1 00:00:00,149 --> 00:00:03,332 Is the Australian property market collapsing? For the first time 2 00:00:03,352 --> 00:00:06,555 in 30 years, the conditions that drove Australian property prices are 3 00:00:06,575 --> 00:00:10,379 starting to reverse. Most people think it's just a temporary downturn. Rates 4 00:00:10,419 --> 00:00:13,622 will fall, prices will bounce, and the boom will continue like it 5 00:00:13,662 --> 00:00:16,965 always has. But the reality is the conditions that created the 6 00:00:16,985 --> 00:00:20,549 last 30 years of property growth, falling rates, 7 00:00:20,569 --> 00:00:24,212 dual incomes, longer loan terms, they're gone, right? 8 00:00:24,332 --> 00:00:27,633 And they can't be recreated. I'm Lloyd J. Ross, multiple seven 9 00:00:27,653 --> 00:00:30,935 figure investor and entrepreneur. I help thousands of everyday people 10 00:00:30,955 --> 00:00:34,137 get out of debt and build real wealth. In this video, I'm going to break 11 00:00:34,177 --> 00:00:38,139 down the seven tailwinds that built the boom, why 12 00:00:38,159 --> 00:00:41,421 they've reversed and whether the Australian property market is 13 00:00:41,601 --> 00:00:45,124 about to collapse. So first, let's give 14 00:00:45,424 --> 00:00:48,727 credit where credit's due. The Australian property boom didn't 15 00:00:48,767 --> 00:00:52,671 boom by accident. It boomed because of very specific, very 16 00:00:52,791 --> 00:00:56,655 powerful set of forces that combined over 30 years 17 00:00:57,256 --> 00:01:00,799 to create almost the perfect conditions for rising 18 00:01:00,839 --> 00:01:04,088 house prices. And understanding these forces isn't just 19 00:01:04,148 --> 00:01:07,409 history. It's essential because the question is not 20 00:01:07,449 --> 00:01:10,910 whether they happen, but the question is, can they happen 21 00:01:10,950 --> 00:01:14,191 again? Right? So here are the seven tailwinds. So 22 00:01:14,211 --> 00:01:17,451 I want you to pen and paper and write these down. The very first one, the 23 00:01:17,611 --> 00:01:20,852 most powerful of all these, this one, right? 24 00:01:21,372 --> 00:01:25,233 Maybe the last one, but this one's very powerful. This is like 25 00:01:25,313 --> 00:01:28,594 gravity to asset prices. Okay. The first one is interest rates. 26 00:01:30,859 --> 00:01:34,681 There's an economic physics, economic principle. 27 00:01:35,381 --> 00:01:38,563 It's mathematical. You can't dispute it. That when 28 00:01:38,603 --> 00:01:41,965 you drop rates, you increase asset value prices. And 29 00:01:41,985 --> 00:01:45,306 when you raise rates, you do the opposite. Because if 30 00:01:45,326 --> 00:01:48,448 you discount the asset cash flows back by a 31 00:01:48,508 --> 00:01:51,649 higher rate, you get a lower figure. It's called net present value. And 32 00:01:51,689 --> 00:01:54,871 it's a mathematical certainty. And so, 33 00:01:56,072 --> 00:01:59,576 When you drop rates, prices go up, and when you raise 34 00:01:59,616 --> 00:02:02,820 rates, prices go down. So interest rates fell. Get this. 35 00:02:03,321 --> 00:02:09,804 Interest rates fell. In 1990, they fell from 17%. For 36 00:02:09,845 --> 00:02:13,308 30 years, they fell down to 0.1%, which is effectively 37 00:02:13,348 --> 00:02:16,450 zero in 2021. Wait, they went from 17% in 38 00:02:17,291 --> 00:02:20,814 1990, and guess what? In 1990, houses were 39 00:02:20,894 --> 00:02:24,297 so cheap, it was like 2 to 1 or 3 to 1 income ratio. 40 00:02:24,497 --> 00:02:28,040 And the reason they were is because rates were at all-time highs of 17%, and because 41 00:02:28,340 --> 00:02:32,503 they were there because of the oil embargo. And guess what? That's what's happening right now. So 42 00:02:32,543 --> 00:02:35,706 I'm not saying it's gonna be exactly the same, but there's a reason why houses were 43 00:02:35,766 --> 00:02:40,011 cheaper in 1990 to wages, because rates were 17%, okay? 44 00:02:41,112 --> 00:02:46,197 But they fell to zero over 31 years. 45 00:02:47,538 --> 00:02:51,082 Zero. Right? So borrowing power 46 00:02:51,122 --> 00:02:54,433 went up. Borrowing power means people borrow money for cheaper 47 00:02:54,453 --> 00:02:58,356 and they buy houses, right? That's what's happened. Two, 48 00:02:58,977 --> 00:03:03,060 women entered the workforce in enormous numbers because, 49 00:03:03,420 --> 00:03:07,163 you know, in the 70s and 80s and so forth, you had to stay at home, right? And 50 00:03:07,183 --> 00:03:10,525 then all of a sudden, oh, if you start working, it means we can buy another 51 00:03:10,545 --> 00:03:13,988 house and show off to the Joneses. We've got a bigger house and we can buy a BMW. So, 52 00:03:14,008 --> 00:03:17,790 honey, you go to work so we can buy BMWs, yeah? Or 53 00:03:17,971 --> 00:03:21,233 there might have been some sort of movement towards independence for women to earn 54 00:03:21,253 --> 00:03:24,355 their own income. Whatever it was, I don't know, it drove dual incomes. It 55 00:03:24,395 --> 00:03:27,858 meant households could then service twice as much of a mortgage. Bang, 56 00:03:27,898 --> 00:03:31,400 guess what? Houses doubled. Three, loan terms have 57 00:03:31,440 --> 00:03:34,763 extended from 20 years. In fact, mortgages might 58 00:03:34,803 --> 00:03:39,006 even end up being 15 years. But they extended from 20 years to 59 00:03:39,126 --> 00:03:42,397 30, and now they're considering 40. So longer loan 60 00:03:42,437 --> 00:03:46,001 terms, right, equals lower monthly repayments. Bigger loans, 61 00:03:46,341 --> 00:03:49,705 and then you pay a lot more interest, but then that exacerbates and creates higher 62 00:03:49,725 --> 00:03:54,172 prices in housing. financial 63 00:03:54,232 --> 00:03:57,993 deregulation, okay? So that's what happened. In the 80s, they deregulated 64 00:03:58,033 --> 00:04:01,634 the banking sector and financial sector, 65 00:04:01,974 --> 00:04:05,314 which enabled banks to come to our shores and 66 00:04:06,175 --> 00:04:09,635 provide credit to lenders at 67 00:04:09,695 --> 00:04:13,396 more compelling rates, right? The lending criteria loosened. More 68 00:04:13,456 --> 00:04:16,997 people could borrow money. There was more competition, so you could actually borrow more for 69 00:04:17,017 --> 00:04:20,558 lower rates. So there was the deregulation that changed 70 00:04:21,298 --> 00:04:24,524 how people borrow money in this country. Five, this 71 00:04:24,584 --> 00:04:28,526 is big, this is big, very big, become 72 00:04:28,546 --> 00:04:31,708 a real problem. It could possibly be the cause of 73 00:04:31,768 --> 00:04:36,592 most of the problems, mass immigration. And 74 00:04:37,492 --> 00:04:40,814 so just to put that in perspective, Australia's net overseas 75 00:04:40,854 --> 00:04:44,817 migration hit a record of 536,000 people in 2022, 2023. That's the whole, 76 00:04:44,837 --> 00:04:49,720 that's like a Canberra. Right? 77 00:04:50,401 --> 00:04:53,505 So if you have a certain availability of 78 00:04:53,666 --> 00:04:56,861 housing. in the country, and then you just 79 00:04:57,061 --> 00:05:00,504 add a Canberra every year, what do you think is gonna happen? It's 80 00:05:00,564 --> 00:05:04,006 gonna be artificial demand, right? And 81 00:05:04,046 --> 00:05:07,808 that's exactly what's happened. So people are gonna be competing for 82 00:05:07,868 --> 00:05:10,930 more houses. And of course that draws up prices. This is 83 00:05:11,050 --> 00:05:14,293 simple, basic economics of supply and demand. Certain 84 00:05:14,313 --> 00:05:17,635 supply housing, demand goes way up, prices go way up, okay? And 85 00:05:17,655 --> 00:05:21,177 so mass immigration. This has only been a huge problem because it really 86 00:05:21,337 --> 00:05:24,839 looks like, by all accounts, that Labor 87 00:05:25,239 --> 00:05:29,360 has attempted in the best way possible to bring in long-term 88 00:05:29,380 --> 00:05:32,721 voter base. And you can argue that, but it seems to be like that's the 89 00:05:32,761 --> 00:05:36,182 strategy based on what the Democrats were doing in America under Biden. 90 00:05:37,282 --> 00:05:40,523 Or it could be a combination of that and the fact that if 91 00:05:40,563 --> 00:05:44,084 we can bring more people, we can artificially inflate GDP 92 00:05:44,144 --> 00:05:47,925 numbers so the country doesn't go through a recession under Labor. It's all political, right, 93 00:05:48,085 --> 00:05:51,807 as far as I'm concerned. So that's the fifth thing. Now, mass immigration, once 94 00:05:52,027 --> 00:05:55,829 certain political shifts happen at the federal level, then 95 00:05:55,849 --> 00:05:59,251 we're going to see that fall. We will, at some point. And that's what's happening 96 00:05:59,271 --> 00:06:02,353 in Canada. It's what's happening in New Zealand. It's what's happening in 97 00:06:02,373 --> 00:06:05,455 America. And guess what happened to the property values in those three countries in 98 00:06:05,475 --> 00:06:08,677 the last two years? down a lot. Okay, that's the fifth 99 00:06:08,697 --> 00:06:12,319 thing. The sixth thing, tax policy, negative gearing, 100 00:06:12,399 --> 00:06:15,581 which gives you tax deductions for owning property investments, etc, against your 101 00:06:16,201 --> 00:06:19,743 assessable income, your personal assessable income. And then a 50% capital gains 102 00:06:19,763 --> 00:06:23,065 tax discount has made people want to buy and flip homes 103 00:06:23,085 --> 00:06:27,068 that they live in, right? It's made property uniquely 104 00:06:27,128 --> 00:06:30,850 attractive to investors and pumping demand. That's 105 00:06:30,870 --> 00:06:34,272 what's happened that the tax policy supports owning houses. 106 00:06:35,152 --> 00:06:38,323 Right. And number seven, the 107 00:06:38,403 --> 00:06:42,024 government demand side schemes that they create, like the first homeowner 108 00:06:42,044 --> 00:06:45,165 grants, deposit guarantees, the latest, which is 109 00:06:45,205 --> 00:06:48,446 the 5% deposit scheme. And they just designed to 110 00:06:48,506 --> 00:06:52,007 keep bringing buyers in, even at the peak of the market, come in, come 111 00:06:52,027 --> 00:06:55,328 in, keep the Ponzi going, keep it going. We need to go up, 112 00:06:55,348 --> 00:06:59,070 we need to go up, right? And a lot of these politicians 113 00:06:59,150 --> 00:07:02,593 who come up with these ideas and schemes, they're obviously owners, 114 00:07:02,753 --> 00:07:06,056 so they're incentivized to make prices go up. But the 115 00:07:06,116 --> 00:07:09,278 higher they go under these weird and wonderful schemes, the higher they 116 00:07:09,298 --> 00:07:12,861 go under all these seven things, the greater the fall, right? 117 00:07:12,881 --> 00:07:16,323 Look at Japan. It had so much of these policies in 118 00:07:16,383 --> 00:07:20,827 place in the 80s, and it was like 18 to one income, priced 119 00:07:20,867 --> 00:07:24,169 income ratio for property, and now it's like nothing. It hasn't even 120 00:07:24,249 --> 00:07:27,691 recovered after 35 years. So where will Australia be 121 00:07:27,792 --> 00:07:31,333 in 35 years? You think you're going to walk up the street and you're going to buy 122 00:07:31,353 --> 00:07:34,774 a house on 100 grand a year? You're going to buy a house for like $50 million? Like, what? 123 00:07:35,134 --> 00:07:39,015 No, it's not going to happen. There's a process 124 00:07:39,235 --> 00:07:42,596 in finance called reversion to the mean. And 125 00:07:42,616 --> 00:07:45,677 it's where you get a mean return over time. And if you've gone through an exacerbation of the 126 00:07:45,717 --> 00:07:48,839 mean, so the returns are above average. Mean is just a sexy word for 127 00:07:48,899 --> 00:07:51,980 average. go above the averages for a while, which is 128 00:07:52,000 --> 00:07:57,002 what's happened since COVID. We're way above the averages. We've had years where it's 12%, 8%. It's 129 00:07:57,022 --> 00:08:00,443 grown 65% in that time. It's just way above the average. So 130 00:08:00,463 --> 00:08:03,864 you're going to have a reversion to the mean. Now, that doesn't mean it comes down to the average. It means it goes below 131 00:08:03,884 --> 00:08:07,040 the average to get an average. So it wouldn't be surprised if we 132 00:08:07,080 --> 00:08:10,264 saw zero negative growth, and that's what's happening again in Canada, New 133 00:08:10,284 --> 00:08:13,507 Zealand, and America. It's happening already in those 134 00:08:14,188 --> 00:08:17,672 countries. So Australia's total residential 135 00:08:17,712 --> 00:08:20,815 property value is about $11.4 trillion as of March of 136 00:08:20,856 --> 00:08:25,282 last year, so that's about a year old, that data. $11.4 trillion. Outstanding 137 00:08:25,342 --> 00:08:29,244 mortgage debt was $2.3 trillion, right? 138 00:08:29,645 --> 00:08:33,086 That's from the Australian Bureau of Statistics. That's the size of the machine that 139 00:08:33,106 --> 00:08:37,108 was built. And now let's talk about why I 140 00:08:37,148 --> 00:08:40,690 can't keep running. More or less, it's the opposite of what's happened in the last 30 years, 141 00:08:40,730 --> 00:08:43,992 okay? So the tailwinds, which is what are those seven things 142 00:08:44,192 --> 00:08:49,155 are, they can't repeat. I'll 143 00:08:49,175 --> 00:08:54,550 explain. Falling interest rates. You can't drop 144 00:08:54,790 --> 00:08:58,113 rates from 17% to zero again. You can't. In fact, what's happening 145 00:08:58,133 --> 00:09:01,857 is the opposite. It's going up. Now it's reversing. That 146 00:09:01,897 --> 00:09:05,160 was the most powerful force behind the boom so far. And 147 00:09:05,720 --> 00:09:08,803 that is reversing. Think about that. If that's the most powerful thing that made it 148 00:09:08,823 --> 00:09:14,388 go up, it will be the most powerful thing that makes it go down, right? 149 00:09:14,428 --> 00:09:18,542 30 years of falling rates. Now imagine 30 years of rising rates. Just 150 00:09:18,562 --> 00:09:22,044 imagine it. What if? How do you know? What if oil spikes 151 00:09:22,064 --> 00:09:25,546 to 300, inflation goes off its face, and they got it at lift rates to 10, 12%? What 152 00:09:25,586 --> 00:09:29,428 if? Now seeing with the straight-ahead most close, that's a possibility. You 153 00:09:29,468 --> 00:09:32,870 see how things that you can't see will happen, and it will change the 154 00:09:32,930 --> 00:09:36,973 trajectory of housing prices? It's not the first time it's happened. It won't be the last. Housing 155 00:09:37,013 --> 00:09:40,275 bubbles don't just continue. You have to understand this. Now we're starting to 156 00:09:40,295 --> 00:09:43,737 see a few cracks, but we haven't seen anything yet, right? 157 00:09:44,617 --> 00:09:47,976 And so, God, if you haven't been around long enough and 158 00:09:48,016 --> 00:09:51,439 you're in your 30s, you may not have seen a recession at all. So you don't know what it's like. 159 00:09:51,859 --> 00:09:54,982 And all you've heard since you're a kid is, oh, it goes up, it goes up. They're not making any more 160 00:09:55,002 --> 00:09:58,525 of it, blah, blah, blah, blah, right? So I 161 00:09:58,565 --> 00:10:01,648 think the oil shock has reignited inflation. We're starting to see rates go up. And 162 00:10:01,688 --> 00:10:05,072 I just think that tailwind is finished. It's stopped. 163 00:10:05,592 --> 00:10:09,196 OK, second tailwind, women entering the workforce, exhausted, 164 00:10:09,456 --> 00:10:12,720 done. It's a one-time structural shift. So from the 70s to 165 00:10:12,740 --> 00:10:16,403 the 2000s, the female workforce participation went massively 166 00:10:16,524 --> 00:10:19,967 up, household income doubled, and that enabled 167 00:10:20,007 --> 00:10:23,251 you to buy properties that were worth twice as much, right? 168 00:10:23,971 --> 00:10:27,715 Simple. That's a very simple structural shift that you cannot change. 169 00:10:28,215 --> 00:10:31,677 The participation's already at like 60, 70 percent. So you 170 00:10:31,757 --> 00:10:34,999 can't move that now. It's done. It's baked in, right? It can't be 171 00:10:35,039 --> 00:10:38,481 repeated. So that's the first two that can't be repeated. You cannot repeat those first two, 172 00:10:38,681 --> 00:10:41,942 right? Now, tailwind number three, longer loan terms. Could it 173 00:10:42,022 --> 00:10:46,296 repeat? Yeah, they, you 174 00:10:46,316 --> 00:10:50,218 know, I mean, maybe you could put 80-year terms 175 00:10:50,278 --> 00:10:53,359 in place, 100-year loan terms, and I think when you 176 00:10:53,379 --> 00:10:56,740 get to 100-year loan terms, I think you move towards like 99-year leases, and 177 00:10:56,781 --> 00:11:00,042 that's how a lot of Europe operates, right? I think, so at that point, you don't really 178 00:11:00,142 --> 00:11:03,403 own your house. You own an option on it, maybe, you know, 179 00:11:03,423 --> 00:11:06,705 but it's a long-term lease effectively. So, I don't know, what are you going 180 00:11:06,725 --> 00:11:10,307 to go to, 50, 60 years, right? I think parts 181 00:11:10,347 --> 00:11:13,931 of Japan, there's multi-generational mortgages that do appear. But 182 00:11:14,011 --> 00:11:18,115 where socially, I don't know if that's acceptable here. 183 00:11:18,195 --> 00:11:21,318 I don't think that's a possibility to move to 50 to 184 00:11:22,159 --> 00:11:25,342 60. Maybe we'll see 40. But I think the 185 00:11:25,422 --> 00:11:28,926 extent that you could go from, you know, what, 20 to 30 is 186 00:11:28,966 --> 00:11:32,109 a 50% jump. So I don't think we're going to see the 187 00:11:32,129 --> 00:11:35,313 same. Okay. Tailwind number four, financial deregulation. So 188 00:11:35,373 --> 00:11:38,856 once office is exhausted, you can't deregulate again. We've already deregulated. Okay. 189 00:11:39,297 --> 00:11:42,860 The expansion of credits already happened. Interest-earning loans 190 00:11:43,000 --> 00:11:46,241 have already proliferated. There's no more different types of mortgage products you 191 00:11:46,261 --> 00:11:50,142 can get. Mortgage growth is outpaced GDP massively. Credit 192 00:11:50,182 --> 00:11:53,323 expansion's done. The only thing they might be able to do is 193 00:11:53,363 --> 00:11:56,805 go to 100% loans, which is where you get rid of percentage deposits, which 194 00:11:56,845 --> 00:12:00,006 is possible. But I don't think APRA, the banking regulator, is going 195 00:12:00,026 --> 00:12:03,427 to allow 100% lending. It's possible, but they're 196 00:12:03,447 --> 00:12:07,008 already onto this now, so I don't think you know, I 197 00:12:07,048 --> 00:12:10,249 think it's gonna get harder, not easier. So I think that's exhausted, right? The 198 00:12:10,289 --> 00:12:13,990 deregulation tailwind is, it's nowhere 199 00:12:14,030 --> 00:12:17,271 to go, I don't think, okay? Just quickly, if you're ready to take control of 200 00:12:17,291 --> 00:12:20,372 your finances but feel stuck on where to start, I have a 201 00:12:20,412 --> 00:12:24,313 solution. My book, Money Bias Happiness, simplifies investing 202 00:12:24,433 --> 00:12:28,154 and wealth building with practical steps to help you achieve financial peace. 203 00:12:28,694 --> 00:12:32,015 Get your copy via the link in the show notes and let's get your money working for 204 00:12:32,055 --> 00:12:36,078 you. Now back to the episode. Number five, mass immigration. It's 205 00:12:36,118 --> 00:12:39,579 not exhausted but it's slowing and it's not sustainable politically. 206 00:12:39,839 --> 00:12:43,321 Now how do I know that? Because you're seeing Pauline Hanson get massive 207 00:12:43,361 --> 00:12:46,662 support wherever she goes because people are fed up. They 208 00:12:46,702 --> 00:12:50,283 don't want a whole Canberra coming every single year. Right? 209 00:12:51,877 --> 00:12:55,158 The strategy is starting to wane. It's not working for labor 210 00:12:55,178 --> 00:12:58,580 anymore. So we're starting to see a shift already. And 211 00:12:58,680 --> 00:13:02,221 politically, you just will not see it. Like, there'll be a revolt. So 212 00:13:02,281 --> 00:13:05,783 it's not sustainable. Will we see some immigration? Of 213 00:13:05,863 --> 00:13:09,604 course. But I think a more sustainable rate of, say, 100,000 to 214 00:13:09,644 --> 00:13:13,026 150,000 a year net migration is a lot better than 600,000, right? 215 00:13:13,566 --> 00:13:16,847 And I think you're starting to see that that will start to win elections. And 216 00:13:17,307 --> 00:13:20,550 I don't think we're far away. from a real reversal there, I think we're 217 00:13:20,570 --> 00:13:23,795 probably less than two years or two years away from a 218 00:13:24,055 --> 00:13:27,400 reversal in those numbers. So that tailwind is 219 00:13:27,440 --> 00:13:31,946 going to be deliberately turned off. Do you understand? The 220 00:13:31,987 --> 00:13:35,602 demand engine is gonna be deliberately switched 221 00:13:35,662 --> 00:13:39,306 off. It will, it just will. It doesn't matter 222 00:13:39,326 --> 00:13:43,229 who's in power. You can't keep doing that to the citizens. There'll be 223 00:13:43,249 --> 00:13:46,332 a flip in civil war. If we have to come to that, it has to come to that, 224 00:13:46,352 --> 00:13:50,015 but then what would happen to property prices, right? Tailwind six, tax policy. This 225 00:13:50,075 --> 00:13:53,238 is obviously on the table to cut. They've been talking about negative, and 226 00:13:53,278 --> 00:13:56,581 I'll touch that, but 50% capital gains tax, they're discussing it. 227 00:13:57,462 --> 00:14:01,105 They're already talking about it. It's already on the table, right? 228 00:14:04,002 --> 00:14:07,223 So I think we're going to see some shifts in the tax policy. I don't think that's 229 00:14:07,263 --> 00:14:11,365 the major one, but we certainly can't repeat the 230 00:14:11,445 --> 00:14:14,546 CDT discount. We can't go, what, 100%? I think they're going to cut 231 00:14:14,586 --> 00:14:18,088 it to 25%. We're going to see that reversal. It's not hypothetical. 232 00:14:18,548 --> 00:14:22,389 It's already been debated to be implemented, right? So 233 00:14:23,030 --> 00:14:26,191 it weakens the desire to own a home. And finally, the 234 00:14:26,271 --> 00:14:29,452 seventh, which is the demand side, the government schemes. I 235 00:14:29,613 --> 00:14:33,017 think the government, whilst it can continue to 236 00:14:33,057 --> 00:14:36,802 do these things like 95% LBR and, you 237 00:14:36,822 --> 00:14:40,426 know, first homeowners and they can pump the demand side. 238 00:14:40,446 --> 00:14:43,650 I think there's little room to move there after what 239 00:14:43,690 --> 00:14:46,982 they did with the 5% deposit scheme. I think that 240 00:14:47,022 --> 00:14:51,666 would, they would now be seen to be being irresponsible, 241 00:14:52,667 --> 00:14:55,730 you know, fiscally irresponsible for doing that to people. Not out of 242 00:14:55,750 --> 00:14:59,153 the question for a government, because they do some dumb stuff, and this government particularly 243 00:14:59,193 --> 00:15:02,536 is really good at doing dumb stuff, so not off the table, but certainly 244 00:15:02,616 --> 00:15:05,839 can't repeat, like how do you repeat that? So I think we're 245 00:15:05,859 --> 00:15:09,001 at the very end. It's not 246 00:15:09,041 --> 00:15:12,144 that the tailwinds are now gone. It's just now they've turned into headwinds, you know, 247 00:15:12,164 --> 00:15:15,506 because if you take tailwinds and you reverse them, which is what's happened, they're 248 00:15:15,526 --> 00:15:18,548 now not tailwinds. They're literally inadvertently headwinds. If they're not a 249 00:15:18,568 --> 00:15:21,671 tailwind, they're a headwind. Does that make sense? So, I 250 00:15:21,711 --> 00:15:25,093 mean, if you look at all this, how can 251 00:15:25,153 --> 00:15:29,677 it possibly go up? Like how? And not 252 00:15:29,717 --> 00:15:32,832 even go up, but how could it like, How could it 253 00:15:32,872 --> 00:15:36,153 grow robustly at all? Does that make sense? Now, what's going to make these headwinds go 254 00:15:36,213 --> 00:15:39,414 faster? Well, if oil stays up at 100 or 200 or 300 miles 255 00:15:39,454 --> 00:15:42,614 a barrel, guess what? Race is going to go up quicker. So we're going to see the unwinding of 256 00:15:42,654 --> 00:15:46,475 these tailwinds turning into headwinds a lot faster. And then you're going 257 00:15:46,495 --> 00:15:50,036 to see a lot of people foreclosing. You're going to see unemployment. We haven't even factored in 258 00:15:50,476 --> 00:15:54,057 the headwind of AI yet. No one 259 00:15:54,097 --> 00:15:57,805 could have possibly Anticipated, AI coming 260 00:15:57,845 --> 00:16:01,226 and changing the workforce and unemployment going up because of AI, truly. It 261 00:16:01,266 --> 00:16:04,827 will happen and it will happen fairly quickly by the looks of things. So what happens, then 262 00:16:04,867 --> 00:16:08,008 what happens? What happens if you don't have a job? You're going to pay your mortgage? Like, you know, 263 00:16:08,128 --> 00:16:11,249 we're going to see a lot of demand for housing come off the board if someone doesn't have a 264 00:16:11,309 --> 00:16:14,930 job. And that was not in anyone's bingo card only 265 00:16:14,970 --> 00:16:18,271 a couple of years ago, right? So that headwind has not 266 00:16:18,291 --> 00:16:21,791 even been considered until now. And that takes things on 267 00:16:21,831 --> 00:16:25,413 a different path. And if you factor that in, You 268 00:16:25,433 --> 00:16:28,756 know, there's probably some, an argument to say that we're going to improve productivity, for 269 00:16:28,816 --> 00:16:31,959 sure. But productivity without employment is like, well, how 270 00:16:31,979 --> 00:16:35,582 are people going to pay for things, right? So that's a 271 00:16:35,682 --> 00:16:39,165 certain consideration. And then, of course, we will have certain unwinding of 272 00:16:39,245 --> 00:16:42,788 red tape with the new government, where supply will start to come online a lot faster. 273 00:16:43,149 --> 00:16:46,412 And there's probably been a bit of delayed supply come online because of the demand. And when you drop 274 00:16:46,432 --> 00:16:49,654 the demand off, there's oversupply. That will happen, but I think it's more the 275 00:16:49,694 --> 00:16:52,797 demand coming off the more than anything that will happen, right? So 276 00:16:52,817 --> 00:16:56,060 there is some supply coming online, but I don't think it's the major headwind. I 277 00:16:56,100 --> 00:16:59,903 think rate rises and all the other structural 278 00:16:59,943 --> 00:17:03,085 changes that happened that can't be repeated. I think if you look at that, you're going 279 00:17:03,105 --> 00:17:06,648 to have a huge mean reversion to the price. I just cannot see. 280 00:17:06,668 --> 00:17:10,231 I wish I was wrong. I mean, 281 00:17:10,271 --> 00:17:13,754 I don't really want people to go through a period of time where there's no housing growth. That's not 282 00:17:13,774 --> 00:17:17,257 ideal, but I just can't see it. You know, like it's just 283 00:17:17,297 --> 00:17:21,024 such a compelling. Dataset that 284 00:17:21,064 --> 00:17:24,866 that signals we're not going to see the same result if 285 00:17:24,926 --> 00:17:28,327 I'm mistaken over the next 10 years, then you know, I'm 286 00:17:28,347 --> 00:17:32,228 mistaken, but I 287 00:17:32,248 --> 00:17:35,629 Don't see how it's possible and Then if it does happen, 288 00:17:35,649 --> 00:17:39,070 then the fallout could be even bigger. I mean, I don't know You 289 00:17:39,090 --> 00:17:42,332 know and to be fair maybe I will create productivity to 290 00:17:42,352 --> 00:17:45,613 the point where our incomes can go up to support the shift I'm 291 00:17:45,653 --> 00:17:49,202 not sure so What 292 00:17:49,242 --> 00:17:52,564 that means is that I think if you haven't bought 293 00:17:52,584 --> 00:17:56,407 a house yet, I think that you're gonna find that there's gonna be some more affordable options 294 00:17:56,427 --> 00:17:59,949 for you. I think they're seeing that in New Zealand now, they're seeing it in Canada now, 295 00:18:00,710 --> 00:18:03,912 in America, or all those areas are coming 296 00:18:03,932 --> 00:18:08,515 off the ball. They're dropping by 20, 30, and 40%. And 297 00:18:08,535 --> 00:18:11,817 I think that the same macro inputs are now in Australia. That doesn't 298 00:18:11,837 --> 00:18:15,019 necessarily mean we're gonna see a 20, 30, 40% fall, but it 299 00:18:15,119 --> 00:18:18,281 does mean I think you're gonna have some time. So, I just don't know whether you 300 00:18:18,301 --> 00:18:21,722 need to be in a rush to be running out buying property when 301 00:18:21,762 --> 00:18:25,964 we have all these macro headwinds in front of us. I just don't think it's as 302 00:18:26,204 --> 00:18:29,705 compelling as what it was, you know, 20 or 303 00:18:30,005 --> 00:18:33,727 30 years ago. Certainly not. It's just not. So, I'm not 304 00:18:33,747 --> 00:18:37,148 going to tell you that we're going to crash. That's 305 00:18:37,829 --> 00:18:44,506 clickbait more than anything. Watch this. Will 306 00:18:44,566 --> 00:18:47,789 it go sideways for quite some time? I would think so, yeah. 307 00:18:48,430 --> 00:18:52,113 I think it's going to be fairly neutral growth, probably for 10 years, possible. 308 00:18:53,415 --> 00:18:56,838 May keep up with inflation, but the years 309 00:18:56,878 --> 00:19:00,962 of 8% to 12% compounded, I just 310 00:19:00,982 --> 00:19:04,144 don't see how that's possible, right? And so I think Yeah, the 311 00:19:04,184 --> 00:19:07,265 oil shock's going to exacerbate things and move things a lot faster. So if anything, in 312 00:19:07,306 --> 00:19:10,627 the next 12 to 18 months, we could see a shift in a fall in price. A 313 00:19:10,667 --> 00:19:13,848 crash, very unlikely, unless we have all 314 00:19:13,868 --> 00:19:17,430 of those tailwinds happening at once, including the immigration one's an important one. So 315 00:19:17,450 --> 00:19:20,651 if that happens, then we'll see a bigger move down. And that's 316 00:19:20,691 --> 00:19:24,052 a possibility in the next couple of years, so we'll see. But marginal buyers will 317 00:19:24,072 --> 00:19:27,253 disappear, and we're going to see not the 318 00:19:27,333 --> 00:19:31,916 same result that we saw in the last 15 years. 319 00:19:32,276 --> 00:19:35,758 All right, so I'll be excited to come back and re-watch this episode in 320 00:19:35,798 --> 00:19:39,241 10 years and go, actually, well, I was right or wrong. It'll be fun, right? But 321 00:19:39,281 --> 00:19:43,003 that's my position. That's the argument for it. If you've got a better argument, or 322 00:19:43,043 --> 00:19:46,826 that doesn't make any sense to you, or you think I've gotten it wrong, or 323 00:19:46,846 --> 00:19:50,448 you've got a canner argument to every one of those seven arguments I put forward, I'd 324 00:19:50,508 --> 00:19:53,791 love to hear it. So pop it in the comments below. Which one of them don't you 325 00:19:53,831 --> 00:19:57,033 agree with? Do you think I'm way off here? What are your thoughts? How 326 00:19:57,073 --> 00:20:00,254 do you think this is positioned? But I need, I want an argument. I 327 00:20:00,274 --> 00:20:03,355 don't want like, nah, it's gonna go up, you're a wanker, right? Look at 328 00:20:03,375 --> 00:20:06,616 this, what is it? Look at this Muppet, or what are they 329 00:20:06,636 --> 00:20:10,458 called? What's this, this flog? Look at this flog. Buy 330 00:20:10,478 --> 00:20:13,659 your book, buy, look, sell your book. I see all the comments, it's hilarious, kind 331 00:20:13,679 --> 00:20:16,960 of makes me entertained, but you 332 00:20:16,980 --> 00:20:20,301 know. I think we're on 333 00:20:20,321 --> 00:20:25,113 the right track with what we're saying here, and so if you don't, Agree 334 00:20:25,153 --> 00:20:28,355 with me. I still want to see them in the comments. So go leave a comment. Hit the subscribe button if you're enjoying the 335 00:20:28,375 --> 00:20:31,498 content. If you love this episode, share it with a friend. That's what I think is 336 00:20:31,518 --> 00:20:35,480 going to happen with the Australian real estate market. And I think the odds are 337 00:20:35,520 --> 00:20:38,642 in our favor that's going to come true. And so that's how that's going to 338 00:20:38,722 --> 00:20:41,884 intimate how I position our portfolio and our wealth going