Latest / Money Grows on Trees / #297 - Australian Property Isn’t The Investment You Think It Is

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#297 - Australian Property Isn’t The Investment You Think It Is · Money Grows on Trees

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  We don't buy these houses to live in.
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  We buy them in bulk, shrinking the number of homes on the open
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  market, skewing mortgage rates, and exacerbating the
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  housing crisis. Then, thanks to low supply, We
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  Yeah, what's happening now, sadly, is real estate has become specifically
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  an investing vehicle, which is not a good idea for communities. And what's
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  happening is, if that continues, we'll break the social contract with young people, and
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  all of a sudden they won't participate, nor would I. I'm Lloyd James Ross,
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  seven-figure investor and entrepreneur, and I've helped thousands of business owners
• 0:36
  and professionals turn financial stress into success. If
• 0:39
  you're stuck in old money habits, overwhelmed by investing, or unsure where
• 0:43
  to start, this is for you. I'll give you the mindset and
• 0:46
  strategies to take control, grow your wealth, and achieve financial
• 0:50
  freedom. It's time to make your money work for you. All right,
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  now it's time to have some fun. We're going to do some reactions here. So I'm going
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  to pull up a reel and you're going to get my honest initial reaction from it.
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  I'm going to try and teach us some stuff as we move through it. So buckle up for these fun ones.
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  Let's see what we can find here in these reactions. So
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  now real estate is like 10 times annual
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  income, but back in the 80s, it was one times, two times annual income. That's
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  because interest rates were at 17% back then. So even though it was higher, they
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  had it a lot easier because the price was a lot different. Now people can't even
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  rent. It's way worse now than ever. It's way harder as
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  a young person now to get ahead because of housing is a crisis
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  We don't buy these houses to live in.
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  We buy them in bulk, shrinking the number of homes on the open
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  market, skewing mortgage rates, and exacerbating the
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  housing crisis. Then, thanks to low supply, we
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  charge whatever we want for rent. It's all part
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  Yeah, what's happening now, sadly, is real estate has become
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  specifically an investing vehicle, which is not a good idea for communities. And
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  what's happening is, if that continues, we'll break the social contract with young people.
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  And all of a sudden, they won't participate. Nor would I. So at
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  some point, real estate has got to be detached from a moneymaking thing.
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  And we do that by allowing more supply and
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  dropping demand. That's the policy that needs to go in place to
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  keep the social contract with young people. And if we don't do it, we're really robbing
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  Have you seen the news today or last night about offset accounts? Nasik's
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  doing a big investigation into all of the banks
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  in Australia for ripping customers off and not linking offset
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  accounts. What have I been saying for years? ANZ got
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  caught doing it for over 20 years and overcharging fees for
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  $200 million. All these brokers grabbed my content. Oh, this fucking guy.
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  Offset, offset, offset. No, you've been fucking flogging products that don't work to
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  Well, I think it goes even further than what Graham's talking about, because banks,
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  they are a monopoly. You don't have any other real
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  options outside the four majors in Australia. And if
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  you come up against a bank, you can't win. They're almost impossible to
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  sue. There's been situations
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  where people can't get their money out of a bank. They're not ideal. I'm
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  not a big fan of banks. They don't
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  lend against other collateral outside real estate. They can do
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  all sorts of things with your money without you, you know, they can hold your
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  money. The KYC rules are destroying people's
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  ability to do business, and I think the bank's got a lot to explain, and
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  there needs to be a better ombudsman challenging how
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  banks deal with customers because they are terrible at customer service.
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  There's a specific year? Yep. What
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  happened? Hang on, I'll show you. That is when
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  John Howard and Peter Costello halved the capital gains tax and
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  the house price to income ratio went from four to
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  eight. It doubled. Right, so can
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  that be fixed? Well, maybe. Well, you'd have
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  to invest in fast rail, I think. You'd have to change the tax settings
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  Good luck getting that through. Yeah, look, to fix the housing problem, agree
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  you've got to improve supply, which means you've got to change regulation. You've definitely
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  got to change the tax system so it doesn't benefit home
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  buyers flipping their own homes to make money, which
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  is what's happened with what he said with the CGT discounts that Howard brought
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  in in 2000. You also have to reduce demand, which means stop immigrating
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  a million people a year to the country. That has to happen. And of course, You
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  know, I think if you did all those things in one go, you'd start to see
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  a shift. The problem is, the people that make the rules in
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  Parliament own houses. So they're not incentivised to
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  do anything but pump it up, and that's the real challenge. But
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  the market has a really good way of figuring itself out despite
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  what these people do. And that will happen. The worse it gets, the
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  bigger the fall will be. We're seeing it in New Zealand, Canada, America, China,
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  all countries that have experienced a big bubble have all collapsed in
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  the real estate sector. All
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  Western countries that have had a real estate bubble have all at some point collapsed
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  from it. We are no different. We will collapse. It's just a matter of when. Just
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  quickly, if you're ready to take control of your finances but feel stuck on
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  where to start, I have a solution. My book, Money Buys Happiness,
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  simplifies investing and wealth building with practical steps to help
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  you achieve financial peace. Get your copy via the
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  link in the show notes and let's get your money working for you. Now back
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  Australia has figured out how to
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  I never thought I would live to see the day where I could say that Australia has
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  figured out how to defeat the housing crisis. Tax
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  unused bedrooms. That is right. Now, it's
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  actually not as stupid as it sounds, kind of,
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  because there is a way in the United States that people plan
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  on getting housing prices to come down, and that's tax unused land, right?
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  Like, for example, if you have a house and the
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  Like, just the thing... tax unused rooms,
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  tax unused land. It's very complicated. It's
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  administrative. You know the fastest way to fix the housing problem? Stop
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  immigrating a million people to the country. That's it. That's all
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  they've got to do is turn the taps off. We'll go through a recession. So
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  what? We'll come back from it. There's so many different things they could
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  do to shift this, but they're just not doing anything. That's the problem.
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  And they come up with these Crazy ideas, just cut CGT off
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  homes, CGT free of homes, cut immigration,
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  relinquish... regulation around supply and
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  shift the energy costs in the country by starting to burn coal and our
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  own gas and so forth. And you'll start to see a shift in real estate values. We'll
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  If you are a first homebuyer, this is big news for you. It
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  is time to sell your car, sell your designer Gucci
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  handbags, get rid of the jet ski, cancel that
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  European holiday that you've got booked for next year because the new first
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  homebuyer schemes come into effect from October 1. just
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  three months earlier than they were meant to come into effect, which was going to
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  be January 1, 2026. Here's how it
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  works. There are no income caps, which
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  replaces the old income caps, which were $125,000 per annum
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  for a single and
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  So if you earn more than 125,000 as an individual, you will-
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  The challenge with this is Jack has to spruik this and propagate this because
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  this is his business. What's also interesting about Jack is that he's
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  made all his money from business and not necessarily from real estate. He's got a leveraged position
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  in real estate for sure. I don't doubt it. He's done super well,
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  but he's a business guy. Whilst this seems good for buyers to
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  get into the market with 5% deposit, the challenge with it is that they're
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  going to be laden with debt. And a lot of them are going to be one paycheck,
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  one job loss away from foreclosure. And
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  the challenge they're going to face now from this stuff is
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  the fact that interest rates are now going up because
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  inflation's ticked up. As I mentioned this on my channel, and
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  this is what's going to happen next. And so those that just got in with a
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  5% deposit and got all that debt, what if interest rates double from here?
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  You're cooked. I'm not a big fan of this. We're already
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  way too overpriced and this is the last bit of
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  How old are you and how much do you have in savings? I am 30 and I
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  have 5,000 in savings. How are you finding the cost of living at
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  the moment? I was renting but I received like two noise complaints so
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  I started looking up like rentals and I was like goddamn fuck that
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  so I was like you know what I'm not gonna stress myself out and I'm trying to
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  move out now I'll go back to my dad save some more. You
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  know, some people have the better, some people have the worst. Like, I make some pretty
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  good money, but I know, like, most people on, like, the average income,
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  like, most people would be struggling. I have accepted, like, never buying
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  I don't have, like, very high ambitions in finding pleasure and
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  fulfillment out of making a lot of money and, you know, starting a family and
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  stuff. I play music and I do, like, martial arts and
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  I find pleasure in other things, like going to the beach and... Just
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  living frugally, you know, because it is so expensive. I don't drink or
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  And this dude doesn't drink, doesn't go out, lives at home. And
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  young, it looks like he's in a suit, does okay for his income. I'm surprised he's
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  only got 5,000 cash in the bank. You know what, I agree with him.
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  Having a house is not the be all and end all. You're not necessarily going to get joy from that. A
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  lot of people go for it for security. However, if you're getting a lot of debt to get it,
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  it doesn't create a lot of security. It actually works against you. I would say
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  that he doesn't have to give up buying a property, it's just that there are other things to
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  invest in that outside property. If he educated himself, he could build wealth
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  without compromising his freedom and optionality, which
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  If you are a property owner or a property investor in Australia, there
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  has been a huge announcement that will affect everyone
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  and you need to hear about this. It has to do with APRA and
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  a change they've now made to the banks in how they calculate
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  Now, this takes me back to- You're wearing a hat that says
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  raise rent. Oh, dear. APRA
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  to limit high debt to income home to minimize risky lending.
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  Obviously, that's a good idea. That's not a good idea if you're wanting
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  people to buy more houses, of course. But APRA must be the only one that's
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  actually going against the grain here and doing what's right, which is to limit poor
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  borrowing, to buy assets that are seemingly way overpriced in
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  a huge bubble. And I think that's a really smart idea. And it's one of the government areas
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  or offices that's doing the right thing for people. So I
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  would say this increased scrutiny is going to help a
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  lot of people to not make the mistake of gearing into
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  a very overpriced real estate market. All right, that was the reactions. Hope
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  you've enjoyed them. If you've loved them, share with a friend, leave us a comment, and
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  I'll see you in the next episode. Thanks for listening to Money Grows on Trees. If
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