Results Mentoring

[NEWSLETTER] Have you had enough of work, like 65% of employees?

If you’re feeling fatigued or demotivated starting back at work this year, you’re not alone.

The pandemic has caused many people to rethink their careers or even consider leaving their jobs, leading to what the media is referring to as “the Great Resignation”.

But for many, just changing jobs won’t solve the problem.

There are media reports of people starting the year already feeling fatigued – thanks to excessive workloads in 2021 (with a lack of any corresponding pay rise), the blurring of work/home boundaries, plus the physical and emotional effects of COVID-19 – particularly with the latest Omicron wave.[1]

Some people simply feel burned-out coming into 2022. For others, the economic uncertainties and job insecurities created by the pandemic have brought the need to have an alternative to working in a job for a living into sharp relief.

Simply put – if you’re reliant solely on your job for income, then you’re vulnerable to economic shocks and greater uncertainty/anxiety when events like the current pandemic or the GFC of 2007 occur.

A recent survey by research group Gartner[2] revealed that the pandemic has caused 65 per cent of workers to rethink the place that work should have in their lives.

More than 50 per cent of employees reported they were now questioning the purpose of their day-to-day job, and over 60 percent were longing for a bigger change in their life.

If you love your job, then more power to you – I think it’s great to get paid for doing something you enjoy.

But if you’re one of the 60+ per cent looking for a change, the question is:

What’s the alternative to working in a job of the rest of your life?

Many of our students have been able to replace some or all of their job income through their property deals, escaping the ‘rat race’ for good.

Over the past 18+ months Results Mentoring members and their mentors have created millions of dollars in income from smart property deals.

Imagine how motivating that can be. Not to mention what it means for your ability to cope with the impact of the pandemic and sleep easier at night – with less worries about the security of your job.

A common theme in discussions with my students over the past 18 months has been how grateful they are that they had begun working on their own financial independence plan prior to the pandemic, and how it has protected them from the current economic uncertainties.

What actions will you take this year to create your own financial independence plan?

If you want to reduce or even eliminate your reliance on your job, and give yourself the choice whether to work or not, what steps will you take this year to make progress toward that goal?

Want a head start – for free?

You can get a great head start by attending our upcoming online ‘Financial Independence Workshop’ for Property Investors.

Participants will learn proven techniques for finding elusive positive cashflow properties, and see case studies demonstrating “active investing” real estate deals that deliver 5- and 6-figure cash profit outcomes in months rather than years – including real-world examples from the last 12 months!

To help you prepare for what’s going to happen in the property market over the year ahead – we will also be covering:

– How rising interest rates, inflation, tighter finance rules and economic disruption from the Omicron COVID-19 wave will impact the property market

– The very latest research and forecasts for the property market (our forecasts have repeatedly proven more accurate than the big banks and most economists, so don’t miss our latest predictions!)

– Why and where property values are likely to rise strongly (plus risky locations to avoid like the plague if you plan to protect your wealth!)

– Creating your own financial independence plan – essential for protecting yourself from economic shocks, and if you plan to retire early.

This three-hour interactive workshop will teach you about property investing strategies that can help you to make significant profits, potentially exceeding the income from your regular job and helping you gain financial independence.

All registered participants will also receive access to a replay recording of the event.

If you’re interested in leveraging today’s property market to “escape the rat race”, then click here to reserve your spot at the workshop.

Whatever your plans for this year, take care of yourself and focus on taking positive steps toward your goals.

Wishing you the best success!

“The Big Banks were WRONG in 2020…

Will they be right about the property market in 2021?”

 

For much of this year investors were bombarded by “doom and gloom” headlines about the future of the property market.

Here at Results Mentoring, we were one of the few market commentators confident throughout 2020 that a property market crash wasn’t on the cards, in spite of the pandemic and recession.

In fact we went on record in April with our analysis that property prices would most likely fall only gradually and by single digits across the middle of 2020, before rebounding in late 2020 / early 2021.

But the big banks and most economists had a different view, and their own predictions ranged from dire to apocaliptic!

Back in May, Westpac and the ANZ were both predicting a 10% decline in national property values. The NAB predicted falls of up to 15%.

Not to be outdone, the Commonwealth Bank also made headlines in May with a claim that house prices could collapse by up to 32%!

 

My how things have changed!

Lately the big banks have reversed their forecasts for the property market.

ANZ is now predicting 9% growth in 2021, the NAB and Commonwealth Bank are forecasting 5% growth, and Westpac sees a 15% “surge” in property values over 2021-2023. 

Many economists have also now backtracked on their earlier dire outlooks…

For instance, AMP’s Chief Economist Shane Oliver, who as recently as August had forecast price falls of between 5-20% around the country, commented this month that “the property market has held up a lot better” than he anticipated 6 months ago, and might even see average capital city dwelling prices beat their September 2017 record highs by April next year.

And head of SQM Research Louis Christopher is now predicting capital city prices to rise by 5-9% in 2021 – a far cry from the 30%-fall-in-12-months scenario painted by SQM Research back in April.

It’s astonishing to see just how consistently wrong all the big banks and economists were in the first place… and disturbing because many investors and home buyers actually bought-into their highly inaccurate forecasts!

Will they be right this time around?

 

Meanwhile, the property market in 2020 has tracked almost perfectly in line with our own predictions…

Back in April, as the pandemic began to take hold in Australia and we could the potential economic impact, we went on record forecasting that property values would likely decline gradually by single digits over the year before bouncing back in late 2020 / early 2021.

Here are some of the statements we made “on the record” at the time:

“The recent run-up in prices was driven by owner-occupier demand, NOT investor speculation. This provides inherent support for property values and mitigates against volatility in the property market.”

“As demand falls, supply is falling too (as sellers keep their properties off the market) which will help support prices or mitigate price falls.”

“We anticipate a noticeable drop in transaction volumes and a (temporary) slow down in the market. City median values may show some pull-back, but this will obscure individual suburb performance, with many suburbs maintaining value.”

“High numbers of forced sales are very unlikely due to the banking sector allowing up to 6-month deferred loan repayments for impacted home owners.”

“Stimulus and support measures are creating the foundation for a significant and sharp rebound late 2020 / early 2021.”

 At the risk of sounding like I’m saying “I told you so” 😉 …we’ve been proven right on every count!

 

How did we get it right when so many banks and economists got it wrong?

We based our forecasts on the same proven analysis and predictive techniques that we had used to accurately pick the bottom of the property market in May 2019, and the subsequent boom in property values in much of the country during the latter half of last year.

These same techniques have been shown to be 90% accurate in forecasting market direction – right down at the individual suburb level.

Our analysis is built on an understanding of how the property market in Australia actually works…

It’s a basic understanding of property market dynamics that, surprisingly, most economists still fail to grasp.

Most property investors don’t understand it.

The media most certainly doesn’t.

Yet it’s so simple, and really comes back to some of the most basic of economic principles — which is why it’s so surprising that most banks and economists just don’t get it.

 

Economics 101

You see, it’s not pandemics, or recessions, or unemployment rates, or wages growth, or government grants, or even interest rates that drive property price behaviour.

If that were true, then property values in every suburb across Australia would always behave the same way at the same time.

But they do not.

What drives price behaviour in real estate is exactly the same as what drives prices for any other “product”…

As any student of high school economics ought to know, prices of goods and services move up and down in response to the balance of supply and demand.

And it’s no different for property.

(Every economist should know this, but for some reason when it comes to the Australian property market they think the basic rules somehow do not apply!)

When attempting to predict the property market, most economists focus just on the DEMAND side of the equation – what’s influencing buyer activity – while failing to understand what’s happening on the SUPPLY side.

The pandemic naturally dampened demand from buyers for property in many areas, as people worried about their job security or couldn’t even inspect properties due to lockdown restrictions.

But at the same time, sellers restricted the supply of properties in the market. They took listed properties off the market, and put off listing their homes while they waited for greater certainty about the outlook.

Because of measures taken by the Government and the banks to ease financial pressures during the pandemic – like income support and loan repayment holidays – those sellers who did not have to sell simply didn’t list their properties.

So, while demand fell temporarily, supply also fell – keeping the overall market more-or-less in balance… and helping to support property values.

It’s simple economics!

 

No Single Property Market

And it’s not enough to look a the overall level of supply and demand across the country, or even across a State or city.

We CANNOT treat the Australian housing market as if it is just one single market where all areas perform the same.

(Yet this is another mistake that most economists and, in particular, property market doomsayers constantly make.)

Rather, the Australian housing market is a collection of around 15,000 individual suburbs – each representing its own unique market with its own unique balance of supply and demand.

This means that even in a pandemic, there will be suburbs where prices are going up, down or sideways – while others perform differently.

As sophisticated property investors we need to understand what’s going on in the specific suburbs where we hold real estate or plan to invest – a rather than fretting about generalised forecasts from economists (which won’t help you make any kind of informed investing decision).

The reason why our forecasts have been so accurate is that we examine the dynamics of the property market right down at the individual suburb level.

This is the ONLY way to see what’s really going on, and to make accurate forecasts about what’s most likely to happen to property prices.

 

Where next for Australian real estate?

Banks, economists and the mainstream media are only just waking up to the fact that the outlook for property values in 2021 is very positive.

All capital cities and major regions are showing growth in property prices according to the latest statistics. Of course, some areas will see prices rise faster than others, and it’s essential to know how to tell which locations will outperform.

Consumer and business sentiment is improving, with progress on COVID-19 vaccines to have further positive impact. Record low interest rates and recent tax cuts are also helping to underpin property values.

Major changes in the pipeline are likely to further support demand for property, with easier borrowing rules, stamp duty reforms / incentives, “equity share” schemes and more coming in 2021.

But with home buyers and investors returning to the market faster than sellers, buyers are likely to face a shortage of supply next year.

And as property prices are a function of both demand AND supply, more buyers than sellers means property prices are likely to keep rising into 2021.

It’s amazing how much has changed in the property market in just a few months.

Cast your mind back to this time last year. Do you recall what was in the news headlines about the property market?

Let’s take a brief trip down memory lane…

 

Late 2018 – predictions of a 40% CRASH!

 In September last year, with property prices around the country falling, Channel Nine’s ’60 Minutes’ ran a feature with the sensational and alarming headline:

 

“Aussie housing prices could fall by as much as 40% in next 12 months”

When the article aired, I received numerous phone calls and emails from investors and home owners who were terrified about what this meant for home values – and whether they should sell up fast!

At the time, we wrote our own article explaining why such a property market crash was extremely unlikely, encouraging investors not to panic.

 

Clearly we were proven right, as a 40% price crash DIDN’T happen!

(In fact, according to market analysts CoreLogic, the peak-to-trough fall in Australian house prices was only a little over 8% before prices began recovering mid-2019.)

  While suggestions of a 40% price fall were a bit extreme, many analysts believed the trend of falling prices was entrenched, and could go on for quite some time…

 

 “Australia’s property downturn will be the longest and largest since the 1980s, say Morgan Stanley”
– SMH, 11 Oct 2018

As Christmas approached, investors fretted about what the Financial Services Royal Commission would mean for lending restrictions (not much, as it turned out) and worried that a Labour victory at the upcoming election could spell the end of negative gearing and CGT tax benefits.

 

The gloomy mood was reflected in the media, with an ABC News headline forecasting more price falls to come:

“House prices in sharpest decline since global financial crisis and ‘will continue to trend lower'”
– ABC News, 3 Dec 2018

 

Early 2019 – prices dropping with “no end in sight”!

The New Year got off to a rough start, with global credit ratings agency Fitch Ratings releasing a report in January predicting that Australia’s housing market would under-perform every other developed country in 2019:

 

“Australia to see worst 2019 house price fall: report”

– ABC News, 16 Jan 2019

 

In February, forecasts of a property market “BLOODBATH” dominated the headlines, with some in the media predicting 40-50% price falls ahead…

 

“‘Let the bloodbath begin’: House prices in Sydney and Melbourne ‘could halve’ in the worst crash since the 1890s”

– news.com.au, 20 Feb 2019

 

Based on our own analysis and forecasts however, we didn’t see any kind of property market Armageddon on the horizon.

Instead we predicted that price falls would moderate, and that property values would soon level out before beginning to climb again.

Still, the media couldn’t see it (yet), with headlines forecasting worse to come:

 

“House prices keep dropping – and there’s no end in sight”

– the Guardian, 21 Mar 2019

 

In April, investment analysts Moody’s predicted that prices would fall further, by another 10%, but offered a glimmer of hope that growth might return in 2020:

 

“House prices set to fall another 10pc before 2020 rebound, Moody’s Analytics says”

– ABC News, 9 April 2019

 

May 2019: The turning point…

In May – to the surprise of many – the Coalition won the Federal Election, and just a week later APRA abolished a significant lending restriction (the 7% interest test on loan applications).

Our own analysis was already showing the market levelling out, and we went on record to call the bottom of the market in May. 

On May 25th, I declared to a room of around 200 property investors that we had reached a turning point, and that the market in much of the country would shortly begin rising again.

Most analysts and market commentators at the time believed the market still had further to fall, or that it was too early to tell, or that the market might only start to bottom-out a year later in 2020.

 

Since May…

The media started to get a sense that something was different around June/July, but they weren’t convinced:

 

“Housing market at its slowest in 12 years – but is that about to change?”

– ABC News, 10 Jun 2019

 

But eventually, market commentators started waking up to the fact that the market had shifted – and the headlines turned from negative to positive…

 

“National property prices increase for first time since 2017”

– 9 News, 1 Aug 2019

 

By September there was no denying the new momentum in the market – at least on the East coast:

 

“House price surge in Sydney and Melbourne drags index higher”

– ABC News, 2 Sep 2019

 

Most recently…

 

Lately, the headlines have changed from “doom” to BOOM!

 

“New property boom looks imminent with a range of indicators pointing to price growth”
– news.com.au, 30 Oct 2019

 

Indeed, house prices in Sydney and Melbourne have rebounded off their lows at a record pace…

 

“Melbourne, Sydney record biggest property price gains in a decade”
– news.com.au, 1 Nov 2019

 

…and the forecasts have shifted from prices falling “with no end in sight”, to predictions of double-digit property price growth in 2020!

 

“Sydney, Melbourne prices to surge up to 15pc”
– Financial Review, 14 Nov 2019

 

From “BLOODBATH” to “BOOM” in a handful of months!

The obvious lesson, looking back at the headlines of the last year, is: do not take your property investing advice from newspapers!

But why did the media get it so wrong?

And how were we able to confidently pick the bottom of the market, when so many “experts” couldn’t see it?

The reason is that every most analysts and commentators treat housing in this country as if it is one single market where prices everywhere move the same way…

 

It is not!

 

The Australian property market is made up of over 15,000 individual suburbs and towns, each representing a discrete market with its own unique dynamics.

 

Every suburb performs differently, and at any point in time there will be suburbs that are rising, suburbs that are flat, and suburbs where property prices are in decline.

The trick – and the key to understanding and predicting the property market accurately – is to be able to tell which specific suburbs are most likely to rise next, and which ones will fall.

Sydney, for instance, is a collection of more than 650 discrete suburbs, all behaving differently.

Right now, Sydney’s overall median house price is rising – but this disguises the truth that while some suburbs are rising, and rising strongly, many are not. Some are actually in rapid decline.

And the forecasts for price movement at the individual suburb level are quite mixed too.

It is only by understanding how the market behaves at the individual suburb level, that you can really assess how the local market is likely to perform over the coming months.

Once you learn how to to “read” the property market at the individual suburb level, you can ignore media hype about booms or busts, and make more informed, more confident investing decisions. (Not to mention sleeping easier rather than worrying about your property investments.)

Keep an eye out for coming live training workshops and webinars where the Results Mentoring team and I will be teaching effective techniques for analysing the property market – right down to the individual suburb level – along with many other great practical strategies and tactics for maximising your property investing success!

 

Until next time,

Invest wisely! 

 

– Simon Buckingham