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The podcast series "Confessions of a Property Investor," hosted by Catherine Andrews, delves into various aspects of property investment in Australia. It aims to demystify the property market, offering insights and practical advice for both novice and experienced investors. The series covers a range of topics, including bank interest rates, property cycles, investment strategies, and market trends. It addresses common fears, misconceptions, and challenges faced by property investors, providing expert opinions and real-world examples. The hosts also discuss the impact of economic factors and lifestyle choices on property investment decisions. The series is designed to educate and empower investors by providing them with the knowledge and tools needed to navigate the Australian property market successfully.
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Welcome to Confessions of a Property Investor. This is Catherine Andrews, managing director of Chase Wealth Australia.(...) Hey, I'm Michelle White. I'll watch this again. Director of Qualificatins. How are you, Mish? I'm good, Cat. How are you going? Yeah, not too bad. Welcome back. I missed you. Thank you. I missed being here. I know. I know. I know. So we're going to go through today, Michelle. Something that I think all of Australia has been hearing about. We have to say it because if we didn't talk about it, it wouldn't be properly transmitted. Yes.
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Essentially, the interest rates.(...) Okay. Why are they still sticking and not dropping as yet?(...) Awesome question, Cath. And I don't expect you to answer it in full. Yeah. Let's give our viewers and listeners some insight as to why it stuck. The reality. Absolutely. So I guess the easiest way to be able to look at interest rates and the impact that they have on society and our financial position is understanding the bigger picture of where we sit with regards to inflation, CPI, household spend, and then how that's looked at. And there's so many different factors that then tie into what the RBA take into account before putting forward their recommendation. And as frustrating as it is, until inflation is within the bracket that they're seeking of two to three percent, interest rates are staying up a little bit higher than what we want them to be. And I think that's their formula domestically and it always has been.
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I guess where people get a little bit, or investors in particular, get a little bit concerned is what that means for them. Yeah. Okay. Because domestically we know the RBA's formula is unemployment rate. Okay. The unemployment rate is at an incredible low. So taxes are still getting paid. Yeah, absolutely. So, and it also means that households are actually still earning a good income and they're still spending.
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So really this recession talk that we've been hearing is unlikely. Well, you know what it is?(...) I agree with that. Definitely agree with that. But then when you look further into the information that gets put forward and things like unemployment rate, you can then have a look at other factors like when you're looking at employment, is it all full-time work? Is it part-time work? Is it casual employment? And what we're finding is that it's actually grasping and tackling everybody together in the one section. So the hours worked are actually less than what they were when we're only taking into account full-time work because there's a component of part-time. So really the figures are skewed. And then it's the perception that's put forward by the media with regards to that and how that's then looked upon by the RBA as well. So I guess where the population sits and how they view it and will they just simply accept it? Because that's what we're being told. Okay.(...) They've made a statement that economic conditions have held up relatively well in Q1 of 2024.
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As unemployment rates remain a near historical low. Yeah.
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You've said now that they're generalizing that with casual and part-time and all sorts of sorts. My question is, they've now claimed, and what I mean by those economists, one of our property experts,(...) you've got the CEOs of many, many financial institutes and they're the ones you listen to because they're the ones that ideally seem to know the economy better than mom and dad's like us. Yeah.(...) But the higher wage growth with household incomes remains consistent. If they're including all these little part-timers in that, they're still stating that the wage is still growing within households, which means people are getting paid considerably well. Yes.(...) Yes. Why are the rates sticking?(...) I hear you.
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There's no answer, is there? I could not give you a specific reason as to why they are sticking because it is all about how the media put it forward. Hmm.
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I think it's probably things to do with offshore that we're not going to get to. I hear you. There are a few elections that have taken place in parts of the world. I think there's three big ones that have taken place. There's another massive one happening in the US in November. We all know about that one.
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With that in tow, domestically, I think it affects us a great deal. And we just don't know how to summarize that. So I guess for our listeners, the confession is we don't know when the rates are going to start coming down. We thought we knew. And to date, days in the property industry, I really thought I knew what I was talking about. So did you, Miss. You've been doing this a long time.(...) Absolutely. What we can say is this. Money isn't as cheap, but it does not affect not a property market. Not as much as what we think it does. The only thing it affects is the lenders that are associated with lending to property. I guess the goal, because you have to go, they keep widening when it comes to serviceability. The hoops you've got to jump through in order to service. Yes. Isn't that right? Absolutely. Yep. Spot on. And what it also affects them is the confidence in the market. So when we start getting whispers of there may be potential rate drops, you see the consumers start lifting their confidence and have that willingness to be able to spend a little bit more, as opposed to a fear component of, are we just going to be stuck in the same rut that we've been in up until this period?
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Look, the fact that unemployment is at an all-time low is a great thing. And we need to start looking at the positives of all of this. So what if the rates are a little bit higher?
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I honestly feel the biggest effect it has is on dollars and cents. And I think that people need to ask them the same question I've been saying this, you know, for a long time now, what are people willing to sacrifice in the short term to make money in the long term? Yes. Are you willing to pay $10,000 into your investment property year one or even year two, $20,000 to make $100,000? And it keeps going back to what about the rates? What about this? What about that? Like I said, the facts are, unemployment is at an all-time low.
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Household incomes are going up.
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You know, the first quarter saw that economic conditions were holding up very well. What does that tell you? We're doing okay. We're on the right trajectory. I can't even say that word. No, neither can I. I struggle with it as well. Say it? Trajectory? Okay, good one.
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Yeah.(...) So I guess what it comes down to is sacrifice.
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Okay. No one really knows what's going to happen with the interest rates. What I can tell you is this. And this is something that hand on heart I've seen happen before. Money is expensive at the moment. Yes. We see that. That's, and a lot of people are probably watching this podcast going, what the heck do they know? They're probably rich. They're probably this. Lots. We're not rich.(...) Okay. What we are is property investors and we're willing to synchronize those going out for dinners every day of the week or every second day of the week. And those Uber eats and those iPhone updates, you have the newest iPhone and the first sneakers and the newest iPads had all of the Netflix's and the stands and all the things you've got on your tellies right now. I'm willing to sacrifice that to buy another investment property. Yes. Regardless of the darn rate. Are you?
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That's the question.(...) Cath, I couldn't have put it better myself.
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Well, you can finish us now because I've done enough talking. Yeah, I love it. I love it. I love it. I guess look, in summary with what you've just put forward, Catherine, you are spot on. At the end of the day, an investment property is going to put you in a better position for you and your family. If you're able to look at it for some short term pain for long term gain, you'll be fine. She's a poet and she didn't know it. Hey. If only I could say the word trajectory. Yeah, no, I can't say that word either. Wordy. No, but thank you, Michelle. Appreciate it. And again, it is Pete, repeat. Spot on. With your sort of stuff, but the formula doesn't change. Neither do the numbers. The fact is, how bad do you want it? As arrogant as that sounds, it's the truth. This is a confessional,(...) right? We only say the truth.
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Thanks, guys. And we look forward to seeing you at our next episode of Confessions of a Property Investor. Take care. Bye.