State of Play: Earnings Season

Hi there and welcome to Our State of Play. Well, it’s that time of year again when corporates and big companies report their earnings to their shareholders, and because they’re going to be transparent only this year, like everything else in the economy, it’s going to be quite difficult for them. So what they’ll be doing is economists are predicting short-term, they’ll be blaming things on the “crisis” and it tends to be that companies focus on quarter to quarter. So they have targets, so they fall prey to short-term thinking. So short-term thinking is going to be, “Well, what could we do? There was a crisis.” But they’ve got to balance that with selling a longer term vision of, “Things are going to be great. Here is our longer term, one year, five year, 10 year plan.”

And unfortunately, because of the uncertainty right now, they won’t be able to do that. So they’re trying to sell certainty when there just is none at all levels. So we’re in the eye of the storm of a once in 100 year event. So if you’ve been following companies and their earnings and your own shares, you will have noticed probably, since the last recession that there’s a lot of talk about dividends and earnings, because that’s what their KPIs and their quarterly targets are.

Now, you’re going to hear a different talk track. It’s going to be about asset impairments and debt covenants. So they’ll be talking about asset impairments means that assets have to be written down in value because a shopping mall, that a super fund owned was valued at $50 million, and now with the change in the world and the change in commercial asset values, it may be worth a lot less. Tenants not paying rent, laws changing, that sort of thing.

And debt covenant and impaired debt means that people owe them money, they owe other people money, so they’re going to be reporting on different KPIs and different figures. And as one of Australia’s oldest well-established investment companies, the Australian Foundation Investment Company or AFIC, their head, Mark Freeman, said there are not too many industries that have been spared right now. So it’s worse than the GFC, AFIC had a 41% decline in their earnings, and they’re an investment company, we’re not talking about airlines and things like that.

And the uncertainties are across the board. Victoria was supposed to have peaked now, so they should be seeing diminishing numbers, but they’re now talking about extending their lockdown further. And that has a knock-on our domino effect, because it was factored into the budget numbers that Josh Frydenberg came out with last week, was that Victoria would slowly recover and come out of lockdown gradually in a six week period, and that looks not to happen. So it’s going to leave a hole in the budget and all of these flare ups and uncertainties are going to take their toll on the economy and on companies at all levels.

So the ASX came out and had an analysis of what companies are going to do in terms of writing down assets. So it’s across the board. So things like the price of oil, transport, people were just not traveling, people weren’t going to shops, and that’s why shopping malls and commercial property, and those sorts of assets will be downgraded. Airlines will downgrade the value of their assets, their planes.

When everything goes down, it’s not just a fuss saying, “Well, let’s pluck a number on our balance sheets. Our shopping mall was worth X, now it’s worth Y,” they are actually real numbers and they probably were going to happen anyway. I think that COVID, like any recession or downturn, has been a catalyst. So for example, the retail sector probably was going to be on a slippery slope. We were going through change and the change was quite slow.

So what was happening was there was a rate of attrition, people were doing more and more online. And what would have played out over 10 years has just been brought forward and is playing out in a matter of months, but it was inevitable, that sort of change. And so, asset prices will change. 100 companies in the past few months have written down the value of their assets. 16 of our biggest companies in Australia have announced $14.7 billion worth of asset rights, asset will come out in their next statements, their profit and loss on their books. So we can see that it’s just slashed billions and billions of dollars of net worth, of our economy, of companies, or for share market.

So on another note though, the property market has been quite buoyant, because our biggest wealth sector, we’ve talked about this before, is in property. So for example, we’ve got seven trillion dollars worth of residential real estate in Australia. Most people’s net worth is tied up in the value of their family home or other investment properties. On the contrary, commercial property is only worth $1 trillion. When I say only, I don’t mean to be blasé about it, but all of the super funds in Australia is $2.7 trillion. So you can see by far and away, 7 trillion in residential real estate is a massive number.

So whenever there’s trouble in the economy or a recession, everyone, it’s all hands to the wheel and they try and plug up residential real estate. Jobs in building and construction and real estate agents, and everyone like bees around the honeypot in the property area are the first port of call. Because if we can stop the ship from taking on water there and prop that up, it’s better for everyone, saves jobs. And it has that, remember we talked about the wealth effect in previous sessions.

So if my house is worth 800,000 and there’s a recession, and I feel like at least on paper, my house has gone down to 600,000. I feel like I’ve lost $200,000. If I feel like I’ve lost that amount of money, I feel poor, I don’t spend, and the whole economy contracts. So if we can prop up real estate values, that’s where all the interest goes, and that’s what they’re doing. At a federal level, they’ve done it already with the HomeBuilder grant and they’ll look at other strategic ways to funnel government stimulus into the property market. But on a state level yesterday, New South Wales came out and said, and the other states, will no doubt follow suit, but they said they’re extending their stamp duty exemption for first home buyers.

It was for properties up to 650,000, they’re now offering it for property purchases up to $800,000, and that’s because the property market has remained stable. Vacant land has increased the stamp duty exemption from 350 to 400, and then they’ll phase that out at 500,000. And on an $800,000 purchase, that stamp duty exemption is worth $31,000, so it’s not insignificant.

And Mathias Cormann who’s finance minister in New South Wales said this is by far the largest industry that has taken up the JobKeeper program with over 50,000 applicants in the construction industry since July. So the construction industry contributes apparently $48 billion to the New South Wales economy, or 7.7% of the net worth of the New South Wales economy. And on top of that, state governments are also giving payroll tax exemptions to business and that sort of thing.

So state taxes are being reviewed to prop up the economy as well as government packages. They’re also laying predictions now on inflation numbers. So they talk about reporting of inflation figures quarterly, only this quarter it’s going to be deflation, which means instead of prices going up, which is inflation prices are going down. So they’re expecting the worst deflation figures in 50 years, and it will apparently take 10 years to return to The Reserve Bank’s target for inflation, which is between two and 3% per annum.

So what that means is that every year prices go up between two and 3%. If it gets much more than that, if prices are going up by 5% a year, then they’ll raise interest rates because inflation is too high, they want to cool down their economy. And if it’s lower than that, they drop interest rates because they want people to borrow and go out and spend money. So they want the price of money or interest rates to be really cheap, but they’ve got no more bullets left to fire.

Interest rates are at 0.25% and the reserve bank is now out of ammunition. And the governor of The Reserve Bank, Philip Lowe, said in a speech last week, there’s no way they’ll be taking rates to 0%. So it is what it is, but we haven’t had a contraction, the prices going backwards or shrinking since 1953, when they went down one and a half percent. So this 2% figure or contraction, prices falling 2% is a big deal. Now, it’s partly because of they look at the CPI, they look at cash price index, they look at a basket of goods and services that most people will buy or be affected by. So things like the price of petrol, and bread, and just common goods, and rental rates.

So because of COVID, that’s been massively impacted in the sense that oil prices have gone down, no one’s traveling, no one’s flying, no one’s really buying, and the June figures for inflation then are going to be really impacted. So that’s where that 2% contraction comes from. They believe this will impact on the annual inflation figure, which means that prices over the course of the year have gone down 0.5%. So it’s not a good thing whilst hyperinflation, really, really fast price rises, and a lot of inflation isn’t a good thing, so to price cuts, deflation is a bad thing because it’s asymptomatic of a recession. Prices don’t grow, people don’t spend, everything contracts upon itself. That’s why the two to 3% target rage for Rhe Reserve Bank, that’s a healthy place for it to be, and we’re going to go into negative territory.

However, the property market has held firm. So we tend to look at auction clearance rates, and those are quite steady. So on the weekend we saw the Sydney market with high auction clearance rates. So 68.3% across the board and some states, it’s not really an indicative figure because some states just don’t have the volume, for example, Tasmania had one auction, or Perth had 14. So they’re just not cities that do auctions. But across the board, the average of the clearance rate is nearly 60%, which is quite healthy.

The other data though, is even out of Melbourne properties are still selling. A lot of them were withdrawn, especially because of lockdowns and COVID, but anecdotally at the coalface, we’ve got students and clients that have sold one property. It was a takeover for our real estate rescue students, but one property, unfortunately we thought was in the Mitchell area. So that’s one of the clusters and it’s in total lockdown, and we thought, “Well, there goes that deal,” but it went on the market. The students said, she worked out of figures on $515,000. The agent said, let’s put it on at 525 and see what happens, and she got seven offers at the 525. So property market’s still really buoyant at the moment. More regional markets, thereby postcode, they are still as well clearing. So they’re in the regional areas in Sydney, Melbourne, and also in the more regional areas outside of the capital cities that are just commute away.

House values are still standing up. We can see we’re still ahead. If you look at Sydney prices, they’re up 12% from this time last year. 9% in Melbourne, up in Brisbane and they’ve gone backwards in Perth, still up in Adelaide. So combined capital cities going backwards slightly over the week minus 0.2% for the week and 0.7% for the month, and down 1%, if we look at the averages for the year. But in the scheme of things, still not that slippery slope that everyone’s predicting that they’re going to just have 30% drops in value and sliced off our property market, probably because of JobKeeper, JobSeeker, banks also allowing deferrals and that sort of thing.

So we’re still treading water and the listings are down. So you can see across the board here, we’ve got 12 and a half percent fewer properties on the market and combined capital cities than the same time last year. So Sydney 3% less stock, Brisbane, 20% less stock, Adelaide, 17%, Perth, 26%. So people are just not selling. So even though we look at uncertain times, if we look at the seesaw or the scales of supply and demand, supply is still less than demand because people have the luxury of just not selling and waiting for the market to come back. So it is tight. Will that change when the government stimulus packages are withdrawn when unemployment increases? And unemployment, by the way, is predicted to get to 10.4%. It’s gone up to 7.4% at the moment, but people are still being kept in jobs by JobKeeper and that package is being extended to March of next year, or be at lower amounts paid.

But the Australian Banking Association have also allowed people to have holidays on their loans or defer their repayments. So we’re still in a holding pattern. And it’s really hard to predict in times like this, where everything’s just on hold and we’re not sure what will happen next. But property prices are still poignant, they’ve held up, medium prices are pretty much where they were before we’ve gone down 1%, which isn’t, God knows what, in the scheme of what’s happened in the world. Maybe that will play out later on down the line as things change.

If we look at time on the market, we can see that properties are selling within a couple of months across the board. So median time on market is like 46 days in Sydney, 47 days in Melbourne, 67 in Brisbane. So a few months on the market. If you look at the average discount, so they also measure to see how strong the market is, what does a seller initially ask for? So what do they list their price for as compared to what they ultimately sell for. So on average, for example, Sydney units spend 47 days on the market, and from initial listing price to final sale price, the vendor or the seller drops the price by 3%, even less, they dropped by 2.6% for houses in Sydney.

So not even in the worst capital cities like Perth, houses only drop by 3% from asking price and units 3.1%. And they sit on the market for a little over two months, even in Perth. So still markets are tightly held and there seems to be that appetite for property. So I love that fair with property is still very much alive and well.

And similarly, the other thing that they measure for the buoyancy of the property market is borrowing. Are people still borrowing for mortgages? And borrowing nationally is at 0.3%. So people applying for loans, moreso 1.2% in New South Wales. Big borrowings in Queensland, two and a half percent, less so in Tasmania 4.1% less than last month. So people are still feeling good, going out, borrowing money and spending it to buy property, getting mortgages against that property.

So watch the space, I suppose, it’s still very uncertain times, but what we can be sure of is the government is coming to the table on a state and a federal level. And it’s just the uncertainty. It’s hard to move forward or to know which way to move forward when we don’t know what’s going on. So very much a holding pattern and still on life support in terms of government stimulus packages being extended and concessions and deals to be done.

Landlord’s giving concessions, and if they’re not, you need to be asking for them because this is the time. If you watched our live stream on the weekend, Jay Abraham came on, he said he’d never seen a market like this for doing deals. Everybody is cutting deals, it’s just a new way of doing business. People need each other, landlords need tenants, tenants need landlords to come to the table and so on. So people are leveraging off for each other and it’s a massive time for dealmaking.

On that note, I’m going to be doing a lot more of our live streams and our events because in this holding pattern, we’ve realized that, at first it was panic stations, it was fight-or-flight, and it plays out in business as in humanity, that adrenaline rush was, “Oh my goodness, what’s happening? We need to communicate.” And you’ll remember we did our daily huddles and our 402s. We paired that back to our state of plays twice a week as we were coming out of lockdown, and now it seems that we’re just in that holding pattern.

So we have made a decision that probably we’re not going to see live events again, as an events business. And I love speaking to rooms of people, but we’ve realized that at least for the rest of this year, with uncertainties and outbreaks, probably not going to happen. Hope it does, but we’re going to prepare for the worst. So we’re putting a lot into our live streams, into the latest technology and into that space of bringing you more experts and other commentators to expand knowledge whilst you’re at home in your pajamas.

So aligned with that, we’ll be doing Our State of Plays now fortnightly. So the next one is going to be on the 6th of August, and we’ll still have our Ask Doms on the Thursdays weekly. So if you ask any questions, I’ll be answering them this Thursday as well. So we’ll still be communicating regularly. I’d love that to be more of an interactive Q&A, and for that to be very organic, ad lib, send your questions in, let’s really have exchanges on our Thursdays where we have interchanges and share knowledge, but also pick my brain. And the actual presentations and content will come fortnightly with Our State of Plays, but also in more live streams and events of that nature.

So we’re putting a big investment there. And whilst we pivoted, it’s not a short-term pivot. If you saw our live stream on Saturday, also, Seth Godin said, “We’re not going back.” There’s no snap back to the old world. In fact, this is a new normal, and when things change as radically as they have, we never ever go back to the way before, so we have to adjust to what’s happening.

So aligned with that, for our next live stream on the 8th of August, we’re actually going to harness some local talent. We’re going to have Shaynna Blaze and Jamie Durie, and we’re going to be talking more about property and the opportunities right now in the current property market. So you can register for that. Being on The State of Play, you guys always get the first heads up, Johnny on the spot. You’re the first people to know about this event, and you can go and register now at dginstitute.com.au/rrslivestream. We’ll put the link to that in the comments section and the description section as part of this live stream, and you guys can be the first in best dress for that event.

So excited about the new space we’re playing in and want to congratulate you and kudos to you for being adaptable in times of change, because that will be the key to not just surviving, but thriving, how flexible you are, because things are going to keep changing, and we’ve just got to get very, very responsive to that.

So looking forward to catching up with you on Thursday at one o’clock, well that’s Eastern time, for our Ask Dom session, start sending questions in now. If you’ve got a thought bubble, type it in now in the comment section, because we collate all of those, or send us an email or turn up live on the day and start typing in your questions. Love to hear from you and talk to you about what’s going on and any questions you might have of any nature, whether it be legal, commercial, property-related, business-related predictions, or just sharing, sharing what you know, your experiences, what you’ve found, what you’ve seen, your stories, your anecdotes, love to hear it all.

So I’ll connect with you on Thursday for that, for our Ask Dom. I’ll see you on the live stream on the 8th and I’ll also see you on State of Play on the 6th of August, so can’t wait to catch up soon. In the meantime, stay safe, take care, be kind to one another, and don’t forget to follow us as well as on YouTube to get regular updates. Share this with your friends, tag them in the comment section. And for those not watching on Facebook, if you’re on YouTube, please like us, subscribe and hit the bell so you can be notified every time we post new content. We’ll talk soon, have a lovely evening.

Dominique Grubi…:Hi there and welcome to Our State of Play. Well, it’s that time of year again when corporates and big companies report their earnings to their shareholders, and because they’re going to be transparent only this year, like everything else in the economy, it’s going to be quite difficult for them. So what they’ll be doing is economists are predicting short-term, they’ll be blaming things on the “crisis” and it tends to be that companies focus on quarter to quarter. So they have targets, so they fall prey to short-term thinking. So short-term thinking is going to be, “Well, what could we do? There was a crisis.” But they’ve got to balance that with selling a longer term vision of, “Things are going to be great. Here is our longer term, one year, five year, 10 year plan.”

And unfortunately, because of the uncertainty right now, they won’t be able to do that. So they’re trying to sell certainty when there just is none at all levels. So we’re in the eye of the storm of a once in 100 year event. So if you’ve been following companies and their earnings and your own shares, you will have noticed probably, since the last recession that there’s a lot of talk about dividends and earnings, because that’s what their KPIs and their quarterly targets are.

Now, you’re going to hear a different talk track. It’s going to be about asset impairments and debt covenants. So they’ll be talking about asset impairments means that assets have to be written down in value because a shopping mall, that a super fund owned was valued at $50 million, and now with the change in the world and the change in commercial asset values, it may be worth a lot less. Tenants not paying rent, laws changing, that sort of thing.

And debt covenant and impaired debt means that people owe them money, they owe other people money, so they’re going to be reporting on different KPIs and different figures. And as one of Australia’s oldest well-established investment companies, the Australian Foundation Investment Company or AFIC, their head, Mark Freeman, said there are not too many industries that have been spared right now. So it’s worse than the GFC, AFIC had a 41% decline in their earnings, and they’re an investment company, we’re not talking about airlines and things like that.

And the uncertainties are across the board. Victoria was supposed to have peaked now, so they should be seeing diminishing numbers, but they’re now talking about extending their lockdown further. And that has a knock-on our domino effect, because it was factored into the budget numbers that Josh Frydenberg came out with last week, was that Victoria would slowly recover and come out of lockdown gradually in a six week period, and that looks not to happen. So it’s going to leave a hole in the budget and all of these flare ups and uncertainties are going to take their toll on the economy and on companies at all levels.

So the ASX came out and had an analysis of what companies are going to do in terms of writing down assets. So it’s across the board. So things like the price of oil, transport, people were just not traveling, people weren’t going to shops, and that’s why shopping malls and commercial property, and those sorts of assets will be downgraded. Airlines will downgrade the value of their assets, their planes.

When everything goes down, it’s not just a fuss saying, “Well, let’s pluck a number on our balance sheets. Our shopping mall was worth X, now it’s worth Y,” they are actually real numbers and they probably were going to happen anyway. I think that COVID, like any recession or downturn, has been a catalyst. So for example, the retail sector probably was going to be on a slippery slope. We were going through change and the change was quite slow.

So what was happening was there was a rate of attrition, people were doing more and more online. And what would have played out over 10 years has just been brought forward and is playing out in a matter of months, but it was inevitable, that sort of change. And so, asset prices will change. 100 companies in the past few months have written down the value of their assets. 16 of our biggest companies in Australia have announced $14.7 billion worth of asset rights, asset will come out in their next statements, their profit and loss on their books. So we can see that it’s just slashed billions and billions of dollars of net worth, of our economy, of companies, or for share market.

So on another note though, the property market has been quite buoyant, because our biggest wealth sector, we’ve talked about this before, is in property. So for example, we’ve got seven trillion dollars worth of residential real estate in Australia. Most people’s net worth is tied up in the value of their family home or other investment properties. On the contrary, commercial property is only worth $1 trillion. When I say only, I don’t mean to be blasé about it, but all of the super funds in Australia is $2.7 trillion. So you can see by far and away, 7 trillion in residential real estate is a massive number.

So whenever there’s trouble in the economy or a recession, everyone, it’s all hands to the wheel and they try and plug up residential real estate. Jobs in building and construction and real estate agents, and everyone like bees around the honeypot in the property area are the first port of call. Because if we can stop the ship from taking on water there and prop that up, it’s better for everyone, saves jobs. And it has that, remember we talked about the wealth effect in previous sessions.

So if my house is worth 800,000 and there’s a recession, and I feel like at least on paper, my house has gone down to 600,000. I feel like I’ve lost $200,000. If I feel like I’ve lost that amount of money, I feel poor, I don’t spend, and the whole economy contracts. So if we can prop up real estate values, that’s where all the interest goes, and that’s what they’re doing. At a federal level, they’ve done it already with the HomeBuilder grant and they’ll look at other strategic ways to funnel government stimulus into the property market. But on a state level yesterday, New South Wales came out and said, and the other states, will no doubt follow suit, but they said they’re extending their stamp duty exemption for first home buyers.

It was for properties up to 650,000, they’re now offering it for property purchases up to $800,000, and that’s because the property market has remained stable. Vacant land has increased the stamp duty exemption from 350 to 400, and then they’ll phase that out at 500,000. And on an $800,000 purchase, that stamp duty exemption is worth $31,000, so it’s not insignificant.

And Mathias Cormann who’s finance minister in New South Wales said this is by far the largest industry that has taken up the JobKeeper program with over 50,000 applicants in the construction industry since July. So the construction industry contributes apparently $48 billion to the New South Wales economy, or 7.7% of the net worth of the New South Wales economy. And on top of that, state governments are also giving payroll tax exemptions to business and that sort of thing.

So state taxes are being reviewed to prop up the economy as well as government packages. They’re also laying predictions now on inflation numbers. So they talk about reporting of inflation figures quarterly, only this quarter it’s going to be deflation, which means instead of prices going up, which is inflation prices are going down. So they’re expecting the worst deflation figures in 50 years, and it will apparently take 10 years to return to The Reserve Bank’s target for inflation, which is between two and 3% per annum.

So what that means is that every year prices go up between two and 3%. If it gets much more than that, if prices are going up by 5% a year, then they’ll raise interest rates because inflation is too high, they want to cool down their economy. And if it’s lower than that, they drop interest rates because they want people to borrow and go out and spend money. So they want the price of money or interest rates to be really cheap, but they’ve got no more bullets left to fire.

Interest rates are at 0.25% and the reserve bank is now out of ammunition. And the governor of The Reserve Bank, Philip Lowe, said in a speech last week, there’s no way they’ll be taking rates to 0%. So it is what it is, but we haven’t had a contraction, the prices going backwards or shrinking since 1953, when they went down one and a half percent. So this 2% figure or contraction, prices falling 2% is a big deal. Now, it’s partly because of they look at the CPI, they look at cash price index, they look at a basket of goods and services that most people will buy or be affected by. So things like the price of petrol, and bread, and just common goods, and rental rates.

So because of COVID, that’s been massively impacted in the sense that oil prices have gone down, no one’s traveling, no one’s flying, no one’s really buying, and the June figures for inflation then are going to be really impacted. So that’s where that 2% contraction comes from. They believe this will impact on the annual inflation figure, which means that prices over the course of the year have gone down 0.5%. So it’s not a good thing whilst hyperinflation, really, really fast price rises, and a lot of inflation isn’t a good thing, so to price cuts, deflation is a bad thing because it’s asymptomatic of a recession. Prices don’t grow, people don’t spend, everything contracts upon itself. That’s why the two to 3% target rage for Rhe Reserve Bank, that’s a healthy place for it to be, and we’re going to go into negative territory.

However, the property market has held firm. So we tend to look at auction clearance rates, and those are quite steady. So on the weekend we saw the Sydney market with high auction clearance rates. So 68.3% across the board and some states, it’s not really an indicative figure because some states just don’t have the volume, for example, Tasmania had one auction, or Perth had 14. So they’re just not cities that do auctions. But across the board, the average of the clearance rate is nearly 60%, which is quite healthy.

The other data though, is even out of Melbourne properties are still selling. A lot of them were withdrawn, especially because of lockdowns and COVID, but anecdotally at the coalface, we’ve got students and clients that have sold one property. It was a takeover for our real estate rescue students, but one property, unfortunately we thought was in the Mitchell area. So that’s one of the clusters and it’s in total lockdown, and we thought, “Well, there goes that deal,” but it went on the market. The students said, she worked out of figures on $515,000. The agent said, let’s put it on at 525 and see what happens, and she got seven offers at the 525. So property market’s still really buoyant at the moment. More regional markets, thereby postcode, they are still as well clearing. So they’re in the regional areas in Sydney, Melbourne, and also in the more regional areas outside of the capital cities that are just commute away.

House values are still standing up. We can see we’re still ahead. If you look at Sydney prices, they’re up 12% from this time last year. 9% in Melbourne, up in Brisbane and they’ve gone backwards in Perth, still up in Adelaide. So combined capital cities going backwards slightly over the week minus 0.2% for the week and 0.7% for the month, and down 1%, if we look at the averages for the year. But in the scheme of things, still not that slippery slope that everyone’s predicting that they’re going to just have 30% drops in value and sliced off our property market, probably because of JobKeeper, JobSeeker, banks also allowing deferrals and that sort of thing.

So we’re still treading water and the listings are down. So you can see across the board here, we’ve got 12 and a half percent fewer properties on the market and combined capital cities than the same time last year. So Sydney 3% less stock, Brisbane, 20% less stock, Adelaide, 17%, Perth, 26%. So people are just not selling. So even though we look at uncertain times, if we look at the seesaw or the scales of supply and demand, supply is still less than demand because people have the luxury of just not selling and waiting for the market to come back. So it is tight. Will that change when the government stimulus packages are withdrawn when unemployment increases? And unemployment, by the way, is predicted to get to 10.4%. It’s gone up to 7.4% at the moment, but people are still being kept in jobs by JobKeeper and that package is being extended to March of next year, or be at lower amounts paid.

But the Australian Banking Association have also allowed people to have holidays on their loans or defer their repayments. So we’re still in a holding pattern. And it’s really hard to predict in times like this, where everything’s just on hold and we’re not sure what will happen next. But property prices are still poignant, they’ve held up, medium prices are pretty much where they were before we’ve gone down 1%, which isn’t, God knows what, in the scheme of what’s happened in the world. Maybe that will play out later on down the line as things change.

If we look at time on the market, we can see that properties are selling within a couple of months across the board. So median time on market is like 46 days in Sydney, 47 days in Melbourne, 67 in Brisbane. So a few months on the market. If you look at the average discount, so they also measure to see how strong the market is, what does a seller initially ask for? So what do they list their price for as compared to what they ultimately sell for. So on average, for example, Sydney units spend 47 days on the market, and from initial listing price to final sale price, the vendor or the seller drops the price by 3%, even less, they dropped by 2.6% for houses in Sydney.

So not even in the worst capital cities like Perth, houses only drop by 3% from asking price and units 3.1%. And they sit on the market for a little over two months, even in Perth. So still markets are tightly held and there seems to be that appetite for property. So I love that fair with property is still very much alive and well.

And similarly, the other thing that they measure for the buoyancy of the property market is borrowing. Are people still borrowing for mortgages? And borrowing nationally is at 0.3%. So people applying for loans, moreso 1.2% in New South Wales. Big borrowings in Queensland, two and a half percent, less so in Tasmania 4.1% less than last month. So people are still feeling good, going out, borrowing money and spending it to buy property, getting mortgages against that property.

So watch the space, I suppose, it’s still very uncertain times, but what we can be sure of is the government is coming to the table on a state and a federal level. And it’s just the uncertainty. It’s hard to move forward or to know which way to move forward when we don’t know what’s going on. So very much a holding pattern and still on life support in terms of government stimulus packages being extended and concessions and deals to be done.

Landlord’s giving concessions, and if they’re not, you need to be asking for them because this is the time. If you watched our live stream on the weekend, Jay Abraham came on, he said he’d never seen a market like this for doing deals. Everybody is cutting deals, it’s just a new way of doing business. People need each other, landlords need tenants, tenants need landlords to come to the table and so on. So people are leveraging off for each other and it’s a massive time for dealmaking.

On that note, I’m going to be doing a lot more of our live streams and our events because in this holding pattern, we’ve realized that, at first it was panic stations, it was fight-or-flight, and it plays out in business as in humanity, that adrenaline rush was, “Oh my goodness, what’s happening? We need to communicate.” And you’ll remember we did our daily huddles and our 402s. We paired that back to our state of plays twice a week as we were coming out of lockdown, and now it seems that we’re just in that holding pattern.

So we have made a decision that probably we’re not going to see live events again, as an events business. And I love speaking to rooms of people, but we’ve realized that at least for the rest of this year, with uncertainties and outbreaks, probably not going to happen. Hope it does, but we’re going to prepare for the worst. So we’re putting a lot into our live streams, into the latest technology and into that space of bringing you more experts and other commentators to expand knowledge whilst you’re at home in your pajamas.

So aligned with that, we’ll be doing Our State of Plays now fortnightly. So the next one is going to be on the 6th of August, and we’ll still have our Ask Doms on the Thursdays weekly. So if you ask any questions, I’ll be answering them this Thursday as well. So we’ll still be communicating regularly. I’d love that to be more of an interactive Q&A, and for that to be very organic, ad lib, send your questions in, let’s really have exchanges on our Thursdays where we have interchanges and share knowledge, but also pick my brain. And the actual presentations and content will come fortnightly with Our State of Plays, but also in more live streams and events of that nature.

So we’re putting a big investment there. And whilst we pivoted, it’s not a short-term pivot. If you saw our live stream on Saturday, also, Seth Godin said, “We’re not going back.” There’s no snap back to the old world. In fact, this is a new normal, and when things change as radically as they have, we never ever go back to the way before, so we have to adjust to what’s happening.

So aligned with that, for our next live stream on the 8th of August, we’re actually going to harness some local talent. We’re going to have Shaynna Blaze and Jamie Durie, and we’re going to be talking more about property and the opportunities right now in the current property market. So you can register for that. Being on The State of Play, you guys always get the first heads up, Johnny on the spot. You’re the first people to know about this event, and you can go and register now at dginstitute.com.au/rrslivestream. We’ll put the link to that in the comments section and the description section as part of this live stream, and you guys can be the first in best dress for that event.

So excited about the new space we’re playing in and want to congratulate you and kudos to you for being adaptable in times of change, because that will be the key to not just surviving, but thriving, how flexible you are, because things are going to keep changing, and we’ve just got to get very, very responsive to that.

So looking forward to catching up with you on Thursday at one o’clock, well that’s Eastern time, for our Ask Dom session, start sending questions in now. If you’ve got a thought bubble, type it in now in the comment section, because we collate all of those, or send us an email or turn up live on the day and start typing in your questions. Love to hear from you and talk to you about what’s going on and any questions you might have of any nature, whether it be legal, commercial, property-related, business-related predictions, or just sharing, sharing what you know, your experiences, what you’ve found, what you’ve seen, your stories, your anecdotes, love to hear it all.

So I’ll connect with you on Thursday for that, for our Ask Dom. I’ll see you on the live stream on the 8th and I’ll also see you on State of Play on the 6th of August, so can’t wait to catch up soon. In the meantime, stay safe, take care, be kind to one another, and don’t forget to follow us as well as on YouTube to get regular updates. Share this with your friends, tag them in the comment section. And for those not watching on Facebook, if you’re on YouTube, please like us, subscribe and hit the bell so you can be notified every time we post new content. We’ll talk soon, have a lovely evening.

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