The big news this week is the official release of James’ book Bulletproof Investing!
Have you got your copy yet? You can buy one here.
The other thing to be released this week was CoreLogic’s May house value data.
Median house values across Australian capital cities were up 2.6% for the month, with Sydney up 3.5% and Brisbane, Adelaide and Melbourne all up by more than 2%.
That means median house values across Australia went up 11.4% over the past 12 months with Sydney again leading the charge at 14.8% followed by Adelaide at 13% and Brisbane at 11.9%.
Here are the median house values in each city if you’re wondering:
MAY 2021
Sydney $1,186,518
Melbourne $908,239
Brisbane $641,727
Adelaide $542,913
Canberra $852,398
Hobart $617,000
Darwin $566,921
Perth $545,620
Australia $781,645
All these numbers can be overwhelming.
For the second month in a row, capital city values great at a faster rate (2.6%) than the regional areas of Australia (1.9%). However, the regional areas of Australia have done very well over the past 12 months, up 15.7% which is huge!
Driving this boom in house prices is sales activity which is running at 37% above the five-year average. At the same time total listings across Australia are sitting at 24% below their five-year average. Demand is far exceeding supply at the moment.
In fact, in the three months to May there were 164,000 homes sold, while in the same period just 136,000 new properties were listed for sale.
With so many numbers it can be easy to become desensitised to it all.
However, to put it in perspective, the Australian median house price was ~$692,000 this time last year (today it’s ~$782,000) – meaning it’s grown by $90,000 in just 12 months. That means you’ve more than doubled your money if you put in a 10% deposit and made more than 60% on your money if you put in a 20% deposit.
And that’s before we factor in rents.
Rents for houses continued to defy historical trends, increasing over the past 12 months at a rate of two to eight times inflation depending on the city. This is largely being driven by a move away from units to houses – a ‘tree change’ as it’s being called – with unit rents copping a bit of a battering in the past 12 months.
In other news, the Reserve Bank of Australia released its announcement on interest rates during the week.
No surprises that the interest rates were left at the current record low.
My takeaways:
1. The successful vaccine rollout (outside Australia, that is) and huge amount of stimulus being injected into the US economy are considered largely positive for the global economy and outlook.
2. The Australian dollar still remains high which concerns the RBA and is big incentive for them to keep our interest rates low (to stay competitive).
3. Unemployment is dropping faster than expected – 5.5% today and expected to be 5% by the end of year – but still nowhere near where it would need to be for wage growth to kick in (and therefore inflation).
4. The housing market is strong and investors are coming back into the market. The RBA will monitor borrowing on housing carefully to ensure lending standards are maintained.
5. Full employment and wage growth remains #1 priority – need to see that before the increase rates à this won’t happen until 2024 at the earliest.
The ATO has released a list of suburbs where the highest income earners live in Australia.
Top of the list were Double Bay in New South Wales and Toorak/Hawksburn in Victoria.
In fact, 7 of the top 10 suburbs and 12 of the top 20 suburbs were in New South Wales.
Victoria’s Portsea was in 7th place – interesting because it jumped 30 places in the past 12 months!
Rounding out the top 10 was Peppermint Grove/Cottesloe in Western Australia which came in 6th place.
For those curious, the average taxable income of a Double Bay resident was $202,541 which, bizarrely, dropped by $40,000 in the past 12 months!
The ATO say that the top 3.5% of earners in Australia – being those earning more than $180,000 per year – paid 31.5% of the total personal income tax in Australia. Seems high and it is. That top 3.5% paid 30.9% of total income tax 12 months ago and a decade ago the number was just 26%.
It’s never been more important to work smarter and not harder in Australia. We’re about to hit nearly $1 trillion in government debt. It has to be paid back somehow and 47% of government revenue comes from personal taxes and a further 19% from company taxes (which also catches self-employed).
Do you have a plan to reduce your tax and use it to build your wealth and pay off your own home?
Join me next week on our webinar during which I discuss just that – and how to use this decade and window of low interest rates to ‘set yourself up for life’.
Interested in knowing more? Check out the weekly podcast we do at The Double Shot Podcast.
James and Alex
