S2E1: Immigration, Interest Rates, and Backwards Government Policy

Welcome to the Finance Show with Joe and co-host, Michael. In today’s episode, Joe and Michael tackle the big questions surrounding government policy and Australia’s housing crisis. 

Are immigration rates unsustainable during the current crisis? Are interest rates helping at all? Why are property prices still rising? The guys get into it all while also making suggestions as to what might be up and coming suburbs. 

This podcast is intended to provide general information (and hopefully entertainment) only and the contents of which do not purport to provide personal financial advice. You should consider seeking independent financial advice. 

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Transcript

All right. Welcome to the finance show with Joe. He's Joe. I'm just some schmo. And today we're going to talk about the Australian housing crisis. You like that intro, right? Yeah. Yeah, you did pretty well with that. Learn a new office, learn a new format. And we just want to be able to bring more financial information to you all and company information about a lot of people come to me and they're struggling with savings.

They're struggling to find a property. I think if I've got a voice, I've got to use it. I can't stay quiet and I can save someone. Ten bucks. Yeah, I feel like I've done a good job. If I could save someone $1,000 a month. Yeah, I've done a fantastic job. And we've done that a lot for people who lost six months.

We just want to propel that even even further. Is that why you've been so passionate about the government all of a sudden on your, on your Instagram and stuff like that. Is that this. There's so many reasons why I'm so passionate and I'm so angry about the way that the labor government has handled things. I want to preface this by saying I'm a Lebanese guy from Bankstown.

I went to a school where I think we were ranked in the bottom half of all schools across Australia. I should not be making more sense than a lot of these politicians and I understand it like, you know maybe I didn't apply myself at school. you know I went we all know I went back to university, I completed a degree in economics and maths as my second major, but I should not be able to pinpoint the issues of the government in a 92nd real.

I should not be able to clearly identify where the bottleneck is. And why so many Australians are struggling in 30 to 40s. So what are those issues. Like what. You know, what are you what are you talking about specifically. We've got we've got three main issues right. Number one is we, we have come out of hyperinflation that occurred during Covid.

Yeah. So the reserve Bank was printing money. Okay. And if you remember we had job Capa we had JobSeeker at the same time. We had a lot of work from home. We had a lot of government subsidies. And the government needs this to be paid back. Okay. So this needs this is debt that needs to be paid back.

Yeah. And the way that the having Australians pay it back is through interest rate repayments. Yeah. Now the reason so many people are struggling is we had the governor of the reserve Bank of Australia, Philip Lowe. Yeah. Come out and say that we're not going to increase interest rates until late 2024. Yeah. I do remember that Australians took this as Bible okay.

We're not going to increase interest rates. I'm going to go buy a property. I'm going to go buy an investment.

And I want to grow a property portfolio at the exact same time the government came in with initiatives like the first home guarantee where there were allowing, you know, first home buyers to purchase with a 5% deposit.

So you've got these kids that are fresh out of university who have saved 25, $30,000 and good on them. Good on them. Saving money is hard. Okay. The sacrifices that need to be made, they've saved this money and they've gone ahead and they've purchased an apartment or they've purchased a house and land package out west or they've you know, invested across Australia.

You know, they've done something with it. They're trying to get ahead. And then within a year or two you have these rapid fire sales because they can no longer afford the repayments. And it's not our fault because the way that we are supposed to assess mortgages, if someone gets a mortgage we add a 2% buffer onto the repayment.

Yeah. That will give the leeway. Yeah. That basically says, okay, this person is you know, they're purchasing a property with a 2% interest rate. Worse comes to worse, the interest rates are going to go up to 4%. That's that's the buffer that we work with as mortgage brokers. And they put up the interest rates. Why 6%? Sorry. Not 6% by 4%.

Yeah. So that's the first point of struggle. I on that though. I was just like curious personally because I know interest rates in Australia are, relatively high to what we're used to, but they're still much lower than like most of the other like Western countries, like I know the UK is. It's much higher. I think in the US it's like around 7 or 8%, something like that.

Does it make it different? Like why it doesn't make such a why is it hurting Australian so much more? If you brought up America, I'm going to use them as the best example. In the States you can lock in your mortgage interest rate for 30 years. Oh okay. So it's a 30 year fixed rate. Yeah. Yeah. In Australia we can't do that.

The maximum period of time is a five year fixed rate. So yes the interest rates might be 7 or 8%. But you have a lot of people who have refinanced previously to a 2% rate. And that's it. They're paying it 2% from now on. Okay. For 30 years 2%. Sure. I'm definitely going to go for that. Okay.

Australia's very different.

Australia. We only get five years maximum of fixed rates. And at the time our fixed rates at five years were a lot higher because the banks knew that the reserve Bank of Australia would eventually increase the interest rates. The issue is nobody knew that we we're going to go up 4%. So it's more like the how quick everything happened more than like the actual number of the percentage.

Correct. And the second issue with it all is the amount of building approvals that are occurring in Australia. So things wouldn't be as expensive right now if we had more approvals for more apartments and for more dwellings in December of 2020 we had 20,000 dwellings approved roughly. Okay. Don't quote me on that, but I'm very close to that.

Yeah. December 2023 three years later, we had 9000 dwellings approved. Yeah. Outmigration scores are so high. And it's causing so many issues for Australians. Rental issues. Feeling it myself okay. I've seen rents go up in numerous suburbs. Double. Yeah. Okay. It doesn't make sense. And the reason is rather than the federal government stepping in and telling local councils.

Hey guys. Yeah. You got to approve more dwellings. Okay. We got to get out of this Nimby culture. This not in my backyard culture that's occurring. And we've got to allow people to start buying closer to the areas that they want to work in. We don't have subcultures across Australia. We don't have, you know, similar. I'm going to use America again as a perfect example.

America has a population of 400 million people. I think it's like 300 and something, something, either way, you're right about either way. Right? And that they have the same land masses. Australia. Yeah, right. Manhattan is the size of Sydney to Parramatta, and they have 8 million people in it. It's a vertical city. Yeah. Anyone that's been to New York knows it's a concrete jungle.

It's a vertical city. You have different subcultures my in Australia, because we don't allow high rises to go up where strangling anyone that wants to build. What's occurring is we've got these sprawling cities, but nobody wants to live in the sprawling areas because there's no subculture there. If Parramatta had a great nightlife, it had a nightclub culture, it had theater, it had restaurants that were open 24 hours a day.

What people would be moving there because that's more of an Australian culture thing, because we we don't seem to well, I don't know, maybe it's just Sydney, I can't speak for the rest of Australia, but like we nightlife is certainly like not a priority. Obviously cost of living is coming into that. Like less people are spending stuff and just going out.

There's period. If it's for food, for drinks, doesn't matter. I know especially for drinks can be expensive. Yeah. It is like the you have it anymore. Yeah. The beach taxes going up so much like I like buying a case of beer now it's like 55 bucks on average now up from the 49 it was. This is how I messed up a little things ago.

But I think it's just like, yeah, everyone's just staying home. At least for me. When it was growing up, we had the lockout laws. Yeah. When I, when I was in that peak, going out period of my life. And so that was always rough. And it was just often easier to just get a mate with a house and, just have a house party or something.

Yeah. Parents or. No, it's didn't really matter at the time. And I just feel like that's probably why these like Parramatta hubs and stuff don't have the their own cultures or at least recreational cultures because I do think these places have very different cultures. I think the

eastern suburbs is very different to Penrith. Okay. But we can create those cultures seeing that's where I'm seeing the issue.

We don't spend enough to create these cultures. Yeah. And that is why Australia is lacking. If I'm telling you now, if we had a better nightlife culture out west, okay, not in the East, you would have people migrating out west. Why? Because you would have people that are like, okay, my job is out west. If I'm a bartender and I make $150 on the weekend working in the city, or I can make $300 working in Parramatta, I'm going to go work at Parramatta.

Yeah, well guess what, I'm working Parramatta. I'm going to live in Parramatta and then my treat to myself is okay, I'm going to go to Bondi for the weekend. That's going to be my treat. That's what I'm going to think to myself. But instead we've got a concentrated culture all in Bondi, all in the eastern suburbs, all in the city.

And we've got no culture out west. Yeah, and the culture to do things in the culture to do things

like, why don't we have the theater, why don't we have a theater in Parramatta? Why haven't you there? You have one in Parramatta. See? That's good. No no no no no no that's good, that's good that you brought that up.

Why don't I know about it? I'm 33 years old. Yeah, well, that's fair enough, I think. I don't know how big the theater is in Australia. I like, I've gone to see, I've got to see the ballet a few times at the Sydney Opera House. But again, this is that center. We couldn't. You literally could not be more central.

so, yeah, I don't know. I don't really know. Maybe we don't have like, that history, that heritage. With that, I don't really know. Well, it's funny you say that because I was in Melbourne last year and my wife bought me tickets to and Juliet, which is a show that's coming to Sydney. Yeah. And it was this. It was a Saturday.

Yeah. And it was packed. Yeah. And Melbourne does not have a beach culture. Melbourne has the alleyways. It's got the cute cafes. It's got all those things. It's got the 24 hour nightclub scene. Why can't we try and upright the same laws that Melbourne CBD has and bring that into a second CBD in Parramatta? I guess the argument would be that it's the NIMBYs.

Exactly. Yeah. So we've got the NIMBYs that are saying, no, I don't want that in my backyard. Okay, fantastic. You don't want that in your backyard. So you don't want young people to be able to get ahead or even just like it happen in Kings Cross. Yeah. Like Kings Cross was world famous for its nightlife. Not anymore. Nah, no way.

Not. No, no. I remember I grew up in Kings Cross. I met a lot of stupid Arabs, back in my day. Like we all. We all did. But Kings Cross was the place to be. And they they they killed it. I think that's really cool. But they did it. They did it for a reason. They did it because you had certain groups that owned land there that had certain groups that were lobbying to say, hey, let's shut down these these, nightclubs.

And if you go to corpus, I bought an apartment next to a nightclub and got angry that there were people making noise that night. What did you think was going to happen? Why did you think it was cheap? I like that's exactly. Yeah. And then what you're seeing now is there's actually so many new high rise apartments in Kings Cross.

Yeah, yeah. And it's like, okay, that's fantastic. So is Newtown. Next is Marrickville next certainly seems that way. Yeah. So they they're honing in and we don't have enough people firing. We don't have enough people turning around and saying go fuck yourself. That's honestly a lot of Australia. And I say that with its simple shirt and its simple logo behind me, you know, like there's just so many problems that I see right now with the Australian federal government, that they're not addressing the core issues.

Where is our culture? Why aren't we approving more dwellings? Why do we have a net migration of 500,000 people? But we're only approving 100,000 dwellings. So I heard about this, actually, and I've seen I've seen blame put on a few few different things, but I've, I've seen blame been put on early, policies and builders. So basically what was happening pre-COVID was, builders were not finishing projects, because of there was a high vacancy rate at the time.

I think it was. I'll have to find it anyway. Basically the vacancy rate was was was quite high, so they weren't finishing things because they didn't need to. Then the pandemic happened. Obviously a lot of things got put on pause. And then once we came out of the pandemic and out of the lockdowns, they started finishing those previous ones.

And then the new, policies, the new the new buildings. I've only now started to happen. Okay. So I'm going to stop you there. That's all. Bullshit. Yeah. I'm I'm asking you. Yeah, I don't know. So. So it's like 50% of what you said is correct, but there's a 50% massive gap. Okay? It's so much more difficult to get buildings approved now.

Yes. That people just aren't building. Interest rates are higher, land costs are higher. And because of those two things, we can't approve buildings fast enough because it doesn't stack up. Feasibility was yeah. So I submit construction loans to the bank. That's my job. I submit construction loans and when I'm running the feasibility with my clients. if it doesn't make a 20% plus profit the banks won't fund.

Yeah. Right. And right now because of interest rates they're so high. It doesn't stack up anymore in the exact site at the exact same time you've got building commissioners that are coming in and halting projects because of a large amount of bureaucracy. That is stopping people from being able to get developments approved. I know a couple, yeah, they purchased a site and they want to put a duplex on it.

Can the day that would take you six months for a day. Okay. And then a couple months later you'd have the construction certificate and you'd probably start building within nine months. But now because of so much bureaucracy that has entered the market, it is taking a year and a half to get a duplex approved, not a large high rise building.

I'm talking a duplex. Okay, mum and dad want to build a duplex because the kids are going to live next door. Yeah, and property prices are too expensive, so they need to do something with the land that they're on. Yeah, okay. They have made it so difficult just for that to occur. Okay. Imagine a process that used to take six months now like 18 months.

Imagine wages have gone up all across Australia. Imagine all the extra certificates that you need. How much more a thing's costing to get off the ground. Yeah, and I like the fact that you mentioned that, that projects haven't started those types of things because a developer went bust the other day. Yeah, a few developers have gone bust in the last like 6 to 9 months.

Huge, huge amounts. Okay. This guy, he's from Wollongong. Okay. Paul Murphy Paul and Gavin Murphy, $120 million. Okay. In assets now it's a voluntary administration. what's going to happen to all the first time buyers that trusted them? Because that had a brand name that had existed 50 years. Okay. But because of all this bureaucracy, because of all the interest rates, they had to go into voluntary administration.

That is not fair. They blame the construction costs. They've grown in Sydney by 29% and 32% in Melbourne, which is a massive amount. That's a huge amount of money. Huge. That's yeah, that's the former profit and the rest. Yeah. And and we're not rewarding people for taking risks anymore. Okay. We are actually punishing them for taking risk okay.

You're like if you're a small business owner and you want to create a hub for people to excel in, it is so much harder in Sydney than what it used to be. Yeah. Now we have a workplace culture. Previously on job sites. It would be normal work. Normal for your foreman to work six days. No. Yeah. Now you might turn around and say no, they shouldn't work six days, but they're paid for that.

Yeah. Okay. So the previous salaries would account for that. Are you working on a Saturday? He's your 25% extra. So he's your 50% extra whatever the Saturday. Yeah. But we need you to work Saturdays so that we could finish the project on time, because otherwise it doesn't stack up feasibility wise. If I don't have you on a Saturday, that's 50 days of production, I lose it.

Yeah. Yeah, right. 50 days of production in a year. what's that? One seventh. So my project is now 13%, 14% less productive than what it was previously. So we've got this culture of zero accountability okay. And it's being enforced by the labor government because labor government around it's like oh no people don't need to work. Yes they do.

how do we grow as an economy. And you could see that because our inflation is only 0.2%, which means no, sorry, not our inflation, our growth, our GDP, our CPI only grew by 0.2%, which means that we're not a productive country anymore. Right? We're not a productive country. We've got inflation because of we've got inflated housing prices because of an immigration policy.

That doesn't make sense to me still. Okay. And we've got so much bureaucracy around building. Plus interest rates are too high. Yeah I so I it's interesting with the, with the immigration thing that you brought up I, I was found I found that the labor government is kind of caught between a rock and a hard place because there's, there's a, there's a shortage of skilled labor that's then that's and that's the, the justification for the immigration policy.

And then apparently, apparently, as everything with politics, apparently the labor government had a housing plan, but they needed because they're minority government. They needed support from the Greens, which they argued didn't go far enough because they wanted to pay back negative gearing and capital gains tax discounts. And then the Liberal Party wasn't happy with them spending money, and they wanted them to instead introduce a policy where people could access up to 40% of their super.

So to put them purchase up only first time buyers, of course. so they, they can't get it. I think their initial plan was, oh, we'll have this housing policy, we'll bring that, we'll bring immigrants in and at the same, same time they'll build it. But now they can't because neither party will let them do it. I don't know if this is true.

This is just what I have seen. Okay? This is a load of bullshit. Yeah. And I'm going to turn around and say that about Anthony Albanese was full of shit. Yeah, I'm happy to say that. I'm very. I want you to cut that up. Putting a real genuinely. The guy is full of shit. He's full. He's full of crap.

Okay. And I will go on record saying that. do you know what? He approved? A $4 billion housing plan at the Northern Territory to build 2700 houses over ten years. Okay, do you know how much that is per house cost per house? That's that's $1.5 million. Okay. Cost per dwelling. If I approached a bank and said to them I'm going to build 2700 houses and each one is going to cost me $1.5 million to build, I think I would lose my license as a mortgage broker for even approaching them and telling them that they would love, they would kick me out.

It would be so horrifically bad. But this got approved. and we don't have enough visibility over who's getting the contract for the housing. We don't have enough visibility over who is going to be in charge. What are the cost of the materials? Who's the housing actually going to, they're saying it's to people in need. Okay. That's fantastic.

I like helping people. Okay. But give us some transparency on it because $1.5 million to cost to build a house okay. Government build houses. I've seen a lot of housing commission in the past. Yeah. So and those properties don't cost $1.5 million. They do not. Okay. So make it make sense to me. Yeah. So you might turn around and say, oh, labor's stuck in a rock and a hard place.

No, they're not stuck in a rock and a hard place. Okay. Albo has turned around and he's probably given the contract over to one of his union mates, and he said he may his $4 billion go build 2700 homes. Again, your profit margins can be 200% on that one. But we're going to make sure that anybody that wants to get ahead in Sydney, we're going to make we're going to strangle them, okay.

We're going to make it so hard for anyone in Sydney to go ahead and make money. And guess what? It's going to be 4 or 5, six different operations that own all everything in Sydney and everything else is going to be out the window. Look at what was in Coles to have a massive duopoly. that is a massive issue right now.

And we're seeing it and it's finally, finally being addressed. It's being addressed. And it doesn't mean anything is going to be going to happen. But this is the problem. This is the problem that we're seeing. And this is my issues with the government. They're not actually doing anything because of where they get their funding from. Okay. Rather in the back pocket of because politicians they're all in the back pocket.

So everyone. Yeah lobbyists and yeah. And the like I can see why the pokies owners in Sydney so much. You see what I mean. At least these are my issues right now. You you're doing this at the cost of Australians. We don't have Australia's. We don't have young Australians building wealth anymore. We don't we don't because it's too hot.

How is a young Australian supposed to build wealth? And this statistic came out the other day. And I think this is going to segue into our next topic. There's a statistic that came out only 1% of all salaries are being saved. Oh yeah. Yeah, I know I did see that with imagine you work your ass off for a full year.

You're on your $80,000 a year salary, and the maximum or the average that you're saving right now is $800 a year. what a kick in the teeth. And why is that? Because interest repayments to high cost of living is too high. Socializing is too expensive. It's everything costs way too much. Like anything that is fun cost too much.

Yep. What are. What are we supposed to do? I just sit and sit at home and stare at the wall? Or, I, I'm perplexed and there needs to be a change. And that's why I've been so vocal about the government. And something desperately needs to change. I have a I'm curious whether whether it would matter which, which party was was running the show right now.

in this post-pandemic era, if it would be any different. I'm just curious. I have no idea. The, I'm curious about it as well. and the reason I'm curious is because we're seeing a more socialist style of government across the world right now. So pre-pandemic, we had Trump, who's big business, right wing, you know, conservative, usual stuff.

We had, Scott Morrison, very similar values to Donald Trump. You know, who is the other guy? The one that was in the UK while Boris Johnson, Boris Johnson, we had him at the same time. So we had three guys, you know, who are very, very similar in values. Okay, let's focus on big business. Let's focus on profiteering.

Let's focus on, you know, making more money. And then there was a radical shift. We went from them to Biden to Albo to who's the PM of the UK right now? Rishi Sunak or something like that. He's still a Tory, though he is, but not, he's not Bojo. Let's just put it that out there like that.

No, no, no, but he's I look, I haven't really been following the UK politics as much. I know that they are you know no Brexit is not going well for them like not at all. But like we've gone from that to the other side and it was radical shifts straight away. We had minimum wage increase yet again I'm completely okay with people making more money.

But if you raise the wages at the exact same time inflation is occurring. Yeah. Do you know what's going to happen? Things are just going to cost more because demand is going to be higher. Now let's say my business is Mount Franklin Water. This is a perfect example. We have one person working on the assembly line to screw the caps on.

His weight has now gone up by $3,000. Okay, let's say we have ten of those. That's $30,000 that I'm now losing because of somebody like that. Because this came in, my interest rates have gone up at the same time. So my profits have cut back all of a sudden just because. Just because of this policy. Yeah. And the issue that's occurring is okay.

Wages went up. Fantastic. I want people to make more money. I'm I made my business because I want people I founded my business because I want people to make more money. But we have to do it in the right way, not in a, Hey everyone, here's some money kind of way in more in a, you know, okay.

You, you want to make more money, you need to advance in life. You shouldn't be raising the minimum wage at the exact same time you're raising interest rates. Because all that's going to happen is inflation is going to keep going up. Everything's going to cost more. Supply and demand is going to go up. And guess what? Prices are just going to go up.

Yeah I went to Hanover once. I went to McDonald's the other day and it was four in the morning, and I'm on the way to the gym and I needed a bottle of water. McDonald's menu is right there, and I drive, drive through it. I go, hey, can I get a bottle of water on the guys? Yep.

Is that it? Yep. Four rolls of $0.55 for a bottle of water. That doesn't make sense to me. But then I'm thinking to myself, okay, the person that's working at McDonald's is now making an extra 2 or $3 an hour. They're going to cover the cost of that. The cost of imports are higher. And guess what? The person that owns the land at McDonald's is probably paying interest.

But this is a this is a global phenomenon. It's not just happening in Australia. It's happening across the world. like post pandemic, all these prices are going up. But yet I just highlighted how to fix it. Okay. How we could have minimized the inflation in Australia.

Maybe inflation is going up around the world okay. This is how you minimize it.

You allow more buildings to be constructed. you don't raise the minimum wage yet. Okay. I'm not saying never raise the minimum wage. It has to go up with the CPI. But let's calm that down okay. We've been voted in. We want to stay voted it. Let's tell people hey if I raise interest rates now you're going to be more broke in a year because that's what's happened down there.

Not interest rates. Minimum wage that raises the minimum wage. But people have less savings in their account. Why? Because of the supply and demand. So we could have minimized it. We could have said, okay, it's taking a year and a half for developments to be approved. Let's instead invest in local councils and give them more people to work.

Okay. Local council is open from 9:30 a.m. to 4 p.m.. That's 7.5 hours of productivity that they can get per day. Let's try and maximize that productivity. No, it's not even 6.5 hours. That's 6.5 hours of productivity a day. Okay, we're not getting the approvals at the speed we used to. let's instead give them more human resource so we can approve more.

Okay. Fantastic. We can approve. Well done.

Done. That's six months of work. No, sorry. That's 18 months of work. Now the efficiency is up because we've got two extra people that that 18 months. That's 12 months. That's less. That's six months less of holding costs. That's six months of commencement. That's six months of, people being able to stimulate the economy.

anyways, I've got, I've got too many issues with the government right now, and if housing was in power, I would be possibly working with one hand tied behind my back, as all politicians are. Yeah, but I genuinely believe that what is occurring right now is not the right way we should be going about things. I, I curious is is it it is the responsibility of the federal government that's, that's causing these things, or is it out of state and local level?

Because I know the Nimby stuff that's more of a local level. They don't they don't want to approve, you know, high rises wherever, even though they should absolutely, absolutely be building them around public, transport train stations and stuff. It is at the local level. but this is where fiscal policy can come into play. Yeah. We, using monetary policy to drive down inflation.

they the government has done nothing in regards to fiscal policy. Right. Okay. So the reserve Bank of Australia is separate too. Yeah, yeah. The federal government, the federal government could enact a policy that says, okay, we're going to give local councils an extra $160,000 each. That's going to hire two more people to approve, constructions. Okay. Right.

That that is going to be a new federal government policy, okay. Every local government, every local council is going to be funded by the federal government to get approvals through faster. What happens if approvals get through faster? All of a sudden we don't have a housing crisis. We don't have people. We don't have lines down the road 100m for renting properties.

You don't have people that are making $80,000 a year after their tax that on 56,000 after their hexed, they've got $52,000 left. And then they have to go look at a property and it's $1,000 a week to be able to rent it. Right. It doesn't make sense to me. No, no, no. so I think the federal government needs to step in and they need to grow some balls because I know it's it's interesting that you say that because it's, that's a that's sort of like a big government policy, which is something that, conservatives tend to try to avoid because, it should be up to the states or local governments, you know, less

you know, less fingers in the pie and stuff like that. Cool. That's great. Okay. Go up to local council, say, how many people have, foreclosed on their house recently? Yeah. Okay. See how many people, struggling to find rental properties? like, we need people with balls in this country that will just turn around and say, phew.

Okay. We're done. We're done with this Nimby bullshit. Yeah, okay. We're done with it. We need more activity in our economy. I shouldn't have some lady screaming across the road at me, because what? Building a house. Why should people be allowed to protest the construction of a dwelling if it's not affecting their a lot of lead, especially because these people are very much in the minority as well.

I mean, it's just it's just family and it's just something that it needs to change. Well, I have no answers because I was asking you, Brian and I went on a massive government rant and, anyways, yeah. So just just to clarify something on on your stances on the immigration policy currently it's got nothing to do with like immigrants themselves.

No, no no no. So this is this is something I need to clarify. My my issue with the immigration policy isn't the policy of immigration. I'm an immigrant. my parents moved in 86. My brother and my sister were born in Lebanon. Like, yes, I was born here, but I am the child of immigrants. I'm first generation Australia.

My issue is with the building policy. If you're going to let in 500,000 more people, you can't only approve 100,000 more dwellings. Yeah, not everyone that's coming here is from a 5% family. Yeah, yeah, they're single people. And single people don't want to live with four random people. Yeah. And we see it with the rental crisis right now.

I was watching a video on TikTok. The other day. This girl was going from rental property to rental property to try and find somewhere to rent, and every single open home had 30 people in it. 40 people. This is going to drive costs up as just going to increase inflation again. And it's just going to be a like a circle.

It's a circle and it's an intergenerational thing now because now it's like if your parents did all right, you'll probably be all right depending on your relationship with your family. But and yeah, increasing that gap between the haves and have nots. Definitely. but let's talk about the RBA policy. They announced something the other day. I don't know anything about it because I don't read anything about the RBA, but you certainly do.

So the reserve Bank of Australia came out and they kept interest rates at 4.35%. Now there are a number of reasons why they kept the interest rates at this level. But the core reason is they want to make sure inflation is stabilized before they start decreasing the limits. Yeah. The reason why they didn't increase them is because they're starting to realize, oh shit, people don't have money.

And we can't keep increasing these interest rates because the more they increase the interest rates. Think about it like this. You're renting, the person that owns your property. if the interest rates go up, their repayments go up. So what are they going to do? They're going to increase how much your rent is per week in order to cover.

Yeah. Their cost of living. Yeah. It's that's just how it works. All right. It's how it's been working and it's very made very apparent. And it's just if they go ahead and they increase interest rates even further, you're going to have more people that are renting not be able to afford these homes. And we're going to have a homelessness crisis.

And we already do have a homelessness. Yeah. It's hey, it's starting to happen. And it's particularly affecting young people as we've got Tent City in Brisbane where like 20 tents are lined up next to each other and people are living it up, and these are people that are engineers and repeat these, these are hardworking people. And they go, oh, I can't afford to rent where I want to rent.

So I'm going to go pitch a tent, and then I'll use a communal shower so that I can, you know, get ready for work in the day. Like it's just it's just crazy right now. The second reason why the reserve Bank of Australia didn't increase the interest rates or they kept them as is, is if they increase the interest rates, the property prices would go down.

Oh, we can't have that. None of that. Because you got a lot of wealthy people in this country. Yeah we do even even the head of the reserve Bank of Australia, Michelle Bullock, she has a net worth of $36 million. She puts interest rates up. There's a good chance her property value could go down because less people would be able to afford it.

And there won't be as much demand for it. I'll go to help her. She has a net worth of 30 million. That's for later, you know. So there's just there's a number of reasons why. Hopefully we do see an interest rate cut come up, because I want to see people get ahead in life. Yeah. And right now I'm seeing more people move towards poverty as opposed to moving towards wealth.

1 in 4 homeless people are aged 12 to 24, 1 in 4, 25%. That is an absurd amount. Yeah of people. And whether and you know, that's a mixture of, you know, broken families, mental health and all that sort of stuff. But it's these other have nots who never can have this. It's certainly starting to seem so. So this is not my issue.

Previously, when we had different governments in Australia is really good. Now, I'll say this Australia is fantastic at taking care of its people. We've got Medicare, we've got public schooling, we've got social housing. You know, we've got a number of things to help prevent people from becoming homeless. Yeah. In previous years the issues with homelessness were mainly around mental health.

Yeah. It was, you know, you would walk past people that were homeless and quite often they'd be somebody that was mentally ill. Yeah. That's not what's happening right now.

We're moving more towards what America has where oh, I've had a string of bad luck. I lost my job. you know, my, I missed interest repayments for three months, and, my kid got sick.

Actually, a kid got sick. This is null and void here. I want to choose one more. My dog got sick because dogs don't have Medicare. those three things, can increase your credit. That could definitely increase your credit card bill. It could increase your mortgage repayments, and then all of a sudden, you're out on the street.

Yeah.

And if you don't have the bank of mum and dad to support you, that's it. Sorry. And a lot of people don't. A lot of people don't. Yeah. So that's a big, big thing. but yeah, it's just it's sad to see the interest rates did need to come up, but I feel like there too are currently the too high.

We saw in December. Retail spending was down significantly from the December before, but I haven't bought anything in ages. You see, I buy an Xbox game maybe once a month to play so I don't have to go outside and pay for big because I find it's cheap, but it's just insane. It's just like there's just so many trickle down effects from what has occurred.

Yeah. And I just I just want to say things don't be normal. Like just halfway to normal. That what we had a few years ago just so people can start getting ahead again. Yeah. Yeah. I mean, it's, it's certainly will drop eventually. It's just a matter of like, time, isn't it? Or will it or is it, does it have the potential to stay at this point for a longer period of time, if it keeps staying at this period and this is the thing with interest rates, you don't feel the effects for three months.

00:36:40:10 - 00:37:02:09
Unknown
So even if they drop the interest rates tomorrow, the bank who has the interest rate or the loan or anything, they will wait as long as possible to drop their interest rates because they make money on it. Yeah. Course. So the reserve Bank of Australia will prevent it. They're holding off on decreasing the interest rates because they don't want too much activity in the economy.

00:37:02:11 - 00:37:24:02
Unknown
okay. God knows why, but they don't want that to occur. The problem is most about inflation is imported because our petrol prices are so high, electricity power, yada yada. And because of that we're just seeing such a trickle down effect. Yeah, yeah. And it's just it's just causing a slew of issues. It's a slew of issues. Like if we prolong the drop of interest rates, we're just going to have more pain.

00:37:24:04 - 00:37:44:08
Unknown
And we're seeing we're seeing it every day. And I want people to get ahead. And that's why people turn to Bitcoin and they turn to all these other alternatives to make more money. But the truth is if the government sat down and said to themselves, hey, maybe we should look just a smidgen at removing this bottleneck of housing.

00:37:44:10 - 00:38:03:03
Unknown
And the second thing is maybe we should remove the excise on fuel and you know, haven't petrol prices come down those two things. Yeah. But just even even energy prices like I mean that's because they privatize. But but do you know what property prices are going up in this skyrocketing still because we don't have enough supply. Yeah yeah yeah.

00:38:03:03 - 00:38:20:23
Unknown
If you've got impulses of supply and demand but that's it. You don't have to be an economist. You don't have to be a genius to see if there's 500,000 new people that live in this country, and they're going to be permanent residents. and then there's 100,000 new houses approved. It's going to go up in value. Yeah, that's just simple maths.

00:38:20:23 - 00:38:40:12
Unknown
Well, yeah. Vacancy rates pre-pandemic were 4.1%, which is normal. That's what it should be. That's exactly what it should be. Point seven. Yeah it was a point seven now because I yeah I saw a figure that said 1.1.1 or something like that, which is still too low. Last time I looked at it it was point seven. Yeah, that's probably more up to date information.

00:38:40:14 - 00:39:01:13
Unknown
Okay. Yeah. So okay. We've we've been very doom and gloom, but surely there is still opportunity in Australia. where are the best places to still buy in Sydney if you have the opportunity? Yes. We've been doom and gloom, but yet again, I want people to make money. And the way, the places, the weather you make money is you find opportunities in your own backyard.

00:39:01:13 - 00:39:19:15
Unknown
Yeah. Without other people really knowing about it. Okay. Because you don't want to go where everyone is flocking. Yeah. It's harder to make money, buying a property in East Gardens now than what it was ten years ago. Is Scott. And ten, 20 years ago, it was just a poor. It was just an area. They redeveloped it. Now it's making money.

00:39:19:17 - 00:39:38:19
Unknown
So you got to look at the free gentrification. Yeah. Not areas that are already gentrified. If they're already gentrified, you could still make money, but you're not going to make as much money as you would have previously. There's also far more competition. So it's harder for you, correct? Yeah. You're an economist. You don't. Right. But the areas I want to focus on are three key suburbs around the Campbelltown area.

00:39:38:21 - 00:40:00:07
Unknown
Now Campbelltown gets a bad rap, but guess what? Pyrmont got a bad rap 25 years ago. Look at the price of property there. Yeah it's true you've got Surry Hills even. Yeah, exactly. You've got Minto, you've got Lamoille and you've got Bradbury. Okay. These are three key suburbs I want to hone in on, because you can still get house and land, not just an apartment.

00:40:00:09 - 00:40:22:15
Unknown
You can still get big blocks of land with a house on it for some $800,000. Okay. Yeah. You draw a map of Sydney, get your radius out from the middle, and and go all the way around, and you try to find places that are less than 900 K. There's not many of them. No, but this area has gone up significantly in value is 2020.

And it's going to go even further because that's just the way that it works. A rising tide lifts all ships. If the prices in Bondi are going to go up again, prices in Maroubra are going to go up and it's going to just keep going, keep going, keep going. Bradbury. For example, I have a client of mine who purchased there in 2020 for $500,000 for ten.

This property now is worth $900,000. So he's almost doubled his investment. Well, he's doubled his investment. But if you think about it in a return of capital way, okay, his initial capital that he put in was $25,000. Yeah. Okay. So his return on investment isn't double. His return on capital is almost 1,200% because he's putting a $25,000 deposit.

Okay? He hasn't put in $500,000. Yeah, he's put in $25,000. The bank came in and lent him the rest. Yeah. Okay. Yes. On to say there's interest payments and everything I'm talking about an initial return on capital. His $25,000 has turned into a $400,000 profit. But 16 times, that's more than Bitcoin. Yeah. You know, so whilst everyone is hopping on about how much money you can make with bitcoin no no no no no no.

Do me a favor. Go save 25 grand. Go and look for these little pockets of interest because you can find these pockets of interest around Sydney. Okay. You could still buy and you could still make a lot of money. Because if the government is going to say no, we're going to restrict the supply of housing and everyone keeps migrating to Sydney.

Guess which way property values are going to go. I mean it's Australia, it's very simple. You buy property, you will almost like 95% of the time make money. Yeah. Look the worst I've seen is break even. Yeah. That's literally as bad as it gets. So you even though even if you do a poor investment okay. Not lose that.

That's exactly right. That's exactly right. So my advice is don't think it's all doom and gloom. I know I've been hopping on, but that's because I just hate the Australian government right now. But seriously, look at where these little pockets are because we could have said the exact same thing about Fairy Meadow. A suburb just outside of Wollongong.

Okay. That was considered a derelict suburb. Look at Dapto. Dapto is growing in value. I can't even heard of Dapto. Dapto is just outside of London as well so that's growing in value. Look at Kiama Koala has skyrocketed in Barry. These were all areas people thought to themselves ill. Okay. How do you find this information though? Like where?

Where if you are interested in looking for these places and doing what you said, where did they find this information? How do they find out about the suburbs? A couple good ways. obviously the information that we give on this channel is general in nature, but all we usually talk about this sort of stuff and think about rising suburbs.

I'm not allowed to tell people where to buy it. Okay. Yeah, because that's specific financial information. But I'm allowed to point out statistics. Yeah. So if you want to find this information, genuinely speak to a good broker okay. Not a shit bath okay. But speak to someone that's got their finger on the pulse. They're investing in Australia at the same time, they're looking around for little pockets where they can make money and stuff because they're the ones that are going to know and they're going to be able to assist you way where to put your money.

Otherwise you can speak to a buyer's agent, don't speak to a real estate agent. The estate agent gets paid by the vendor. Yeah. And they're going to increase prices as much as possible. Well, they're going to attempt to increase prices as much as possible. Speak to a buyer's agent. Right. Try and find one that's not going to charge you too much in face.

But they've usually got great data as well. Maybe even speak to the good folks over at It's Simple Finance. that's a shameless plug, right? That you didn't even work here. but honest, honest. Truth is, you speak to someone that is putting the knowledge out there. Yeah, that's the best way to put it. Go on Instagram.

So expert basically. No, no, no. But you might you might be finding people and they'll say, oh, I'm not going to reveal that information or that information is specific. Those people are hiding stuff specifically because they don't want to get called out. Okay, okay. But if I'm giving generic advice where I'm saying to people, hey, look at Campbelltown.

Oh, okay, that is still undervalued. Or if I say, hey, look at Liverpool, you could still get red brick apartments there for $400,000. Hey, look at Parramatta. There are certain places there that you would have bought last year for 420. They've gone up in value to like 520. Right? Right. Okay. These places exist. Yeah. But you just got to look in the right place and you've got to speak to the right people up.

Put up a real yesterday just to show people. And that was a different that's on a different level because that was Bondi. That was you know, the property doubled in value. Okay. But look for the people and I'm giving you this information for free because they are the ones that aren't sitting there. They're not going to charge you 15, 20 grand for this information.

They're sitting there and they think to themselves, I want to help me. Yeah. Is a nice to look at. In the May in Tasmania, I bought an eBay for $170,000. I bought a house for $170,000. Nice. Okay, I rented it. It was positively get. That house is now worth $400,000 and yeah, okay. My initial investment was $17,000. Okay.

10% a deposit as a pilot is mortgage insurance. It was $5,000 at the time that got added to my mortgage. But if I didn't look for those little pockets around I wouldn't have found a suburb that was undervalued. Yeah that was having a university built near it soon or that was having a train station built near it said because there's these little pockets all over the place.

I can haul lot 50 in Melbourne right now. There you go. Don't have an alarm for no, no, no, I have a running show that's going to be real. But there there's always these little pockets of space. There's watch this nice. There's always these little pockets that you could take advantage of. Yeah. Okay. What would that little hope of, you know, that glimmer of positivity we probably have to call it there.

We'll be here all day. I hope you guys enjoyed the show. I've been Michael and I've been Joe. And if you guys need any help with your finance, you can find us at. It's simple.com tonight. You

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