MB Fund Podcast 2020 – Is 2021 the year to buy Australian property with Bushy Martin

This week we thought we might finish off the year with another big show on Australia’s favourite investment class, property.
To help colour in the conversation we have brought along Bushy Martin who is a keynote speaker, all round property investment wizard and award winning author of his 2018 book, Get Invested. Link here – https://bushymartin.com.au/books/
It was a terrific conversation covering areas of property market conditions that have changed since he wrote the book, such as under supply of quality properties, falling mortgage rates and the changes to responsible lending laws. We talk about areas of Australian property that have been helped and hindered by the pandemic and a chat around some key metrics he uses when sizing up the potential in an investment property.

 

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Tim Fuller is Head of Advice at the MacroBusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Tim Fuller is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.

Tim Fuller

Comments

  1. Bulls win in overtime

    No, sit on the sidelines for another decade listening to the bears saying a crash is imminent! (18 months)

  2. We’ve got an Aging Population. Growth has been slowly collapsing for many years so its not something thats just started happening. As I type this, we’ve got Covid spreading in NSW and VIC. The other thing thats dawning upon me is just about everyone I know has a health problem. Its not a nice thing to say but the number of people Im seeing in the Community who’s health is failing and arent likely to survive the next 5 years is hard to avoid. Your not talking nobbly knees but life threatening illness without proper care, these people would probably die. Peoples health is collapsing.

    Interest rates are at virtually zero. You go negative and you basically wreck the currency. People will be withdrawing money out of the bank so fast it wont be funny. You’ve got Migration thats turning into a Covid Pandemic. One look at NSW / VIC today and your kind of seeing the results of that. Im thinking that leaves Quantitative Easing. As growth continues to fall in Australia ( which Im thinking is going to keep happening for many years to come ), I suspect in 2021 we are about to unleash rivers of Money Printing. When you look at Australias Bond Rates, you can see they should be falling on present trajectory… but the levels of Money Printing are already ramping up to get pretty extreme. Bonds are going sideways and I suspect in 2021 they may be rising off the back of such extreme levels of printing.
    https://gyazo.com/e566f9862870b006f04932679874ef89?token=2e72af4d5e54b0574d0e0c5515711eae

    Property and Shares to rise off the back of all this Money Printing. Yeah, probably. However, we are living in a world of some pretty extreme volatility. We tend to be optimists. The budget projections suggest the damage from 2020s covid will rebound by 2024 ( thats 4 years away ). All of this is on the proviso that Covid is over, we have no other Extreme Events and everything just goes smoothly and quietly for the next 4 years. America wont collapse. China wont declare war. There wont be an Aging Population and everythings just going to be living in happy land for 4 years. Given the amount of risks in the world today ( which I think are at extreme levels ), there is a huge possibility of things going wrong in the next 4 years and all these Happy Plans sliding off the rails.

    I think the Government is throwing it all into Property because Property is the last thing the Australian Government has left. Its lost control of everything else. Crypto is competing against the Currency. Im thinking Shares could have many scandals in years to come as dodgy accountants grab the cash and run for the back door. The Governments lost control of many things in Society. You’ve got money bleeding out of the Country and I happen to know that Australias Tax Enforcement is terrible. A lot of people in Australian Society are rorting the system as Taxes arent properly being collected. Enforcement exists but much like the crime happening in Australia today, the levels of enforcement just isnt enough. The people I see succeeding in Australia are the con artists, the rorters, drug dealers and pretty much everyone deceiving the system. Most honest people just dont seem to be going anywhere.

    I agree with MB. I think growth collapse will transpire into heavy money printing, rising Real Estaet and Stocks ( for a while )… but the cracks Im seeing in the Community have me really worried. I dont think things are as rosey as they seem to be. While I cant specifically state whats gonna happen to us in the future, I just think the potential for risk is massive right now. I think anyone who thinks nothing will happen in 4 years is dilusional.

    Im thinking our desperation for high house prices, with interest rates at close to 0% is most likely just going to force downward pressure on currency. I think Interest Rates have a long way down to go. Bonds may rise off the back of money printing but interest rates are stuffed… and in my opinion, so is the Currency ( Australian Dollar ). Interest Rates in years to come… are going very far down.

    To be fair, Im not proud to say, its pretty much how I saw it many years ago. https://gyazo.com/ef530d63d6a11e666d941fef3a34418f

    I’ve spent more time in hospitals caring for family then I’ve liked. I spent Christmas and new years beside hospital beds. I think the scary thing isnt that all this is happening but the most scary thing, to me, is there’s just no plan for where we are going. At a time when you need Leadership and to focus on the things we hold most important, there’s just no plan.

    I dont mean to ramble but walking through a hospital, it dawned upon me how many old guys sat in rooms without any family. Many rooms of intensive care and just about everyone of them was alone. My family had someone sitting the room but all these other familys, there was just nobody. Aussies are notorious for being there for their mates. I’d sell my shirt if it meant doing what I thought was right. Something in Australias changed. I think we are stubbornly beholden to rules that just no longer make sense anymore. I dont think there are going to be any winners in this. Only losers.

    If people are thinking things are going to go according to a precise plan in the next 4 years and nothing is ever going to change, then in my humble opinion, I think thats a very aggressive thing to say and judging from the things I’ve seen, I just dont believe thats reality. I think we are only in the beginning. Thats why Im sticking to Gold.

    • I agree there is no plan. If Covid-19 is put under control, then there is no plan to deal with climate change and that will drastically alter our lives far more then Covid-19 has.

      I’m not too worried about house, stock or crypto prices because if we don’t have a plan to deal with everything else then those things won’t matter anyway.

      The reason to be bullish on property is because you see currency being devalued along with its purchasing power and I see an avalanche of stimulus coming over the next 4 years, but.. will it work? Does it work? I suspect it will be less and less effective.

      • Arthur Schopenhauer

        Yep. There is a retreat to a pre-World War 2 social order. Property at a cost well above a wage earner’s attainment, along with the re-establishment if intergenerational housing.

        In many respects, Covid has accelerated the pattern, with adult children retreating to the family home. Those with higher degrees will see their wages continue to rise (doctors, senior lawyers, the pointy end of comp sci, etc) while the majority will be pushed into relatively lower state of wealth.

        Everything will be done to sustain the status and assets of the ‘owners’ of property. The rest get to rent. Overtime, those who fall off the property ladder will find it more difficult to get back on, and like the US, the under class will burgeon.

        The crazy thing is, it is a political choice. As Covid has shown, governments can act when they want to.

        • Yep it’s sad isn’t it.. it can all be fixed if there is political will to do so. I do think once the plebs are disenfranchised enough they will riot. It will get ugly.

  3. Bushy is just another property spruiker, albeit a more intelligent one than most, although he has limited it to houses now that he sees apartments as being a wasteland for a long time.

    He knows that its basically a ponzi scheme, but tries to palm it off as being for the good of Australia by asserting that its long term driver is skilled migration (his assertion) in addition to falling interest rates. Quite obviously he is not willing to admit that the migration program only involves a small portion of skilled migrants and that most are basically low skilled people who come here to compete against the average Aussie. In addition Bushy does not talk about foreign ownership of our housing stock as a key driver of house prices since that is a sensitive issue.

    Bushly believes, as most of us now acknowledge, that the govt (Lib or Lab) will do anything to hold property prices up and fails to talk about the economic distortions stemming from this – I suppose he does not care because he is profiting from it.

    The idea that property prices will not fale in Oz is false – they will just as they have in Japan for about 30 years after they peaked out in 1990, but it will take longer for this to happen is Oz because unlike the Japanese, we are willing to sell our country to support the continued rise in house prices and to also see the existing population replaced by migrants.

    House prices will fall after a major economic event that restricts capital inflows, caused by such events as a longer term global depression, rising interest rates, war, a major contraction of export revenue (could be caused by falling commodity prices especially iron ore prices).

    We are now in the roaring 20s so make hay while the sun shines. My asset of choice is still goldie shares, but its possible that it may be better to own goldies with overseas mines due to the high (and rising) AUD in the medium term resulting in little operating margin expansion for local mines.

    Good luck to all in 2021.

  4. Both parties will turn backflips to keep property prices high and going higher. If a crunch comes and a high percentage start to fail in repayments then I would expect the government will buy the bad mortgages from the banks and refinance them back to the mortgagees at peppercorn rates all under the guise of “giving a helping hand to honest, hard working mums and dads doing it tough”. Ironic coming from a party who’s mantra is all about letting market forces guide the economy and rewarding lifters instead of leaners. The banks must be saved at all costs even if they are majority foreign owned.