In Episode 24 of the Inspire & Inform Show, Colin discusses the trend in Regional Australia and Impact of working from home to the property market
Please see below for the full transcript of this video
Hello, hello, and good evening to you all welcome to Episode 24 of Inspire and Inform. For those that don’t know me, my name is Colin Lee and I’m the founder of Inspire Realty helping our clients build a better future together. Well, tonight is a special night. In fact, today is actually a very, very special day. I’m sure you would know that today’s the 11th of November. But more than that, today is a day where we remember all those that have fallen. So we remember all those souls that have had to make the sacrifice for our benefit and for our sake. But it’s also another special day, and I’m not sure how many of you actually tuned to watch me live. Hopefully, you can watch me a little bit later on. But tonight, I’ll be covering on the shift in the regional areas in terms of property demand, and how that’s really affecting, you know, investment properties and the overall property market. So I’ll be sharing a little bit about that. Talking about also something I read in a Financial Review quite recently about migration and what’s going to happen there. But also, just to give you a quick snapshot of some of the regional areas that have been quite popular, certainly in the last quarter, and certainly this year when COVID hit as well.
But before I do all that I just want to share with you a story. A number of years ago, I was actually based out in Brisbane, and when I was in Brisbane, by the way that’s that’s a shot of the Sydney Opera House today, I think you’ve you, it’s still not too late to head up to the Sydney Opera House to to, to look at the Opera House with the with the wonderful display of the poppy flowers. But as I was saying many years ago, I was actually in Brisbane. And when I was in Brisbane, I I decided that I would go and watch the state of Origin. I remember at the Suncorp Stadium, they think this is back, you know, three or four years ago, and I’m quite a staunch blue supporter. And obviously I knew what I was getting myself into. But I remember going into this massive stadium. I don’t know if you can actually see a photo of it. But it was a stadium full of Maroons And, and one of my colleagues said, Are you sure you want to wear your your blues shirt and go into a sea of Maroons? Well, I tell you what, I certainly felt incredibly intimidated on the night. But I had good fun. I mean, obviously, I’ve lived in Sydney for many years. And when I was in Queensland, I still watch the State of Origin. But tonight is game two of State of Origin. And I’m just hoping and praying in that the blues will give the Maroons a run for their money. And hopefully we’ll have a great game for game three. But anyway, if you’re a Maroons or you are blues supporter, all the very best and may the best team win.
But I share that because I lived in Brisbane for a couple of years. And I’ve really, you know, gotten to know Brisbane to you know quite well. I did a lot of traveling when I was there, certainly working in the property industry. So I’ve got to know quite a lot of the suburbs made a lot of friends in Brisbane. And I’ve often wondered of potentially one day, even moving to Brisbane, you never know, we’ll see where God takes me. I’ve surrendered to the will of God. And if the right opportunity comes along, I’ll certainly be quite open to moving to Brisbane. Most of my investment properties are in Brisbane, Queensland as well. So you know, I would love to, to, to be there to not necessarily to look after them, but certainly, certainly see the potential and and I’d love to experience the growth of Queensland.
But anyway, it’s also another special day, last week and a little bit ago, if you were in my Inspire and Inform series, which is really that aim to educate you as investors to make informed decisions about your property investments. But I have never seen this. Certainly in my 20 years that I’ve been in Australia, I have never seen the cash rate as low as 0.1%. Now, I don’t know if it’ll ever get into negative territory, like the, like other parts of the world. But I certainly think that at 0.1%. It’s never been, you know, cheaper to get a home loan than ever before. So if you’re thinking of investing or buying your very first property, I really believe that this is a really good incentive for you. You know, money is cheap right now. I mean, we’re getting rates now below 2%. I’m a finance broker myself. So I’m already seeing banks are starting to pass on the savings, which is point one 5% basis points onto customers. I certainly know a handful of banks that are already talking about rates below 2%. So it’s cheap, it’s certainly cheap. And as a result of the, I guess, the reduced rates. And I mean, obviously, COVID has impacted a lot of people, but quite a lot of us have not necessarily been that heavily impacted by COVID. And what that means is that with the reduced interest rates, you’re starting to pile up and in your savings. And so I think it’s, you know, for a lot of Australians, you’re starting to see quite a influx in savings. And I’ll show that in the next slide. But I thought, I’ll just show this to you. Because it’s really quite revealing to me, when you look at this graph, what it basically says is that, hey, you know, if you’re a loyal customer, with the banks, you are paying easily point five to about nearly 1%, sometimes more than what a new customer would get in the interest rates. So I really think you got to be smart with your money, and why pay the banks if you don’t have to.
So there are two options, really, one is to ring your bank to lower the rates. I know certainly for for a lot of banks, they may not necessarily always lower the rate. And you can’t do it too often, I think every six months, you can only do it once with the banks. But if you haven’t, I think this is a really good idea to ring your bank to negotiate with them for a better rate. Alternatively, which I think is already a really good idea. Some banks are offering cash backs. And I won’t name all the banks, because they all have varying cashback offers varies anywhere from $2000 to $3,000. And but that’s a really good incentive for you to consider moving your, your, I guess, your loans across to a bank, that would give you a better rate.
Just to give you an idea, you know, refinancing an $850,000 home, which is, you know, below the median price in Sydney, I had a client at 3.27%. And we dropped it to 2.19%. And they were saving nearly Well, certainly over $1,000 or something like the tune of $1,030 a month in savings. And they were not able to negotiate with the banks to drop the rate as much as down to 2.19. So I think it’s really important. If you’re thinking about refinancing to either give me a call or touch base with me via an email, to discuss about your current situation and explore what we can do to help you save more money, so that you can maybe put together that for another rainy day, or save up for a deposit for another investment property down the track. So definitely talk to me if it’s something that you’re keen on looking at.
But this is what’s happening. So I was looking at the Australian Bureau statistics, actually, this was sent by my very good friend and colleague, Andrew. And he said Colin, have a look at this. And it’s really the household savings ratio. So if you look at the data since 2004, you can see that it’s really risen, you know, to 2008, when the GFC kind of hit, so people started to save more money 10% roughly around that. And then over the years over the next 10 years, it’s really just dropped. As you can see, it just progressively dropped, people were spending more money. And but when COVID hit, which is in around June, July, you can see that the household savings ratio really just picked up went through the roof. Because we were all in lockdown, we couldn’t spend money, we couldn’t go out for a cup of coffee, we couldn’t go shopping, we couldn’t do the things that we would normally do. So what’s happened with the combined with the low interest rate, and with the high savings ratio, it’s really like a bit of a loaded gun.
What that means is that a lot of investors and first time buyers are really starting to get into the market. And certainly as an investor, I really think this is a good time to start to look at some opportunities. The question is where? and so this is where I would really just go through a very high level, what’s happening with regional cities and really not to discount that.
I never thought I’ll ever say this. I guess I’ve always learned through you know, in my years in property, I’ve always been to seminars, and I’ve listened to mentors and people who have amassed a huge property portfolio. And the message I tend to always get is only invest in cities or in suburbs that’s close to the CBD to the central business district. And there was even an argument that says don’t buy too far away. There’s some investors that say I wouldn’t buy anything that’s more than 15 kilometers, 20 kilometers away from the CBD. And but what we’re seeing now because of COVID is really the, the the trend really the, I guess the shift from living close to CBD, which you don’t really need to go into more suburban areas and, and also regional areas, I literally had a client that have said to me, You know, Colin I’ve been working in Sydney, his workplace has been really good and say, Look, you don’t need, it’s not even an option for you to work from home work from home. It’s cheaper for the company. Anyway, so they’re moving to regional Queensland, to settle down with the family and for the same amount of money and they were able to buy a much bigger opportunity and a much bigger and better property as well. So we can start to see that happening.
Now, this came out last month, and it was only recently that I kind of looked at it again. And I thought this is really, really interesting. And what it is really, it’s talking about the tsunami of the influx of international migration. I remember when I was, you know, 17/18. And I, and my parents said, you know, guys, let’s consider migrating and we had a few countries, we had New Zealand, believe it or not we had Canada, but Australia definitely came came up. We had two uncles in Australia, so it was an easier choice for us to come to Australia. And I remember, you know, like saying, what, what a lucky family we are to come to Australia, not only to live, but now thrive. You know, like my, my younger brother and younger sister, my family is, you know, they’re doing, you know, relatively well, considerably as migrant families in a in a completely brand new country. So, it is the lucky country. And I already know from my many, many, many conversations with friends from Malaysia, from Hong Kong, from the Philippines, from Indonesia, even a lot of them are saying that they are very keen to come to Australia, you know, to live in the long term, you know, we’ve handled a lot of things very well. It is the clean country it is it is you know, yeah, Australia gives you a fair go. So I just, I just know that in the next few years, there’s going to be a huge influx of international migration, which is ultimately gonna be driving up the population of Australia. And before you know where we’re going to be down on our supply for properties again, and that’s when we really start to see capital growth in property.
I’m not sure if you saw the Westpac presentation on the prediction for property prices, but they were they were predicting anywhere from 10, 15% to 20%, for Brisbane, in terms of capital growth between 2022 and 2023. So that’s quite an incredible, sort of. Yeah, it’s incredible. I mean, just just to see what’s been happening. So really, it’s good news for regional areas in Australia. I’m just going to show you very quickly, just to touch very briefly on some of the regional areas that that are really shifting. You can see here that for many years between 2001 and 2019, the red being the regional growth in terms of capital, population growth. For a lot of the capital cities, you can see that the population sometimes it’s double of, or even more if you look at Northern Territory, but let’s look at New South Wales. The population growth in capital cities are double what it is of regional cities. And we’re starting to see the swing back into regional. So I definitely see some good opportunities in regional Australia as well. These are just some of the areas and the median price. Looking at inquiries. So obviously, I got this from real estate.com and we’re just looking at some of the areas and what’s happening with the median price. So you can see that orange house the median prices about 445,000 that’s apparently one of the top inquiries, followed by Wollongong and in Byron Bay to no surprise in Victoria you can see Mildura Shepperton, Wodonga in Queensland Surfer’s Paradise Mooloolaba and Southport South Australian Mount Gambier Port Pirie Murray Bridge, Western Australia Dunsborough South Headland Cable Beach, Tasmania Devonport, Georgetown, and West Launceston so you can see these are all very regional areas. And what it’s saying is that the inquiries are starting to pick up in these regional areas which is quite interesting.
So the main beneficiaries of I guess the shift in regional areas in Victoria Geelong Bendigo Ballarat Latrobe Gippsland, has been one of the big beneficiaries, followed by New South Wales Illawarra, Southern Highlands Shoalhaven and Hunter Valley, I know of a number of my investors who are already inquiring about some of those regional areas, potentially to live as well, if you could work from home. So that’s really interesting Queensland Gold Coast and the Sunshine Coast. Without a doubt, certain suburbs within the Gold Coast and Sunshine Coast have really picked up in in those areas. A lot of sydneysiders are buying some of those areas sight unseen. So that’s incredible. And we certainly have a number of opportunities in Gold Coast. And so if you’re interested in having a chat about that, please let me know. And I’ll be keen to share with you a little bit more information about that. I’m not going to talk too much about the more remote regions in in Australia, but certainly there for you to look at if you want to.
Actually I’ll pull this up. There we go. Yeah, so I think I’ve missed this. But these are just some of the areas, regional areas that have really experienced quite a significant amount of inquiries in real estate quite recently. So that’s been quite cool. And not sure if I showed this. But the point here is that the population growth in regional areas have always been very much under what capital cities would grow at some capital cities grow two times three times four times, what regional areas would grow, and how that affects capital growth is obviously with population, you have jobs. And with that, the inquiries and the demand for those properties will go up, and hence the capital growth. So I start, I’m starting to see there’s going to be quite a lot of interest in regional areas. For the capital growth in the long term, certainly with what’s happening with COVID. remotely working and working from home has become quite the norm. So it’s certainly worth you having a look or keeping an open mind about some of these areas. for the long term. Never thought I’ll ever say this actually.
Last but not least, these are just some capital, some regional areas that are experiencing growth. I’ve got two graphs here, really not graphs, but tables here. One is looking at the September 20, median price and just looking at the quarter and quarter change, you can see that Grafton mid North Coast, Richmond Tweed, has grown by quite a significant I mean, these these are like, you know, if it continues to go at 8.7, it’ll double within 10 years or quicker than that, actually. So this is very high growth rate, Victoria, similarly, Queensland, Townsville, Gold Coast, White Bay, see Gold Coast has come up once again, in terms of regional areas that that are growing quite quickly. I’m not going to go into too much of the other areas. But what’s really, really interesting to see is the September 2000. So now this is 20 years of data in terms of how properties have grown. And it is incredible, I mean, 20 years to see that the percentage change, you know, with numbers like 1280, in Bungalow, Fletcher Glenroy all you know, 800 and 740% growth in the last 20 years that is a huge amount of growth. Victoria Queensland, anyway you get the message. You know, regional areas are starting to really become, you know, areas that are, you know, on the radar of many investors, so it’s certainly worth taking a look at that.
Hey, I hope you’ve enjoyed this Inspire & Inform Live. Check us out every Wednesday evening, we normally go live anywhere between six to 630. Sometimes I need a little bit more time to prep. But hey, if you’re interested in having a conversation with myself or any of my team, just go to www.inspirerealty.com Have a good night and all the best of the Blues or if you are with the Maroons, all the best with the Maroons. Thank you so much and have a great night. Bye for now.