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Wealth vs happiness
This month, as many of you probably know, we have begun a new lunar year: the ‘Year of the Pig,’ according to the Chinese Zodiac. In China, the pig is a symbol of wealth and abundance. At Chinese New Year, we give out red packets filled with ‘lucky money’ as gifts and would wish others “Gong xi fa cai” – literally, a wish for wealth and prosperity for the year ahead.
In Chinese tradition, as you can see, we do not shy away from the idea of ‘wealth’ – in fact, we proactively wish it for our friends, family and colleagues as part of living a happy and successful life.
There are a lot of Australians, in our experience, who also would wish for more wealth in life, but simply don’t know how to make it happen or don’t believe they can – because they’ve been told for so long that it’s impossible or have never learned how.
It strikes me that in Australia, wealth is considered a taboo topic. We don’t talk about money, we don’t teach wealth at school, and we certainly don’t wish others good wealth or fortune at Christmas or on birthdays!
But I believe that everyone deserves more wealth. I also believe that most people, in their heart of hearts, would probably want a bit more wealth too – even if they may not voice it out loud.
Imagine if you’d been taught at a young age or at school how to save, use credit cards properly, look into your super, invest in income-producing assets – how different life might be today?
Historically, wealth has had a negative connotation; centuries ago, most wealthy people made their money through feudalism, war and violence. While in today’s society, we see materialism and excess flaunted in all aspects of the media and celebrity culture.
While there may be a section of wealthy people who fit this stereotype, it’s certainly not a wholistic picture.
In his book, ‘The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,’ author Thomas J Stanley interviewed a number of American millionaires. He ultimately drew the conclusion that 95% of millionaires in the US actually live a relatively simple and modest life.
In my own experience, I have noticed the same. The wealthy people amongst my acquaintance live relatively simply and are very humble and generous in nature. Those with kids tend to be even more disciplined with them, very careful not to spoil them and ensure they learn the importance of working hard towards their goals.
They also see their wealth as a responsibility to build opportunities for others – through business and through contributions to charities. This is certainly how I see it for myself as well.
Wealth doesn’t have to be a negative thing, or something to reject. In fact, wealth is an essential part of living a happy life.
We do many things to find happiness in life. Love is a major one; we will pursue happiness through love, only to find that love can fade, and love on its own doesn’t make us happy.
Good health and wellbeing are also important – exercise, eating well, taking care of yourself – all of this makes us feel good. But again, on its own, it’s not enough.
The last factor that tends to get overlooked is wealth. Like health or love, wealth on its own will not equate to happiness, but it can certainly contribute in a big way.
For example, if you hate your job, but you need your job to pay the bills, then you might bring that stress home, where it will start to affect your relationship or your mental health. If you had a bit more money it would make it easier to change jobs and find something else that you may find more fulfilling.
There are many everyday things can be solved by having a little bit more money – to take any financial pressure off your relationships, to help you access resources – good, nutritious food, or exercise facilities – to live a healthier life. Or the flexibility to have more time to spend doing what makes you happy and spend more time with your kids or loved ones.
The universal formula for happiness, therefore, is the combination of these three elements: health + love + wealth.
While there’s no doubt that wealth can remove your own worries or struggles, and enable you to live your own dreams, it also has the potential to do something much greater.
The more wealth you have, the greater your ability to look at the bigger picture. Your family will likely be first in mind; I myself felt good to be able to look after my parents, and my siblings as well and my friends. But beyond your own circle, you also have the capability to help many, many more people.
I had a friend who had some acquaintances working very hard to raise funds to improve a community park and playground. They had been working at it for months, and my friend, once he found out about it was so glad to be able to just write a cheque and solve the problem.
On the top end of that scale, you have something like the Bill and Melinda Gates Foundation. It holds $50 billion in assets and through investments in health, agriculture, education, and other sectors has helped innumerable people – including the most vulnerable people in the world. For example, since 1990, 122 million children’s lives have been saved – due mostly to getting more vaccines out to kids who need them but can’t afford them.
There’s no doubt that wealth can be a very important resource to bring about the positive change you want to see in the world.
With wealth also comes knowledge and experience – and that too, feels good to give away. This is one of our great passions at Ironfish; to remove the veil of secrecy that often shrouds wealthy people. We want to share our knowledge and experience of investing, so others can benefit too.
But whether you want to build more wealth is a personal decision; not everyone is going to want to and not everyone is going to succeed at it if they try. There is no certainty in life; it would be great if someone could just offer you a guarantee that if you did these 10 things – all of which are legal, ethical, doable, but hard work – then you will 100% become a millionaire. But it’s not going to happen that way. And without that certainty, it’s hard to push past your comfort zone to give it a try.
But if you decide that you do want it, then the next steps are relatively simple: find out what the price is i.e. find out what you need to do to achieve it, and then pay that price.
If that sounds like you, and 2019 is going to be the year you start focusing on your own wealth: know that we at Ironfish are here to help. To those who are already Ironfish investors, we thank you for choosing to build your dreams – and your wealth – with us.
And on behalf of Ironfish, we wish everyone wealth, good fortune and happiness in abundance in the Year of the Pig!
3 reasons to invest in Brisbane’s West End
A fusion of cultures and a lively, eclectic village vibe give the inner-city Brisbane suburb of West End a unique charm. But there’s an x-factor which has seen demand for property in the area increase by up to 30% in the last six months alone.
West End is only 1km from the Brisbane CBD, and while it has every urban convenience, it enjoys a more laid-back vibe than the heart of the inner city.
Apart from being a stone’s throw to the city, West End is also an easy and convenient distance to some of the Australia’s most prestigious universities including The University of Queensland (UQ), Queensland University of Technology (QUT) and Griffith University.
Natural beauty abounds, as West End’s unique positioning means that residents can enjoy a combination of park, river and/or city views. Orleigh Park and Davies Park are the perfect natural vantage points and Riverside Drive provides a fantastic riverfront vista for a morning walk or run.
Council is investing in the suburb as well, with a $2.1 million upgrade to Davies Park, expected to complete by January 2020.
Described as Brisbane’s artistic and cultural enclave akin to Paris’ Latin Quarter, New York’s Greenwich village or even Sydney’s Erskineville/Newtown, West End is where you go for vintage fashion, craft beers on tap, great dining options, and a lively music and bar scene.
Brunch is an event in West End, with a plethora of amazing cafes where great coffee is a given. Some of the most popular spots include Plenty, West End Coffee House and Morning After.
On Saturdays, Brisbane locals head to West End’s iconic weekend markets in Davies Park, to stock up on organic produce, snap up a unique piece from up and coming fashion designers, or to enjoy a good coffee and a bit of live music.
For young families and couples, West End has another major drawcard or ‘x-factor’. West End sits within the catchment area for the coveted Brisbane State High – the best public school in Brisbane, and the second-best Brisbane school overall, according to Better Education rankings.
Brisbane State High is the only public school ranked in Better Education’s top 10 Brisbane high schools. When you consider that the other nine private schools in the top 10 have fees of over $20,000 a year, it’s easy to see why demand for a West End address is strong – and buyers are willing to pay a premium for it.
Luke O’Kelly of Ray White – West End told News last month that buyers were willing to pay up to $100,000, or around 10% more, for a property in the Brisbane State High School catchment. While, Michael Hatzifotis of Place Estate Agents – Kangaroo Point said demand for properties in the catchment had increased by up to 30% in the past six months.
Because of its great lifestyle appeal, inner-city location and desirable catchment area, West End has a very broad appeal.
“In many ways, West End is one of the suburbs that represents the very best that Brisbane has to offer, in terms of location, with its combination of great parks, river views, lifestyle and close proximity to the CBD, and Brisbane’s best educational institutions,” said Ironfish Brisbane General Manager, Irene Liu.
“If you go to West End, you’ll find two major demographic groups. The first is the under 30s group – a lot of single professionals, who love the lifestyle – being so close to work and having an array of choice when it comes to great restaurants, cafes and bars to head to over the week or on the weekend.
“The other major group is families, who live here for access to Brisbane’s best schools and educational and cultural facilities – the QPAC library, for example, or Southbank’s museums – as well as amazing parks and the quiet, ‘riverside’ lifestyle. You’ll find a variety of luxury apartments along the river, and residents here are primarily families or retirees who want that mix of riverside living with all the great lifestyle benefits,” Ms Liu said.
We have a very exciting new investment opportunity coming up in West End. Take a sneak peek at some of the designs below.
If you’d like to be notified once details are released, you can register here.
With thanks to our customers – from Ironfish
Last Saturday evening, Ironfish North Sydney and Burwood branches hosted a wonderful night on Sydney Harbour, celebrating the beginnings of a New Lunar Year, alongside nearly 400 of our valued customers.
In a black-tie event aboard the luxury ‘Starship Sydney’ cruise liner, our customers and Ironfish Sydney staff took the opportunity to enjoy a great meal, some good music and the opportunity to meet and mingle with like-minded investors. The event also took the record for the largest crowd ever to come aboard the Starship.
“This event was really important to us because at Ironfish, our aim is to create customers for life. We aim to be there for the long haul, to support our customers through the life of their investment journey – and part of that is taking the time to truly appreciate and value the trust our customers place in us,” said Ironfish Director, Property and Research, Grant Ryan.
“The cruise was a great opportunity to be able to thank our customers; to celebrate our customers’ achievements and bring in the Year of the Pig with a bit of style and fun.”
Mr Ryan also applauded the vision and courage of guests who had recognised the need to take action with their finances and start building a portfolio to safeguard their future.
Ironfish CEO & Founder, Joseph Chou delivered the keynote speech for the evening, starting with a new year’s wish for 2019.
“The Pig is an auspicious symbol to the Chinese, representing prosperity and many blessings. We wish our customers joy and prosperity in the year ahead,” Mr Chou said.
“We also thank our customers for their loyalty and trust in Ironfish over many years. Regardless of how the market may change, or other factors may change, Ironfish will continue to strive harder to improve and work alongside you to ensure you achieve your dreams.”
Ironfish Burwood Managing Director Linda Lu took the opportunity to emphasise how important property investment had been in realising her own personal financial freedom and personal development over the last decade.
Over the course of the evening, guests and staff alike were treated to a musical performance by Ukrainian musician Larissa Kovalchuk – who also happens to be an Ironfish customer, herself. Ironfish North Sydney’s newest Strategist Astrid Chalken also gave an impromptu performance with the big band – unveiling another hidden talent amongst the Ironfish team!
Trivia and games followed, with special congratulations to our customers Oleh Klochan, Stanley Darmawan, Portia Chang, Vijiyata Sharma and Shara Jamei for their prize wins.
We also congratulate our Instagram competition #ironfishsydneyvipcruise winners:
Most creative post: japorms_olif
Most liked post: Sophia_have
Best styled post: petalux.au
Thank you to our customers for coming along on Saturday night, and of course, thanks to all our customers, nation-wide, for coming along with us on your investment journey.
Wishing you all the very best for 2019 – The Year of the Pig.
Australian Space Agency: “One small step for Adelaide…”
Move over NASA, Australia now has its own Space Agency, and it’s set to open for business in brand-new headquarters in Adelaide, South Australia.
The Australian Space Agency will be located at the former Royal Adelaide Hospital site in the ‘Lot Fourteen’ precinct, situated at the north eastern edge of city, adjacent to Adelaide Botanic Gardens. It’s expected to open its doors by mid-2019.
With an established reputation for technology and innovation, Adelaide beat out rival states for hosting rights of the new Agency.
Although it is one of Australia’s smaller capital cities, Adelaide has made worldwide headlines for its innovation culture, ‘smart city’ status and its race to renewables – including the world’s largest lithium battery installed by Tesla to store wind farm energy.
South Australia is already home to over 60-space-related organisations, with more than 800 employees working in the sector. The move to establish a Space Agency in Adelaide also complements major sectors such as defence, which currently boasts an $89 billion project pipeline for submarine and shipbuilding.
“South Australia is the ideal location for the Australian Space Agency with a range of local space industry businesses already established here as well as a rapidly growing defence industry sector,” said South Australian Premier, Steven Marshall.
The Space Agency’s location, Lot Fourteen – Australia’s first ‘creation and innovation precinct’ – will become home to thousands of residents and workers. The precinct is designed to drive jobs growth across major growth industries such as artificial intelligence, cyber security, robotics, as well as defence and space technologies.
This location is also strategically positioned near Adelaide’s three most prestigious universities (The University of Adelaide, The University of South Australia and Flinders University). The Australian Space Agency is expected to bolster Adelaide’s higher education and research sector as well.
The University of Adelaide’s Acting Vice-Chancellor Professor Pascale Quester said the University had already been playing a significant role in Australia’s space industry for over 50 years.
“With the announcement of the new national Space Agency, the University of Adelaide is uniquely placed to build on years of expertise in the fields of engineering, computer science, mathematics, physics and law, and their application to space,” Professor Quester said.
The University’s Executive Dean of the Faculty of Engineering, Computer and Mathematical Sciences Anton Middelberg added, “The University of Adelaide is already delivering the technological expertise and graduates necessary to re-build Australia’s space industry.”
Prime Minister Scott Morrison said that the new Australian Space Agency would be pivotal in helping Australian businesses access the $476 billion global space industry.
Australia has a number of space related industries across multiple states and cities. The Federal Government is investing $41 million into the new Australian Space Agency, with the aim of tripling Australia’s domestic space economy to $12 billion.
The Government estimates that the new Space Agency will create 20,000 new jobs by 2030.
Australian Space Agency Director, Dr. Megan Clark told the ABC: “We’ve got a pipeline over the next three years of over $1 billion of capital being invested into the space industry, half… of that is inbound capital coming in from industries and space agencies around the world.”
“National coordination and international partnerships are absolutely key to our success.”
Royal Commission Final Report – what it means for property investors
Justice Hayne’s much anticipated Royal Commission Final Report was publicly released by the Government yesterday.
The aim of the Royal Commission – which is the highest form of inquiry into matters of public importance – was to expose any wrong-doing in banks, insurance and superannuation companies.
The Royal Commission Final report contained 76 recommendations to improve consumer outcomes across multiple areas including banking, financial advice, superannuation, insurance, as well as cultural governance and remuneration.
The Government has since agreed to adopt 75 of the 76 recommendations, the key exception being a recommended change to the mortgage industry.
Currently, mortgage brokers receive upfront and trailing commission from banks and other lenders. Justice Hayne recommended:
However, the Government will not immediately adopt a borrower-pays model, saying it may decrease competition in the mortgage industry. The Government said it will ban trail commissions on new loans from July 2020. It will also conduct a review in three years to consider the implications of removing upfront commissions and moving to the borrower-pays model.
We see three key factors which will likely impact property investors over the short, medium and long-term as a result of the Banking Royal Commission.
One of the key themes of the Final Report was evidence of irresponsible lending practices by the banks.
Responsible conduct obligations require that banks take reasonable steps to verify a borrower’s income and expenses. However, the Royal Commission revealed that banks do not always follow these obligations, which leads to unnecessary risk for borrowers and the broader financial system.
The Royal Commission has brought a renewed focus on the importance of ensuring that all lenders comply with Responsible Lending conduct obligations.
The Final Report did acknowledge that some banks had already improved their lending practices over the past six to nine months, in anticipation of the Royal Commission Final Report.
The Report contained no recommendations for further tightening of lending practices, noting only that existing lending standards should be maintained.
As a result, the Royal Commission is expected to have little to no further impact to lending beyond what has already occurred.
Although credit conditions are anticipated to remain constrained in the short-term, interest rates remain at historic lows and supply and demand fundamentals are robust – evidenced by the national vacancy rate of only 2%, the lowest level since early 2014, according to SQM Research.
At the same time, population growth remains strong and new residential building approvals are down by a steep 24.7% year on year, as at November 2018. These broader trends suggest that future supply is declining, while demand is continuing to strengthen.
Meanwhile, macroprudential policies aimed at reigning in house prices, particularly in Sydney and Melbourne – such as APRA-driven limits on investor lending, and interest-only loans – have now been removed, as the desired impact has already taken place.
For investors, the Royal Commission should be seen as welcome news as it will help to strengthen, what is by international standards, an already strong and stable financial system in Australia.
The Royal Commission revealed that there is still much to do to ensure the resiliency and strength of our financial system over the long term. Maintaining public confidence in the nation’s lending institutions will be paramount, however the Government will be aware of the potential implications that any practical response may have on the economy and the free-flow of credit.
Ultimately, the recommended changes in the Final Report are a sensible and necessary approach to improve on current practices. Banks have been shown to prioritise profit over its customers to the detriment of the wider economy. The push to increase regulator powers and oversight would help to ensure that existing legislation and regulation is prudently followed in the best interests of society at large.
As a whole, this will mean that our financial system will be more stable, robust and reliable moving forward – and this is something that everyone (including property investors) will benefit from.
At Ironfish, we support the greater and necessary emphasis on prudent lending practice and serviceability, which will ultimately benefit Australian property investors and the broader financial system.
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What is negative gearing – and how do changes affect you?
With the Federal Election only months away, negative gearing remains front and centre as a major point of debate and contention between Australia’s two major political parties.
Bill Shorten’s Labor Government has promised to overhaul negative gearing rules for investment properties should they win the election. The current Liberal government stands firmly opposed to the stance. So, what are Labor’s proposed changes, and how could they impact property investors?
Gearing is a term that tends to be used primarily in relation to property investment. The income you earn from your investment is usually either positively or negatively geared.
A positively geared property is one where your incomings i.e. rental return is higher than your outgoings i.e. interest repayments, repairs, strata fees etc.
An investment property is negatively geared when the incomings are less than your outgoings. The shortfall can be claimed as a loss when you do your tax return – essentially to reduce your taxable income and therefore tax payable.
Many investors use negative gearing to reduce their taxable income over the short term – as the loss can be deducted from other earnings. These investors are typically targeting long term capital growth above their accumulated losses for when the property is ultimately sold.
As a simplistic example of negative gearing: John Smith earns a salary of $70,000 a year. Out of which, he would pay $15,167 in tax.
If he purchases a $650,000 investment property, with a rental income of $650/week and outgoings of $750/week, then he has a weekly out of pocket expense of $100/week. If John claims this as a loss, he reduces his taxable income to $64,800 ($70,000 – $5,200). This makes John’s tax payable $13,345, a saving of $1,822, which reduces his weekly out-of-pocket expense to $65/week.
If John’s property has depreciation claimable as well, then this would be counted as an ‘outgoing’ – even though it’s not an actual ‘out-of-pocket’ expense. This would increase John’s shortfall, which would in turn further reduce John’s taxable income.
For example, John’s brand new $650,000 unit has annual out-of-pocket expenses of $5,200/year. His first full year depreciation claim is $13,832. Therefore, John’s total ‘shortfall’ in his first year is $19,032, making his taxable income $50,968. This would reduce John’s tax payable to only $8,366 – a saving of $6,801 – or roughly $130/week – therefore putting John $30/week ahead overall.
If elected, the Labor party has plans to limit negative gearing to new residential properties only. The plans will take effect from a date that is yet to be determined after the next Federal Election, which is likely to fall in May.
They also propose to halve the capital gains discount for all properties purchased after a date (also yet-to-be-determined) after the next election. In effect, this will reduce the capital gains tax discount for properties that are held longer than 12 months from 50% to 25%. If you sell your investment property in less than 12 months you’ll pay the full capital gain tax – this is what is currently in place.
All changes will be grandfathered, which means they won’t apply to any properties purchased before Labor puts its changes into effect.
The policy has been proposed to tackle housing affordability, while also boosting construction to keep up with Australia’s strong population growth. Critics of negative gearing reform suggest it may have the opposite effect or be a repeat of 1985, when Bob Hawke’s Labor government entirely abolished negative gearing only to reintroduce it 18 months later.
According to a poll by The Australian, in April 2017 54% of respondents supported negative gearing reforms. By November 2018, this figure had fallen to 47%.
Public opinion on the issue continues to be mixed to the point where the Labor Party recently indicated that a negative gearing re-think is possible. Earlier this month, Mr Shorten confirmed that proposed timings for the reforms will be deferred till after an election win.
If the reforms do go through, for investors of new property, changes to negative gearing will not apply, and for long-term investors who are holding properties for retirement or later in life, the capital gains tax change will also have no immediate application.
Regardless of whether these reforms go through or not – or whether or not Labor wins the Federal Election – it’s important to note that investors still make up only a small minority of the Australian taxpayers, only 8.69% according to the latest data available from the ATO and they also play a valuable role in providing rental properties to the market for those that can’t afford to buy, or simply prefer to rent.
At Ironfish, we recommend a buy-and-hold strategy and to ensure your investment properties represent quality, with strong owner occupier appeal. You want to ensure your property appeals to the widest possible market when it comes time to sell – and as the above data shows, owner-occupiers are the majority by a significant margin. Owner-occupiers may also be more willing to pay a premium for something they fall in love with, compared to an investor.
“If Labor gets elected this year and upholds their promised changes to negative gearing – which will favour new property – then owner-occupier appeal will be even more important for investors when and if they decide to sell,” said Ironfish CEO & Founder, Joseph Chou.
“We have seen from experience that short term market fluctuations, or policy changes will always come and go. The key is to ensure you are investing in quality properties in good locations and prepared to hold over the long-term,” Mr Chou added.
Which up and coming Brisbane suburbs are tipped for 2019?
With many analysts dubbing Brisbane as the ‘quiet achiever’ of 2018 and the one to watch in 2019, the question that follows for many investors is: ‘which Brisbane suburb will be best to invest?’
At Ironfish, one Brisbane suburb firmly within our own sights is Rochedale. This southern Brisbane suburb benefits from excellent connectivity, being adjacent to the M1, M2, and M3 motorways which allows residents to access the CBD in 15 minutes, the airport in 20 minutes, and the Gold Coast in 45 minutes.
The suburb is also within 10 – 15 minutes’ drive from three of Queensland’s top universities including QUT and University of Queensland as well as over 20 public and primary schools.
Rochedale has its own Coles and town centre already under construction, and a neighbourhood retail centre has also been approved. It’s also just a five-minute drive from Westfield Garden City – the 7th largest shopping centre in Australia.
Over the last five years, the suburb has become increasingly attractive, with the latest Census reporting Rochedale’s population has tripled in the five years to 2016. In terms of demographics, Rochedale residents are most commonly of Asian ancestry, with 60.8% of residents reporting both their parents were born overseas. The top three countries of origin were China (28.5%), followed by India (6.3%) and Korea (4.9%).
Interestingly, Rochedale boasts an average housing value that is either on par or even significantly higher than coveted inner-city suburbs such as Kangaroo Point, Indooroopilly, Grange and Windsor. According to CoreLogic data, the latest average housing value for Rochedale as at October 2018 was $1,031,649. By comparison, Grange recorded $894,018, Indooroopilly $978,897, Windsor $830,277, and Kangaroo Point $1,046,072
Rochedale has three key fundamental drivers: excellent infrastructure, access to employment both locally as well as in the CBD and strong population growth.
A report by the Queensland Productivity Commission last year found that Brisbane house prices have increased 299% in real terms since 1986 – second only to Sydney, in terms of increases. Most of Brisbane’s increases occurred in two bursts, between 1987 and 1992, and 2001 and 2009.
Since 2007, 11 of the 12 Queensland local government areas that experienced the strongest house price growth were in South East Queensland, with prices increasing the most in Brisbane.
Yet, compared to Sydney, Brisbane’s housing market remains significantly more affordable, which has sparked a recent wave of interstate migration to the Sunshine State.
The latest Deloitte Access Economics business outlook report, released on Tuesday, reveals that the state’s growing population along with its strengthening economy signals an ever-brightening future ahead for Queensland.
“…gas exports are leaping, and Sydney’s stupid housing prices are underpinning a resurgence in population gains back above the national average,” Deloitte says.
“So State growth has recovered from tricky times amid the downturn in resource investment of just a few years ago.”
Deputy Premier Jackie Trad welcomed the report stating: “Sydneysiders are saying goodbye to NSW and hello to our sunshine state lifestyle and who can blame them?”
“Queensland offers a more affordable and liveable lifestyle, incredible weather and booming new industries in research, LNG exports and renewables.
“Tourists are also flocking to our beaches, cities and regions, with the longest period of sustained tourism growth since the 1990s, delivering a welcome boost to the retail and hospitality sectors.”
Ms Trad said the report also outlined significant investment into the state’s infrastructure. Queensland’s $16 billion infrastructure program represents another key driver for the state economy. Big ticket infrastructure projects already underway in Brisbane include the $3 billion Queens Wharf Casino, the Brisbane Airport expansion and Cross River Rail.
Would you like to learn more about the Brisbane market? Download our latest quarterly market report.
You can also access our list of Ironfish recommended properties by registering here.
Top 5 books to read in 2019 – and how to get the most out of them
At the beginning of a new year, it’s so common to hear of people joining book clubs, making reading lists, or resolving to read a new book every week for the year. And every day you find someone sharing an article on social media that ‘you simply must read’.
Everyone reads for different reasons; for some it’s for pure literary enjoyment, for others it’s to gain more knowledge, skills or for personal development.
I myself, am an avid reader. At university I majored in English literature, and enjoyed fiction, poetry and short stories. Ever since moving to Australia and becoming an entrepreneur and investor, I now primarily read non-fiction, to learn more and enhance my own skills and knowledge in business. I also read a lot of biographies as well as history to learn from the past or from other people.
For me, reading is an important part of developing and growing as a person. Because, I believe that, as leader within the business, if I don’t learn and grow, then I’m doing a disservice to my colleagues and to our customers.
It’s important to be selective about what you read, but even more so, you need to be able to get the most of what you’re reading.
You don’t want to read just for the sake of it – to be able to tick off a list, or spout a great quote at a party, or to be seen saying, doing or sharing the ‘right’ things on social media.
If you’re reading motivational or personal development books, it’s really not important how many books you read, but what you take away from them, and what you do with that knowledge.
Have they made you a better person? Have they helped you grow a bigger heart, widen your perspective, be a better leader?
Many people say to me: “Oh I don’t read personal development books, because they all say the same thing.” That’s true, they do – because the principles of success are universal. But reading multiple books may offer a unique perspective on the theme. You may pick out something new from each one. Or an idea you’ve read before may suddenly become more relevant to you because you’re in a different life stage when you’re reading it. I’m a firm believer in duplicating success formulas; if you read a biography about a successful entrepreneur or an Olympic gold medallist, you’ll find their road to success in one form or another is actually quite similar.
But before you’re tempted to start quoting great passages or sharing article links or books with others, ensure you’re taking the time to read those books or articles carefully yourself. And that you are applying the principles you learn to your own life first. Unless you do so, your shares or quotes are not really coming from the heart, and if it’s not coming from the heart, then you’re not really changing or growing as a person. Other people will also quickly lose interest in what you have to say, when they see it’s not genuine.
The list of books I’ve put together here were essential reading for me, in my early days as a migrant, business owner, leader and investor. They’re great foundational books on mindset, EQ, wealth-building and investment and have been highly influential in my own success. If you’re looking for books on these topics, I think they’re worth a read. I also think that for parents, they’re great books to encourage your kids to read or to gift to them as a ‘coming of age’ birthday present. I certainly encouraged my own children to read these as well.
I’ve mentioned before that this book is like a bible to me. I must have read it nearly 100 times by now. And the reason why I think it’s such an important read is because in life, whatever job you do, or whatever your background, you’re going to need to work with people.
To be able to work with different personalities, to bring out the best in yourself and others, to work to people’s strengths rather than weaknesses – all this ‘EQ’ stuff is so important.
For me personally, I made a concerted effort to apply Carnegie’s principles in my daily life – initially this was a conscious effort, and later it has become unconscious. Most importantly, it has come from the heart – from a genuine desire to change and a genuine desire to relate with others better and see the world from another perspective.
Because of our upbringing, background, where we live or a whole host of other factors, for many of us, we tend to have modest dreams. This book is great in helping you to expand your horizons, so you can open up new opportunities in life. The other thing that I personally got out of this book was a small section towards the end which discussed social situations.
I’ve always been an introvert and used to be very shy. In a party or group event, I would never be the first to go up to someone and start talking, I’d usually just wait for someone to approach me.
This book made the point that in such situations, it’s usually the most successful person, the most important person, or the person who holds the highest position in the room, who makes a point of going around and introducing themselves – because they’re likely to have the most confidence. After reading this, I started forcing myself to start doing the same thing. Of course, I quickly discovered that it didn’t need to be so daunting, that everyone is just like me – keen for someone to approach and strike up a conversation.
Napoleon Hill’s classic talks about the great power of the subconscious mind. It also contains the success formula developed by Andrew Carnegie – the richest man in the world at the time – and reinforced by the author’s 20-odd years of studying the most successful people in America. These people include Henry Ford, Thomas Edison, J.P. Morgan as well as the President and even movie stars of the time.
For many people, lack of self-belief or self-confidence is what holds them back from achieving their goals or the success that they’re pursuing. I often ask people: “If I could provide you a government guarantee that if you do these 10 things (all of which are legal, ethical etc but might be uncomfortable and require you to step out of your usual routine) you will achieve your goal, would you be more likely to do it?”
For most people, the answer would be yes. But of course, life isn’t like that, there are no such guarantees on offer, which is why you tend to stay in the safe zone: you’re not confident of your own future success.
To be honest, the first time I read this book, I wasn’t really ready to take it in; it was only on-re-reading, when I’d gone away and grown as a person that it started to become relevant. I’m now a firm believer in the power of the mind and the law of attraction!
Many successful people, including celebrities such as Oprah Winfrey, credit this book to their early success. I can certainly attribute this book to where I am today and where I will be in the future.
This is a great book which explains the basics of managing personal finances and wealth-building. It’s essential reading for anyone who aspires to be financially successful and it’s written in a format that’s very easy to grasp: as short ‘fables’ or ‘parables’.
Sometimes I find that books can be written in a style that’s unnecessarily complicated, which makes them too difficult to read. If you’re writing a literary narrative, then you probably want to craft your language beautifully and with greater complexity. But for non-fiction, I believe you just want it to be as accessible as possible. With my own book, this was also important – the point wasn’t to show off my writing skills, I just wanted the messages to come across as simply and effectively as possible.
This is another great book about wealth building that provides some clear financial definitions, for example, between an asset or a liability. But ultimately what it explores – and challenges – is the traditional path of getting an education and going on to get good job versus achieving financial success through greater financial literacy, through investing or choosing to become an entrepreneur.
I read this book when I first started as a strategist and it was crucial in helping to open my eyes to the importance of wealth building through investing in assets, including property investment. I regularly gave a copy of this book to each of my customers back at that time as well.
Ultimately, while it’s interesting to find out what successful people are reading, it’s important to note that everyone is different. Books that others are reading – even if those people are very successful – may not be relevant to you. I certainly don’t go away and read all the books on Bill Gate’s reading list – because many are simply not relevant to me, my life or my business.
The books I’ve been reading recently are on the topics of artificial intelligence and its effect on business and the workplace; innovative ways of marketing as well as autobiographies – two of my favourites are Shoe Dog by Nike Founder Phil Knight and Principles by Bridgewater Associates Founder, Ray Dalio. Apart from books, I also make a daily habit of reading the Australian Financial Review, Forbes and Fortune to stay up to date on business, news and trends.
Be smart about what you choose to read and of the books, articles or publications you do choose: try to devour them. Take in the most important points. Re-read the relevant sections. Don’t feel like you need to read a book cover-to-cover for the sake of it. I often scan the contents page of a book and read only the sections that I find most interesting or relevant. If you start reading a book and find it un-readable, go away and find a better one on the topic.
Take the time to enjoy the pursuit of reading in the moment, and then take what you learn and genuinely master those concepts. Doing this will truly make your life better, and perhaps more importantly, will become a way of making other people’s lives better. One of the most important lessons I’ve ever learned from a book is to try to make other people you meet leave you feeling better about themselves. That is one of the best feelings in life.
Property: what can you buy for under $750K in Australia’s biggest cities?
In 2018, Brisbane/ South East Queensland (SEQ) stood out for its positive performance, posting housing value rises when its southern counterparts – Sydney and Melbourne – were recording falls.
Driven by strong interstate migration rates, local demand and significantly more affordable house and land prices, the SEQ property market is tipped by analysts as one to watch in 2019.
So how much more affordable is Brisbane / SEQ property?
Taking $725,000 as a price-point and proximity to the CBD as the benchmark, we compared just how much bang for your buck you can get when you’re buying a house and land package (4-bedroom, 2-bathroom, 2 car-space) in our 3 biggest cities.
|Rochedale||Cranbourne Nth||Jordan Springs|
DISTANCE TO CBD
For first home buyers or property investors who are looking for a 4-bedroom house and land package in convenient distance to the CBD, it’s hard to compete with Brisbane’s relative affordability.
Affordability is expected to remain a key factor in purchasing decisions in this market in 2019, especially with the Queensland First Home Owner Grant reduced from $20,000 to $15,000.
Buyers are looking towards more affordable, smaller lots with Oliver Hume reporting that SEQ land lots ranging from 301 to 400 square metres was the most popular buying choice over the September 2018 quarter. This lot size represents a sizeable 34% market share.
Growing demand for South East Queensland property has driven up land prices, with the latest data from Oliver Hume revealing that average land values in the region rose 11% in the 12 months to September 2018.
The capital city of Brisbane remained the most expensive at $910 per square metre, followed by Redland $757 per square metre and Gold Coast at $732 per square metre.
Brisbane also recorded the strongest quarterly appreciation in land values of all Local Government Areas (LGAs), with a growth rate of 3% for the September 2018 quarter.
Over the year, the Gold Coast, Logan and Ipswich LGAs came out ahead, recording annual appreciation rates of 9%, 5% and 3% respectively.
This upward trend in values is expected to be just the beginning.
Recent data from the Australian Bureau of Statistics shows that interstate migration to Queensland is trending at 10-year highs. The Sunshine State’s population growth from interstate migration was 24,698 people over the 12 months to June last year, making Queensland the number one choice for interstate movers by a significant margin. This result was almost double that of Victoria, which came in at second place with a net interstate migration increase of 14,316 people.
While housing remains affordable compared to eastern city counterparts, and with the broader Brisbane economy benefiting from the state’s $45 billion infrastructure plan, more and more buyers are looking to secure house and land in Brisbane and SEQ – which is expected to place further pressure on land values throughout 2019 and into 2020.
At the same time, Brisbane is now leading all the major Australian capital cities from a rental yield perspective as well, with October 2018 data recording a healthy 4.1% rate.
These factors are likely to narrow the gap between Brisbane property prices and Melbourne/Sydney over time and makes the Brisbane market one to keep an eye on in 2019.
How big will Australia’s population be in 10 years?
In August last year, Australia’s population clock ticked over to an historic milestone: 25 million people.
It took Australia 23 years to increase from 15 million people to 20 million people. But the latest 5 million, to reach the 25 million milestone, was added in just 14 years.
According to the Australian Bureau of Statistics (ABS), our next milestone of 30 million people may only take about a decade.
Late last year, the ABS released 3 population projections for the country: slow-growth, medium- growth and high-growth. The ABS projections are based on factors such as the fertility rate, life expectancy and migration rate.
Australia’s Future Population Growth
According to the medium-growth model, we can expect Australia to grow to 30 million in 2030-31 and by the year 2066, our population would reach 42 million. In the high-growth scenario, our population could reach nearly 50 million by 2066.
Net overseas migration currently accounts for 62% of our population growth, with natural increase accounting for only 38%; so our 25-millionth Australian was more likely to have been an overseas migrant than a new-born baby.
The ABS also noted that urbanisation would continue across the country, with every capital city projected to grow faster than its state/territory counterpart. By 2030, our 2 largest capital cities: Sydney and Melbourne are projected to have a population nearing 6.5 million.
The trend towards capital cities is one which is reflected globally. According to the United Nations, in 2018, an estimated 55.3% of the world’s population lived in cities. By 2030, urban areas are projected to house 60% of the world’s population.
While the population debate in Australia continues as to ‘how big is too big,’ it’s interesting to note that compared to other countries and indeed, other cities of the world, we still have a long way to go.
For many Australians, contemplating a national population of 30 million seems in itself astounding, and no doubt it is – and yet there are cities which already have a population in excess of this number.
Cities with 10 million or more residents are typically referred to as megacities. For example, today, the world’s largest city (and megacity) is Tokyo in Japan, where the population is approximately 37.5 million, followed by Delhi, India in position number 2 with a population of 28.5 million. Their positions are expected to reverse by 2030, with Delhi to reach nearly 39 million.
Australia’s population is growing at an unprecedented rate, with greater concentration leading towards our capital cities. This has already been a key driver for accelerated progress across a number of infrastructure projects underway across the country, particularly in our capital cities. It’s also expected to continue to drive demand over the long-term for property in these areas.
Because while reaching 30 million is unquestionably a big milestone for Australia to meet in just 10 years, it also begs the question – how much further will we go from there?
Want to learn a little more about population, demography and other trends which drive demand for residential property in Australia? Download our quarterly property market research report which covers the fundamental property market drivers and performance of each of the 5 major capital cities in Australia.
Melbourne rents still going strong
Amidst a backdrop of gloomy sentiment in the Melbourne property market, Melbourne rental prices are not showing any signs of slowing down.
According to the latest rental data from Corelogic, in the 12 months to October 2018, Melbourne apartment rental growth increased by 2.5%. This translates to an increase of $10 per week for landlords, bringing the median asking rent to $410 per week.
Melbourne apartments also recorded the strongest overall rental growth out of the five major capital city apartment markets over the five years to October 2018, rising by 17.1%.
Sydney apartments followed at 14% and Adelaide at 6.9%.
Melbourne housing rents pushed only slightly ahead of apartments, with rental growth of 3.5% in the 12 months to October 2018 and 17.3% over the five years to October 2018.
Rental yields remained attractive at 4% for apartments, whereas housing rents recorded 2.8% in October 2018.
Melbourne’s vacancy rate continues to remain low at only 2.2% which is the second tightest rental market after Adelaide – a sign of strong rental demand.
“For long-term property investors this rental growth will come as welcomed news, increasing the cashflow across their portfolios,” said Ironfish Head of Property, William Mitchell.
“It will be interesting to see to what extent this growth encourages greater investor activity.”
Melbourne’s rental growth comes off the back of record population growth for the Victorian capital, which the Australian Bureau of Statistics projects to overtake Sydney as Australia’s largest city in the 2030s. Other analysts, such as McCrindle Research, expect this to happen even earlier, by 2026.
This strengthening population comes at a time when Victoria is experiencing a significant decline in unit approvals. According to analysis by ANZ Bank, over the 12 months to August 2018 approval numbers reduced by a substantial 46%. Should this decline significantly impact the Greater Melbourne market, further rental growth is anticipated along with a sustained period of low vacancy.
Chart source: Business Insider
Want to learn more about the Melbourne property market? Why not download our latest quarterly market report.
You can also watch our latest property market update for Melbourne.
7 things you can do for your super & finances today
The Productivity Commission released a report today on superannuation in Australia, which found the current system is “harming millions of members” with underperforming funds, multiple accounts and excessive fees.
Specifically, some of the report findings include:
The Productivity Commission has proposed sweeping reforms to improve retirement outcomes. The Federal Government is reserving its formal response to the report until after the findings of the Royal Commission into super funds is presented.
In the meantime, for those who may have multiple super accounts or otherwise keen to make some improvements to your overall financial wellness, we’ve put together some tips to help you make some practical and quick improvements.
A significant 65% of people in Australia are dissatisfied with their current financial wellness, but saving, or investing for your future doesn’t have to feel impossible. At Ironfish, we make no secret of the fact that it’s our mission to help people improve their financial wellbeing and build property assets for the future. We help many Australians proactively work towards achieving this every day.
But if big financial or property goals feel like they are too far beyond your reach right now, to get you started, here’s some small, achievable things you can look into today.
Today’s report findings show that it’s well and truly time to merge your multiple super accounts into the one account, to save you from paying fees and insurances on multiple accounts. You can also look into your investment strategy while you’re at it – for example whether high growth is more appropriate or defensive play-it-safe is more appropriate. You can also check any default settings and insurances you have and consider amending anything that may not apply to you at your current life stage. Many super funds offer some financial advice as part of their service, so you can easily check on their website or by giving them a call if this is available to you. There are also online comparison tools which can show how your super fund has been performing compared to others. When you’re assesssing a super fund’s performance, ASIC suggests checking if the fund has performed well over the past 5 years, not just the last year.
It will be hard to save or even set a budget if you’re not keeping a close eye on what you’re actually spending your money on. Tap and go also makes it much easier to be disconnected with your spending. Try entering your PIN when you pay for things and download an app to track and review your spending to start putting a budget in place. There are plenty of apps out there – including a free one from the government.
Avoid late payment fees by automatically paying bills by arranging a direct debit – you can specify dates to coincide with the day after you get paid to ensure funds are available.
Did you know that Australia currently has overt $1 billion in unclaimed money? If you move often or miss the paper trail, you may be missing out share dividends or bank payments.
You can still find and claim this money via the link below. While you’re at it – opt in for email communications from all your banks and institutions so you don’t miss this kind of information in future.
Some people find that if you can’t see your money it’s easier to save. Try automatically debiting a set amount from your pay each week/fortnight/month – you can start as small as you’re capable of – and put it into a dedicated savings account. This is something that sounds pretty simple, but it’s a strategy that has actually worked for our customers (including this single-mum-of-4) to help them to save up for a deposit for their first investment property over a period of time.
If you’ve managed to buy your first home or investment property (congratulations!) and haven’t looked into the loan for a while – it’s a good time to ask your broker or bank to look into refinancing options. There may be better interest rates available or a skilled mortgage broker may help to restructure your loan to save you more money in the long run or provide you with the flexibility of off-set facilities, for example.
We believe that success in any aspect of life is much more achievable if you have a mentor or a coach. At Ironfish, our Property Investment Strategists follow our customers throughout their investment journey – acting as a mentor to keep our investors informed, motivated and on track to achieve their goals. One of our younger staff investors says that having someone to be accountable to in your savings can really help motivate you to stick to your goals. If your goal is to buy your first home or investment property – that’s something we can certainly help with.
We hope these tips and links to useful resources help inspire some positive changes for your financial wellbeing. No matter where you’re at in terms of savings, super, career or general life stage – you can always start making some positive changes, however small. We know from experience that small, consistent efforts do add up over time!
For many of our own customers at Ironfish, building a portfolio of properties is part of safeguarding their retirement, to ensure they can be financially free to enjoy retirement and last 30 – 40 years of their lives. For further resources on how you can get started, or simply learn more about investing, consider these:
This blog article was updated for relevancy on 10 January 2019. It is intended to provide general information only, and does not constitute any financial advice, offer, or inducement to buy. Investors are expressly recommended to do their own due diligence any investment decision they make and seek independent financial advice.
Smart goal setting in 5 steps
A message from our CEO & Founder, Joseph Chou.
People often think there’s a kind of myth or magic around success or successful people. But the truth is, there’s no such thing. There is, however, one thing that most people overlook: the importance of knowing, every time, exactly what you’re shooting for. Everything I’ve achieved so far is the result of a goal that I’ve set.
At the end of the day, you have to know what you want to do or where you want to go if you want to have any hope of getting there.
Setting goals has also inspired the drive and discipline required to achieve my goals. And while it might have taken me longer to achieve a goal than I had originally hoped, I’ve never yet given up on any goal I’ve set for myself.
How long it takes you to achieve the goal really doesn’t matter. You’ll never fail at achieving a goal if you never give up on it!
The way I see it is that we only have a finite number of years to work with – and while not everyone aspires to make millions or become an entrepreneur – it’s safe to say, that most people would appreciate a little financial security in life; a retirement free of any financial stress. So, thinking from this perspective, we really need to maximise what we’re able to achieve in the limited working years we have. And that’s where goal setting can really help.
There is a famous story about a study conducted by the Harvard Business school, which found that only 3% of their students achieved significant financial success several years down the track after entering the workforce. Those students who had achieved that success, were students who had written down their goals, back when they were still studying, and crucially, had also written down a concrete plan of action to go for it and make it happen.
So if you’ve set a new year’s resolution for yourself or simply planning out your year ahead – here are 5 points to note that will help you on your way to an even more successful 2019.
When people take the time to think about and write down a goal, they tend to stretch themselves a little bit. Without a clearly defined goal, you’re likely to repeat what you did last year. There’s no strong motivation to learn a new skill or to broaden your knowledge base to be able to reach the next goal.
When I was a kid at school, I made the decision to become a table tennis player – and to be the best player in the school team; that was my goal. In setting that goal, I knew I had to improve my skill level as a player, and practice hours on end to be able to realise that goal.
In my early years after arriving in Australia, I got into the habit of writing my goals for the year on the 1st of January every year. It was a genuinely exciting time for me because it was when I learned that I can define my own results for the year; to begin with the end in mind. Back then, my goals were about basic financial outcomes, for example, I used to write down the money I needed for the year to fulfil my family’s needs and aspirations.
Before I had even learned about the power of visualisation, I’d already made it a habit. Back when I was in high school, and considering my options for the future, I decided that I would like to go to uni and my goal was to gain admission into one of the best universities in China.
Immediately, I imagined myself walking down the Peking University campus, and what I’d do there and how great it would feel. Returning to this image gave me the energy and drive to continue to be disciplined enough to put in the otherwise overwhelming number of hours of study that would be required to get there.
The difference between wishful thinking and goal setting is committing to a plan of action. Without a concrete plan of action, your goal will remain an aspiration, as opposed to something that is possible to achieve. So for me, when I would write down my goals on January 1st every year, I would also write down the plan of action that would help me achieve them.
Part of committing to a plan of action involves working out what you’re prepared to give up in order to achieve your goals. Because there will be sacrifice – and that sacrifice may mean working harder than everybody else is – getting up earlier to get to the gym, practicing more at a sport or instrument, studying more, or simply, finding more hours in the day to get through your work faster.
When I set the goal of getting into Peking University, I literally stopped everything else, I stopped playing the violin, I stopped playing table tennis, I even stopped setting off firecrackers at Chinese New Year. And I didn’t even notice that I’d stopped, I was just so focused on my end goal.
In my early years in Australia, when I was working in insurance sales, I wrote down that I’d be happy to give up watching TV (something I used to love) in order to have more time to achieve my financial goals. For example, this would give me more time to make calls and spend time with potential customers.
Throughout the year, I would review my goals each month to see how I was tracking against my plan. This way, if I knew I was missing my target for the month, I’d know I’d need to double my efforts to get there.
Setting a goal is one thing, but committing to that goal so that it becomes a ‘burning desire’ is the thing that’s missing in most people’s lives.
What I learned early on, when I first started reading about goal setting, is that when you have a strong desire to achieve something, you will have the discipline to follow through. Giving up won’t be an option; you will simply have no choice in the matter.
When a goal you set is your true ‘heart’s desire’, everything you do on a daily basis in order to achieve it, will no longer feel hard or tiresome – it will become part of chasing your dreams.
As the saying goes: “if you want something badly enough, you’ll get it” – because you’ll be happy to do whatever it takes to get there.
And these days, the idea of sitting on the sofa and watching telly sounds tiring and frankly, a little boring to me!
For me personally, because I have largely realised my earlier goals in life, my goals these days are much longer term. My new personal financial goal is to be able to commit to becoming one of the members of ‘The Giving Pledge’ – an open invitation for billionaires, set up by Warren Buffett and Bill Gates to publicly dedicate the majority of their wealth to philanthropy.
I also remain committed to my goal of helping others, through my work with Ironfish investors, and also through individual mentorship, by teaching others what I’ve learned about changing your mindset and learning how to set and commit to goals. This is one of my ongoing goals that I’m most proud of achieving; the many people I have worked with and have seen develop in their careers and flourish.
Seeing people reach their full potential and achieve goals that they never believed possible is incredibly rewarding and it’s one of my favourite things about what I do.
What property investors can learn from the 2018 market
In my experience, most people already believe property is a great investment option and wished they’d started investing years ago. But whether it’s because of the media, wider market uncertainties, lack of time, knowledge, or the confidence to make a decision and take action – so many people let opportunities slip by.
For example, there are so many people who did not make any money in the recent boom in the Sydney and Melbourne markets. By this I mean, there are so many people who were financially qualified to be able to invest, many who wanted to invest but who failed to act on their intention.
Of course, this is understandable. Property investment is a significant commitment and it can be hard for a new investor to take the first step.
But there are so many people out there who aren’t even aware that building wealth for the future is important. There are so many people who are not even aware of the possibilities and options for investing. If you are aware and have the intention, then this is a big step in itself.
If you have not yet managed to take the next step and actively get yourself into the market, what I would say is: make 2019 the year. I encourage you not to let another year slip by or let another cycle come and go without taking some action. Because at the end of the day, only action will bring results.
So what can we learn from 2018 to be able to take some action in 2019?
I read a great quote recently: “the media is never there to inform, it’s there to startle.”
As negative headlines of plummeting property prices dominate the media – now more than ever, it’s important to be careful who you listen to.
Because what we know from looking at the data is that there is a more nuanced story than what appears in the newspapers. Certain areas, suburbs and types of properties are continuing to outperform the wider market.
Look beyond Sydney and Melbourne and you’ll find the South East Queensland market is genuinely moving. There’s some simmering in Western Australia and to some extent South Australia as well. But you won’t find too much of that reported in the media.
There’s no doubt that there is some pain involved now in terms of credit, however there are signs of improvement.
Just this week APRA announced that it will remove interest-only lending restrictions as of 1 January 2019. This is the second time APRA has relaxed lending restrictions this year. In April, the regulator lifted the 10% annual ‘speed limit’ on investor credit growth. We would expect these changes to help relieve some of this ‘pain’ and help stabilise the overall market in due course.
Regardless, as our Director of Property & Research Grant Ryan detailed in length last week: wherever there are challenges, there are also opportunities that emerge from these challenges. Having the right mindset in your response to these challenges will still be very important.
For example, while some buyers will be scared off by the media headlines, this will leave others who are more informed to take advantage of the markets that are still growing.
Some may be deterred by finance, while others will take the opportunity to work on themselves, on their careers and better qualify themselves.
Investors with strong financial profiles will realise that lenders will be competing for their business and take the opportunity to negotiate better rates and secure a quality property before the market becomes highly competitive again.
We expect to see a genuine difference between quality properties with owner-occupier appeal and ‘investor-focussed’ properties in 2019. In a booming market, any property you buy will probably perform. Now, investors will need to be even more discerning. At Ironfish, our focus is quality properties, and this is why we’ve been able to successfully help our investors settle so many quality properties this year – while others are facing 20% – 30% valuation issues.
Ironfish has never been a fan of student accommodation or serviced apartments for the same reason we steer clear of properties that will only appeal to investors. When you come to sell your asset, you want to be able to access the widest possible market. Property investors make up only a small percentage of the market, comparatively speaking. Investors also tend to make purchasing decisions less emotionally. Owner occupiers may be more willing to pay a premium for something they fall in love with.
If Labor gets elected next year and upholds their promised changes to negative gearing – which will favour new property – then owner-occupier appeal will be even more important for investors when and if they decide to sell.
This is now the third market cycle I’m coming into since becoming an investor and I can tell you now that challenges will always exist regardless of when or where you decide to invest.
But as an Ironfish investor, you are so much better supported than the many investors doing it alone. As an Ironfish investor you will be able to embrace those challenges and take advantage of the opportunities that will emerge. You are also backed by our comprehensive service, research, property selection and customer care teams for the life of your investment journey.
Our national reach means we can help you invest with confidence in other cities or learn more about ‘sub-markets’ in Melbourne or Sydney which are expected to outperform the wider market.
Our relationships with leading developers – long-standing brands – means we will continue to be able to offer you quality properties that are a cut above. Our property and research team ensure the properties we recommend have strong fundamentals – including properties favoured by owner occupiers – and offer genuine value for our investors.
In 2019, you can expect to find fewer property companies; particularly those without the scale, infrastructure, relationships and customer-centric approach that we have established over the past 12 years. As I’ve mentioned in the past, Ironfish is growing at a time when others are scaling back or closing their doors. We are doing this because we know there are opportunities for investors, it’s a time when investors will need professional help more than ever and we want to make sure that we are investing more into our people and services, so we can provide our customers with a better service experience.
Building wealth through property investment takes time, so even if you purchase the perfect investment property at the perfect time – this alone is not going to help you achieve financial freedom. The key is to build a portfolio strategically and then to hold those assets over the long term – and holding is easier said than done. But with the right support team around you, success in investment – as in anything in life – is far more achievable. We are here for the long term to ensure you achieve your goals; at Ironfish, our aim is to create customers for life.
So, as we finish up for 2018, I would like to take the opportunity to wish all our investors a Merry Christmas and Happy New Year. Thank you for taking action with us. I hope our continuing investment in Ironfish people and services will enable us to exceed your expectations in the new year and contribute to your further success in 2019.
APRA to remove interest-only lending restrictions on 1 Jan
The Australian Prudential Regulation Authority (APRA) has announced that it will remove interest-only lending restrictions from 1st January 2019.
These restrictions were originally introduced in March 2017 and essentially forced lenders to restrict the percentage of their new interest-only loans to 30% of their total home loans that they issue.
The restrictions have been very effective in curbing interest-only lending, as evidenced by the chart below.
Source: RBA, JP Morgan
“This announcement is good news for property investors who can now look forward to some improvements in terms of credit in the new year,” said Ironfish Head of Property William Mitchell.
The announcement comes off the back of cooling markets in Sydney and Melbourne, which previously enjoyed strong growth, placing significant pressure on housing affordability.
“We expect the measure will bring more buyers back into the market, particularly in Sydney and Melbourne, in due course,” Mr Mitchell added.
JP Morgan’s Chief Economist Sally Auld said that while she doesn’t expect a quick acceleration in interest-only lending, she does expect borrowers to potentially benefit from cheaper interest-only loans.
“Interest-only loans were repriced quite significantly [higher] in the wake of this regulation, so there will likely be some reduction in rates for these loans,” Ms Auld told the ABC.
The announcement from APRA marks the second time this year that the regulator has relaxed lending restrictions.
In April, APRA lifted the 10% annual “speed limit” on investor credit growth which had been in place since 2014.
“APRA’s lending benchmarks on investor and interest-only lending were always intended to be temporary,” APRA Chairman Wayne Byres said.
“Both have now served their purpose of moderating higher risk lending and supporting a gradual strengthening of lending standards across the industry over a number of years.”
Want to stay up to date on the latest property market news, investment information and resources? Why not subscribe to our monthly newsletter.
Australia’s changing landscape – before & after transformations in our capital cities
The sheer scale of Australian investment into major infrastructure projects has been transforming the Australian landscape and improving amenity, access and liveability of our major capital cities.
These city-shaping projects have also been a strong economic driver over the past several years. The creation of thousands of jobs has flowed positively into the labour market, with the ABS recently reporting that the national rate of unemployment in trend terms, has improved to only 5.1%. This is the lowest rate of unemployment since early 2012.
The nation’s infrastructure investment pipeline has been a major priority for both Federal and State Governments as they collectively seek to keep up with Australia’s population growth.
According to projections released by the ABS in late November 2018, population growth figures again beat governmental forecasts. Australia is now expecting to reach 30 million people as early as 2029, decades earlier than originally anticipated.
In the coming years we can expect further delivery of critical transportation infrastructure and increased amenity across diversified sectors of society including education, health, sporting, entertainment and culture.
With billions of dollars invested in projects such as Adelaide’s Future Frigate Program, Brisbane’s Queen’s Wharf Casino, Melbourne’s Airport Rail Link, Perth’s METRONET and Sydney’s Second Airport – the landscape of our cities will continue to change.
Take a look at some of the ‘before and after’ transformations of iconic infrastructure projects that have been taking place in our cities thus far.
Representing an investment of over $2.1 billion, the Royal Adelaide Hospital is South Australia’s flagship hospital. The facility provides a comprehensive range of clinical care to an estimated 85,000 inpatients and 400,000 outpatients each year.
Supported by 6,000 staff, the new hospital was built on 10 hectares of Adelaide parklands on the North Side of the terrace and is complemented by courtyards, terraces and sky gardens.
The future for Adelaide infrastructure is exciting and will continue to be led by further developments in renewable energy infrastructure as well as the $90 billion investment into submarine and shipbuilding.
This mixed-use development represented a $2.6 billion investment into the heart of the Perth CBD. Elizabeth Quay was designed to revitalise the city centre, by creating a truly inspiring waterfront precinct.
The project connects the river back to the city – with over 150,000 cubic metres of soil dug out to create a new inlet. Elizabeth Quay now features parklands, playgrounds as well as 39,000 m2 of retail space, 150,000m2 of office space and 1,700 residential apartments.
The future infrastructure investment pipeline for the Western Australian capital is promising with analysis by CBRE, estimating $13 billion earmarked for the metro area over the next five years. This is over and aboves major developments which are happening in the lithium space.
AAMI Park Stadium was Melbourne’s first large-scale, purpose-built rectangular stadium. The stadium hosts the NRL, Super Rugby as well as A-League soccer.
Located about 1km east of the CBD, the stadium features a cutting edge ‘bioframe’ design, with total capacity of approximately 30,000 people.
The AAMI Park Stadium is just one of the reasons as to why Melbourne was crowned the Sports City of the Decade back in 2016.
The cosmopolitan lifestyle, and abundance of amenity in the Melbourne CBD has long underpinned Melbourne’s continued dominance in the upper echelons of the World’s Most Liveable Cities rankings by the Economist Intelligence Unit.
More and more infrastructure projects are underway in the Victorian capital, accelerated by the Andrews Government in conjunction with surging population growth.
Some of the exciting projects include the proposed $10 billion Melbourne Airport Rail project and the proposed visionary $50 billion Suburban Rail Loop.
Sydney Metro Northwest is due to open in the second quarter of 2019 and remarkably, is expected come in $500 million under budget.
The surplus funds are expected to be injected into future routes of the Sydney Metro program.
The welcomed rail project will see the growing North West region of Sydney receive eight new railway stations and 4,000 commuter car parking spaces.
Trains on the new line are projected to run every four minutes during peak hours.
The project will be a critical part of the transport infrastructure in the region, which is expected to receive an additional 200,0000 people over the coming decades.
This project represents one project of many within the broader roads and rail infrastructure boom in the city.
Brisbane’s second runway is on track to commence operation in 2020, and once complete, will enable the airport to service the same capacity as Hong Kong and Singapore airports today.
By 2035, it is estimated that the runway will create 7,800 jobs and contribute $5 billion to the economy per annum. The second runway is also designed to support the expected growth in tourism from Asia and beyond, as more international visitors are drawn to other new projects in the city such as the $3.6 billion Queen’s Wharf Casino precinct which is due to open in 2022.
The Sunshine State is also readying itself for domestic visitors and migrants; Queensland has been the number one choice for interstate migrants over the year to March 2018.
Challenges and opportunities in the current property market
Market insights from Ironfish Director, Property & Research, Grant Ryan
As we begin a new year, many investors are wanting to know what 2019 may hold for the market and how this may impact their portfolio and potential investment decisions over the next 12 months.
At Ironfish, we see three main challenges within the current market which property investors will face. These include: access to finance, general market uncertainty and the influence of mainstream media.
From our experience as investors and working in this industry for nearly 20 years, we can also identify the opportunities that will emerge from these challenges. This article aims to explore these challenges and opportunities in greater detail as well as showcase some key aspects to watch out for in each of our major capital cities.
The biggest challenge which has impacted property investors have been the restrictions placed on purchaser finance. The nation’s prudential regulator, APRA, actively drove the recent market slowdown, especially in Sydney and Melbourne. This was achieved by limiting investment housing loan growth. This trend is expected to continue in the short term, with the Royal Commission prompting further public scrutiny on lending practice thereby heightening speculation on further restrictions to purchaser finance.
Investors continue to benefit from a low-interest rate environment with the RBA choosing to keep rates on hold at 1.5% for the 28th consecutive month. As a result, the current mortgage rates on offer are trending at historic-lows. Major banks continue to compete aggressively for market share, particularly for borrowers with strong financial profiles, offering attractive terms and discounted rates for new loans. With less investors in the market, today’s tightened finance environment favourably means less buying competition for those who are able secure finance at an attractive rate and surround themselves with the right team of professionals.
General uncertainty in the market has been driven by several factors. At a global level, the world continues to watch what is happening with China’s economy as well as US and China trade relations and movements to US interest rates. Domestically, the general feeling of uncertainty has been underpinned by recent price adjustments in Sydney and Melbourne, limited access to finance and news of potential oversupply in certain areas. Furthermore, with the upcoming federal election just around the corner, debate about the actual impact and benefits to changing negative gearing and capital gains rules at this point in the current market cycle, has intensified.
In recent history, we have had several events which have heightened market uncertainty such as the GFC and the end of the mining boom. Irrespective, property as an asset class has continued to perform with solid capital and rental growth recorded over the long-term. According to SQM, the national residential vacancy rate improved to only 2% for October 2018 – the lowest rate since early 2014. All major capital city markets continue to have a tightening vacancy rate trend over the past 12 months except for Sydney. Additionally, the October 2018 national trend unemployment rate improved to 5.1% – the lowest unemployment rate since early 2012. Solid economic growth continues to be driven by the nation’s major infrastructure investment pipeline. With more buyers sitting on the sideline feeling uncertain about the market, many markets around the country now have a lack of buyer competition, and hence there is greater opportunity to secure a quality property in these markets.
The mainstream media has continued to hype a doom-and-gloom narrative, with much of the focus being around the recent pullbacks in Sydney and Melbourne. However, when looking back at the data, it is evident that investors who purchased early in the cycle would have done well. Sydney increased by 85% between early 2012 and early 2017; and Melbourne increased by 74% between mid-2013 and mid-2018. Had investors relied on media headlines back in the early 2010s, they would have missed out on the growth that Sydney and Melbourne generously offered. The same would have been the case for the respective strong periods of growth experienced in Adelaide, Brisbane and Perth.
With underlying fundamentals such as population growth, economic performance and jobs creation remaining sound, the negative sentiment in the market presents a great opportunity for long-term investors. In effect, the media has played a key role in creating buyers markets in areas where fundamentals continue to remain solid. Cyclically of the five major capital cities, Brisbane and Perth are best positioned for growth in the next 5 years – not surprisingly, these are also the 2 markets where the media has been most negative over the past few years.
Now let’s review what is happening in each of the major capital cities.
Overall, the underlying long term fundamentals for property in our capital city markets remains sound, largely driven by population growth, strengthening economic growth, jobs creation and infrastructure investment. However, the challenges of finance, market uncertainty and the media continue to be felt in the market nationally, not just in Sydney and Melbourne.
The upside for investors is that this has created buyers markets in areas where localised market fundamentals remain solid. Consequently, today’s property market provides opportunity for investors to add quality properties to their portfolios – providing they are actively researching and assessing opportunities.
University of Sydney announces new campus
Australia’s oldest university, the University of Sydney has announced plans to open a new campus in Western Sydney.
The move reinforces the rapid expansion of Sydney’s west and its growing significance within the Greater Sydney Region.
The new $500 million, 25,000 student campus is being delivered in partnership with the NSW government.
The campus will specialise in artificial intelligence, advanced manufacturing and data.
The exact location of the campus is yet to be confirmed by Sydney University, however the proposed site currently is within the heritage precinct within the Parramatta North growth centre. Negotiations between Sydney University and the NSW Government will continue over the coming months to finalise the exact location.
“The entry of our oldest, and arguably most prestigious university into the heart of Western Sydney signifies the breadth and depth of investment going into this region. Western Sydney is already expanding at a rapid rate, and with more quality employment, infrastructure and education options, the region will become an even more attractive place to live, study and work,” said Ironfish Head of Property, William Mitchell.
Phase one of the new campus is expected to be complete by 2030, with capacity for 6100 students, as well as creating 3100 local jobs, and more than 1000 affordable housing places and social infrastructures.
The second phase, to be completed by 2050, is expected to attract 25,000 students, create 20,000 jobs and inject $13 billion to the state NSW economy.
University of Sydney Vice-Chancellor Dr Michael Spence said the announcement crystallised a “once-in-a-century opportunity to create an economic, intellectual, social and cultural asset in the heart of greater Sydney.”
The announcement also comes amidst an infrastructure boom in Western Sydney, including kick off on earthworks for the new airport at Badgerys Creek along with important new rail links.
Badgerys Creek and surrounding suburbs have been identified as a 3rd city of Sydney, complete with its own CBD (along with Parramatta and the traditional CBD in the east) according to the 3 cities plan unveiled by the Greater Sydney Commission late last year.
“We wanted to invest again but this time in a systematic way”
“I purchased one investment property in the past. But I was fully aware that I lacked long-term planning or strategy. I didn’t know how much I could afford to borrow, I didn’t know what kind of property I should invest in. I needed a professional I could trust to help me take the next steps.”
Ironfish customer Vivian Ma is based in Melbourne. She works in the public sector; her husband is a mechanical engineer and together they are busy raising 2 young children. Before Vivian connected with us, in many ways her situation was not unlike many others in Australia who dabble in property investment.
“In 2008 my husband and I invested a small apartment before we had our own home. At that time we already believed property would be a good investment, but we didn’t have any professional knowledge about property investment at all. Luckily our first investment turned out to be very successful, so we realised we needed to treat it more seriously. We wanted to invest more, but this time in a systematic and professional way.”
Vivian and her husband were fully aware of their shortcomings – their lack of knowledge and long-term strategy as well as their limited experience in property investment. In order to build on their first success, they knew they needed some professional guidance.
“Around 2009 I was invited to attend a seminar “From Bicycles to Bentleys” presented by Ironfish CEO & Founder, Joseph Chou. The seminar was quite inspiring and motivating. We totally agreed with Joseph and Ironfish’s investment philosophy. We gained a lot of confidence and motivation from this seminar and it gave us a very good first impression of Ironfish.”
“I not only appreciate Jimmy as my strategist, but also as a person; he has become a close friend. We are both about the same age and back in 2008/09 when we first met, both of us were at the early stages of our career. Jimmy is a very positive, genuine and practical person. He answered my every question in a detailed and professional way. I remember him saying, ‘Ask me whatever you want to know. If I don’t know the answer, I will go ask my supervisor, my managers, until I get the most accurate answer, that’s what I MUST provide to you.’
“Today Jimmy is very successful in his career, but he remains modest, hard-working, and sets a high bar for himself. I truly trust and respect him – so much so, I hope my own son will grow up to be just like him!”
With Jimmy’s help, Vivian has now built a portfolio of 4 properties with Ironfish – 3 apartments and 1 townhouse in Melbourne.
“Jimmy knows my situation so well that each time he’s able to recommend a property that exactly meets my criteria, expectations and my financial needs. The purchase timing, the property itself, the professional team support, everything is tailored for me.
“I truly believe Jimmy offers the best service possible, and I believe a company that has someone like Jimmy on their team will surely be thriving. I have been happy to introduce many friends and relatives to Jimmy and to Ironfish as well.”
While Vivian can not speak highly enough of Jimmy, she’s also very grateful to our many service support teams especially at settlement.
“Ironfish’s ‘after-sale’ service is incredible. I was deeply touched by the efforts the Ironfish team made for me at settlement. In 2015, I experienced some mortgage issues during the settlement process. If I couldn’t get the finance, I wouldn’t be able to settle, which might have incurred a penalty from the developer. The Ironfish team did all the communication with the bank, the developer and myself. Eventually I was able to settle, and it turned out to be a quite successful investment. It made me feel so much better to have a whole team back me up.”
What are the seeds of success?
In 2006, Ironfish began with a single office, 12 staff and a mission to help people achieve long-term financial wellbeing through strategic property investment.
We had a vision to build a property investment services company that would be loved by staff, complimented and trusted by our customers, and admired by our industry peers.
Today, we have over 14 branch offices and over 300 staff, as well as significant property development, mortgage broking and property management arms.
Through our expansion, we have been able to help thousands of customers set and achieve their investment goals – and look forward to a brighter future.
We are privileged to partner with some of the best developers in the industry – great brands who share our values and our commitment to quality.
Over the past 12 years, we have also managed to attract and retain many talented people to service our customers. We enjoy a happy and harmonious working life here; our people are kind, inspiring and infinitely generous in their ability to share their time, knowledge and skills for the benefit of colleagues and customers.
The truth is, in this industry, there is a very low entry point to get started. But to grow to the scale that Ironfish has managed and to have won the trust of so many customers, I believe, lies in our service approach.
We are genuinely committed to do the right thing by our customers – every time. Not simply when it’s convenient to do so.
The values that underpin Ironfish are the same values that have shaped the way I live my life and the way I do business. These are values that have been instilled in me from a very early age (like many people) by my father and mother. And I am eternally grateful to them both for everything they have taught me.
This month marks the 10th anniversary of my mother’s passing. At this significant milestone, I can not help but reflect on just how much my mother has influenced my life and my work. I admire her beyond imagination and her guiding principles have made me who I am today. For this reason, I would like to share some of these principles with our investors who have placed their trust in us; a responsibility we at Ironfish do not take lightly.
I grew up in Beijing, China; my father worked in the military, and my mother worked as a medical doctor, so we were lucky to be financially better off than the average Chinese family. My parents were always very generous. My father sent his entire pay-check to support our relatives in Shandong who would otherwise be living in poverty. My mother’s income also helped to support her sisters, as well as my uncle who lived with us for some time.
Their generosity extended beyond our family as well. My mother gave out many ‘loans’ to neighbours and friends when they were experiencing difficult times – money she never expected to have returned. I remember clearly one occasion when a young military officer passed away leaving a widow and son, my mother paid for his son’s entire university fees. All this my parents did without ceremony; only kindness and genuine desire to help. This spirit of sharing has instilled in me my own sense of responsibility to give generously – and to share my time, knowledge, skills for the benefit of others.
When I think about generosity, it’s not simply in terms of wealth or finances; it’s a mindset. Whilst having a strong sense of self respect, my mother showed me the importance of always putting others first. For example, in China it’s not uncommon to find that mothers-in-law don’t get along with their daughters-in-law – with daughters-in-law feeling like outsiders in the family. But my mother worked hard to make sure her own daughters-in-law felt like part of the family. So much so, that she actually treated her daughters-in-law better than her own kids. “They’re on their own, without their own parents or siblings around them. We have to make sure they feel loved and welcome in our family,” my mother would say.
My sister has a great story about this. When I went to study in America, I bought a really nice coat for my sister – a rarity and luxury in China at the time. My sister was ecstatic, and absolutely loved it. My mother, on the other hand, insisted on her giving it over to our sister-in-law, so she wouldn’t feel left out. My sister wasn’t thrilled – unsurprisingly – but she did it, and today, regards it as an important learning.
Treat the underdog better. And always do the right thing – even when it feels really hard.
At Ironfish, we talk a lot about having the right mindset. As a kid, I always had dreams. I went through various phases of wanting to be a soccer player, or a concert violinist or a table tennis champion. My mother supported me in all these pursuits. She didn’t mind that I kept changing my mind on what I wanted to be. As long as my pursuits were good and my intentions kind, she was behind me 100%. She made me feel like it was all possible and I could do anything I put my mind to.
When I was in the thick of my table tennis obsession, I’d lose track of time, coming home late for dinner. My father would sometimes scold me: “Do you know what time it is? The food is cold!” (This was a time before microwaves, before we even had gas stoves.) My mother, on the other hand, would never react. On another occasion, I was carrying a stack of dishes into the kitchen a little carelessly and they fell and smashed onto the floor. Again, no reaction from my mother.
Only a few days later, would my mother sit me down to talk to me about what happened and how I could do better next time, and why it was important. She told me much later on that she did this for a couple of reasons. Firstly, because every time a child makes a mistake, they’re nervous. Your anger is a predictable response and they won’t learn when they’re in a heightened state of nervousness or anxiety. Secondly, when you’re angry, you often say and do things you don’t really mean. Sometime later, when everyone is calmer is when you can consider what you really want to say, and the message can get through more effectively.
Watching the way my mother handled everything in life and seeing firsthand the calm and considered approach she took to setbacks and challenges has had a lasting impact on me. In my relationship with my wife and kids I’ve endeavoured never to react with anger. At work as well, my ability to handle any business challenge calmly is due to my mother.
All this, I have learned from my mother, but I can safely say she never once ‘preached at me’. My mother told me lots of stories and she also showed me the importance of leading by example.
Instead of telling us to give, she simply gave herself. Instead of telling us not to judge others, she never judged others. She never told us to treat everyone equally, she treated everyone around her with the greatest of respect.
In China, it is not uncommon for professionals to have a driver, housekeeper or nanny. Unlike many Chinese families however, we called our nanny ‘Grandma’ and she was a true member of the family. In fact, for a long time, we actually thought she was our grandma. She and my father’s driver (supplied by the military) would eat with us at home or together with us at a restaurant when we went out for special occasions. Later in life, my parents had a carer to look after them in their older age. When I treated mum and dad to their first experience of a stay at a 5-star hotel, my mum told me not to forget their carer and to make sure I had a room booked for her too. My mother’s kindness was universal and not affected by what was the cultural norm or what others do or expect.
While we don’t tend to have the luxuries of a driver or housekeeper here in Australia, I can see every day how these principles apply here. People might treat me better, being the CEO, than they would someone less senior in a company or even the cleaning staff at the office or waitstaff at a cafe. I had coffee in the same café across the road at our old St Leonards office for many years. The café staff there eventually became Ironfish customers. In my experience, when you make a genuine effort to treat everyone with the same respect, to act with integrity, to keep your own feet on the ground and know that however successful you are – you can always be better – people can feel your sincerity and are drawn to it.
When my mother became sick, she had so many visitors and so many wishes of goodwill. Her actions throughout her life won the respect and admiration of everyone around her. Today, she is missed by many – not least by me.
But I take heart that her legacy lives on today in my brothers, sister and myself. In the calm, secure and loving home-life my wife and I endeavour to create for our kids, for the habit of charity which she instilled in me, and in our commitment at Ironfish to always do the right thing, every time.
We will continue to uphold that commitment to our investors. Thank you for coming with us on this journey.
And thanks also to my mother for showing me the way, always.
Brisbane’s newest river-front destination
Brisbane’s premiere new river-front destination is officially open, with stage 1 of the $110 million Howard Smith Wharves redevelopment now complete.
The first phase of venue openings includes 2 major event spaces: the Rivershed and Howard’s Hall, along with craft brewery Felon’s Brewing co, an old-world over-water bar called Mr Percival’s as well as parklands and a lift that travels down the cliff face from Bowen Terrace to the riverside and new event spaces.
Once the project is complete the historic site will include 2.7 hectares of public open space, an array of restaurants and cafes and a new luxury 164 room Art Series Hotel. The majority of venues are expected to be open before Christmas, and the new hotel is due to open in March 2019.
The Wharves are set to become a vibrant river-front venue for locals, as well as a major tourist destination for Brisbane’s growing international and domestic visitors.
“Ultimately what is being produced here is something that will add to the Brisbane experience… Two years ago we had 7 million visitors to our city, both internationally and domestically… Today that figure is around 8.4 million per year,” said Lord Mayor Graham Quirk.
The $60 million flagship Art Series hotel is the first to be developed since becoming part of the Accor Group.
Described as the most luxurious Art Series hotel yet, the stunning 6-storey hotel is carved into the cliff under Story Bridge. It will feature multiple drinking and dining outlets as well as an impressive rooftop pool boasting spectacular views of the Brisbane River and CBD, bar, gym and 3 conference rooms.
Brisbane City Council also announced this month that it would build a new ferry terminal to service Howard Smith Wharves – expected to open in 2020.
“With regular events planned at Howard Smith Wharves’ exhibition centre, as well as the restaurants, bars and public parkland expected to attract large crowds, the terminal will provide convenient public transport to the site,” said Brisbane Deputy Mayor Adrian Schrinner.
Howard Smith Wharves CEO Luke Fraser welcomed the terminal announcement as a great addition to the vibrant Howard Smith Wharves precinct, which he says “is at the heart of the city’s transformation into a New World City.”
Banks now offering steep discounts for some investors
With lending criteria tightened, leaving a smaller pool of property investors shopping for home loans, major lenders including the big 4 banks are now vying for investor market share.
As a result, some are now providing very attractive discounts to win the business of new investor customers with strong financial profiles.
‘Mortgage rates remain low and there is strong competition for borrowers of high credit quality,’ RBA Governor Philip Lowe said earlier this month.
Mortgage comparison website, RateCity, recently announced Australia’s largest lender, Commonwealth Bank, had been increasing the discount on some of its lowest home loan rates.
HSBC, and Westpac were all also lowering their rates in an effort to acquire new customers.
A recent mystery shopping exercise into home loans by mortgage comparison website, Mozo, revealed that getting a better mortgage deal ‘may be as simple as asking for it.’
When pressed, lenders such as CBA and ANZ offered a discount which would result in savings of up to 0.95% – a much higher discount compared to last year’s 0.13% offering by major lenders.
According to Mozo, investors who were able to negotiate discounts with the banks could save $9,500 every year on a $1,000,000 interest only loan.
First home buyers could save up to $2,001 per year on a $300,000 loan and refinancers could snag discounts equating to $3,145 in savings each year on a $500,000 loan.
In addition to discounted rates, banks were also willing to provide other incentives such as cash back and frequent flyer points.
“This is a great example of the unique opportunities available right now for investors who are in a position to buy and can secure finance. Lenders are competing for the business; it truly is a buyers’ market,” said Ironfish Head of Property, William Mitchell.
Capital cities Vs regional towns – where should I invest?
When it comes to price growth in capital cities vs regional towns, one has far eclipsed the other over the last 5 years.
Market analysis by independent property research company RiskWise reveals that residential properties located in capital cities have in fact greatly outperformed their regional counterparts over the past 5 years.
Capital city houses achieved a 5-year average return of 52.2%. Houses in regional area achieved less than half that result, at only 23.5%.
According to a study by ANZ Research, major capital cities not only far outperformed the rest of the state in terms of price growth in the past 15 years, they were also less hit by periodic downturns. When compounded over an investment lifetime, the return for investors is significant.
Source: ANZ Research
The weaker performance in regional cities, according to RiskWise CEO Doron Peleg, was driven by slower economies and poor population growth. Factors which are unlikely to change dramatically into the future.
“Investors should not rush into unnecessary adventures in remote areas just because the market in Sydney and Melbourne have cooled as they will face needless risk and poor returns,” Mr Peleg.
Put simply, population growth drives demand for residential property. All things being equal, greater population growth means greater demand for homes, which in turn puts upward pressure on price growth.
Currently, our 5 largest cities – in terms of population – are Sydney, Melbourne, Brisbane, Perth and Adelaide. The 6th largest is the Gold Coast, with a population of over 650,000 people.
These cities are not only the most populous, they are also some of the fastest growing cities in Australia.
Melbourne, for example, added in excess of 125,000 people in the 2017 financial year. This is the equivalent to adding a city the size of regional Ballarat in the span of 12 months.
Due to a large population base and very strong rate of increase, the population increase across our major capital cities trumps all regional cities – as the visualisation below shows.
Capital cities tend to enjoy stronger and more diverse economies than regional cities – making them more resilient and robust over the long term.
For example, unlike a capital city, a regional city’s economy tends to be heavily reliant on just 1 or 2 industries. If that particular industry hits a downturn, then the city’s overall economy will slow significantly and this will directly impact property prices in that city.
Captial cities are where most of our industries and jobs are located and where the bulk of our population resides. In fact over 63% of Australia’s population lives in our 5 largest cities alone.
As a result, public investment decisions tend to centre around capital cities as well. This means capital cities enjoy the prioritisation of major infrastructure projects.
Infrastructure investment is an important driver for local property markets; stimulating jobs creation, economic and population growth.
With all states now in the middle of a ‘once-in-a-generation’ infrastructure boom, the multiplier effect of major infrastructure investments such as Sydney’s Second Airport, Melbourne’s Metro Tunnel, Brisbane’s Second Runway, Perth’s METRONET, and Adelaide’s Future Frigate program, are expected to be significant.
“There may well be periods of high capital growth in regional centres, but ultimately, capital cities are where we expect to see strong and relatively stable performance over the long term,” said Ironfish Head of Property, William Mitchell.
“Some investors will look to regional towns for stronger cashflow, however for those looking for long term capital growth, the big cities are a no-brainer. That’s why at Ironfish we advocate a sensible long-term buy and hold investment strategy targeting great locations in our capital cities with robust economies,” said Ironfish Head of Property, William Mitchell.
“You don’t have to compromise on lifestyle to invest”
“A lot of people feel they have to compromise big time on their lifestyle to become an investor, but in my experience, it wasn’t the case. As a young professional, it’s completely do-able.”
For a long time, Tony Ng lived what he describes as a conventional life. He studied hard at school and afterwards chose accounting at uni. because it seemed like a ‘safe’ option. Then after graduation, he went into full-time work straight away with an accounting role at Coca Cola Amatil and got stuck into climbing the corporate ladder.
“I took a very traditional path; I come from an Asian family and my mum always told me: work hard and you’ll do well in life. That’s why I was so focussed in my studies and afterwards in my career. After starting at Coca Cola, I quickly went on to get my CA (Chartered Accountant). I made solid progress in my career, changing roles every 1-2 years, initially at Coca Cola, and subsequently moving to Woolworths, where I led a small team as the Finance Manager.”
Apart from being a bit of a high-achiever, Tony also happens to be the nephew of Priscilla Cheung – one of our long-serving Strategists, and highly successful investor in her own right. By having access to Priscilla’s expertise and insights, Tony made one slight and quite crucial deviation to his otherwise conventional path.
“I bought my first property when I was 20. I still remember clearly; I was at Priscilla’s house, she hadn’t started working for Ironfish yet, but she was already an experienced property investor. Priscilla had just decided to purchase a property off-the-plan and suggested that it might be a good buy for me too. I was 20 – I had no idea about anything! But Priscilla had already had some good results to show for her investments and Mum was very supportive and happy to pay the deposit. It was an off-the-plan purchase and settlement wasn’t for another year, coinciding with me working full-time. And as a first home buyer, I was able to access some government incentives as well.
“But without Priscilla, it wouldn’t have been done. I wasn’t thinking about investing; my sole focus at the time was getting into my career. Priscilla’s knowledge gave mum confidence that it was the right thing to do for me long-term, even though I was just starting in my career. And given she is family, we had complete faith and trust in her guidance. It was the ideal partnership.”
Tony is quite adamant that for a young professional such as himself, property investment really doesn’t require any compromise to your lifestyle and shouldn’t be something that holds you back.
“When you take out a big mortgage it seems very daunting and I think there’s a big misconception that this has a major effect on your lifestyle. But I realised very early on that it didn’t really affect my lifestyle at all. Because I had a tenant paying off my mortgage, what was left was relatively little. And at tax time every year, I’d always be excited because I knew I’d be getting a nice return. I did live at home – which helped. But I also had a good social life and went out a lot – probably more than many of my friends.”
After his first property purchase, Tony subsequently built a portfolio of 5 properties, 3 of which were purchased with Ironfish. Tony’s first purchase, with the benefit of hindsight, was his first ‘pot of gold.’ Market timing happened to work in his favour, which allowed him to refinance and have a deposit for his subsequent investments.
“After my 1st property, I still had no interest in investing, but after the first 2 properties started to perform, that’s when I started to get a bit more interested. That’s when I realised just how important it was to build assets, as early as possible.
“And I had only been able to achieve this because of Priscilla, because of having the support of Ironfish and a good team. Priscilla put a good broker around me and a solicitor. (I do my own tax – so I didn’t need an accountant.) So, I never really had to think or stress about my investments. I could concentrate on progressing in my career. And that’s what I’ve learned – if you have a company like Ironfish and their services, you can be a successful investor without any property investment knowledge or time.”
Earlier this year, to Priscilla’s great surprise, Tony took a second unconventional step in his otherwise traditional / ‘status quo’ path. He decided to apply to join Ironfish as a property investment strategist.
“The turning point for me was when I attended [Ironfish CEO] Joseph’s ‘Active income, passive investment’ workshop. He said, to be successful you need the right platform, industry and team. You also need a purpose. And this is something that really resonated with me. Because when I worked in the finance industry, it was all very numbers driven. I lived in the world of Excel and lacked meaning and satisfaction in my work. Ironfish’s company mission to help others, like me, build assets, build wealth for the future – this has been very meaningful and motivating for me. I didn’t really have a greater purpose before.
“Priscilla always says this industry is very fair, because you get out what you put in. Earning the trust of your customers comes back to how much time and how much energy you invest in your customers. At the end of the day, people can sense whether you’re being genuine and whether you are really there to help them. I really like that, because I know I’m now in control of what happens with my career.
“I’m still investing as well, alongside my customers. My original aim was to purchase my 6th property before I turned 30 and I’ve just achieved that. I signed a contract just this Monday to purchase an apartment in Melbourne, within the ‘Aspire’ development!”
I get feedback from my friends – you’re so lucky, you started 8 years ago; we’ll never see that again. But markets tend to work in cycles, and I’m still investing today.
Know your end goal otherwise the journey can become misdirected and inefficient. I have worked with professionals who lacked clarity with their career and they become very reactive to their environment.
It’s easy once you associate with the right people and know the fundamentals. It’s hard if you are not willing to find out and think it’s unattainable or wanting to take shortcuts.
We have a world of information out there, so this is not the issue. But having the ability to put everything together and take action is the crucial part.
Understand that building wealth through property investment takes time. I did get lucky with my first investment, but I chose to re-invest the gains and build a portfolio, which is what has helped to build real wealth for my future. I feel very fortunate to be in my current position due to the success of my portfolio. I was so happy to be able to buy mum a BMW after all these years. Hard work, keeping faith, taking ongoing action does pay off!
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Australia’s annual economic growth highest in 6 years
Latest figures reveal that Australia has achieved the strongest annual GDP growth in 6 years.
The June quarter result represents the fastest rate of growth since September 2012, during the height of the mining boom.
“This exceptional result bodes well for the property markets, with economic growth accompanying Australia’s rapid population growth which is concentrated in our major capital cities, particularly Sydney and Melbourne,” said Ironfish Head of Property, William Mitchell.
This 6-year high growth rate was driven by a combination of factors, including accelerating demand for property which surged off the back of strong population growth, with Sydney and Melbourne adding over 100,000 people each respectively over the 2017 financial year.
Furthermore, the roll-out of multi-billion infrastructure projects across major capital cities was another key contributing factor, with thousands of jobs being created across diversified streams of industry including transport, health, and education.
ABS Chief Economist Bruce Hockman said: “Public investment remained at elevated levels reflecting continued work on infrastructure projects across the nation.”
The June quarter result exceeded the initial 3% the Reserve Bank of Australia (RBA) had forecast as well as outpacing Federal Government projections used in the recent budget.
“Australia’s economy is strong, the fundamentals are good, momentum is continuing and these are encouraging numbers,” Treasurer Josh Frydenberg said.
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