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[NEW VIDEO]: What Do The New Stage 3 Tax Cuts Mean For The Melbourne Property Market?

Don’t miss out, CLICK HERE to get up to date video education from Konrad Bobilak.

Are the Stage 3 tax cuts fair (and will they happen)?

On January 15, Prime Minister Anthony Albanese said the Stage 3 tax cuts were here to stay despite Labor’s consistent reservations, according to the Australian Associated Press.

Since then, the conversation has swirled about the fairness of the Stage 3 tax cuts, which is set to cost the government $313 billion over 10 years.

By January 22, one media outlet had claimed that the tax cuts were not going ahead as planned – although at the time of writing, there has been no changes to the Stage 3 tax cuts.

With the $1,500 tax offset ending this financial year, many workers that earn under the Australian average annual salary of $90,000 will be worse off in net terms despite the tax break.

In a cost-of-living crisis, the fact that someone earning $200,000 receives a $9,075 tax break while someone earning $40,000 gets no immediate benefit can feel unfair.

Others have made the case that the tax overhaul could save $130 billion off the total bill if it were reweighted towards lower income earners.

However, the reason Australia's middle- and higher-income earners are set to receive the major tax breaks is because they bear the larger share of the tax burden, according to property expert Ben Kingsley.

“And so they should, but how much is too much?” said Kingsley, founder and director of Empower Wealth, which was recently named Liberty Australian Brokerage of the Year at the 2023 Australian Mortgage Awards.

“Squaring up the ledger a bit whilst also addressing bracket creep is a fairer outcome.”

For example, Kingsley said someone earning $70,000, currently paid $13,217 in taxes. Now double their income to $140,000. Their tax bill jumps to $36,867 – that’s 179% more than the lower earner, not just double.

With the new Stage 3 cuts, that number falls to 166% higher – ($12,592 compared to $33,592).

Watson agreed, “I think for most Australians, the tax cuts have been enacted to provide improved equality for everyday Australians, particularly for ‘middle Australia’ who do a lot of our country’s heavy lifting.”

What are the Stage 3 tax cuts?

The Stage 3 tax cuts are the final part of a three-phased tax reform plan legislated in 2019 and are set to come into effect for the 2024/25 income year.

It involves changes to personal income tax brackets, primarily affecting earners between $45,000 and $200,000.

There will be two key changes:

  1. Merging tax brackets: The existing 32.5% and 37% tax brackets will be merged into a single 30% bracket for those earning between $45,001 and $120,000.
  2. Raising the top tax threshold: The 45% tax bracket will start at $200,000 instead of $180,000.

What does all this mean for borrowing capacity?

In terms of borrowing capacity, prospective homebuyers will likely be the ones to benefit the most.

Borrowing power could increase by $15,000 for someone with $100,000 annual income and around $100,000 for someone on a $200,000 income – and that’s assuming APRA still leaves the buffer rate at 3% on lending servicing.

“Borrowing powers are based on your net income,” 

“Banks subtract your expenses, and then lend to you based on your leftover income available. These tax cuts directly increase the leftover income. The higher your income, the larger the boost to your borrowing power is.”

“For the rare households with two income earners above $200,000, there's potentially a $200,000 increase coming your way.”

Dear Fellow Property Investor,

If you are wondering why Australia is suffering its worst rental crisis in living memory, look no further than today’s official September quarter immigration data from the Australian Bureau of Statistics (ABS).

Australia’s population surged by 660,000 people in the year to September 2023, driven by a record-high net overseas migration of 549,000:

Australian Population Change Graph

145,200 net overseas migrants landed in Australia in the September quarter of 2023, the second highest quarterly figure on record behind March 2023:

Net Overseas Migration Chart

Net overseas migration as a share of Australia’s month remained at a record high of 83% in the September quarter of 2023:

Immigration as a % of Population Growth Graph

Meanwhile, natural population increase was a historically low 111,000 in the year to September, courtesy of a jump in deaths, most likely related to the baby boomers dying off and the impacts of the pandemic.

Australian Natural Population Increase Graph

Finally, the next chart shows the explosion in net overseas migration on a historical basis dating back to Federation in 1901:

Australian Net Overseas Migration Graph

Notice how residential rents fell at the beginning of the pandemic when net overseas migration was negative, only to explode when net overseas migration surged?

Quarterly Growth in Residential Asking Rents Graph

The Albanese government’s extreme immigration program is why Australia has experienced such a severe shortage of accommodation and a rental crisis.

Capital City Asking Residential Rents

Anyone who denies this fact is a liar.

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022),

Or will you join them?

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the Real Estate Investing Fast Track Weekend!

Click HERE to reserve your seat now!

Dear Fellow Property Investor,

Did you know that a mix of middle and outer Melbourne suburbs can be revealed as the city’s best performing over the past five years, after the house price medians grew as much as 40 per cent in some locales.

The Melbourne suburbs where house prices rose most over five years revealed!

Unit prices grew the most in Mitcham, where they jumped 21.3 per cent over the five years to $752,000. It was followed by Highett (19.6 per cent to $658,000) and Brighton (17.9 per cent to $1.2 million).

Melbourne’s overall median house price rose 22.1 per cent in the same period. Although it remains below its peak, the market has somewhat improved in recent weeks as clearance rates point to modest price rises and home buyers show renewed activity in expectation of a Reserve Bank rate cut later in the year.

The analysis excludes the Mornington Peninsula, but growth was even stronger in popular sea-change destinations that swelled during lockdowns such as Blairgowrie, Sorrento and Rye, which were up 66.3 per cent, 52.9 per cent and 52.8 per cent, respectively.

Let me ask you something…

Do you have a game plan for 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022), 

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the Real Estate Investing Fast Track Weekend!

Click HERE to reserve your seat now!

Dear Fellow Property Investor,

A new report is forecasting Melbourne’s median house price will surge more than $110,000 to an almost $1.16 m record high in the next 18 months – the equivalent of $200 a day.

Oxford Economics Australia forecasts that the price recovery will drive Melbourne’s median $1.04 million median house to jump 110,000, or 5.5%, close to $1.157 million by mid-2026, driven by an expected resurgence in migration from both interstate and overseas.

And it’s not just house prices, unit prices will also reach a new record.

According to the report, Melbourne’s median unit is also anticipated to increase 6.5% to an all-time $726,900 high.

Let me ask you something…

Do you have a game plan for 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022), 

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the next Real Estate Investing Fast Track Weekend!

Click HERE to reserve your seat now!

Dear Fellow Property Investor,

Did you know that over the past decade, luxury houses have experienced a far stronger rate of growth than the rest of the market?

Median priced houses have increased by 78 per cent. In comparison, houses priced in the top five per cent have doubled. A luxury house has been a good investment over the past decade. Will this strong performance continue?

Australia’s luxury homes have outperformed the market!

A big driver of luxury house price growth is simply land value. There are only so many properties you can build in our most expensive suburbs, which tend to be located close to beaches, bays and rivers. Anything with even more unique characteristics that are hard to replicate, such as a view or close proximity to the water, are likely to have increased even further.

Another driver has been renovation activity, which surged during and immediately after the pandemic. Luxury homes have become even more expensive over time as more investment has taken place. And while it is not possible to measure, it is likely a higher proportion of well located luxury homes have been renovated than the rest of the market and almost certainly true that more has been spent on them.

A greater concentration of wealth has also likely increased prices. A recent report from Oxfam has found that the wealth of Australia’s richest people has increased at a rate of 1.5 million per hour since 2020. A lot of this wealth has been invested in luxury homes around Australia.

While luxury homes have outperformed, they have also exhibited a lot more volatility in price growth. During the pandemic, they increased far more than more affordable properties. But they also saw a much greater decline in 2022. Timing the purchase of a luxury home appears far more important than it does for buying one closer to the median.

Units have also outperformed, showing a switch in the way that wealthy people want to live. Historically, the majority of apartments built in Australia have been aimed at people that could not afford a house. As such, many of them were seen as a stepping stone to buying a house. Now there is growing demand for luxury apartments and the gap between the median and the most expensive has grown as quality has improved.

Luxury apartment market

Will this outperformance continue? The Federal Government Housing Accord seeks to build more homes within established suburbs. However, it is likely that most of them won’t be built in our most expensive suburbs. Owning a luxury house or apartment in our most expensive suburbs is set to continue to be a solid investment over the next decade, providing of course you can afford to buy one in the first place.

Let me ask you something…

Do you have a game plan for 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022), 

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Don’t miss out, CLICK HERE to get up to date video education from Konrad Bobilak.

Dear Fellow Property Investor,

I realise that Apartments tend to get a bad rap when it comes to property investing. 

And rightly so…many Melbourne suburbs such as Docklands, South Bank, and Melbourne CBD, just to name a few, have proven a complete disaster when it comes to long-term capital growth, with many apartments underperforming the rate of inflation…

But did you know that according to a recent CoreLogic report, Unit [Apartments] values in Blackburn South and Mont Albert in Melbourne’s inner east, Mulgrave, Dandenong North, Noble Park, Springvale and Springvale South in the south-east and Somerville and Frankston South on the Mornington Peninsula have more than tripled in the past 20 years.

Unit prices in Melbourne climbed faster than both Sydney and Brisbane over the past 20 years, increasing by 120 per cent, data from CoreLogic shows. 

Those gains were boosted by strong population growth and lower stock levels in the 2000s.

Sydney’s median unit value increased by 115 per cent, while Brisbane lifted by 81 per cent during the same period.

Underlining Melbourne’s performance over the past two decades, units across 85 per cent of all its suburbs more than doubled in value, while prices in more than 10 suburbs tripled over the same period.

Melbourne suburbs where apartments tripled in value over 20 years revealed! Investors Prime Real Estate

A large chunk of the growth in Melbourne unit values in the past 20 years occurred before and after the GFC with unit values surging more than 20 per cent in 2007 and also in 2009-10, according to CoreLogic.

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?

Or, will you join them?    

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Book Real Estate Investing Fast-Track Weekend

Dear Fellow Property Investors,

Australia is facing two more years of house price growth, with two standout markets expected to jump the most, according to a bank expert.

Melbourne and Perth will clock the greatest increases in house prices this year, Bank of Queensland chief economist Peter Munckton found in his new year outlook report.

Depleted listings and few options for buyers will cap how far prices can decline, Munckton wrote in the BOQ's Housing Market Update.

Prices will go up this year but not by the margins seen in 2023, he predicts.

Annual % change standalone house prices. Konrad Bobilak

Munckton is not expecting interest rate cuts until the end of the year. Earlier rate reductions would result in more "aggressive" house price growth, he said.

Price rises will likely continue with gusto in 2025.

"Average house price growth Australia-wide is likely to be lower in 2024 than it was in 2023," he said in the report.

"The lack of new supply puts a floor as to how far house price growth can slow (at least without substantial changes in interest rates or the unemployment rate).

"Stronger house price growth is likely in 2025 as interest rates are reduced and the economic outlook improves."

Domain's latest House Price Report (December 2023), released in January, found record median prices were struck across several capital cities. It has never been more expensive to buy a house or unit in Australia.

At $1,094,539 for houses (up 2.1 per cent over the quarter, or 7.8 per cent over a year) and $638,372 for units (up 2.3 per cent over the quarter and 6.8 per cent over 12 months), the fresh levels inflict further challenges on those striving to get a foot in the market, but reflect capital gains and increased equity for those with mortgages.

Munckton said the bounce of prices in 2023 was a "surprise" to most analysts.

He said the "biggest rise" in standalone house prices in 2024 will be in Melbourne and Perth - markets which he regards as "best value" when comparing rental yield with the level of long-term interest rates.

"Melbourne price performance last year was modest by capital city standards," he wrote.

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?

Or, will you join them?    

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Book Real Estate Investing Fast-Track Weekend

Dear Fellow Property Investors,

A handful of Melbourne suburbs recorded double-digit property price increases over 2023, bucking the city’s wider trend of modest growth.

Melbourne’s median house price median rose 2 per cent to $1,047,000 over the 12 months to December, and its unit price grew 4 per cent to almost $580,000 in the same period, the latest Domain House Price Report showed.

In the ever-popular inner north suburb of Fitzroy, however, house prices increased 16.4 per cent to a median $1.63 million last year. Unit prices in neighbouring Fitzroy North also shot up over the year, up 12.5 per cent to nearly $617,000.

Burwood (up 11.9 per cent to $1,411,000) and Maribyrnong (up 11.9 per cent to $1,031,000) had the next highest house price growth, and Notting Hill (10.8 per cent to $385,000) and Bayswater (10.5 per cent to almost $608,000) were the closest for units.

Domain chief of research and economics Dr Nicola Powell said the growth was out of character for Melbourne. “There are a handful of suburbs that have seen double-digit increases and declines, but the bulk of suburbs haven’t seen a lot of movement in the past 12 months,” she said.

Powell said Fitzroy and Fitzroy North had over-performed particularly when compared against blue-chip suburbs which typically lead market movements.

Melbourne suburbs where property prices rose most. Konrad Bobilak

Nelson Alexander agent Jonathan West said sought-after suburbs tended to help boost prices of their neighbours, particularly if they held high-quality homes. Brunswick East, for example, recorded house price growth of 4.3 per cent over 2023 to a median of $1,249,000.

“It’s the connection suburb to Fitzroy North and Carlton North,” West said. “They will start coming out of Carlton North and Fitzroy North and look in Brunswick East to see what’s around, then they’ll hop to Brunswick and Brunswick West if there’s nothing there.”

Brunswick West had less spillover effect, however. House prices there fell 19.8 per cent to $923,000 over the year.

West said the Brunswick West neighbourhood included homes which needed more work, and didn’t attract the same premiums as turnkey properties.

“Brunswick East is more expensive, there’s no doubt about it. With Brunswick West, you get bigger blocks and wider streets,” he said. [The median price] is based on those older style double-fronts that need a lot of work.”

Prices fell the furthest in the unit markets of Clayton South (down 23.2 per cent to $460,000) and St Kilda West (down 20.7 per cent to $486,000), and for houses the biggest drops were in Elwood (down 19.8 per cent to $2,085,000), Brunswick West and Alphington (19.4 per cent to $1.55 million).

Westpac senior economist Jarek Kowcza said the demand for renovated homes was a common trend because of Australia’s high inflation, particularly in the construction sector.

“Properties that are ready for people to move into are really popular,” he said. “The cost of building a new home has been one of the main contributors to inflation.

“So that’s meant the cost of renovating the home has really increased. The availability of staff and materials are also a factor.”

Let me ask you something…

Do you have a game plan for 2024?

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which, in my opinion, already bottomed out in November 2022), again?

Or, will you join them?    

So, what are you waiting for?

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Book Real Estate Investing Fast-Track Weekend

Dear Fellow Property Investor,

New figures show inflation has slowed to a two-year low of 4.3% leading many to speculate there will be no need for further interest rate rises.

Australian Bureau of Statistics figures for November, show inflation is down from 4.9% in October. This is down from a peak of 8.4% in December 2022.

Graph: Inflation falling as fast as it went up

The Commonwealth Bank is tipping a drop in interest rates of nearly 1 percentage point by the second half of 2024.

CBA chief economist Stephen Halmarick, believes cuts will start in September 2024, dropping rates to 3.6%. He also predicts a further 75 basis point drop in 2025 when inflation sits within the Reserve Bank of Australia’s target of 2% to 3%. This, he says, will bring the cash rate back to 2.85%.

This is excellent news for all property investors as blue-chip inner-city properties located in desirable suburbs will become cash-flow neutral, and in some instances positive!

This aspect of cash-flow positive blue-chip properties will be further accelerated by the current unprecedented increases in rental yields in ‘Key Suburbs’ around Melbourne and Sydney.Imagine, buying a townhouse in Carlton, Yaraville, or St. Kilda and its cash-flow positive from Day 1!

But you have to have the specialised skills and understanding in order to unearth these rare gems?

Let me ask you something…

Do you have a game plan for 2024? 

Or will you watch savvy, educated, market-ready investors snap up all the bargains at the bottom of the Melbourne property cycle (which in my opinion by the way has already bottomed out in November 2022). 

Or will you join them? 

So, what are you waiting for? 

Reserve your place and join me and 55 like-minded property investors for the first Real Estate Investing Fast Track Weekend for 2024!

Click HERE to reserve your seat now!

Investors Prime

Interested in learning more about property investing in Australia? Please visit our main website InvestorsPrime.com.au for loads of free resources, articles, videos and more to help you on your investing journey.

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