Australians tucked an additional $6.53 billion away in the bank in May as household deposits continued to hit record highs.

The total amount saved in the bank from households is now $1.481 trillion – the 11th consecutive record high, according to the latest APRA monthly banking statistics.

This means household deposits have risen by over $210 billion since the start of the rate hikes (April 2022 vs May 2024).

RateCity.com.au research director, Sally Tindall, said:

“Money in the bank has hit a new record high every single month since mid-last year.”

Australians now have $1.48 trillion stashed in the bank – a rise of more than $210 billion since the start of the RBA hikes.

That’s an astonishing buffer considering the financial pressure many households are under.

With tax time right around the corner and extra cash coming down the line via the government’s stage three tax cuts and the electricity bill rebate, this total balance is likely to continue to climb in the second half of the year as many Australians focus on building up their buffers.

A lot of households will use the extra cash from the stage three tax cuts and other government relief to shore up their budget and pay down rising credit card debt, however, those who are managing to stay afloat are likely to bank at least part of this extra cash.”

Total deposits by households, May 2024

Source: APRA monthly authorised deposit-taking institution statistics.

ANZ’s household deposits to leapfrog NAB’s after Suncorp merger

ANZ currently has the fourth largest value of household deposits on its book, with 11.7 per cent of all household deposits among the banks.

However, Suncorp’s 2.4 per cent share of deposits will see ANZ overtake NAB in terms of the value of household deposits when the two banks merge, taking it to 14.1 per cent or almost $209 billion.

Banks with the largest value of household deposits

Source: APRA

Home loan books continue to grow

The total value of housing loans to households – which includes both owner-occupied and investor loans – increased by $11 billion in May, or 0.5 per cent, with all four big banks recording growth in their loan books.

Westpac posted the biggest growth out of the big four banks with a monthly increase of $3 billion, which translates into a 0.6 per cent increase in its loan book.

Macquarie surged ahead again this month with a $1.37 billion rise in the total value of its home loan book (1.2%).

The ANZ-Suncorp merger, when complete, will see ANZ move into third position in the jostle for market share among Australia’s largest home loan lenders.

NAB and ANZ currently have 14.5 per cent and 13.6 per cent share of all ADI loans respectively, however, ANZ’s share is set to rise to 16.0 per cent with the merger.

Big four banks + Macquarie + Suncorp: loans to households, housing: May 2024

Source: APRA. *Authorised deposit-taking institutions. Note: loans to households: housing is total of both owner-occupier and investor loans as recorded by APRA.

Ms Tindall commented:

“Westpac and Macquarie continued to post strong growth in their residential mortgage books, while ANZ is set to take the reins as Australia’s third largest home loan lender once the Suncorp merger goes through.

The government’s requirement for ANZ to keep both banks’ branches open for the next three years will help settle some nervous Suncorp customers. It has also rightly pressed for the bank to join the Bank@Post program.

Australia Post plays an important role in keeping competition in the banking sector alive, because of the Bank@Post services it provides.

Cash might no longer be king, but there’s still reasonable demand for in-person banking transactions such as depositing and withdrawing cash, and while there are limits to the services Bank@Post can provide it still plays a valuable role across the country.”

About Sam Alaaeddin
With well over a decade’s experience in asset and wealth management, Sam is an Elite Wealth Planner at Metropole and leverages his expertise to help clients achieve their wealth management goals. He holds a bachelor’s degree in law and commerce (Finance) and a Diploma in Financial Planning.

In the ever-evolving landscape of real estate there has been a notable shift in focus towards neighbourhood when home owners have been making their buying decisions.

And investors should similarly focus on selecting the right neighbourhood as this trend transcends mere aesthetic appeal or status symbols; it delves into the more profound aspects of socio-economic dynamics and lifestyle preferences shaping today’s property market.

Remember it wasn’t that long ago that the coronavirus pandemic of 2020 and 2021 forced all Australians to reevaluate how we live our lives.

And it wasn’t that long ago that offices were shut, and lockdowns were in place and that resulted in many of us working from home.

Now that our lives are back to normal, people are likely to continue working flexible rosters and hybrid situations where we work at least part-time from home are here to stay.

This means gone are the days where our ‘home’ was simply the place we rest our heads and enjoy some downtime between work and our social lives – the coronavirus social distancing has put an end to life as we once knew it.

If social distancing and the Covid-19 environment have taught us anything, it has taught us the importance of the neighbourhood we live in.

If you can leave your home and be within walking distance of, or a short trip to, a great shopping strip, your favourite coffee shop, amenities, the beach, or a great park, the recently implemented coronavirus restrictions might seem a little more palatable than if you had none of that on your doorstep.

That’s why choosing the right neighbourhood is important for property investors

In short, it’s all to do with capital growth, and we all know capital growth is critical for investment success, or just to create more stored wealth in the value of your home.

Sure there is always the opportunity to add value through renovating your property or making a quick buck when buying well.

But these are “one off’s” and won’t make a long-term difference if your property is not in the right location because you can’t change its location.

This is key because we know that 80% of a property’s performance is dependent on the location and its neighbourhood.

In fact, some locations have even outperformed others by 50-100% over the past decade.

And today’s property investors and homebuyers are placing an unprecedented emphasis on lifestyle.

It’s not just about finding a place to live, but about discovering a place that aligns with one’s way of life.

This is especially true in urban centers like Melbourne, Sydney and Brisbane where neighbourhoods offering a mix of cultural experiences, entertainment options, and leisure activities are highly sought after.

These ‘liveable’ neighbourhoods with abundant amenities are where capital growth will outperform.

What makes a ‘good’ neighbourhood?

A good neighbourhood means different things to different people, but there are some key factors that help to determine which locations have the potential to grow in value faster in the future.

Generally, a good neighbourhood is determined by its physical location, suburb character and its close proximity to amenities such as a shopping strip, park, coffee shops, education, and even some jobs.

It’s obvious then that today more people will want to be in a location where everything they need is in short 20-minute proximity – whether that is on public transport, bike ride or walks – to their home.

In planning circles, this concept is known as the ‘20-minute neighbourhood’.

Many inner suburbs of Australia’s capital cities and parts of their middle suburbs already meet the 20-minute neighbourhood tests, but very few outer suburbs do because there is a lower developmental density, less diversity in its community and less access to public transport.

The key criteria for a ‘good’ neighbourhood

Here is a list of 7 primary neighbourhood factors which have the potential to drive up property prices:

1. Close proximity to public transport

A key factor to consider is a suburb’s connectivity and infrastructure.

Neighbourhoods with properties that are within walking distance of public transport, such as the train, tram, bus, ferry or light rail, are popular with buyers and therefore are likely to add value over the longer term.

2. Close proximity to schools

While the quality of local schools has always been a crucial factor in property investment, its importance has escalated in recent years.

Families are more willing than ever to pay a premium for properties located in top school zones, driving up demand and prices in these areas.

Interestingly during the property downturn of 2022, the top 10 primary and top 10 secondary school catchment zones nationwide all reported house price growth of at least 25% year-on-year.

3. Accessible amenities

 As I have already mentioned, a neighbourhood with all the local amenities you could want – parks, shops, restaurants, cafes, gyms, the beach etc. – would fetch a premium price for its local properties.

And don’t forget the green factor.”

Green spaces, parks, and environmental quality are no longer just ‘nice-to-haves’.

In the wake of increased environmental awareness, these features have become significant determinants in property investment.

Neighbourhoods that offer parks and recreational areas are seen as more desirable, reflecting a broader trend towards health and wellbeing.

4. A low crime rate

The sense of community and safety in a neighbourhood is a growing consideration.

 It goes without saying that a property in a neighbourhood with a low crime rate will be more valuable than one with a high crime rate.

5. It’s well maintained

Neighbourhoods and homes which are well-maintained and clean indicate a level of community care that can help add value to properties in the local area.

6. Economic Stability and Growth

Strategic investors are also paying close attention to the economic stability and growth prospects of neighbourhoods.

Areas with a strong employment market, growing industries, and potential for future development are on the radar of savvy investors.

Neighbourhoods with planned upgrades could also be beneficial  to property prices in the area.

For example, improved public transport and any plans to make the neighbourhood more visually attractive (improvement to the appearance of buildings or footpaths for example) could increase property prices.

7. Any historic charm

Historic charm brings unique character to a neighbourhood that is often in demand by buyers and in the long term buyer demand for this type of area has the potential to translate to higher property prices going forward.

It’s all about the neighbourhood

Neighbourhood has always been a key factor to consider when buying an investment property, and now it’s even more important.

I’ve always looked for desirable neighbourhoods in aspirational suburbs – locations where people aspire to live – which are very different to locations where the only reason people live there is that they can afford it.

Not only do we already know that location does the heavy lifting when it comes to capital growth, with some areas fetching 50-100% greater capital growth than other locations, but we’re also in unprecedented times which has forced us to adapt to a new normal.

This became the new normal when restrictions were put in place on our movement, social distancing has been implemented and your home now doubles as your office.

This also shone a spotlight on the neighbourhood we live in and what we have available at our fingertips.

As the world around us evolves and adapts, homeowners and investors must do the same and view properties with a post-pandemic eye.

Many inner suburbs of Australia’s capital cities and parts of their middle suburbs already meet a 20-minute neighbourhood test.

However, very few of the outer suburbs would do so.

But it’s about much more than walkability.

For outer suburbs to become 20-minute neighbourhoods, then two key requirements must be met.

1. Local development densities need to be increased, to say around 25-30 dwellings per hectare, which will better support local activity and services provision.
   An introduction of a mix of uses into these neighbourhoods. This would bring more jobs and services close to where people live. They would also have a range of housing to support a mix of household types, income levels and age groups.
   This combination is often known as density plus diversity.
2. Second, local public transport service levels need to be greatly improved.

And this will be very difficult for many outer suburbs to achieve.

At the same time, they won’t meet the aspirational and desirability criterion I mentioned above.

Our property markets will be more fragmented

Over the next few years it is likely that high interest rates and inflation will keep eating away at the average Australian’s household budget for some time making the property less affordable for many.

Moving forward our property market will be much more fragmented.

If you think about it, certain demographic segments will find the rising cost of living due to inflation and higher rents or higher mortgage costs at a time when wages are not keeping up with inflation will either stop them from getting into the property markets or severely restrict their borrowing capacity.

This will have an impact negatively on the lower end of the property markets which will also be affected by the fact that many first-home buyers borrowed to their full capacity and will have difficulty keeping their mortgage payments up at the time of rising interest rates or when their fixed rate loans convert to variable rates.

In other words, there will be little impetus for capital growth at the lower end of the property market

That’s why I would only invest in areas where the locals’ income is growing faster than the national average.

These tend to be the “established money” areas or gentrifying suburbs.

In these locations, locals will have higher disposable incomes and be able to and are likely to be prepared to pay a premium to live in these locations.

Many of these locations are the inner and middle-ring suburbs of our capital cities which are gentrifying as these wealthier cohorts move in.

There are great investment opportunities in these suburbs in houses and townhouses.

About Michael Yardney
Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He’s once again been voted Australia’s leading property investment adviser and one of Australia’s 50 most influential Thought Leaders. His opinions are regularly featured in the media.

Recently the Australian Taxation Office sent around a bulletin busting 5 common tax myths.

Did you believe any of them?

Myth 1: Investors can claim travel expenses to visit their residential investment property.

Since 1 July 2017, investors can’t claim travel expenses to check on their residential investment property.

This includes long and short-term rentals, along with holiday homes.

Myth 2: Replacing like-for-like is always a repair or maintenance.

This comes down to ‘what’ is being replaced.

If it’s a depreciating asset, like a cooktop or pool pump, it must be claimed over each asset’s ‘effective life’, which is how long that item is reasonably expected to last.

If it’s replacing the rusted part of the guttering, then it’s a repair. However, if the whole guttering is replaced, including the rusted part – it’s considered capital work.

Myth 3: When buying a place to rent out, investors can claim conveyancer’s fees as a borrowing cost.

Conveyancing, along with state or territory stamp duty and several other costs, aren’t deductible.

These are the costs of acquiring the property.

However, investors need to keep this information for when they sell their property and can use it to reduce the capital gains tax (CGT) cost base.

Myth 4: You only need a market valuation when you sell.

There are several reasons why property investors may need to get a market valuation, including when they sell.

When you earn income from your home, the ATO recommends property owners get a market valuation as Capital Gains Tax  may need to be considered, including when using the home as a:

• long-term rental
• short-term rental
• running a business from home.

Myth 5: Having a rental property means you are in a business.

When you own a residential rental property, it’s likely you are an investor.

For this to be treated as a business by the tax department, you must have a lot of rental properties and manage them in a business-like manner.

Need more information on any of these?

Why not visit the ATO website for details about:

About Sam Alaaeddin
With well over a decade’s experience in asset and wealth management, Sam is an Elite Wealth Planner at Metropole and leverages his expertise to help clients achieve their wealth management goals. He holds a bachelor’s degree in law and commerce (Finance) and a Diploma in Financial Planning.

Moving to Australia may seem like an easy task, but you need insider info to tackle obstacles all on your own.

In today’s article, we’ll explore 5 expert tips that will help you move to Australia and find your new home in the down under.

You may even decide to not move to Australia, depending on how well you consider you can acclimatize to the different environment.

Are you ready?

Let’s get started.

1. You may be a little confused, even if you speak English

It’s not a secret that Australians have the lingo that they use in day-to-day life. You may even hear an abundance of curse words, curse words that shouldn’t be spoken in other countries, as a term of endearment.

Some Australian terms you may have never heard before are:

Barbie: Barbecue

Macca’s: Mcdonald’s

Ankle biter: Child

Bogan: Redneck

Bathers: Swimsuit

Brekky: Breakfast

And that’s just the start of the slang. Before you head on over to Australia, learning a few of their slang words will help go a long way.

For instance, if someone says “S’Arvo”, they’re referring to this afternoon. If you’ve never heard of this before, don’t worry, you’re not alone!

2. The cost of living is HIGH in central cities

Many users on platforms like Reddit.com, have gone ahead and stated how high the cost of living is in Australia. One of them stated:

I think one needs to have a salary of at least $200K or have at least $2M wealth to be comfortable in Sydney. That’s in AUD and for 2023.

As of 2024, the costs have continued to go up, for all purchasable goods and will continue to go up. If you don’t have a lot of money to live off of before you get situated, you may want to decide to live elsewhere. The average salary in Australia is around USD 65,000, and $95,000 AUS.

Tips: Look into applying for jobs before you move to Australia, or have a safety fund that’s going to support you during your move to Australia. And if you’re a smoker, it may be a good time to quit as a pack of cigarettes will cost you around $22AUD or $17USD.

3. Housing oversight has some problems

In Australia, it’s common for building regulations to be much looser than in any other part of the world. Many apartments and residential buildings are constructed poorly, with cheap materials, often disastrously impacting residents and investors.

Tips: If you decide to move to Australia and purchase a home, it may be a good idea to have an inspector come along with you to make sure no corners were cut.

One of the biggest complaints is terrible insulation during the winter months, leading to a very cold and uncomfortable house in the winter.

Another task before purchasing a home is to have it inspected for pests. Australia is renowned for having pesky critters, and buying a house full of ‘em is likely not at the top of your list. Vet your real estate agent as well as your inspectors to ensure that they are operating legally and lawfully within Australia.

4. You can hire movers to help

Before moving to Australia, you’ve likely considered that you may have to sell your belongings before moving there. But with the best Australian international moving companies getting all of your belongings safe and sound to Australia should be no problem.

One great aspect of moving companies is that they offer full-service moving, which takes care of all the packing, unpacking, and even the garbage disposal at the end. If you’re in a pinch, and have little to no time on your hands, full-service movers make the moving process easy.

You can also leave your furniture and belongings in storage in Australia so you can take your time until you arrive. Without any stress and tons of belongings to haul with you, you’ll show up to Australia ready to tackle the big move, without the unneeded stress.

5. Australia is FAR away from the rest of the world

Australia is a big island, referred to as an “island continent”, without any connection to any other parts of the world.

Note: This means that if you have family in the USA or Europe, travel is going to be necessary. And the resulting bills as well.

The other problem with living in Australia is that you won’t be able to go on a road trip to any other countries nearby. If you’re used to living in Europe, this may be a big change that you are not prepared for. Flights are also incredibly long from Australia to the rest of the world, resulting in higher fees for airlines.

Conclusion

Before you move to Australia, checking out the culture may be a good idea rather than outright moving there without visiting. The culture is vastly different than what you might imagine, and you may have a different opinion of Australia after visiting.

Note: That being said, Australia is a great place to live if you have a good income.

If you are struggling, the high prices in Australia for housing can be offputting for anyone without a lot of expendable income. With these tips in mind, you should be able to make better decisions when it comes to moving to Australia.

About Guest Expert
Apart from our regular team of experts, we frequently publish commentary from guest contributors who are authorities in their field.

Right now things feel awful.

Tuesday’s Westpac Melbourne Institute survey shows three times as many Australians say their finances have worsened than say they’ve got better, and twice as many think the economy is getting worse as think it is getting better.

The national accounts show real income per Australian (adjusted for inflation) has been sliding for a year.

We are buying less per person online and in shops than at any time in the past two and a half years.

And Commonwealth Bank transaction data shows even our spending on essentials is failing to keep pace, except for older (mostly unmortgaged) Australians who are actually spending more on essentials than they were, as well as more on luxuries.

But – and I am sure you’ll find this hard to believe – things are nowhere near as bad right now, in the middle of 2024, as they were expected to be.

Nowhere near as bad as predicted

A year ago, at the start of the financial year that’s about to end, the panel of expert forecasters assembled by The Conversation expected inflation and interest rates to be much higher than they are today.

Inflation was going to be 3.9%, not the present 3.6% and headed down, and the Reserve Bank’s cash rate was going to climb two times in the second half of 2023 from 4.1% to 4.5%.

Instead, it climbed once, to 4.35%, and hasn’t climbed since.

That’s something worth remembering when people tell you inflation is stubbornly high.

It isn’t as stubbornly high as it was expected to be.

And a recession looks much less likely.

Back in mid-2023, when asked about the probability of a recession in the next two years, the expert panel’s average answer was 42%.

Asked when that recession was most likely to start, the panel’s average answer was December 2023.

So worried was the government over Christmas that it asked the treasury to come up with extra cost of living relief.

What the treasury produced was a reworking of the Stage 3 cuts due to start in July.

The rejig doubled the tax cut set to go to Australians on average earnings and halved the tax cut set to go to Australians on more than A$200,000.

By the time The Conversation’s panel next assembled to examine the probability of a recession, in February, it had cut the likelihood to 20%, which is about the lowest average probability a recession ever gets in these sorts of surveys.

What’s gone right

What’s gone right is that inflation has proved easier to subdue than expected, and not only inflation in the price of goods, many of which are made overseas.

Inflation in the price of services has been falling the entire financial year.

That good news has allowed the Reserve Bank to hold off on increasing interest rates all year. And it’s partly because of us.

Businesses attending the bank’s liaison meetings have told it they are “intensifying their focus on containing costs as they find it harder to increase prices”.

That’s because we are less likely to put up with higher prices.

Are we in an election year?

Excuse me for being cynical, but each state seems to be bringing initiatives to help housing affordability.

Don’t get me wrong… this is a good thing.

However, when looking more closely at some of the initiatives, the numbers don’t really stack up.

Build-to-rent scheme for essential NSW workers

The recent NSW budget announced that the Minns government will build apartment blocks for Sydney’s essential workers, offering them cheap rent so they’re not priced out of the city.

The budget set aside $450 million to build more than 400 build-to-rent (BTR) dwellings over the next three years for essential workers to rent at a subsidised rate.

Essential workers, including nurses, paramedics, teachers, allied health care workers, police officers and firefighters, are set to benefit from the BTR scheme, which aims to “increase the supply of well built, well located, secure and accessible rental accommodation for the essential workers who keep Sydney running but are being priced out of the market,” the government said.

Premier Chris Minns said the government was thinking “outside the square” to improve affordability.

“We’re expecting big towers, and they’ll be exclusively for essential workers,” Mr Minns said.

The funding will enable Landcom, the NSW-owned land and property development organisation, to acquire up to four new sites to build at least 400 new apartments in the next three years.

“Landcom will select sites with a preference for surplus government land identified as being suitable for housing with the specific locations to be determined,” the government said.

“The homes will be offered to essential workers at a discount to market rent, through a separate subsidy program.

“The Government will retain ownership of the housing with rental income available to help fund a potential future additional expansion of the Government’s key worker housing program.”

While the discounts haven’t been decided, the premier suggested they would be close to 20 per cent.

“We can offer competitive rates because the government will own the land. It will be the builder of the project,” he said.

“Any profits that come about as a result of the project will be reinvested so that we can potentially envisage stage two or stage three of this.”

The apartments will be located in metro Sydney, with the aim of providing essential workers with the opportunity to work and live in the communities where they work.

Subject to planning approvals, construction is expected to begin on the first site in early 2026 with essential workers expected to be able to move in from late 2027.

Eligibility criteria, details on how to apply and the rental subsidy will be available closer to the completion of the first project, expected in 2027.

Then there’s the $6.6 billion Building Homes Program

We know that social housing has not been a priority for state governments for several decades, so a new initiative that will be the largest-ever public housing investment in NSW history and focus on providing affordable housing for the people who need it most is set to be pretty transformative.

Here’s what we know so far.

Focusing primarily on meeting the needs of Sydney’s more vulnerable communities, the Building Homes for NSW Program plans to:

• Build 8,400 new public housing abodes (half of which will be dedicated to women and families experiencing domestic violence);
• Fix 33,500 public homes in desperate need of repair;
• Deliver more than 21,000 affordable and market homes across the state; and
• Build affordable rentals for key workers
• The project also aims to address the issue of homelessness in the state, injecting more than half a billion dollars into homelessness services and crisis accommodation.

To facilitate the project, the government aims to leverage surplus government land and public housing construction to undertake the biggest planning reforms in a generation – with aims to build homes around existing infrastructure and roll out the biggest investment in public housing maintenance to date.

Described by Minister for Housing Rose Jackson as a “once in a generation opportunity”, the project aims to “fix the housing system and create one that is fair and affordable for everyone”

My thoughts:

I believe rental accommodation should be provided by both the private and the public sectors.

In general, most of the rental accommodation is provided by ordinary Australians (what many call mum and dad investors) and public housing for those in need, and there will always be disenfranchised Australians, has been provided by the government.

In fact, I believe it is their obligation to do so.

However, over the last couple of decades, the state governments have been letting their constituents down and not providing sufficient social housing.

So these initiatives by the New South Wales government are very welcome.

The availability of housing, and in particular, affordable housing, is one of the biggest pressures faced by Australians.

And many essential workers just can’t find a property that they can afford close to where they work.

But let’s look at the numbers a little bit more carefully

1.  The $1,120,000 cost of construction for each of the 400 BTR apartments for essential workers is excessive. Especially if the government already owns the land and we know the government are not really efficient at building anything, so this will not be an efficient use of taxpayer funds.

2. 400 affordable dwellings is a drop in the ocean compared to the 494,000 projected increase in NSW’s population over the four years to the end of 2027.
3. The government said: “Any profits that come about as a result of the project will be reinvested so that we can potentially envisage stage two or stage three of this.” Clearly, the government has no idea what it costs to construct high-rise dwellings in the city, and if they offer discounted rents, where is there a profit to be made? The only profits I can see if they make the renting received a higher than holding costs, but I can’t really see that happening.
4. And finally – it will take a number of years for these developments to get out of the ground and be completed, even if the government fast-tracks everything.

About Michael Yardney
Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He’s once again been voted Australia’s leading property investment adviser and one of Australia’s 50 most influential Thought Leaders. His opinions are regularly featured in the media.

Many of the gains for many Australians in 2020 and 2021 were artificial and didn’t last.

The COVID Supplement temporarily doubled JobSeeker, for example.

JobKeeper paid workers what their employers could not.

As these measures have been unwound, the gains have been unwound, making it more difficult than usual to separate the economic signal from the noise.

But in a study just published in the ANU Centre for Social Policy Research journal POLIS@ANU, we have made an attempt.

We wanted to find out which kinds of households are expected to be financially better off and which are worse off five years on from the outbreak of COVID, comparing 2024 with 2019.

We’ve adjusted incomes for living costs

We have examined incomes after adjusting for changes in living costs.

This means that if a household’s after-tax income increased by 20% but its cost of living also increased by 20%, we have regarded its financial living standard as unchanged.

The tool we used was the ANU PolicyMod model of the Australian tax and transfer system, Australian Bureau of Statistics data on employment, demographics, prices and wages, and government data on tax and payments.

We have also taken account of the income tax cuts and changes to payments that begin next month.

Our estimates for December 2024 are projections based on the assumptions in the budget about incomes and prices.

We find overall living standards increased from 2019 to 2021 but then fell sharply in 2022 with a further small fall in 2023.

Overall living standards were 0.6% lower in December 2023 than in December 2019.

This year they are expected to climb to be 1.3% higher than December 2019.

But it’s an overall picture that glosses over the full story.

Gains for high earners, low earners

The only groups whose living standards grew significantly over the period were households on the very lowest and the very highest incomes.

We divided households into five “quintiles”.

The lowest-income fifth we called Quintile 1.

The highest-income fifth we called Quintile 5.

The Quintile 1 living standard grew 3.5%.

The Quintile 5 living standard grew 2.7%.

In contrast, the living standard of the second-lowest quintile barely grew, and the living standards of the middle and upper-middle quintiles actually fell.

The living standards of middle and upper-middle-income Australians were lower in early 2024 than they had been in 2019.

Low-income households did relatively well partly because their payments were indexed to inflation.

The Real Estate Institute of NSW (REINSW) has uncovered another underhanded plan by the NSW Government to charge property owners more, aiming to offset increasingly “unaffordable” insurance costs.

Buried within the Budget’s explanatory notes is a reference to the NSW Revenue Legislation Amendment Bill 2024.

This bill outlines the NSW Government’s strategy to shift the cost of the Emergency Service Levy (ESL) away from insurance companies and onto property owners instead.

The state’s emergency services are primarily funded by the ESL.

With the growing impacts of climate change and more frequent natural disasters, these funding requirements are rising, making insurance less affordable, according to the Bill.

The Budget Paper states:

“The Government will remove the ESL on insurers and instead spread a replacement levy across a broad base of property owners.”

Among the proposed measures are increasing surcharges for foreign purchasers, raising the surcharge land tax, and freezing the land tax threshold.

REINSW has expressed shock but not surprise at the move to transfer the increased insurance costs for emergency services to property owners, given the Government’s track record.

REINSW CEO Tim McKibbin said:

“This Government’s solution to the state’s economic woes is clearly and unashamedly singular: property owners must be able to afford it, so they can pay for it.

If the Bill passes, property owners and buyers will face higher charges so the Government can reduce insurance costs.

The expectation is that insurance companies, in good faith, will adjust their premiums accordingly.

More tax on property owners means reduced investment in property.

In a housing crisis, this is among the most reckless courses of action.”

About Brett Warren
Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.

Millennials who delay buying their first home are putting themselves at huge risk of being long-term renters.

But complaining about a lack of affordability isn’t going to get them anywhere; instead, they need to start to turn attitude into action.

The fact is: that the number of first-home buyers is dwindling.

This is a massive concern, when you consider a home is the biggest asset the average Australian has when they retire.

But now, for the first time, we’re facing a generation of lifetime renters.

Millennial renters could easily spend over $1.25 million on rent during their lifetime.

And in the end, they won’t have anything to show for it!

Rent money is empty money.

It’s throwing money into paying off someone else’s mortgage.

The alternative is investing your money into an appreciating asset.

To do this means getting out of the rental hamster wheel and buying your own home.

Now, I can see two key reasons why young people are delaying a home purchase.

Millennials are either struggling to enter the market because they can’t afford it or because they aren’t prioritising the task of ‘owning a home’.

I can understand why our younger crowd is on the fringe.

The market is expensive, and growing more so, particularly in white-collar hubs where the jobs are.

Added to that, there’s also a negative presumption – heightened by media hype – that it’s not possible for young people to get a foothold in the property anymore.

But that’s not always true.

There are several avenues available to our Millennials that make it possible to enter the market.

I also firmly believe that it’s vital for Millennials to prioritise real estate ownership – despite the planning and sacrifice that it takes.

The earlier, the better.

Why? Because delaying only perpetuates the unaffordability cycle.

Prices won’t suddenly drop significantly in the next year or two, making it easier to jump into real estate.

Every year of delay equals lost capital growth, a step lower on the ladder, and thousands of dead-end rent dollars.

In an ideal world, your first home should be your own.

You have to live somewhere for the rest of your life, so the person who should ideally own that property is you – not your landlord.

A home is the biggest asset you’ll own and over time as it increases in value and you pay down the mortgage, you’ll be able to unlock equity that can be used as seed capital to buy further (investment) properties.

Come retirement, you’ll own your own home – worth considerably more than the purchase price and several investment properties that generate enough income to live comfortably.

But if you can’t afford to buy your own home in your desired area, what do you do?

First, get to the bottom of the reason why haven’t bought you.

1. Is it because you’re too picky? 

If you haven’t yet bought a home because you’re feeling priced out of the market, it might be time to loosen the ‘dream home’ criteria.

Very few first homebuyers debut in inner-city Sydney.

Once you’re on the property ladder, you can start working towards your ultimate home – but for now, just get on the first rung.

2. Is it because you have grand expectations?

A smaller home, or one further from the city, or a townhouse instead of a family home, could put you in a more affordable price bracket.

Lifestyle ‘wants’ might have to take a backseat for a while.

3. Is it because you can’t afford it?

Yes, there is a major money hurdle involved when saving a deposit, getting loan approval, and paying for a mortgage. But that doesn’t mean it’s impossible.

So your first action is to start saving today, even if you’re not sure when you’ll buy.

For example, if you’re an apprentice earning first-year wages, you might not qualify for a loan – but you can start putting aside $50 a week for a deposit.

Assuming a four-year apprenticeship, you’ll have $10,400 saved by the time you’re entering the workforce as a qualified employee.

I would also strongly advise that you maximise your savings by keeping your money in an account with a high compound interest rate.

Saving – and paying a mortgage responsibly – takes some sacrifice.

People don’t often like to hear the ‘s’ word, but it goes hand in hand with moving forward towards security and independent wealth.

Culling some of the major expenses, like dining out, shopping sprees, holidays, and brand new or second family cars might be a necessary step towards getting on top of your finances. You might even need to make bigger sacrifices such as renting a cheaper place while you save.

What about Rentvesting?

If buying your own home still seems out of reach, consider buying a home for someone else instead.

‘Rentvesting’ has become a buzzword lately.

It’s a brilliant strategy for those who either can’t afford to buy where they want to live.

Essentially, rentvesting is buying an investment property where you can afford it in order to get on the property ladder, while you continue to rent where you want to live.

That way, you can be close to employment or lifestyle factors you enjoy, while someone else pays off the mortgage for you.

Rentvesting is also a strategy that suits those who want to buy a property but need the flexibility to move around for employment.

One of the big differences between buying a rental property and your own home is the tax benefits.

Investment properties boomerang money back to you through depreciation, negative gearing, and other deductible expenses that can really boost your financial standing to lenders.

It could be the extra weight you need to tip the scales.

You might choose an investment property in an affordable bracket; you might choose a home you’d like to live in one day but can’t afford to just yet.

Either way, having a tenant paying down your mortgage while you rent elsewhere means you’re holding a tangible asset that’s progressively growing in value.

Remember:

The earlier you start in the property market, the more time, leverage, and compounding will work for you.

Also, buying a property that’s within your means will make saving for a deposit an easier and more achievable task.

Using equity to springboard into purchasing other properties is also a proven and time-honoured strategy used by many of Australia’s 1.8 million investors to grow wealth.

Millennials aren’t an exception to the rule.

Times have changed, but the method is the same: save, sacrifice, and have a plan that sets you up for a financially secure future.

About Leanne Spring
Leanne is a highly experienced Buyers Agent in the Brisbane Real Estate market. Leanne became a passionate lover of property in 2001. Since then, both professionally and personally, she has been involved in all aspects of property including purchasing, negotiating, renovating, and selling.

Wondering what the Oracle of Omaha has his money invested in?

In this graphic, we illustrate Berkshire Hathaway’s portfolio holdings, as of Q1 2024.

This data was released on May 15, 2024, and can be easily accessed via CNBC’s Berkshire Hathaway Portfolio Tracker.

Furthermore, note that Berkshire has received SEC permission to temporarily withhold data on certain positions.

This includes all of its Japanese stocks, which are reported as of June 12, 2023.

It’s (almost) all Apple

The data we used to create this graphic can be found in the following table.

Positions worth less than $5 billion were included in “Other”.

Company	% of Portfolio	Value (As of 05-23-2024)
Apple Inc	39.7	$149.8B
Bank of America	10.7	$40.6B
American Express	9.7	$36.8B
Coca-Cola	6.7	$25.2B
Chevron	5.3	$20.0B
Occidental Petroleum	4.2	$15.7B
Kraft Heinz	3.1	$11.7B
Moody’s	2.7	$10.2B
Mitsubishi Corp	2.1	$7.8B
Chubb	1.9	$7.1B
Mitsui & Co	1.7	$6.4B
Itochu Corporation	1.5	$5.5B
DaVita	1.3	$5.0B
Other	9.4	$35.9B
Total	100	$377.9B

From this, we can see that Berkshire’s largest position is Apple, which makes up almost 40% of the portfolio and is worth nearly $150 billion.

While Warren Buffett once referred to Apple as the best business in the world, his firm actually trimmed its position by 13% in Q1 2024.

Even after that cut, Berkshire still maintains a 5.1% ownership stake in Apple.

Why Japanese Stocks?

While most of Berkshire’s major positions are in American companies, Japanese firms make up a significant chunk.

In 2020, Berkshire took positions in five Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.

Also known as sōgō shōsha, which translates to “general trading company”, these firms are highly diversified across major industries.

According to an article from IMD, Buffett sees an attractive opportunity in Japan due to the country’s low interest rates, among other things.

About Guest Expert
Apart from our regular team of experts, we frequently publish commentary from guest contributors who are authorities in their field.