We often get asked “How can a financial adviser help me?”. It is good question.
Why would you pay for an adviser? Certainly not just any old adviser!
When you partner with Calnan Flack you not only get an adviser to help you navigate your own personal financial road map specific to your circumstances and objectives, but you get this done with a complete understanding of the cycle and within the context of our Calnan Flack Economic Cycle Action Plan.
This Economic Cycle Action Plan forms the foundation of ALL of our advice.
And here is why it is SO important!
Let’s call it the tale of four articles.
I read a lot. Lucky for me I do have some very good helpers, members of our Investment Club often send me articles of interest. I really enjoy receiving these articles and hearing members’ perspectives and views!
I am going to give you a quick rundown on four articles I have read in the last few days.
Now I know that each article has an element of truth and some basis of fact, however I encourage you to read the headlines and then listen to your emotions.
It’s all ridgy-didge and this sort of news reporting goes on day in and day out. It’s no wonder that investors, sophisticated or otherwise, get overwhelmed with investment research and fatigue that ultimately leads them to paralysis by analysis or in many cases making poor investment decisions.
These articles are not particularly special. They are just ones that I noticed over the last few days to illustrate my point. I’ve included a hyper link to each article so you can read it in its entirety for yourself if you choose to. The text below the headlines are quotes directly out of the article.
Remember the news market will often do everything it can to get you to make the WRONG decision at exactly the WRONG time. It’s just how it works.
This is where Calnan Flack can help.
This IS our point of difference.
The practical application of the economic, credit and investment cycle is what we do.
Article 1 – 18/10/2019
The RBA is anticipating a housing shortage and another crazy price boom in markets that really don’t need it
“Australia is headed towards yet another property supply shortage, and it could put a rocket under prices, the Reserve Bank of Australia (RBA) has warned.”
“While the increase in supply has finally met the earlier increase in demand, demand will continue to grow given population growth but supply is going to decline. So there is quite likely to be a shortfall again in the foreseeable future,” RBA deputy governor Guy Debelle told an investment conference in Sydney on Thursday.
For those not living under a rock, Debelle’s words should trigger a serious sense of déjà vu. Those same conditions led to prices running away for years, pricing many out of the market entirely in Sydney and Melbourne. Prices in those cities shot up 75% and 58% respectively between 2012 and 2017.”
“Since September 2018, residential construction activity has declined by 9 per cent. The decline has been broad-based across detached and higher-density housing, as well as spending on renovations.”
“The housing price cycle has also turned, but in the opposite way to the construction cycle,” Debelle said. “The growth in demand without a meaningful supply response will lead to a larger price response.”
In layman’s terms, with slowing supply, and growing demand, the RBA’s thinking is prices can really only go one way — up.”
Photo by Maximillian Conacher on Unsplash
Article 2 – 21/10/2019
Australia home prices keep rising as auctions heat up
“Australian house prices are heading for their strongest month of gains since mid-2017 as record low interest rates and looser lending rules stoke auction demand in Sydney and Melbourne.
The recovery is welcome news for the economy after a two-year downturn ate away at household wealth and confidence, undermining consumption and business earnings.”
“Sydney saw prices rise 0.5 per cent in the week and 1.7 per cent for the month, while Melbourne gained 0.6 per cent and 1.6 per cent respectively.”
“The spring selling season is in full swing and conditions look to be strong in the two major markets with withdrawal rates low in both,” Westpac senior economist Matthew Hassan said.
“Recent clearance rates are consistent with price gains running at over 1per cent a month – i.e. 3per cent a quarter and a double-digit annual pace.”
That would be a boon for consumer wealth and spending power given the housing stock in Australia is valued at a cool A$6.6 trillion (US$4.52 trillion), or more than three times the country’s annual economic output (GDP).”
Photo by Eggzy Pallet on Unsplash
Article 3 – 21/10/2019
Majority of off-the-plan apartments worth less than purchase price, data shows
“7.30 (with Leigh Sales) can reveal that 60 per cent of off-the-plan apartments in Sydney, and 52.9 per cent in Melbourne, were valued lower than their contract price at the time of settlement.
The latest figures from property data provider CoreLogic for the month of August shows that nearly a third of off-the-plan buyers in Sydney were moving into new apartments worth at least 10 per cent less than the price they purchased them for.
Just two years ago, less than 16 per cent of newly constructed NSW units were valued below contract price after they were completed.
In Queensland, 43.1 per cent of units were worth less at settlement than what they were purchased for, and in Western Australia it was 22.5 per cent of apartments.”
“Now cast your mind forward to 2019 and we’ve seen prices come down in Sydney by 15 per cent. In Melbourne, they’re down by about 11 per cent.
“A lot of those off-the-plan buyers have seen a very fundamental shift in the value of the project that they purchased a couple of years ago.” CoreLogic’s head of research, Tim Lawless
Article 4 – 22/10/2019
The fall of property prices and a weak dollar has wiped more than 120,000 Aussie millionaires off the face of the earth
“However, as prices drifted towards earth over the last 18 months, so too has the net worth of Australians. In 2019, the country lost some 124,000 millionaires according to this year’s Credit Suisse global wealth report and it’s not like they simply pulled up sticks and departed our shores.”
“On the downside, Australia was the biggest loser, shedding $US443 billion due to a decline in house prices combined with currency depreciation against the US dollar,” Credit Suisse said in its report, noting that Australia lost more wealth this year than any other nation on earth.
“For Australia, this has resulted in little movement north in the last eight years, with average wealth just about remaining the same since 2011. Meanwhile, both China and the US took out the top honours throughout the list in terms of gross gains. The US, lifted by a roaring share market, managed to add an astounding $US3.8 trillion of wealth, with China lagging behind in second with a gain of $US1.9 trillion.
Despite this, Australia still lays claim to 1.1 million millionaires, the ninth most in the world. This places it in the same company as Spain (0.9m), Canada (1.3m) and Italy (1.5m) and well behind the US (18.6m) and China (4.4m).”
Photo by Krista Purmale on Unsplash
So, what the bloody hell is happening to the property market?
Is it going up? Or is it going down?
This is the genuine conversation that Australians are consistently debating in their heads – with NO conclusion being reached.
We educate our clients and investment club members to learn how to critically follow the media with their understanding of the underlying drivers of the economy and knowledge of the cycle underpinning their thought process and hopefully their investment decisions and actions.
Those who attend our Calnan Flack Annual Property Update meeting know exactly what we can expect for the Australian Property markets.
Whilst these articles and most in the financial news are based on facts they are also very much emotional opinion pieces. They leave out more relevant facts than are included. The facts that are included are there to support the emotional headline. Remember their main objective is encourage you to read the article.
People who have studied the Calnan Flack Economic Cycle Action Plan will know what to expect. This Economic Cycle Action Plan provides a templated road map for the repeatable and predictable Boom Bust cycle that has encapsulated our economy and investment markets (property and shares) since our forefathers first landed.
We are currently putting the finishing touches on the program for our November, Calnan Flack Forecasting Conference. Our planning and research for the conference is exciting and always helps us better understand just exactly what’s in store for investors for the year ahead.
It’s how we at Calnan Flack view the news and advise our clients that makes us different and it is why we invite you to engage with us.