year under
• 33:22
  Speaker 1: the various schemes. The first one is the First Home Guarantee,
• 33:25
  Speaker 1: which used to be called the First Home Loan Deposit Scheme,
• 33:29
  Speaker 1: and right now they have thirty five thousand places each
• 33:31
  Speaker 1: in every single year available, and it allows first home
• 33:35
  Speaker 1: buyers with deposits as low as five percent to qualify
• 33:38
  Speaker 1: for a home loan without having to pay that pesky LMI.
• 33:41
  Speaker 1: So if you have five percent deposit, you won't have
• 33:44
  Speaker 1: to pay that what was it, sixteen thousand dollars in
• 33:46
  Speaker 1: LMI if you're paying for a five hundred thousand dollar property.
• 33:49
  Speaker 1: So essentially the government will act as the mortgage insurer.
• 33:51
  Speaker 1: For example, if a borrower provides a deposit worth five
• 33:54
  Speaker 1: percent of the property value, the government's actually guaranteeing fifteen
• 33:58
  Speaker 1: percent of that property value, making the risk to the
• 34:01
  Speaker 1: lender exactly the same as if the borrower provided a
• 34:04
  Speaker 1: twenty percent deposit. It's kind of good, very neat. The
• 34:07
  Speaker 1: next is the Family Home Guarantee, which is a little
• 34:10
  Speaker 1: bit more niche. There are only five thousand additional places
• 34:13
  Speaker 1: a year under the Family Home Guarantee from the first
• 34:16
  Speaker 1: of July twenty twenty two to the thirtieth of June
• 34:19
  Speaker 1: twenty twenty five, so it hasn't even started yet. It's
• 34:22
  Speaker 1: coming up in July. This is an initiative that exists
• 34:25
  Speaker 1: to help eligible single parents with dependents purchase a family
• 34:28
  Speaker 1: home sooner, which we love. And under this scheme, single
• 34:31
  Speaker 1: parents can buy home with only two percent deposit without
• 34:34
  Speaker 1: having to pay elamite. How good's that?
• 34:37
  Speaker 3: That's pretty good.
• 34:37
  Speaker 1: There's obviously so many more semantics to these that you
• 34:40
  Speaker 1: need to consider and obviously can't purchase over a certain
• 34:42
  Speaker 1: amount and rah rah. But like, if you're a single parent,
• 34:46
  Speaker 1: saving up twenty percent is a ridiculous thing to think
• 34:49
  Speaker 1: you could do in your own lifetime. Whereas you might
• 34:52
  Speaker 1: actually have the cash flow to afford a mortgage, you
• 34:54
  Speaker 1: actually just don't have heaps of free cash flow to
• 34:56
  Speaker 1: save up enough for a deposit, and that could be
• 34:58
  Speaker 1: usually the big hurdle that you're looking So I don't know,
• 35:01
  Speaker 1: I really like that one. The next one is the
• 35:03
  Speaker 1: Regional Home Guarantee. Double the places, so ten thousand places
• 35:07
  Speaker 1: under the new Regional Home Guarantee from the first of
• 35:10
  Speaker 1: October this year to the thirtieth of June twenty twenty three,
• 35:14
  Speaker 1: So this scheme is going to be open to first
• 35:16
  Speaker 1: home buyers and anyone who has not owned property within
• 35:19
  Speaker 1: the last five years, which is an interesting I guess
• 35:22
  Speaker 1: addition to that guarantee, and the legislation for that is
• 35:26
  Speaker 1: currently still pending, so we're not sure if we'll get
• 35:28
  Speaker 1: that one, but we will know very soon and is
• 35:30
  Speaker 1: very likely to pass, otherwise I wouldn't have bothered to
• 35:33
  Speaker 1: mention it. Gking on the pod brilliant. And then the
• 35:35
  Speaker 1: next is the first Home super Saviors scheme, which, as
• 35:37
  Speaker 1: you guys know, I think is a pretty good money win.
• 35:40
  Speaker 1: The first time Super Savior scheme, if you haven't heard
• 35:42
  Speaker 1: about it before, allows first home buyers to save their
• 35:45
  Speaker 1: home deposit for their first home inside their super account,
• 35:48
  Speaker 1: which means that you get to take advantage of concessional
• 35:51
  Speaker 1: tax rates. Right, So, as we know, tax rates inside
• 35:54
  Speaker 1: superannuation of fifteen percent, but most of us will probably
• 35:58
  Speaker 1: be paying thirty two and a half cents on the
• 36:00
  Speaker 1: dollar for tax, and that means that you get a
• 36:03
  Speaker 1: pretty good rebate. So under this scheme, the government has
• 36:06
  Speaker 1: increased the total amount of savings borrowers can release from
• 36:09
  Speaker 1: Super from thirty thousand dollars which was over two years,
• 36:11
  Speaker 1: to fifty thousand dollars over three years, which I think
• 36:14
  Speaker 1: is far more. I don't know. That just makes a
• 36:16
  Speaker 1: lot more sense to me, G. Because who in their
• 36:19
  Speaker 1: right mind in Melbourne or Sydney only has thirty thousand
• 36:22
  Speaker 1: dollars for a home deposit.
• 36:24
  Speaker 3: You'd be buying a tent in the woods.
• 36:26
  Speaker 1: But my calculations are that if you're in the situation
• 36:30
  Speaker 1: where you're making use of the thirty thousand dollars, not
• 36:33
  Speaker 1: the fifty thousand dollars only because I have the thirty
• 36:35
  Speaker 1: thousand dollar example in my head. If g you were
• 36:37
  Speaker 1: on a seventy thousand dollar income and you were planning
• 36:40
  Speaker 1: on saving you know, over three years for a home
• 36:43
  Speaker 1: deposit and wanted to get to about you know, thirty
• 36:45
  Speaker 1: thousand dollars, if you did that inside superannuation on a
• 36:50
  Speaker 1: total of like thirty thousand dollars, by contributing fifteen thousand
• 36:53
  Speaker 1: dollars each financial year after three years, you would have
• 36:57
  Speaker 1: saved six two hundred and ten dollars more a standard
• 37:00
  Speaker 1: saving account if it was in your SUF it was
• 37:02
  Speaker 1: in your superhot instead of if it was in your
• 37:04
  Speaker 1: savings account. So to me, that makes a lot of
• 37:08
  Speaker 1: financial sense to consider it. If you're planning on buying
• 37:11
  Speaker 1: your first home. There are obviously a few caveats, like
• 37:13
  Speaker 1: you can't pull it out without proof that you are
• 37:16
  Speaker 1: purchasing a property, and there's a higher marginal tax rate
• 37:19
  Speaker 1: if you do pull it out, so you can't just
• 37:21
  Speaker 1: like whip it back out without you know, giving them
• 37:24
  Speaker 1: some money. But if you're planning on purchasing a property,
• 37:27
  Speaker 1: and hypothetically, if it was coming up to the end
• 37:30
  Speaker 1: of a financial year, you could dump money into superannuation
• 37:35
  Speaker 1: if it was aligned to your values in the middle
• 37:37
  Speaker 1: of June, and then the same in the middle of
• 37:39
  Speaker 1: July and make both financial years and then buy a
• 37:42
  Speaker 1: house within a few months. So technically, if it's pre
• 37:45
  Speaker 1: June right now and you're listening to this podcast, you
• 37:49
  Speaker 1: can actually make use of both of those fifteen thousand
• 37:51
  Speaker 1: dollars amounts before the end of this actual calendar the year.
• 37:55
  Speaker 1: Little hack, well hack, if you wanted to do it
• 37:57
  Speaker 1: only from experience, my love.
• 38:00
  Speaker 3: Very good. That's second last question for the day.
• 38:02
  Speaker 1: All right, I'll allow it.
• 38:03
  Speaker 3: Let's talk about the word on everyone's lips inflation.
• 38:07
  Speaker 1: Oh, that is not what I thought you were going
• 38:09
  Speaker 1: to say, but yeah, let's talk inflation, my love.
• 38:11
  Speaker 3: At the time of recording, inflation sits at three point
• 38:14
  Speaker 3: five percent and the RBA doesn't expect it to fall
• 38:18
  Speaker 3: back with it it's two to three percent range until
• 38:20
  Speaker 3: the middle of next year. We've talked inflation of the
• 38:23
  Speaker 3: show many times before. But for anyone who's new to
• 38:26
  Speaker 3: the show or wasn't listening, can you please give us
• 38:29
  Speaker 3: a little recap who wasn't listening, You've nailed in Yeah, exactly,
• 38:33
  Speaker 3: it's been literally three years.
• 38:35
  Speaker 1: Gee, in literally three years. I'll get there one day.
• 38:38
  Speaker 1: But inflation is essentially how much things increase in price,
• 38:42
  Speaker 1: So the cost of the goods and services that you
• 38:44
  Speaker 1: purchase on a daily basis g and how much they
• 38:47
  Speaker 1: increase over time. And obviously the best example of this
• 38:51
  Speaker 1: is the McDonald's twenty cent cone or George, you're younger
• 38:54
  Speaker 1: than me, so you reckon it's the McDonald's fifty cent cone.
• 38:57
  Speaker 1: But what are they now? Like a dollar something else?
• 39:01
  Speaker 1: I remember when they were were they two dollars for
• 39:03
  Speaker 1: a little while there?
• 39:04
  Speaker 3: Hooracity don't like it.
• 39:06
  Speaker 1: But essentially, it's how much goods and services increase over
• 39:09
  Speaker 1: time and you would have heard this like the amount
• 39:12
  Speaker 1: of people saying, oh my gosh, well, in my day,
• 39:14
  Speaker 1: I bought my first house for fourteen thousand dollars. Yeah, okay, Paul,
• 39:18
  Speaker 1: sit down, it's now worth two million dollars. And I
• 39:20
  Speaker 1: am not getting into the semantics of this argument just
• 39:23
  Speaker 1: because you could afford it, but it's important to understand
• 39:27
  Speaker 1: because the most well known measure of inflation that is
• 39:30
  Speaker 1: not a McDonald's twenty cent cone is the consumer Price index,
• 39:33
  Speaker 1: weighted average of the price of thousands of different goods
• 39:36
  Speaker 1: and services that are commonly purchased by households, which are
• 39:40
  Speaker 1: then grouped into literally eighty seven different categories like meals
• 39:44
  Speaker 1: out and takeaway food, and women's clothes and domestic travel.
• 39:47
  Speaker 1: And that's how we get to CPI. So I've probably
• 39:50
  Speaker 1: said that in passing before, but essentially CPI is consumer
• 39:53
  Speaker 1: price index, and then the two largest items in CPI
• 39:57
  Speaker 1: are the cost of purchasing newly built dwelling and rent
• 40:01
  Speaker 1: go figure, which collectively make up about fifteen percent of
• 40:04
  Speaker 1: the index. So essentially that is what inflation is and
• 40:09
  Speaker 1: how it is calculated and why it is calculated, and
• 40:12
  Speaker 1: TLDR it is how much things increase each year in price.
• 40:16
  Speaker 3: And how does that impact the home buyer's market.
• 40:19
  Speaker 1: It means houses are going to increase each year in
• 40:22
  Speaker 1: line with how much things are increasing in price. In general,
• 40:26
  Speaker 1: things are more expensive. Things just get more expensive, and
• 40:29
  Speaker 1: we should have seen this coming because inflation has been
• 40:32
  Speaker 1: happening right under our noses for our entire lifetimes.
• 40:34
  Speaker 3: Can you give us just a quick little like inspo
• 40:37
  Speaker 3: for anyone that's not in the home market yet but
• 40:39
  Speaker 3: wants to be one day, but is still just feeling hopeless.
• 40:43
  Speaker 1: Honestly, I think it's one of those things that is
• 40:45
  Speaker 1: still being worked out. I completely understand how disheartening it
• 40:49
  Speaker 1: is when we talk about property and it feels entirely inaccessible,
• 40:53
  Speaker 1: But I think it's also about embracing how much positivity
• 40:56
  Speaker 1: and how much good is coming out of twenty twenty
• 40:58
  Speaker 1: two as well. Right, so, you might not be able
• 41:00
  Speaker 1: to afford a home, but we now have the ability
• 41:03
  Speaker 1: to travel the entire world, while my grandmother she never
• 41:06
  Speaker 1: got that opportunity, you know, Like, I feel like we
• 41:09
  Speaker 1: are so connected and technology has advanced, and there are
• 41:12
  Speaker 1: so many different things in this world that are gorgeous
• 41:15
  Speaker 1: and lovely, and we should be embracing. I think that
• 41:18
  Speaker 1: too many times we weigh our self worth on whether
• 41:21
  Speaker 1: we can afford a property or not, and that's a
• 41:23
  Speaker 1: really ridiculous measure of how good we are in this world.
• 41:26
  Speaker 1: So from my perspective, property means absolutely nothing. It's actually
• 41:31
  Speaker 1: about your wealth creation journey and what you're doing to
• 41:33
  Speaker 1: save and invest and create a life for future you.
• 41:36
  Speaker 1: And if that involves property, fantastic. If it doesn't, whatever,
• 41:40
  Speaker 1: But it also can feel really terrible. G If you
• 41:44
  Speaker 1: just can't get into the market, EG me all right,
• 41:46
  Speaker 1: but talk to a good broker. I think that's it. Okay,
• 41:49
  Speaker 1: go to our website, introduce the self to Kate or Nicky.
• 41:52
  Speaker 1: Both of them are absolutely brilliant, and we'll put you
• 41:54
  Speaker 1: in the best possible position perfection.
• 41:56
  Speaker 3: All right, let's go through the disclaimer.
• 41:59
  Speaker 1: Who am I, What do I do?
• 42:00
  Speaker 3: G King and go the advice chair on. She's on
• 42:03
  Speaker 3: the Money is general in nature. It does not consider
• 42:05
  Speaker 3: your individual circumstances. She's on the Money exists purely for
• 42:09
  Speaker 3: educational purposes and should not be relied upon to make
• 42:12
  Speaker 3: an investment or financial decision. And we promise Victoria Divide
• 42:17
  Speaker 3: is an authorized representative of in Focused Securities Australia Proprietary
• 42:21
  Speaker 3: Limited ABN four seven zero nine seven seven nine seven
• 42:25
  Speaker 3: zero four nine AFSL two three six five two three.
• 42:28
  Speaker 3: We will see you on Friday, friends,