Latest / Money Grows on Trees / #273 - Is Mass Immigration Collapsing The Australian Property Market

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#273 - Is Mass Immigration Collapsing The Australian Property Market · Money Grows on Trees

0:00
So let's say there's over half a million people coming into Australia every year.
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They're saying that's like having a whole Canberra come into Australia. Now what's also
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interesting about that is they're not all skilled workers. That of that cohort,
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only 12% are skilled workers. The rest are family members. 62,000 extra
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Labor can't even build one! It's not
0:23
a laughing matter, Lloyd, it's not. So the Liberal Party's falling apart a little bit. We've
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got two main members of the coalition not supportive of
0:30
the Liberal Party policy. You ought to be
0:34
voting for those who have some sort of energy policy in place that's not about
0:37
green energy and someone who is supportive of not bringing in a
0:40
flippin' half a million people every year. It's just like ridiculous. If you do nothing else
0:44
at the next federal election, at least vote for someone who's gonna help you in your back
0:47
pocket. Why is this important when it comes to your wealth? I'm
0:51
Lloyd James Ross, seven-figure investor and entrepreneur, and I've helped thousands
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of business owners and professionals turn financial stress into
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1:12
Is mass immigration collapsing the Australian property
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market? How has this got to do with wealth? Well, everything, particularly
1:19
if you live in Australia. Not only is immigration making
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property unaffordable, many think that if it stops,
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it could collapse the Australian property market. Now, in this episode,
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I want to talk to you about what's happening with mass immigration, how
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it's impacting your everyday financial life, why
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it's a problem in all areas, and will
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it stop and what impact will that have? Not just on your lifestyle, but
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certainly on the Australian property market, which includes your home and property investments.
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So is mass immigration collapsing the Australian property market? No,
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it's actually the opposite. Mass immigration is pumping the
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property market. It's pumping it to levels that
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we've not seen since the late 1800s, when we
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had our last immigration led property bubble. And so
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I would say mass immigration is pumping the Australian property
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market, not collapsing it. However, If
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and when, I should say, mass immigration falls away, which
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at some point it probably will, and I'll explain with some data points
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here why I think that will happen, then we don't have all this orchestrated demand.
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Now, if we don't have orchestrated man-made demand, then we
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are going to see a massive shift in the growth of
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Australian property compared to where we've just come from. Because
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what's happening is we're anchored to this 65% growth
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in three or four years, which is gnarly. It's unusual. It's
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well above the mean returns for property, even at a nominal rate, when
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we include inflation, still high. And what that means is the
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future returns are going to be much lower, particularly if it has to come and revert back
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to the mean or the average. It will have to have some sort of slump to
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get back to the average of even 7% a year. Now,
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there's two things happening and you'll say this to me in the comments. I may as well address it
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now. There are two things happening with prices in Australia. One
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is driven by inflation. The other one is driven by real returns. Okay.
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So part of the return equation and the total return of a property asset
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or a company or shares, whatever it might be, is
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two parts. One is the inflation, which is running at about 2.8% a
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year, if you believe the core inflation data. And
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the rest of it is real returns, actual returns driven by growth in
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the asset based on the sustainable demand and supply of
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the asset. And also the income, okay, at a
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discount rate. So with that all said, What
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is happening right now with immigration? How is this impacting your finances? Well,
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as I said, it's pumping the Australian property market up. However, it's
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also causing it's also causing
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some problems in the employment sector and
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it's causing huge amounts of inflation, all right? So even
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if property is going up, if inflation is also running with it and wage growth
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is not, then because of the supply of labor, then
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we're gonna have a huge stagflation problem, which is probably what's happening right
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now in North America too, okay? Now stagflation, the last time it happened
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was in the late 60s, I think from 1966 to in
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the 70s, stagflation was very rampant. And
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what happens with stagflation is that when you drop rates,
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growth doesn't appear, but inflation goes up. And
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so what happens with this stagflation is you get high
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unemployment and high inflation. It's
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a terrible spot to be. And last time it happened, Paul Volcker, who
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is the Fed chair in America back then, he
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had to increase interest rates to 18% to
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beat this stagflation and break it. Now, when that happened, It
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collapsed the share market. It collapsed the property market. Everything collapsed.
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And this is when Warren Buffett was buying up all these incredibly cheap
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companies. He and Charlie Munger were spending a lot of money buying up cheap companies.
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They bought a lot of good businesses back then for cheap. Now, just as a signal,
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Warren Buffett's got about $370 odd billion in T-bills right now. So
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perhaps he might think that stagflation is upon us already. But
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in Australia, what's preventing
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stagflation really setting in is this mass immigration. So they're really trying to
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avoid a recession here by printing more people. This is brutal, right?
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So let's check it out, right? Here's what I want you to know. There's
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record high net overseas migration. So there's, I
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think to the tune of like, I think 528,000 new arrivals.
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So if you think about the size of that, and the numbers change from
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source to source, but this is from the Daily Telegraph, and it's MSM,
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it's mainstream media, so take it with a grain of salt. It's just broad
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figures. It's just estimated figures. So let's say there's over half
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a million people coming into Australia every year. That's like they're saying
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that's like having a whole Canberra come into Australia. Now, what's also
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interesting about that is they're not all skilled workers. In fact, I read a statistic yesterday
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that of that cohort, only 12% are skilled
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workers. The rest are family members. So
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we're bringing in non-productive labor at a
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much higher rate than we're bringing in productive labor. So why is that important? Here's
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why. There were only 148,000 new dwellings built. So
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we're bringing in, I mean, again, the family unit
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can fit in there. So if you look at the data, 500,000 into 140,000. Maybe,
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maybe enough, maybe. But it's certainly not going to
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alleviate the pressure on the housing market by any stretch, okay? So
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it says here, by the day of the Telegraph, 62,000 extra homes
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Labor can't even build one! It's
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not it's not a laughing matter Lloyd. It's not 62,000. So I see
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Again, you're probably right in the comments. I don't see with
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the current immigration levels the property market Cooling
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I don't see it collapsing yet. However, when
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it comes off the ball, I do see it adjusting Okay, so
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let's look at so let's look at that. The next part is this This is
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an interesting stat So we have a shortfall
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in dwellings. We then have, I wanted to touch on
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this, we have the jobs. So there's about, last
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time I checked, I don't have the exact source here. And I'm using sources now, because some, you
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guys in the comments are flipping unrelenting. You're just like, we need
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sources. I'm trying to give you the sources from the data. But I did read
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with the employment, I'm pretty sure it's about 53,000 public
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sector jobs available. and let's
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call it at 12% of finances, there's probably, there's
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not quite enough jobs to fill with the immigration that's coming in. Certainly if
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you add in a spouse, we're looking at 250,000 entrants
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a year and 50,000 market jobs. So we're like
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five times too many people to each job. So
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what we're doing too when we're immigrating all these people is not only exacerbating rentals
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and property values, to unreasonable levels,
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but we're also creating unemployment instantly. And
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what we're doing then is they have to go on welfare, if there's any social security they
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qualify for, and then all of a sudden where the taxpayer, all of
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us who are already here, are servicing this burden
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or this anchor of non-productive labor. And it's making Australia
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a very unproductive place, which is why our GDP per capita
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has gone down over the last seven quarters. We've been in a quiet recession for
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seven quarters, almost two full years. So that's what's causing this,
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right? So, here we go.
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Yes. Oh, my mistake. So 37,500 job
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vacancies, not even 53,000, it's actually less. Just quickly, if
8:48
you're ready to take control of your finances, but feel stuck on where to start,
8:51
I have a solution. My book, Money Buys Happiness, simplifies
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investing and wealth building with practical steps to help you achieve financial
8:59
peace. Get your copy via the link in the show notes and let's get your
9:02
money working for you. Now back to the episode. Why is this important
9:06
when it comes to your wealth? And why do I think this is happening? Well,
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it seems to be the reason why this is happening is because Labor
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is effectively importing voters. It
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seems to be because they're moving into specific electoral areas that
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are labor voting areas. And I'm not
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the first person to mention this. If you hang out enough on X, you'll find it. Now,
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they will obviously deny that, but it's a
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bit of a chapter taken out of the Democratic Party's playbook, the
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last federal election in the United States. And if that's the case,
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then we may see a long run of labor. In which case,
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you're probably going to see mass immigration consistently come into Australia
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for a few years. In which case, we will not
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see a collapse in the property market. We just won't. Not
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in the short term. However, I did notice recently that
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the polls for One Nation have grown by, I think, 12% now of certainly
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the popular vote. in
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the polls, and now moving towards One Nation. Here's why.
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And even recently, one of
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the members of the coalition, what's his
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name, Andrew? He recently just went against Net Zero, which is a
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major policy of the Liberal Party and coalition, and
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he's now backtracking. And same with the other lady, Jacinta.
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So we've got two main members of the coalition not
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supportive of the Liberal Party policy.
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So the Liberal Party is falling apart a little bit with Susan Lay's leadership. And
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so what we may see is a new coalition, perhaps
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with One Nation or a shift in the Liberal leadership and a spill.
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And if they proceed to move forward with effective policy
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for Australian people, it would be this. One, Net
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zero scrap so we can improve our energy costs here, which brings inflation down, which
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helps your back pocket. Two, stopping mass immigration,
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dropping the immigration numbers to a sustainable level of 130,000 a year instead of
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550, whatever it might be. And Paul Enhance is spearheading
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that too. And if they do that, and they succeed
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over a number of years, we will see a flattening of the property sector. And
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I just don't think we'll see these nosebleed prices again. and
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it could be a long, long time, which
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is why I ain't touching the property market, not one bit. Once
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this artificial demand drives up... Look, if
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the Australian people are... Aussies... We
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don't march. We're just not marchers. But the other day, when
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was it, 13th of September, everyone's marching with the Australian flag
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against mass immigration. And the mainstream media is like, oh,
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it's to do with anti-racism. But no, it's
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because you're bringing in too many flippant people. And
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so for Australians to get out of their house and march, which I
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flip them. It's amazing. So it's really
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annoying. This mass immigration issue is now hurting the Australian people
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in a big way, so they're marching against it. So do you think that
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long-term Labor can keep up with this mass immigration strategy? Do
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you think? Or do you think the people will revolt? I think at some point
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in the future, it has to stop. Like,
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either it stops because there's a leadership spill and the people voted in,
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or Labor gets in because of this flipping voters they're importing, and
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the people just revolt, and we start to see real unrest, civil
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unrest. And that could take many years, of course, too. But I guess my
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point I'm trying to make is the artificial demand can't go on forever. You
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cannot bring in half a million people, let's
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say even of which, you know, 60 or 70,000 are skilled,
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and you can't bring them into a certain supply
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of jobs, you just can't. There has to be way more jobs than what
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we're bringing in people, and right now there's not. The
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welfare, you can't keep relying
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on that forever because at some point, we'll just become so unproductive. Our
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GDP growth will just be negative quarter, quarter, quarter, quarter, quarter, quarter. We'll
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have all these overpriced houses. No one's going to have as many jobs. Wage
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growth is going to be stagnant. It's not
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going to be a pleasant place to live. I just don't think the Australian people are
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going to put up with that forever. So one way or another, either the
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leadership sorts it out or the market and the people's power
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will sort it out. But at some point, this mass
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immigration, by the way, pound for pound, population size,
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we're bringing in the most in
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the world. I
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think it will stop and that will have a massive, massive effect on
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the property sector. Supply is constrained, but
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as supply comes online later too, we'll see a flattening out.
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So I wouldn't be surprised if we saw over the next
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year or two, property prices continue to rise. Wouldn't
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be surprised by that at all. And then I
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wouldn't be surprised if there's a shift in immigration policy, we see
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it flatlining for over a decade, if not falling. Like
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you're seeing at the minute what's happening in the United States. The reason why they're also engaged in
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a massive property slump is because they are literally people
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leaving the country because there's a lot of illegal immigrants in
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the country and they're getting removed by ICE. So you're actually removing and
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dropping the population or they're not immigrating as
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many, net immigration's lower. And so they're seeing a
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drop, same as in Canada. They're seeing a drop in the property sector.
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And what's interesting in Canada is they're seeing a drop in the property sector while they're
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still immigrating. So by and large, we
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may not even need to see a drop in
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immigration, a drastic drop in immigration. to
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see the property market flatline, truly. Even
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if Labor starts to go, actually, we can't keep doing this, they
15:03
may be the ones to stop it. But what I'm trying to impart here
15:06
in this wonderful episode is It
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will come to a stop, the music will stop. We don't know what it's going
15:15
to stop it, but once it does stop, I just would not like to be
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the person holding a $4 million property, a $4 million
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two better, or whatever it might be, three
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better. with $3.5 million of debt, I
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just wouldn't want to be holding that one. I don't think it's going to go anywhere.
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If you're in a position with your property where you're negatively geared, and you're making
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negative cash flow from it every month, and if you had to host in, this
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happened before, I saw this happening in the mining, when the mining boom
15:44
was on in 2010. There was obviously high yields in mining towns
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like Moranbah and Emerald and these
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different places in North Queensland here in Australia. And
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I saw the yields, like they were very high.
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And it was obvious that the demand was driven by mining employees moving
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to the area. Now, when these people bought those properties because
16:05
of the growth, et cetera, the mining
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sector fell away. And they had to hold those properties in
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negative equity. And negative equity means that
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the house is worth less than what you own it. And then they had to hold the property with
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negative cash flow for sometimes 12 to
16:23
15 years, some of them. Some of them are only just coming back now. And
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that was in 2010. What's it? Yes, almost 15 years. And
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so that's fine if you're going to be a long, long, long term holder of
16:34
property, which you should be. But can you sustain negative cash
16:38
flow losses for 15 years? That's going to grind away at you.
16:41
So I guess it's like buy beware. We're at the height of
16:44
this immigration led property bubble. Immigration
16:48
itself is causing the bubble. And at some point,
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it's going to stop, which means the artificial demand will stop, which
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means the growth won't be the same, which means
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Buy beware, right? Now, of course, out
17:04
there, there are people in the property industry and by all accounts, I
17:08
understand why they're sprucing it, I get it. They have to, like, why
17:11
would you be in a property business and not believe in property? I totally get it. But
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even they would see too now that it's like, it's
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getting a bit crazy, right? So this will have an impact in the
17:23
short term on inflation here. It'll have a short-term impact on
17:27
house price growth. But long-term, I see hopefully
17:31
an alleviation of the inflation problem and an alleviation of the house
17:35
price crisis we're having. And all it's going to take is a
17:38
spill in leadership and some shifts to policy in energy
17:42
and a shift in policy of immigration. They're the two big things that
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if they change federally, it'll help your back pocket. So
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if you're struggling, you ought to be voting for those who have
17:53
some sort of energy policy in place that's not about green energy. and
17:56
someone who is supportive of not bringing in a flippin' half a million people every
17:59
year. It's just like ridiculous. So if you do
18:02
nothing else at the next federal election, at least vote for someone who's gonna help you
18:06
in your back pocket, all right? So I hope that makes sense. I just wanna share some stats here
18:09
about what is happening with immigration, how it's impacting property prices, good,
18:13
bad, or indifferent, and of course, explain to you how that could possibly
18:16
change. And when it does change, what it's gonna do to asset values and
18:20
hopefully inflation, all right? Hope that has been of value to you. Hit
18:24
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And if you want to add any data to this or throw your hat in the ring below in
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