mrd

In life there are indisputable laws that we have to contend with.

There are laws of chemistry and physics, laws of nature and there are also financial laws.

If you fight the laws of physics you will lose every time. Have you ever tried to fight the law of gravity? It’s painful when you land with a thud! Gravity wins every time. NB: While the law of aerodynamics supersedes the law of gravity… it does not do away with it!

Did you ever try to grow a plant that was totally unsuited to the local climate? No doubt, you didn’t have much success! How silly would it be to mix two explosive chemicals together… and no reaction?

People drown fighting rips… but anyone can swim with the tide.

LAWS GOVERNING THE FINANCIAL WORLD:

As there are laws governing most things about us… so too it is with the financial world. Two obvious laws that I want to consider here are (1) Time and (2) Inflation. In my experience, most people fight these financial laws like the swimmer in the rip. They drown financially… but it does not have to be that way!

Once we accept that there are laws governing time & inflation, we can learn how to harness them to our advantage; it’s that simple! It can be like having the wind at your back, rather than running into a headwind.

Therefore, my strong suggestion is: “Quit fighting natural laws; rather learn how they work… and how to use them to your advantage”.

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House prices are expected to rise by as much as 40 per cent across the country during the next five years, according to economic forecaster BIS Shrapnel.

BIS Shrapnel director and chief economist Frank Gelber said housing affordability, already at record lows, would sink even lower as demand continued to outstrip supply.

Mr Gelber said there was currently a construction shortfall of 30,000 dwellings, but has forecast that number would grow to 60,000 by June this year and 129,000 midway through 2009.

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The recent fall in the Australian sharemarket may help the housing sector, as property is regarded as a “safe haven” during such times. Other factors that may have a positive impact on house prices include very low rental vacancy rates and high levels of immigration. Factors that may have a negative impact on house prices over the next 12 months include the likelihood of more interest rate increases and a possible slowdown in the economy. In general, St George Bank predicts house prices will rise by between five and 10 per cent in most markets over the next 12 months

Source – Money Management

The number of residential properties advertised for sale in Perth has reached levels last witnessed in 1995. The total of 16,300 in March 2008 also compares with a low point of just 4,800 in mid-2006. Rob Druitt, president of the Real Estate Institute of Western Australia, notes the over-supply of listings has created a buyer’s market. Among the reasons for the situation are higher interest rates on mortgage loans, volatility in the sharemarket, and selling by speculative investors who got involved during the recent boom in prices. Many vendors are now opting to enter the rental market rather than suffer discounting of around 10% to secure a sale

Source – The West Australian

Life won’t necessarily deliver us those things that we deserve (which sometimes could be a blessing!). Nor does life… or the world owe us anything!

But… our lives will respond powerfully to our expectations!

The power of expectation is a force that will release either success or failure.

Our expectations create belief and are constantly at work… whether for us or against us.

Think about it.. how do we see ourselves? Do you see yourself as good looking? Well groomed? Talented? Positive? Worthy of success? Of course you do!!

Real Estate ‘guru’ and motivational speaker, Peter Daniels was intrigued as to the common denominator among highly successful people. What made the great Great! He read hundreds of biographies and auto-biographies before reaching the conclusion that the glue that held them all together was an unshakeable sense of destiny!

This sense of destiny gave people like Churchill, Ghandi, Bill Gates and Richard Branson the determination, expectation and belief to be great achievers in their chosen paths.

Do you feel that you have a special destiny awaiting you… one which only you and no one else can fulfil? I believe that you do… by the very fact that you are engaging with this short article right now!

Expectation and belief are more powerful than many realise… they will either limit or propel us in our progress towards success. We have a destiny to fulfil, we have a reason for being here and we have a future full of unlimited possibilities.

You are a person of destiny. My greatest desire is that YOU will be the rabbit that gets the chocolate… and why not?

Happy Investing,
Nick Lockhart

The Gold Coast Weekend Bulletin comments on the recent Midwood Report highlighting that the Gold Coasts population should reach 600,000 by the end of this year.

The report confirms that the Gold coast is still Australia’s fastest growing region and the largest city outside the 5 mainland capitals.

• “Enrolments at Griffith and Bond Uni are approaching 20,000″.
• There is $100 million being spent in airport upgrades.
• Qld unemployment rate is 3.6% compared to the national average of 4.5%
• Since 1981 the GC population has grown by an average of 16,000 per year.
• The majority of the population is in the 40-59 age bracket.

Back in 2004 a story that epitomized some of the worst aspects of the human psyche came out of the U.S.A; it was the flu vaccine shortage!
Typically doctors have a tough time convincing patients to bother with the vaccine; it’s not a big deal to most people…. so why was 2004 in the U.S.A. so different?

Simple… there was a flu vaccine shortage and the fact that people couldn’t get one suddenly caused a panic. Healthy, middle-aged people were allegedly bribing their doctors for a shot… or scheming with business associates to find someone who knew someone in practice which might have some of the precious medicine.

Why is it that people suddenly want a thing after it becomes unavailable? (The same happened in the last property industry ‘boom’… whereas the best buys actually exist NOW!)

People became desperately worried about a thing they couldn’t change… even if, as was the case in the U.S last year, they were otherwise healthy, relatively young and unlikely to suffer from the flu!

One can only imagine, ironically, that many of these very same people were content to smoke, walk around with extra weight, ignore exercise, drive without seatbelts and ignore any financial disaster that may await them.

Paradoxically… so many (well meaning) people focus on the things they have no control over, yet are loathe to change things in their own lives that really could make a difference?

I believe that we DO have control over our destiny… that we CAN be what we want to be. We can also stop and say, ‘No, I won’t do it; I won’t think or act this way anymore’.

Do you really want to be different… to make a difference? It’s time we stop worrying about things we can’t fix and get willing to make small sacrifices in our own lives… to change the things that we can!

Happy Investing!

Nick Lockhart

Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each.  The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort.

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True.

But the greatest annual falls in Australian residential property were -0.9% in 1996 and -0.3% in the depths of the 1990’s recession.

So how does that compare with shares? Between September and October 1987 the Australian share market fell -43.0% ,-15% in 1992,-17% in 1995, -18% in 2003 and I don’t know how much this year.

In risk adjusted terms, since 1984 residential real estate has given vastly superior returns to all other broad asset classes More than triple the returns of shares! (ANZ Bank report Jan 2008)

By 2010 analysts are predicting a record housing shortage in Australia of 200,000 homes driving prices and rents higher.

No one can give you guarantees – except to guarantee that if you never invest in property you will never make any money in property.

ABC radio this morning interviewed Bill Morris of the Midwood report. Marion and I (Martin) occasionally have dinner with Bill and his wife at local trivia night so I was already aware of his opinions but this interview was still interesting.

The points covered were-

• Median rents on the Gold Coast are now the highest in Queensland. $10 PW higher than Brisbane medians.
• G.C. median rents have increased 12% in the last 12 months.
• Because of the lack of rental properties Bill expects rents to increase by 40% in the next 4 years.
• We need 130 new dwellings EVERY WEEK just to meet existing demand and this is simply not happening.
• Currently there are only 400 blocks available for sale on the entire Gold Coast!
• The shortage of available land means that this situation will not change in the foreseeable future. Rents and prices will continue to rise with the laws of supply and demand.