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Breaking Square | 5th April 2024

I trust you had a great Easter and you had the opportunity to catch up with family and friends. Kim and I got a short break and it was relaxing to sit on a beach and catch up with friends on the coast. We even got a chance to check out the site where we have purchased an off-the-plan apartment at Palm Beach – all part of our future planning.

Whilst away, I didn’t pay too much attention to the news and despite some cursory reading of the Financial Review, I didn’t really take in what has been happening. To my surprise, I noted today that gold has risen to above $2000 per ounce. The significance of this is, when gold rises, it generally means traders and investors are buying as it is a great hedge against inflation and/or worrying signs in the economy and the world.

The primary cause of this rise is the conflict in the Middle East and still some signs that inflation is not yet beaten and we may not see a cut in rates this year. So for now, there is a pile on into gold.

The commentary around rate cuts is interesting and their is a growing minority of economists that predict rates will not be cut, however, there are still many economist who strongly believe we need to cut rates now based on lower business investment and more worryingly, a huge decline in building approvals, which they feel is a result of higher rates – in fact, Queensland had the largest decline.

Despite Government rhetoric and pledges to build more homes, we are quickly falling behind and it seems that no one really has an answer to the problem. Most of the apartments that are being build are targeting down-sizers, typically larger floor plans and higher price points, so not really catering to the mass market where the need is greater. So the simple metrics of supply and demand are well and truly playing out and will continue to do so. We simply have more people wanting to buy or rent a property, than there are properties to buy and rent. It all sounds like a broken record, but it’s been a common theme for some time.

So why keep repeating it, well, I think there is opportunity to benefit from this and not in a way that we do so off the back of someone else missing out or losing. I am talking about being strategic with property and looking for the opportunities. Like Kim and I, we purchased our bolt hole in Brisbane, which we rent out until the time comes to sell our family home and downsize, and we have purchased off-the-plan on the Gold Coast as we recognise huge upside and we rather pay in today’s money as opposed to years down the track when we actually have to do something.

The beauty of what we are doing is it gives a unique perspective on what it is like to be in this situation and we feel we are in a position to offer advice by way of sharing our experiences and thoughts; as many folks will be in a similar situation regarding the future downsize move. We have been through the purchase of our “forever home” when our family was young; going on 15 years since we did this and probably be another 5 years at least before we sell.

However I can hear the catch cry of “Ok Boomer”; although I think I just miss the cut off. It is true, our children will certainly struggle to get into the property market, so whilst from the outside it may appear Boomers are just greedy and hold all the wealth, there will come a time when some or all of this wealth will be transferred – they may just need to wait a little while as we are living longer. Perhaps we should all be investing in medical research to prolong things??

I read an interesting article about a speech delivered by Ken Henry, you may or may not agree with his sentiments, but I think it’s still worthy of consideration. Until we have a government that is willing to make the necessary reforms in the absence of polling numbers, we may actually get good policy that serves us all. I have attached the article for your reference.

Obviously there are a few distractions in April with Easter and ANZAC Day, occupying our minds and free time and then backing up with another long weekend in May. However, rentals and sales still forge ahead unabated. Recently we have been pleased and grateful with the number of owners who have decided to engage us to manage their properties, that up until now have been managed by other agencies, there’s been a real uptick.

Next Friday our Collective Group is taking an excursion to the “The Shed”. The Shed is located in Crows Nest just outside Toowoomba. It is here that Ray White started his business. The White Family some years ago took measures to save and salvage the Shed. For some it is like a pilgrimage, for me it will just be a very interesting trip to see and read the history, of what is essentially a large family business. Most of the success of Ray White can be attributed to Brian White’s vision and leadership, taking the business from several offices to over 1000 today. I will share the experience in another newsletter.

Until next week, stay safe and be kind.