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In this week’s episode, Dave, Cate and Pete take you through:

  1. Why are some people naysayers? 2020 was the year the naysayers and in the end, the sky didn’t fall. The trio explain the drivers that turn people into naysayers.
  2. When is a naysayer doing this out of care? Parents are great at spotting the risks their children may be opening themselves up to. That doesn’t just disappear when the kids reach adulthood. We explain how to manage the people that care about you the most.
  3. When should you listen to your ‘old folks’? You’ll be laughing all the way to the bank with the money management tips you can mine from your parents and grandparents.
  4. What has a naysayer cost you in the past? The Property Buyer shares the opportunities she’s lost from listening to those near and dear.
  5. How to get past the naysayers. The best way to combat the naysayers, is to understand the ‘why’ behind the opinion and make up your own mind. This means doing your research and asking your independent experts great questions.
  6. What role did the media play during our recent downturn? Interestingly, the media’s focus on trumpeting the worst-case scenario may have actually mitigated the impact to the property market. The trio explain how.
  7. How are predictions shaping up now? The sun has come out on the property doomsayers, with many now predicting growth of around 10% in 2021. However, the clouds are still hanging over Melbourne, with predictions that Melbourne will see the lowest growth next year. But we think this is overly pessimistic.
  8. And of course, our ‘gold nuggets’!

Weekly market insights– the Property Planner, Buyer and Professor’s insights

  1. Demand for holiday homes increases. Fears of another outbreak, combined with additional household savings following lockdown have driven a large proportion of buyers to consider a holiday house purchase. But is this the right strategy for you? We think this warrants a full episode, so stay tuned for next week’s podcast as the Property Planner, Buyer and Professor tackle holiday homes.
  2. Sunshine Beach wins the 2020 crown for capital growth. CoreLogic figures released last week have revealed Sunshine Beach had the largest capital growth return of 2020 with values rising by a whopping 27.6%. No doubt the capital cities of Melbourne and Sydney have been channelling money into these locations as beautiful holiday hotspots. It will be interesting to see whether long-term performance will result for investors.
  3. Unemployment forecasts have improved. Banks and economists have revised their unemployment predictions, with most agreeing we won’t even reach 8% unemployment, a vast improvement from the previous forecast of 11%. Commonwealth Bank economists have announced that they expect the unemployment rate has already peaked and we won’t go any higher than where it is right now.

Resources:

Show notes 

  • Why are some people naysayers? What is the real root cause of their reason to be vocal about their negative expectations of the property market? 
  • 2020 was the year of naysayers, the sky was falling and influenced buyer behaviour. 
  • A lot of people who are pro shares and anti- property will be vocal and anyone with a negative experience with property as well. 
  • People who are risk averse. 
  • Someone who is jealous of those with a stronger risk profile, they will always have an element of regret that they didn’t have the courage to do something risky. 
  • The people who wished they could do it, but they didn’t have a partner who was on the same page. 
  • Educate yourself, inform yourself, listen to trusted independent professionals. 
  • To do anything well, takes hard work – people are looking for short cuts. Spruikers are like the bright lights and they attract the bugs – 10% return, depreciation, no cash flow needed to hold the property. If it’s too good to be true, it probably is. 
  • You can pay someone to do that hard work – buyer’s agent 
  • When is a naysayer doing this out of care? 
  • When they are worried that you’re not making an informed decision. Parents are great at looking forward and seeing risk. You have a fear of something happening to them and this protective shield that you want to wrap around them. 
  • Parents look at their children growing up and making financial decisions. 
  • Most decisions, even the ones that are not so good, are recoverable. 
  • Talk them through your risk mitigation strategy or rationale. 
  • People with parents in their 70 or 80’s, they were purchasing property after the war, things were a bit scary. All they did was buy their house, but didn’t do anything else. When the kids say that they’re going to buy an investment property and get another mortgage, they encourage to just buy a house and take care of the family. 
  • Environment has changed now, it’s much easier to get money and more common for people to invest in property for their retirement. 
  • Grandparents have seen hard times, have seen financial institutions collapsing. 
  • Listen to the ‘old folks’ about money management, they’ll have some great tips on what to do. But leveraging on property to purchase more, may not be their forte. 
  • What has a naysayer cost you in the past? 
  • Cate’s dad talked her out of a property in Bentleigh. Dad’s idea was one that doesn’t give any maintenance trouble, so directing her to off the plan. 
  • Luckily property is a forgiving asset. If you pick a bit of a dud, over the long-term, you’ll still make money. The earlier you do this, the greater chance you have of recovering. The reality is that when you purchase your first, you’ll be higher leverage and more risk with higher loan to value ratio. Available funds buffer will not be as high after the purchase. The people who are more influenced by naysayers are more likely to be people who are younger and don’t have their own experiences yet.  
  • If you can pick a good capital growth property as the first one, it’s sets yourself up for the long-term because of the time that you will hold. 
  • What role did the media play during our recent downturn? 
  • Worst-case scenario – banks and economists model different scenarios – 30% is the WORST case scenario. The headlines did not demonstrate that it was couched in that way. We had a glut of negative news stories hit the property market. 
  • Many people placed their search on hold. 
  • Lockdown number 2 in Melbourne saw the same thing happen all over again. 
  • Data proliferation – science of what’s happening in investment and market, but there’s still art. Which is more important than it ever was. 
  • All predictions we see now, everyone is now out and getting close to 10%. But I think they’re still being too negative on Melbourne. Second lockdown, had some impacts, but the Melbourne market dropped the furthest as well. 
  • The media inadvertently helped the property market, they scared people who were interested in selling, there was hardly anything to purchase. Which meant supply as well as demand was low. 
  • Rates are the lowest they’ve ever been 
  • This is helping people get into property 
  • Barracking for the property market 
  • Property market is dominated by owner occupiers, the last thing people will do is sell their home. They’ll forgo discretionary spending in other areas to keep the house. Share markets are purely investors. 
  • Who’s in your circle? 
  • Don’t talk property with negative people. 
  • If you’re listening to a naysayer, ask yourself: what background do they have? Why are they saying this? 

Cate Bakos – The Property Buyer’s Golden nugget: if someone’s being a naysayer because they’ve had an issue with property. It’s ok to unpack that and find out what it was that they did wrong. A well selected property doesn’t tank, unless they had a short timeline and had unfair expectations and more often than not, it’s because they’ve chosen a dud. Invariably, they’ve done something critically wrong. Delve into and understand, why that person has a jaded view. 

Peter Koulizos – The Property Professor’s Golden nugget: educate and inform yourself, listen to the naysayers and find out why they’re negative. Are they saying that property markets collapsed in that period. Do we have the same environment for the same thing to happen now. Don’t discard what they’re saying, but do your own research to make up your own mind.

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