We’re officially halfway through the year and the RBA are in a rock and a hard place.
Raising interest rates are proving to be a blunt instrument. While we’re experiencing inflation, the big spenders are baby boomers who are least affected by interest rates rising as most own their homes unencumbered.
Meanwhile, the government has increased wages by 5.7%, after already raising them to 5.2% last year, we’re still bringing in workers out of necessity, and the RBA expects rents to increase by another 10%, although I expect it will be closer to 20%.
However, there is some good news. Underlying inflation appears to be dropping, May 2023 was the best performing month since November 2021 and auction clearances are up to approximately 80%.
There is no doubt, we are in the midst of a critical shortage of properties, lacking 1.33 million homes! As migration continues to increase, Australia has not kept up with the house supply. For the last 20 years, we’ve averaged around 153,000 homes when we need to be delivering 220,000. This year I think we’ll be lucky to even reach 153,000.
What’s the solution?
As property investors, we need to take advantage of the housing crisis, while contributing to the solution by providing much needed homes. I’m buying and building wherever I can, and you should too.
Interest rates will come down and when they do, we’ll see the market pick up like never before, which is why the time to act is now.
We need better government decisions around incentives. Last month, the federal government revealed in the budget, overseas companies will receive tax incentives to construct rental properties in Australia. This decision ignored the 2 million Australians who are already investing in property and who, for the majority, make the average wage.
Australia is very wealthy with $270 bullion in inheritance. If you come into any inheritance, take advantage and invest in property.
Finally, as a Custodian if you’re able it’s your responsibility to help you children into property. Educate them on the Custodian way, why it’s important to invest and help them into their first investment property.
With negative news headlines and interest rates rising, many are feeling tense and anxious.
I always keep in mind, we think, we feel and we do and ensure positivity runs through these actions. By ensuring my thoughts, feelings and actions are aligned with my core values I easily block out the noise.
However, that’s not always possible. The people around us are affected by what’s occurring in the world and it can, in turn affect us, particularly in a world where we’re stuck on our phones.
The most significant change you make to your mindset is to turn off your phone, have some quiet time and practice your breathing techniques.
One of my favourite breathing techniques is a simple 4 block breathing exercise. Breath in for four seconds, hold for four seconds, breath out for four seconds and hold for four seconds. To slow our minds, we need to slow our breaths down and practicing this exercise will have you taking four breaths a minute.
We’re going through a generational change and next month I look forward to exploring where housing is going and what we should be doing.
As always, I think we should never delay and let doubt and uncertainty get the best of us. Act now!
JF
