The managing director and I have taken my mum to Cooly for a little holiday after my dad passed away late last year. Many happy memories of the southern end of the Goldy revisited and a cracking outlook from Reflections by the Sea. For our money the views are the best on the coast and while some of the units are getting a little tired you simply can’t beat the location. Nice staff too.

The views do contain one sad vista. The old Greenmount Resort is now a pile of rubble to be replaced by a new residential development. Prices start circa $4.8M so God knows what a penthouse will be worth! If the number of mega buck residential apartment projects either on the go or in planning are any indication, there is some serious money looking for a home on the Gold Coast and in Northern NSW. You’d have to think that will put upward pressure on existing unit values and with that clever segue, it’s crystal ball time.

Let’s say values of new off plan units continue to hit stratospheric numbers. It’s true that these new projects provide a level of architectural elegance and amenity mostly unmatched by existing apartment buildings. But, as the old saying goes, a rising tide lifts all boats and it’s hard to see unit values at, say Reflections, not rising as a result of the prices at Greenmount. Even if you’ve got to do a full reno the value proposition is hard to argue against. Of course, such a trend might not be all good news for management rights operators with expensive managers apartments. The old unit to business value ratio challenge may mean that unit values giveth and business values taketh away. Will any of this happen? I have no idea.

Let’s say our rulers in Canberra decide to tinker with negative gearing and capital gains tax concessions. In fact, let’s say they abolish both but grandfather existing arrangements. If you are already in the market, you are now a property investor with a tax arrangement that new investment buyers can’t access. While you hold the asset, and when you decide to sell, you can take advantage of negative gearing and/or capital gain concessions. The person you sell to cannot. Therein lies a strong motive to retain the property and take advantage of tax concessions both while you hold and when you sell.

Maybe such a situation would stem letting pool losses to owner occupiers. Almost certainly new investor demand would slow. Would that result in falling prices for traditional investor stock? Will any of this happen? I have no idea.

Let’s say there is a war in the Middle East, and the net result is constricted world oil supply. Let’s say that while our politicians say we have plenty of reserves we really don’t. Petrol prices rise and so do the costs of every service and function in our economy that relies on oil. Think the grocery stores, delivery drivers, farmers, airlines, etc etc. All of this is of course inflationary, and we all know what that means. The blunt instrument of interest rate increases comes down upon 3.3 million owner occupiers, 2.2 million investors and 2 million businesses. But here’s the thing. There is demand and supply side inflation, concepts that our treasurer is currently studying so he can differentiate. What I’m talking about is supply side and no amount of tinkering with interest rates is going to stop me from buying toilet paper, no matter how expensive. Will the RBA apply some nuance at its next board meeting or bring out the hammer? I have no idea.

Let’s say all this has you thinking about interest rates. To quote Shakespeare, “what light from yonder window breaks”…………. ahh, wrong one. Let’s try “To fix or not to fix, that is the question”. On this we can be fairly clear. Fixing is for the fearful and variable is for the brave. Throwaway line but grounded in truth. If you borrowed a few bob 30 years ago and stayed on variable the whole time you’d be, on average, ahead of the fixed rate curve. That doesn’t mean that through fortunate timing some fixed rate punters haven’t done well, particularly if you fixed during a pandemic. Hope we never have one of those. If you sleep better knowing your loan payments are locked in go right ahead. For the rest of us variable is the go. Of course, there are numerous interest rate management options the banks will try and flog you. Hedging, caps, collars and split facilities, to name a few. My advice is to take the advice of Alan Bond, legendary businessman, borrower, fraudster and sailor. If you owe the bank $1M you got a problem, if you owe them $100M, they got a problem. Will fixing work for you? I have no idea.

Let’s say you borrow some dough and want to preserve a few bob for emergencies. You also want to pay down debt as fast as you can. Maybe you want to park your money in an account that pays you no interest but offsets that balance against your loan balance. For you the interest rate question has been answered. It’s gotta be variable. Provided your loan has a redraw facility and redrawing funds doesn’t create a tax problem there seems no need for an offset account. Just pay off more than you must and know that if a nasty surprise arrives you can redraw the funds. The banks tend to promote offset accounts which seemed weird to me if a paydown and redraw facility is available.

Then I read ASIC’s annual report on areas they will be focusing on in the banking industry. Turns out some banks hadn’t been properly linking offset accounts to loans, and some hadn’t been offsetting interest at the same rate. To be fair some banks self-reported these “discrepancies” while others got caught fair and square. I reckon these dramas are almost always related to outdated IT and rarely if ever an evil plot. Having said that, will the Australian banking industry ever sort out these dramas and cease paying fines to the regulator? I have no idea………………. Do they?

In closing some clarifying remarks:

RBA is the Reserve Bank of Australia, not Resort Brokers Australia.
Stop it you guys.

Negative gearing is, of itself, a complete waste of time and money.
Don’t do it for its own sake.

Borrow as much as you can, make sure you spend the money on an appreciating income producing asset and pay it off as fast as you can. Debt is good but only if it builds wealth. Debt for a new TV is bad.
Always trust your finance broker.

None of this is financial advice.
Please consult someone who has an idea.

If you really want to be guided by Shakespeare, may I suggest Side 1, Track 2 of Making Movies. Will it change your life? I have no idea.

How did I become so opinionated and grumpy, and how does the managing director put up with me? I have no idea.

In memory of my Dad, Ross Phipps (1935-2025), who loved these articles. What a great role model….. you have no idea.

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

At the time of writing, this was a forward-looking forecast, prepared without knowledge of any outcomes

No AI or ChatGPT has been used in the writing of this article.

I should be happy, but I’m not. In fact, I suspect this will be our last such journey with future adventures confined to our native land and perhaps the occasional foray to the Land of the Long White Cloud. On a positive note, our experience has shone a very bright light on the positives of travelling at home or across the ditch.

Where to start?

The MD had wanted to do a European river cruise for some time, so we booked the classic Amsterdam to Budapest route and added a few weeks after to explore places we hadn’t been before. Christmas in Europe seemed a good idea, not least to escape the heat and humidity at home. Our flights with Emirates were ok, if you set aside being stuck on a taxi way for an hour waiting to leave Dubai or finding another aircraft parked in your bay upon arrival in Amsterdam, leading to another hour watching the seatbelt signs and praying the toilet would become available. While on the subject of airlines, beware the quality differences. Emirates flew a newly refurbished aircraft out of Brisbane but a very tired one out of Dubai on the connecting flight. All of this turned out to be an omen of what was to come.

Amsterdam is a very interesting city with much charm and history. It is also a city of smokers who seem quite happy to dump their cigarette butts on the ground. We forget how much smoking has become socially unacceptable in Oz, not so in The Netherlands it seems. The city feels safe enough albeit I wouldn’t go out at night around the main railway and dock area unless you are interested in the less appealing aspects of failed immigration policies.

Even before we boarded our floating home for the next two weeks signs of things to come emerged. We would not be meeting the ship at the main downtown port as planned, but instead in a rather unattractive industrial dock area. Upon entering our cabin, we discovered that the tour company have an incredibly gifted marketing photographer. You could swing a cat I guess but the poor feline would definitely end up with concussion.

Within a few days the softening up process commenced. River levels were falling and we would need to speed up and bypass some of the main onshore attractions. The lock system is dependent on water levels we are told and we don’t want to get stuck. As it turned out it didn’t matter. While moored at the lovely medieval town of Passau we were informed that a lock had broken and our journey via boat had come to an end. We would remain onboard until the end of the tour and then be bused to Budapest. So much for the historic tour of Nuremberg or New Year’s Eve in Vienna.

The bus ride turned out to be some 8 hours inside a mobile virus incubator. Within 24 hours of our arrival in Budapest the MD had been flattened by a very nasty bug and I soon followed suit. Of course, being a bloke, I was far crooker as I’m sure you will appreciate. With deteriorating health and doctors’ orders not to fly we reluctantly cancelled the last three weeks of our journey and have made the Matild home for the time being.

So far, we’ve learnt some lessons we maybe should have already known. Overall airline reputations don’t necessarily guarantee you will be riding in a nice new plane. Tour companies should know of possible impending dramas but just seem to assume that guests will take major problems in their stride. My suspicion is that the company did know that water levels were falling before we embarked and that the trip would be impacted. They chose to keep our money and go anyway.

And here’s the big one.

Travel insurance companies seem ill-prepared to assist customers in medical crisis. Our previous provider failed that test spectacularly a few years back, so we moved to another insurer. They answer the phone at least but that’s about all. They seem very keen to explain the claims process but unable to manage even basic medical support. The lady we spoke to was pleasant enough but admitted she was unfamiliar with Hungary and that the company had no one on deck who was. This is a major travel insurer! The hotel staff did a way better job so if you are going to Budapest stay at the Matild. Even if you are crook, it’s still a wonderful experience with lovely people to look after you.

As you can imagine this whole experience isn’t cheap and given the debacle it has turned into one might ask………. what the hell, why not holiday at home?

Let’s start with convenience. With the exception of the wonderful Margaret River region, most appealing domestic locations are less than a four-hour plane ride from pretty much anywhere on the east coast. No international transfers, no passport controls and limited opportunity for loss of luggage. Hell, even Queenstown is only 3 hours away and the Kiwi attitude to the arrivals process is pretty relaxed. Dodging the need to sit in a 14-hour recycled germ factory also has its merits of course.

Travel is expensive and the further you go the higher the bill. The problem is that unlike Australia many countries feel no need to have transparent pricing. In Hungary for example prices are displayed as what one might describe as retail. This means the 27% VAT and 15% automatic service charge are added on only when the bill hits your table. That’s an extra 42% on top of the price displayed. Incredibly there is also an expectation that the poor hapless punter will provide a tip on top of this. For hotels in many countries the tariff is quoted before city taxes, green compliance levies, water surcharges and anything else the local authorities can dream up. Many hotels also have horrible cancellation policies which pretty much guarantee you’ve done your dough regardless of how much notice you give. Add in a weak $AUD and the holiday at home bang for buck argument makes even more sense.

Here’s the thing though. We are not getting any younger (the MD says she is, but I await proof) and health considerations must now form part of our travel planning. Becoming ill a long way from home in a country whose health system you don’t understand and with no practical travel insurer support is no fun. The financial and emotional impact of cancelling a long-planned trip of a lifetime while being marooned in a foreign land is significant. Is it worth it? As of now the answer is a resounding No.

Next time…. Tassie here we come.

Postscript:
I reserve the right to go skiing and I promise not to complain if things go sideways.

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article.

The days are going faster than I expected but I’m developing a slight sense of dread as our tour director seems to be softening us up for some unpleasant news regarding possible changes to our itinerary. I’m also developing a theory based on the demographic on board. The travel company is Australian so no great surprise that the majority of guests are Aussies. It seems that the more dire the economic circumstances of the State of origin, the more strident the support for the people who delivered that outcome. An almost Stockholm Syndrome state of mind manifests itself among some Victorians, who one might expect would know better. I’m having a lot of fun albeit the MD says I’m just a sh*t stirrer. She might be right.

Of even greater surprise are the number of seemingly sane passengers who argue that out of control electricity prices are a sure sign that renewables are the cheapest form of energy. Their inability to grasp that government subsidies distort actual costs is a constant excuse to steer conversations toward the many positive attributes of communism. On this the Victorians can all agree.

And speaking of which…

As our nation lurches from one crisis to the next it’s hard to focus on any particular challenge, much less contemplate solutions. To some degree I am comforted by the clear and present evidence that those in power are similarly challenged when it comes to devising positive outcomes. Surely the ruling class are smarter than the rest of us, so perhaps we just need to accept that some problems are indeed intractable.

Or maybe not.

In the many debates that range across the vista of public discourse one objective measure appears to be missing. When politicians, bureaucrats and their many many advisors spell out policy positions, they seem to miss one vital ingredient…

The oft quoted but rarely spotted endangered species known colloquially as common sense.

The term can be traced back to a 1776 essay by Thomas Paine in support of American independence from Great Britain. Since then, the broadest interpretation seems to be an ability to make sensible decisions in daily life. A capacity to use knowledge and intuition to come to reasonable conclusions. You can see why our political class have trouble here so let’s try and help.

But where to start? Given everyone is entitled to my opinion I guess I could start anywhere, but let’s zoom in on a current buzz word. Productivity it is but what is it?

Economists tell us it’s a measure of efficiency whereby we look at inputs like resources, time and labour and the ultimate outputs achieved. Sounds a bit abstract and here’s where common sense comes to the fore. To me it’s simply being able to do more with less or at least do the same with no more.

Rather than attempt to form a vision of productivity failures and possible solutions via the medium of obtuse economics or policy speak, let’s examine a few practical examples. Perhaps even apply a bit of common sense. As luck would have it I’ve uncovered a spectacular example of a productivity and efficiency killer. And even better, I can guarantee you that you have first-hand experience of this most evil blight on society.

In 2024 Australians spent about 123 million hours on hold in call centre and government contact queues or waiting for businesses to answer the phone. All the while we are subjected to recorded messages extolling the virtues of the company or government department that thinks so little of us as to value our time at zero. Depressingly, the 123 million hours represented a 15% increase over the previous year. It is estimated that the negative value impact on GDP as a result is circa $1.28 billion dollars per annum.

Of course, the businesses and government departments that deliver these appalling outcomes will bask in the cost savings and resulting bonuses that result from sacking staff and passing the pain on to taxpayers and consumers. Even so, wasting $1.28 billion dollars a year might be a good place to start if we are looking to improve productivity. Oh, and by the way corporate Australia. Having me work for you as a check out chick doesn’t save the economy any money, it just shifts the cost from you to me. I await my Xmas party invitation and annual bonus with bated breath. Common sense says I should not hold that breath.

Let’s move on to an emerging threat to productivity. While it’s too early to tell, I predict that the work from home trend will make call centre productivity impacts look like chicken feed. How can this be Mike, you ask? The overwhelming majority of workers and unions support WFH. So what I say! If a two-day working week for a five-day pay packet was proposed I bet the workers and unions would be delighted. Doesn’t make it a good idea as most businesses would be broke within 12 months, and there’d be no pay packet at all.

Work from home might be manageable if a job could be tightly defined and performance metrics set at a highly accountable level. Good luck with that when it’s near impossible to sack even the most incompetent and lazy employees or public servants under current IR laws. In my experience over many years working in groups within a corporate structure, it’s hard enough to get some people to do the minimum under direct supervision. God help us when these same employees don’t even need to get out of their PJs on a work day. In the absence of live supervision and peer group pressure, I can’t accept that many employees will maintain reasonable output levels. The data will be interesting, but common sense suggests WFH is hardly likely to improve productivity.

BTW, I know people who work from home and do insane hours with an ongoing challenge of being able to switch off. For them WFH may well present an entirely different challenge.

Of course, all this pales into insignificance when compared with the impacts of over regulation and IR laws. The productivity costs of dealing with an ever-increasing bureaucracy, a growing raft of legislative and compliance demands, and a union movement that pays lip service to matching improved worker benefits with improved productivity, are truly eye watering. In 2025 the Dexus Group undertook research that suggested most major construction projects in Queensland were productive for about 2.5 days per week. More broadly, growing regulatory burdens and union activity have been identified as key contributors to this appalling outcome. The most recent data suggests an economic impact circa $160 billion dollars per annum in reduced GDP as a result of red tape in Australia.

That $160B is the tip of an eye watering iceberg. It doesn’t include lost investment opportunities, stifled entrepreneurial activity or the broader malaise that comes from dealing with mindless regulation and rule by legislation. Almost none of our lawmakers has ever started or run a successful business. Maybe that needs to be a prerequisite when running for public office.

The red tape solution was most magnificently proposed by the late Kerry Packer in 1991 while giving evidence to a parliamentary tax enquiry. He suggested that before any new legislation could be passed at least one existing law should be repealed. Considering the blizzard of legislation and regulation now being piled on to existing laws, his words were prophetic indeed. I highly recommend a look at Kerry in full flight via YouTube. His commonsense schooling of his inquisitors is wonderful to behold and shows them for the clowns they are. Nothing has changed.

A few closing thoughts. The next time a politician carries on about the cost of housing crisis ask them why it takes so long to get residential projects off the ground. If a developer has to acquire and hold a site and take years to obtain the necessary approvals, guess who pays for that added cost? If a construction project feasibility factors in 2.5 days productivity out of 5, guess who pays for that. If some poor punter spends their entire lunch break sitting on the Telstra call queue, guess who pays for that?

The entire system is simply punishing the end user, and I think we need to do something about it and fast. The economic outcomes of our current course are not going to end well. It’s not too late and we have the resources to regain our prosperity. We just need the resolve and determination plus a very large shredder for all those regulations. It’s common sense really.

Disclaimer: Not everyone who works from home is lazy. Not everyone who turns up at work is productive. Some corporations are bastards and there is most certainly a place for organised labour in any society. Victorians are not all bad and some seem openly hostile to their Premiers past and present, which is refreshing. Telstra isn’t the worst call queue performer but they are making every effort to be so. Not every finance broker who turns up drowned in the Danube slipped accidentally.

And finally, if you are new to this column, I’m just taking the p*ss. No insult intended but feel free to be offended. It’s all part of the service, no call centre necessary.

“It is not enough to be busy. So are the ants. The question is: What are we busy about?” – Henry David Thoreau

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article.

Like many major speedbumps on life’s highway our first quarter time feature has its roots in the 20th century. We can thank computer programmers who were trying to save valuable coding space by using two digit dating protocols for this one. The result, a worldwide panic that upon the stroke of midnight 1999 the world would come to an end. Computers would read 00 as 1900 and aircraft would fall from the sky, financial institutions would crash and burn and we would descend into a post apocalyptical nightmare. While the Managing Director’s solution was to party like it’s 1999 more serious minds tried to figure out how to make a dollar, whoops, sorry, I mean fix the problem. The subsequent $500 billion global spend certainly made the IT crowd wealthy but what if we’d done nothing. We’ll never know I guess albeit a global panic, a much-hyped existential threat, huge dollars spent and no idea if it was really necessary is all sounding vaguely familiar.

Having dodged the Y2K bullet the world moved on, and rampant capitalism took centre stage. The epicentre of this Gordon Gecko, greed is good (look it up young people) mentality was surely the lofty heights of the Wall Street banks and hedge funds. The ticking time bomb that reflected excessive risk taking and questionable business practices finally got noticed in 2007 and by 2009 had well and truly exploded. The ensuring debacle brought down some of the biggest names in global banking, investment and insurance with the shockwaves making a significant impact on the Australian banking system. Let’s not forget that at its core the GFC was caused by slack home loan lending standards, high risk transactions, sloppy debt service analysis and a belief that housing prices would always go up. Investment in mortgage-backed securities by domestic US banks and those abroad created a web of what was defined as contagion risk. It’s the old cliché about the yanks sneezing and we all catch a cold.

It’s interesting to note the recent push by regulators to free up lending standards, particularly for first home buyers. Add a hot market and 5% government guaranteed deposits and it’s déjà vu all over again.

At a personal level the GFC was one of the most positive things to happen to me……ever. With little activity in the Australian banking sector, other than blind panic, I finally bailed and went broking. In the middle of a global recession with regulators throwing the kitchen sink at tighter banking regulations this would seem a pretty dumb move. The reality is I had no choice. The MD made me do it and for that I am forever grateful. Not sure if she’s braver than me or operates on blind faith but either way her judgement is often right. Quite annoying but we move on.

Just to draw a line under the GFC I recall younger people (basically everyone I know) being super optimistic in the early 2000’s. Many had never seen challenging times and some thought I was a bit negative for suggesting the good times never last. I was asked regularly what could throw a spanner in the works. My reply is as true today as it was then. It’s not the stuff I can think of, we can plan for that. It’s the event that comes out of left field. To quote Donald Rumsfeld, “it’s the unknown unknows”. The stuff we don’t know we don’t know.

Then, in 2017 we had the banking royal commission, more formally titled the Misconduct in the Banking, Superannuation and Financial Services Industry. Judging by recent fines levied by various regulators and current service standards within these sectors I’m not sure the commission had the desired effect. What I do know is that it ushered in a period of victimhood among people who have a limited desire to take responsibility for their actions. Yes, I used my credit card to waste thousands on the punt but it’s the banks’ fault. They should have known I’m an idiot. Next thing we’ll be suing car makers when a drunk uses one of their products and hurts some poor bugger. Some of the commission evidence revealed a few particularly slippery characters from the upper echelons of the banking sector and laid bare the disdain some bankers had for the finance broker profession. Interestingly post royal commission broker market share has increased while bank service standards have declined. It doesn’t take a genius to join the dots here albeit it seems to me that some banks would rather brokers weren’t around to hold them to account and advocate for borrowers. The MD reckons we are safe until the banks offer a superior service proposition. She has declined to hold her breath. Wise woman.

And we sure didn’t know that by 2020 we would be cowering in our homes while armed police patrolled the streets and gangs of toilet paper dealers lurked in the shadows. The so-called global pandemic is fresh enough in everyone’s minds that I’ll skip the history and move on to some thoughts on what to make of it all. Turns out just about every official enquiry into the Covid 19 response has come to the same conclusions. That is, we have no idea how many people would have died of Covid (not with) if left to its own devices, most of the expert medical advice was flawed and the lock downs difficult, in hindsight, to justify.

While we can’t know what might have happened if we’d just taken a few precautions and got on with our lives we do know some things for sure. We know that we have become culturally subservient to government. How else to explain a willingness to give up most of our freedoms and civil rights without meaningful protest. We know that the subsequent rampant money printing and support payments to citizens and businesses has left us with a weakened economy and a culture of government dependence. We know that the economic impact of our Covid 19 response resulted in a circa $9.6B hit to our economy. Maybe we overreacted, a theme I will return to soon.

Of course, all this doom and gloom pales into insignificance when compared to the greatest catastrophe to befall us so far this century. Forgive me the chronological variation but it’s important to have some context before we mention this event. I suggest send small children to their rooms and pre-warn the elderly, infirm or hysterically predisposed. I’m sure you can remember where you were, perhaps even what you were eating when you first learned of the Gallery Vie decision. The outcome of a misguided QCAT ruling would compromise bank lending, and the world would end. The MD would wake me in the middle of the night asking why I was muttering Gallery Vie in my sleep. Not sure how holding a pillow tightly to my face was assisting the waking up process but I’m sure she had her reasons. Some financiers couldn’t have cared less while others blindly took positions with almost no grasp of what the decision actually meant. Needless to say solutions were found and while I’m loath to praise lawyers, I think the profession can be proud of the manner in which the challenge was met.

And now, in no particular order, some other noteworthy events before we run back onto the paddock for the second quarter.

In the past 25 years we’ve had two cracks at formally altering our social and political fabric. In 2017, and with 60% support via a national postal survey, same sex marriage was recognised via amendments to the Marriage Act 1961. Then, in 2023 we held a referendum designed to recognise indigenous people in our constitution. In an extraordinary statistical convergence 60% of people said no. These two events may seem unconnected but in fact they tell the same story. The majority of Aussies want everyone treated equally. In the case of same sex marriage the MD just reckons gay people have every right to be as miserable as the rest of us. She’s kidding of course…………a happier more content woman would be difficult to find.

No commentary on the past 25 years would be complete without some reflection on the rise of technology. The internet, which had been around in one form or another since the eighties, became integral to our lives. The pervasive presence of social media quickly followed, aided by addictive devices like the touch screen, first introduced in 2007. At the same time the dreaded App began to appear, driven by the launch of the iPhone. Those were innocent times before we came to realise that business would use the technology to have customers work for them for free.

Of course, the excitement surrounding the potential of the internet had already claimed its first victims. By 2000 optimism regarding the use of the Web for commercial purposes was rampant with the tech and ecommerce centric Nasdaq Composite stock market index up 600%. The so-called Dot Com bubble burst in 2002 with 78% of the index value lost and many companies going under.

Exciting new tech, huge amounts of money pouring in, unproven profitable commercial applications, unforeseen consequences. Sound familiar? It’s Deja Vu all over again, again.

I could go on and sometimes I do, but let’s wrap up this first quarter review. It’s hard to avoid the conclusion that when faced with a challenge we are prone to overreact. We also seem to learn little from past lessons and as such are bound to repeat them. For sure we mostly have good intentions but often fail to appropriately appreciate where the Genie might go once out of the bottle. The NDIS and our response to managing pollution are classic examples. Globally the post 9/11 war on terror is another.

Having outlined these first quarter challenges, it’s easy to overlook some positive performances. Global poverty levels are improving as are health standards. People are living longer, and researchers are achieving wonderful results in managing disease. Global skirmishes haven’t erupted into world wars and we remain a relatively civil society. If I was coaching this side my first quarter address would be to stick to the game plan, don’t overreact if we are behind, try a few set plays and if you see a player wearing an Ai jersey, drop the shoulder.

And most importantly, yes we are out to win but be respectful to the other team.

BTW….if you find the Deja Vu all over again quote amusing it’s widely attributed to a bloke with the unlikely name of Yogi Berra. Well worth a Google search of his history, wonderful quotes and a dispute with a certain bear.

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article.

I used to be offended by much that I encountered in these enlightened times but now I have a laugh and move on. Speed restrictions in roadworks where there are no works. Signs telling us that speed cameras are for road safety. Businesses telling us we are important before putting us on hour long call centre queues. Those same businesses treating us like crap while asking us to respect their staff. Politicians addressing the public with a cast of goons looking uncomfortable in the background. All grist to the mill in my quest for entertainment.

The managing director thinks I’ve lost the plot, and she may be right. Hell, do we even know what the plot is anymore? Like some B Grade horror movie, I think best to maintain a sense of humour, accept that the plot is farcical and enjoy the ride.

The positive energy my newfound demeanour has unleashed has motivated me to actively seek new comical inspiration. I didn’t have to look far. In fact, my latest laugh out loud moment came courtesy of my bank. Yeah, I know. Seek help Mike, there is no humour in banking. But there is.

It all started when the MD and I were out for a weekend drive. Like most of the population we can’t go past an Open for Inspection real estate sign, so when one loomed into view off we went. Talk about an error of judgement. A very cute house in a great spot we’d forgotten existed had been styled to hook unsuspecting punters like us. I’m no fan of the supernatural but this joint had good karma seeping out of the walls. We returned a few weeks later for the auction where it became quickly apparent there were lots of lookers, but few real buyers. The MD found the bidding process fun, albeit in her excitement she started bidding in $100K jumps when the trend was most certainly $10K at a time. I am told catastrophe was diverted via one highly amused auctioneer, and the property was ours. I’d like to be able to recall the final bidding but as I had succumbed to heart failure, when the MD launched the $100K increases, my memory’s a little sketchy.

Next stop, the bank and the stress of signing an unconditional contract when you’ve got no dough. The MD did the borrowing, I did the promising to pay back. At last count our bank had sent us over 500 pages of information, much of it duplicated. The torrent of communication included sending us everything we had sent them in support of our application. Did they want to? Of course not. They did it because some bureaucrat thought that by forcing the bank to send us hundreds of pages, we’d be protected from their evil schemes. It also seemed that as a guarantor it was the bank’s duty to protect me from the MD. Good luck with that. I laughed. I cried. I read the summary and threw the rest in the bin.

The best way to mislead and deceive is to give the average punter so much information that they are overwhelmed and read none of it. It’s also the best way to hide any unpleasant terms and conditions. To be clear, I’m not for one minute suggesting any bank is up to no good, but you get the point.

Then the bank compelled me to seek independent legal advice as to my obligations. They didn’t want to, but the lawmakers insist, and it’s a classic case of walking as slow as our slowest person. Despite over 45 years in finance I must be treated as if I don’t understand my obligations as a guarantor. So, I visited a lawyer of my acquaintance who laughed a lot, signed off on my declaration and charged me for the pleasure. To be honest we both laughed, and I reckon I got my monies worth in shear amusement.

It’s all so silly you gotta laugh, and I did.

You see, regulators believe that more and more rules are required in order to protect we citizens from………………… ourselves. The race to the bottom is kinda funny and kinda sad. You can educate yourself, have a desire to take responsibility for your decisions and live via a sense of moral obligation but the banks are forced to treat you like an idiot. As a result, people at times lose their sense of humour and get angry at the lenders. Better to point the blame at the law makers and those who seek to avoid their obligations by playing the victimhood card. In a situation that must surely be in a Seinfeld episode, some regulators seem to think that by increasing compliance rules the rent seekers and victims will somehow miraculously be saved. More likely the minefield so created will provide ever increasing avenues for the less sincere among us to escape their obligations.

Given that I struggle to convince anyone that I am a victim of anything I tend to cut to the chase when reading bank documents. I’m not for a moment suggesting anyone should do likewise but frankly life is short and reading hundreds of pages of stuff seems like such a waste.

If I can be serious for a moment this is not a beat up on banks. They are simply caught in a sit-com situation that has developed over many years and is not unique to the finance sector. For the record, our bank delivered despite the horrible compliance processes they must go through, and we settled on time.

I’ll sign off with some personal advice. If you are driving around the ‘burbs this weekend and see an Open for Inspection sign keep driving. Otherwise, it might turn out to be the most expensive Saturday morning of your life. You gotta laugh.

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article.

In no particular order, here’s what goes through my head when I’m thinking about putting down some of my hard earned. To be sure, this is not investment advice, just some general observations. Shall we start with returns.

Broadly speaking and with some notable exceptions, the higher the cash return the higher the risk. So, what is a high return? Shall we start with what we might all agree is a low-risk play. That would be cash in the bank on a term deposit at let’s say 4%. That’s roughly the same as a rental property or a CBA share. So, if you see an ad spruiking a 15% or greater return, it’s the first sign that you need to tread lightly and read the fine print. The opportunity might be incredible but best to be sure.

Mind you, I’m in management rights syndicates running well north of 15% and I consider these to be low to medium risk investments. Semi-illiquid and incredibly management sensitive for sure, but well within my risk appetite. The same is true of other accommodation assets such as leasehold motels, but I digress.

How about we dive a bit deeper into returns, coz there’s a bit more going on here than you might think. The first and simplest way to view the numbers is via return on investment (ROI). That is, you buy a listed share or a stake in an unlisted fund and the company or trust pays dividends. In most listed share investment cases it also provides a tax benefit via franking credits. Let’s say all up your share averages returns circa 7%. All things going well your share will also provide a secondary noncash return via capital growth. Except for franking credits, the same is true of an unlisted trust. In most circumstances that growth can only be accessed as cash once you sell the investment, at which point some of your windfall may fall into the hands of our friends at the tax office.

So far, so good, but now things get a bit trickier. The murky world of leveraged equity awaits. It may be that you or the asset manager decides to borrow to invest. Nearly every property investor does just this, as do management rights syndicates, public companies and unlisted trusts and wholesale funds. What we must now look at is return on equity (ROE). It’s a simple calculation whereby the investor looks at the total equity contributed and the profits to be paid after all expenses within the investment are met. In many cases the biggest expense is interest on the loan. For a property investor it’s not unusual to find oneself in negative territory based purely on ROE. Sadly, many property investors are comfortable with this scenario because of negative gearing, a fancy phrase for losing money. Yes, you can get a tax break on those losses, but without sustainable capital growth in excess of tax losses, what’s the point.

While it’s counter-intuitive the reality is that so long as debt is cheap, leverage can create somewhat miraculous outcomes. It can also send you bankrupt if things go sideways or you don’t have a plan B. What if we take management rights as an example. The average MLR runs circa 14% ROI. The average cost of debt is say 6%. Put very simply the more 6% money you can grab to acquire the 14% ROI asset, the higher the ROE. Of course, if the economy tanks and interest rates rise, you can see how things might get problematic. To be clear, I’m not advocating crazy levels of gearing, better a lower ROE and a lower risk in my view.

Most astute investors look at opportunities through the prism of risk, cash return, taxation benefits, liquidity, opportunity cost and capital growth. They also tend to invest in asset classes they understand. That’s why I’m in management rights syndicates and bank shares, while the managing director is in bottle shops and hardware stores.

While my approach may be conservative, there’s actually nothing fundamentally wrong with making a high-risk investment. My concern is that there are too many punters taking that risk without knowing it. The recent spectacular collapse of a number of investment funds has led to the loss of many investor’s life savings, and in some cases their entire superannuation. I think a perfect storm of equity access via rising house values, use of SMSFs and so-called sophisticated investors being anything but, has resulted in some very sad stories indeed.

For what it’s worth, here’s my investment checklist. Use it at your peril !

• Do I understand the asset class?
• What’s the best entity to use to invest?
• What are tax implications, both now and when I liquidate the investment?
• Who’s managing the show?
• How much proven experience in the asset class do the promoters have?
• Are the advertised returns too good to be true?
• Is the investment liquid or illiquid?
• Is there a ready market for the asset?
• Are returns being quoted as cash or has capital growth been factored in?
• Does projected performance of the asset stack up?
• What else could I be doing with my money compared to this opportunity?
• If I invest, will my portfolio be too heavy in that asset class?
• Have I sought the feedback of an unbiased and experienced advisor?
• What’s my exit strategy?
• Does the managing director approve?

Let’s be clear (to quote our Prime Minister before being anything but). There is no right or wrong answer to these questions. The important thing is to know the answers and therefore be able to assess the risks. For example, there’s nothing wrong with making an illiquid investment provided you don’t need the money for the life of the investment. There’s nothing wrong with assessing an opportunity predicated on cash returns plus anticipated capital growth. Pretty much everyone who plays the stock market does just that, to say nothing of the property market.

For all you smarties out there I get that this is all very simplified. I could go down the rabbit hole of net present value of future cash flows and internal rates of return, but all I’d prove is my embarrassing lack of an economics degree. We don’t want that!

In closing, a few years back I bought shares in a future copper mine. I got a hot tip from a bloke who, it turned out, knew less about copper mines than I did and I knew zero. I sought no other advice, didn’t do any real research and went with the vibe. I was in on a sure thing. Turns out I might as well have taken a bag full of $100 bills and set them on fire. At least I would have been warm while I cried into my beer.

See, even geniuses make mistakes.

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

Disclaimer – The writer is not an investment advisor. In fact, he struggles to follow his own advisors. None of the content contained here should be construed as advice. Examples are for illustration purposes only and we encourage anyone considering any form of investment to seek independent expert advice specific to their circumstances. None of this content should be relied upon in any manner whatsoever other than for its entertainment value. Don’t even think about it.

No AI or ChatGPT has been used in the writing of this article.

Recently I’ve been making an effort to see the world through, if not rose-coloured glasses, then at least not grey ones. It’s not easy. I started by avoiding reading the news, other than the financial pages. Like the addict who can’t quite break the habit I sometimes weaken, visit my dealer at the newsagency and have a quick look at the political and world events pages. It’s depressing and I definitely feel better when I avoid them. There is of course some withdrawal, but that soon passes as blissful ignorance sets in.

I’m also trying to stop dealing with companies who don’t give a toss about me. This is proving difficult as most large corporates fall into this category. You know, the ones experiencing longer than usual wait times and have had that message up since Covid. The ones who have adopted automated systems that don’t work, and have decided not to publish phone numbers. The ones who promise to call back and don’t. The ones with offshore call centres where no one speaks fluent English. The ones with virtue signalling meaningless corporate slogans, but pitiful service standards. I could go on, and sometimes I do. On a positive note, these large corporates do provide us with the core values of our own business. We just do the opposite, works every time.

The managing director says I need to chill out and just deal with it, but I refuse to let the bastards grind me down. Instead, I am trying to be optimistic and, dare I say, grateful. In this quest for true enlightenment, I have found an unlikely source of inspiration.

Here’s the thing. At every turn the evidence suggests the world is going to end, but our clients don’t care. World affairs are scary, our economy is in deficit, our government is pretty average, productivity is an embarrassment, and we have never been busier. The evidence suggests that, out there in the real world, there are a bunch of crazy optimists with the courage and determination to put aside the doom and gloom and have a crack. For a recovering pessimist, this is all very counter intuitive and a bit inspirational. Here’s a wide range of mainly businesspeople saying to hell with it, I’ll make my own luck. And for the most part they are doing just that and doing fine.

This confounding situation makes me wonder if what we are seeing is accommodation, property management and tourism sector centric. I suspect that it is. As a very wise lawyer said to me years ago, everyone needs a place to live and everyone needs a holiday. I think we could add that everyone needs a good bed and a hot shower when travelling in this vast land, hence the nationwide boom in motel sales.

Our clients are not blindly optimistic. They don’t jump off cliffs and hope someone will throw them a parachute on the way down. Most are not excessively positive to the point of ignorance or naivety. But I’ve noticed that they don’t let the state of the world have much influence on their outlook. In fact, if anything, demand for business finance in the tourism and accommodation sector is accelerating. The federal election is behind us, interest rates are falling, rental demand is strong, and tourism accommodation demand and forward bookings are looking exceptional. Add to this the incredible performance of the regional motel sector and the hits just keep coming.

Will it last or is the light at the end of the tunnel a bloody big train? In this regard I’ve had an epiphany. There is no tunnel, and if you are optimistic and prepared to have a go, the sky’s the limit.

In closing I am starting a new chapter of Pessimists Anonymous. We will adopt as our motto the Serenity Prayer.

“God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference”.

The managing director reckons it’s the wisdom thing I struggle with. I think for once, she may be right!

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article.

“We didn’t write this with AI – promise. But we did run it past one to see what it thought (turns out even algorithms enjoy dry humour). Here’s the feedback…”

This is a brilliantly written piece—dryly humorous, self-deprecating, insightful, and surprisingly hopeful for a self-confessed pessimist. It reads like the kind of column you’d find in a thoughtful business magazine or as the opening to a keynote speech. No AI or ChatGPT has been used in the writing of this article

If you got lucky you would end up meeting someone like the managing director. A sensible but fun bird with very understanding parents and no Bankcard debt incurred investing in motorcycles. The day my dad met her he offered her a Porsche to marry me. That debt remains outstanding! We’ve now been married for too many years (her definition, not mine) to mention and our relationship has survived. Those of you who know me well will marvel at this miracle and most likely nominate the MD for a Sainthood.

Truth is it takes effort to make a personal partnership work. You gotta be diplomatic yet honest. Shared goals are a must. Some level of forgiveness will no doubt be called for as will a degree of patience. However, to me the most important aspect is to get it right from the outset. Too often relationships fail for reasons that should have been apparent once the initial rush of lust and excitement had passed.

And with that rambling introduction I will now try and segue from personal to business relationships, and more specifically investment partnerships. It strikes me that many of the positive attributes we see in successful relationships can be applied directly to management rights syndicates. While I’m not advocating hanging out in pubs trying meet the right manager, I’m in no doubt that finding that person is key. The reality is that a great manager can turn a poorly performing business around while a terrible manager can destroy even the most strongly performing asset.

I’m an investor in a few management rights groups and my motivation is always driven by the quality of management. Once such a person is identified and I think we share similar goals and ethics let the hunt for the right asset begin. This is not a cookie-cutter process. In many cases the challenge is to match the manager to the asset. Different skill sets and life experience can inform the perfect match. It is true that a great manager and a great business may not necessarily be compatible. Kinda like that personal relationship stuff I was talking about earlier.

Once that perfect match is identified it’s imperative to set out expectations. I recall the MD doing so quite early in our courtship. If you come home late and inebriated, you will be sleeping in the back yard. If you play that guitar too loud you will need to find an understanding proctologist. Once we have kids you can no longer ride motorcycles…… you know guys, all that sort of fun killing stuff.

For business partnerships communication is everything. If things are going well, that should be one-sided management messaging just keeping the group up to date. Silent partners should ensure a sound understanding of the word silent, unless things go sideways. At that point strong management reporting becomes essential and partners should work together to strategise solutions to any present or anticipated problems. Sadly, in my experience this rarely happens. Touch wood the businesses I have invested in are managed by highly professional people and for the most part things run seamlessly.

In over 25 years financing and investing in management rights groups there is one key dynamic that upsets the apple cart time and again. The highly experienced manager with the great CV turns out to be a turkey with terrible communication skills and a persecution complex. In some cases, I have witnessed seemingly sane managers do absolutely unpredictable and crazy things. Worse still once this unfortunate situation emerges a siege mentality manifests itself and no amount of support and effort can resolve the impasse.

My advice, regardless of how wonderful your intending manager seems to be, have a partnership agreement that assumes they go crazy and need to be removed. Hopefully you’ll never need to use it but think of it like a prenup. You know, I love you and want to spend the rest of my days with you but just in case you turn out to be a homicidal maniac let’s write down some expectations. We did it in our wedding vows….…. something about death and parting. Probably not appropriate for a business agreement but you get the picture.

If you are an investor in a syndicate know that ambivalence can be a killer. Yes, stay silent but make sure you have a spokesperson who is across the business performance, has nurtured a great relationship with the manager and is not afraid to have the challenging discussions. I often see negative situations emerging in partnerships we have funded and more often than not none of the investors is prepared to grasp the nettle. Sometimes a brave soul will step forward but it’s often too late. In numerous cases over the years that brave soul, with no investment in the group, ends up being me. As you can imagine my finely tuned levels of empathy and negotiating skill nearly always……… again, who are we kidding? Mostly by the time I get the phone call the manager has well and truly gone rogue or the body corporate are on the warpath, or both.

Henry Kissinger couldn’t fix some of these problems so what chance do I have? These situations don’t require diplomacy; they need a marriage counsellor.

In closing I should stress that the challenges I am talking about are in the minority but once they emerge it’s incredibly hard to put that genie back in the bottle. Far better to get it right from the outset. Great manager and great business. That’s the dating game.

I’ll leave you with this quote from Fiona Shaw which I suspect the MD uses often:
“I’m married to a very unusual person, but maybe it took a very unusual person to be willing to marry me”.

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article

Interestingly enough, I ended up being aware of all the geographic locations we stayed at but had never heard of any of the actual businesses.

First stop Byron Bay, and a place called Byron Suites. I guess I’ve driven past maybe 30 times over the years and never noticed this superb establishment. Beautifully presented and conveniently located a short stagger to the famous Beach Hotel, this place is special. The general manager turned out to be a lovely lady who had an intimate knowledge of the property and had worked for a famous previous owner of the pub. We asked how they managed to have the property so well presented with multiple owners in a strata scheme. Simple. While the property has the appearance of a management rights, the whole shebang is owned by one party. No problems with consistency of presentation, and I’m guessing no shortage of resources. The owner bought the Beach Hotel recently for a reported $140M.

I am pleased to also report that Byron has returned to its old and charming vibe after a period, that seemed to us, to be a bit too close to the less appealing aspects of Nimbin by night.

With lots of rain predicted we headed to our next destination, the beautiful Macleay Valley and, more specifically, Salt at South West Rocks. A collection of thoughtfully appointed and perfectly presented cabins on the river was to be home for the next 3 nights. Mother Nature had other plans… In a repeat of my recent ill-advised trip to flood affected western Queensland, it rained. And rained. And rained. Towns in the area were cut off, farms devastated, businesses destroyed and as the catastrophe unfolded, 3 people were dead and 50,000 had been isolated. Our 3-night stay became 6 as roads were cut and access was controlled by road blocks. Supplies to town became scarce and in a flashback to Covid era habits, we observed much panic buying, with toilet paper top of the list. Our hosts at Salt acted wonderfully. A reduced nightly rate given we couldn’t leave, regular updates as to flood conditions and most importantly, plenty of toilet paper. For the record there are worse places to be trapped, the surf club is a ripper and our small inconvenience was nothing compared to the disaster many faced.

Sadly, our extended stay at South West Rocks meant we needed to cancel our next destination, which had been fully paid. The manager understood the situation and, combined with some persuasion from the MD, provided a full refund. Needless to say, we will go out of our way to stay next time.

For me, our next destination was the find of the trip. The Moorings Lakehouse at Coomba Bay, near Forster, is a hidden gem. It’s only got a few rooms and a cottage and there’s no formal reception. The MD had booked the cottage, and we had a great time doing very little. Cold wet weather and a fireplace makes for some serious wind-down time. The gentleman who looked after the garden turned out to be a top bloke who kept the firewood stocked and helped with our bags. Again, the whole place is owned by one family, and they have created something pretty special.

A couple of nights in Yamba on the way back to Cooly provided an interesting lesson. The property had clearly been renovated to a high standard at some point, but small details let it down. I suspect the challenge is to maintain consistent presentation standards after the reno is complete. No point having marble tiles on guest throughfares and then using the space to store roll away beds and spare crockery. No point in having a beautifully appointed reception area if back of house is a train wreck and the door is left open.

So, back to Cooly and the same unit we stay in every year. The resort is, in my view, the most appealing on the southern end of the Gold Coast. The staff are always super helpful, the secure parking is easy, common areas well-presented, and the unit has a great layout and a cracking view. But boy oh boy, is it tired! The contrast between the single owner accommodation we had been staying in and this strata titled unit could not have been more pronounced. I am sure that management have encouraged the owner to spend a few bob, but it’s equally clear that no investment is being made. I wonder if this lack of consistent presentation in leisure-based strata schemes presents an ongoing risk and if so, what do we do about it? Clearly, owners have to be persuaded to spend money and that’s not always easy. I’m a fan of comparative returns based on room type, with inferior apartments being priced accordingly. Admittedly this was a whole lot easier before Air BnB and the like came along but I think still a strategy worth pursuing. Encouraging open and honest guest reviews and sharing these with the owner will work in certain circumstances but may be more likely to antagonise, if not presented in a constructive fashion.

I’ve seen managers have some success putting together renovation packages and even paying for them with pay back terms via the letting appointment. This arrangement requires a level of trust which may be at odds with the moral compass of some owners. Caveat Emptor as they say.

I used to be a fan of the guilt trip strategy. You know the one. Your unit is horrible and it’s impacting the reputation of the property, and it’s not fair on the owners who have undertaken renovations. I’ve come to understand that some owners don’t care. As long as the money is rolling in why spend a cent? That just leaves the threat of terminating the Form 6 which I don’t recommend unless the unit presents an actual health and safety risk. The likely outcome will be a shift by the owner to an online booking platform, an advocate among owners to follow suit and an anti-on-site management owner. Better to keep them on side, share your business plan and vision and pray that at some point the message resonates.

It’s a bit crude but Lyndon B Johnson said it best….
“Better to have your enemies inside the tent pissing out, than outside the tent pissing in.”

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article

I was ready to move to acceptance when a miracle sent me straight to happiness. The leader of The Greens had lost his seat. I could scarcely believe it. The Greens votes had seemingly transferred to Labour and the LNP’s principled stand to preference them last had an impact. The stages of grief were dispatched, and a lightness of mood prevailed. Just in time, as it turned out, as the MD’s web browser history suggested research into the effects of a pillow held firmly to a sleeping face. Never use a down-filled pillow as an autopsy may find traces of duck feathers!

Given the truly frightening prospect of a Labour / Greens minority government it is the case that things could be worse. That said, I expect the next 3 years will not be great, albeit if you take one look at The Greens housing policy, I suspect you will conclude that we’ve dodged a bullet.

So, what of Labour policy as it may affect property markets, interest rates and housing more broadly. Well, maybe nothing if the past 3 years is anything to go by. In its first term Labour promised to preside over the construction of 1.2 million homes over 5 years. At the end of their first term, they were looking to be about 400,000 short. Current estimates suggest we can’t build much more capacity than previous years given labour constraints (no pun intended), appalling productivity standards, and massive input cost increases.

My feeling is that new construction will simply fail to keep up with demand and that demand will be turbo charged by immigration and the first homeowners policy settings due to come into effect in January 2026. It is in the collision of increasing first homeowner demand, diminishing supply, and favourable government and lender policy, that I see potential for challenges. We have already seen politicians suggesting that lenders relax credit standards for first home buyers. Oh, what short memories they have. Banking commission, what banking commission?

From January 1, the First Home Guarantee Program is due to take effect. That’s a 5% deposit scheme backed by a government guarantee. With circa 130,000 first home buyers in the market at any given moment the numbers are not inconsequential. Research suggests that these buyers will be hunting in the $500K to $1M space and it gets better. The government has signalled that it intends to allow the banks to ignore student debt when assessing first home loan applications. This is on top of a 20% discount to be applied to HECS related student loans. I’ll bet all your older degree holders out there who worked three jobs, scraped and saved and lived on Spam sandwiches are feeling really good about all this, but I digress.

As you can see, we have a possible property firestorm brewing, driven by restrained supply and increasing demand. That demand will be supported by government policy and I expect, to use a fire investigators jargon, we are about to see an accelerant introduced. Today’s RBA cash rate is 4.1%. The NAB predict the rate will be 2.85% when the First Home Owners Guarantee kicks in on January 1 and will fall to 2.6% soon after. Other lenders and economists have a variety of predictions, but they are all reflecting falling interest rates. It’s worth pointing out here that while low interest rates are helpful to a point, they can also be a sign of a stalling economy so be careful what you wish for.

All of this points to pressure on home and unit prices after January 1. If you are in the market for a purchase I reckon get in now. If you are a seller maybe cool your heals until January 2.

There are a few other sleepers lurking within the housing policy landscape that are worth keeping an eye on. None are conducive to property investment as an attractive option. The first is creeping tenant rights legislation, which appears to be focused on making the tenant more powerful than the landlord. For a glimpse into the truly nutty end of this spectrum, I urge you to visit the aforementioned Greens housing policy.

I’m all for tenants having rights but when those rights marginalise the property owner the whole investment becomes less appealing. God help the property managers who have to deal with this dynamic.

Secondly, I expect to see tax policy associated with property investment to be “reviewed” by the legislators. Opportunities to tinker with negative gearing and capital gains tax concessions will be hard for the politicians to ignore, with any changes almost certain to disincentivise investors.

And last but most certainly not least is a piece of tax policy the likes of which we have never seen in Australia. The federal government is contemplating legislation to tax unrealised capital gains within superannuation funds. Sure, there are benchmarks, and the tax would only apply to fund values over a set value ceiling, but the whole concept is just plain scary. This is a proposed tax on money you don’t have and have not earned. If you invest wisely in your SMSF and the assets within the fund grow in value it is the case that you may need to sell assets to pay a tax bill predicated on what the tax man says they are worth. As most SMSFs have property assets you can see where this might end. Oh, and the value ceiling is not to be indexed, so as asset values grow more and more, people saving for their retirement will be impacted. How long before this insidious scheme escapes the superannuation environment and is applied to all investments and maybe one day, the family home.

Let’s circle back to where I’m trying to head with all this. Owner occupation in permanent management rights schemes is already a clear and present threat to the stability of letting pools. It ain’t gonna get any easier after January 1.

In closing, I note the more hysterical in the press are calling the recent federal election result a landslide. Labour picked up 34.7% of the primary vote and the LNP landed at 32.2%. In North Korea the ruling party holds 87% of the seats with aligned minor parties holding the rest. That’s a landslide.

Mike Phipps F Fin
Director | Phippsfin Pty Ltd

No AI or ChatGPT has been used in the writing of this article