Take our 1 minute quiz and find out how we can help you achieve your dream
Take the quiz

Doom and gloom…you’re in trouble!

The episode of ABC’s Four Corners on Monday 21 August was about the Australian property market.

In summary, they would have you believe doom and gloom is in store for the whole Australian residential property market, and that is an understatement.

There were two independent commentators that are adamant there will be a collapse; not a correction, but a total collapse.

Their fundamental belief was that this is due to over funding by the banks; the majors in particular. They were focusing nearly solely on the debt levels of Australians in relation to incomes.

ANZ chief Shayne Elliott was interviewed and explained that the bank (of course), with all its extensive resources, studies the minutia and the macroeconomic changes of ‘the market’ on a moment by moment basis. It does this on behalf of itself and all its stakeholders, which includes Australia and its citizens. They are careful and it seemed comfortable.

When you are as old as I am, you have the real benefit of hindsight. You learn that there are things that you know, there are things that you know you don’t know, and there are things that you don’t know that you don’t know.

Firstly, there are always naysayers – those that are predicting doomsday, similar to the messaging of this episode. I know they are always there, commenting on any market.

Now of course they aren’t necessarily wrong. However it’s very important to understand that no one individual or organisation has access to enough knowledge, facts, experience or ability to be completely certain. That’s what I know I don’t know.

So, considered conversations with carefully thought out and worked through facts and theories that are presented reasonably – considering all possibilities and nuances within the boundaries of what might be – is much more believable and likely than certainty.

The certainty and narrow investigation that this Four Corners report was based on is disappointing.

Frankly, it was a great example of how people don’t know what they don’t know.

Certainty, in predictions such as these, is nearly always correct in hindsight but very rarely correct in foresight.

For us, it is crucial to be careful and critical in making all our judgements and recommendations.

It is equally as crucial in the macro issues as it is in the advice given to each and every individual.

Property is still an appropriate investment vehicle for many individuals as it has been for every year since we have been advising, as we have continually done for the past 37 years. It is as appropriate today as it has been for every year that I personally have been involved in property, in a career of around 45 years. That is through the recession we had to have, the GFC and the introduction of major taxes and changes in laws and governments.

This same point could also be made about using leverage as an appropriate investment mechanism for many Australians for all of those years.

However when it comes to individual investment planning, with regard to the above two points, always remember the three golden rules; do your financial planning conservatively and correctly, buy the right property and, give it time (ten years minimum).

Spain, the US, and I think it was either Ireland or Tokyo, were used as examples of property crashes. Each circumstance is different; it serves no solid purpose to gloss over analogies or examples, nor does it exemplify quality journalism. It is impossible to cover these circumstances properly, on a show with the time constraints of an episode of Four Corners.

To compare the US housing crash – which was brought on by the subprime loans debacle  –  without investigation and careful explanation and comparison, is verging on being irresponsible.

Firstly, in regard to the recent US property crash, it was not all property markets in the US that crashed. Quality residential property in prime locations – say Manhattan Island or quality locations in San Francisco – did not fall out of the sky. However much more importantly, the fact that the home owners (the borrowers from the banks and various home lenders in the US) could, in most cases, literally hand back the keys with no recourse by the lenders or responsibility by the borrowers for the outstanding debts was wrong and had huge consequences.

This cannot happen in Australia.

Further, the fact that, by law, residential loans in Australia above 80 per cent loan to value ratio must have mortgage insurance is very important. So yes, the banks could feel pain, but that pain would be spread and supported around the world by many other financial institutions, lenders and insurers that have prepared for events like the US crash.

Then you must also consider that these loans in the US were bundled together and sold to many financial institutions and banks around the world as AAA security financial instruments. False values were applied to the properties and to these instruments. It was fraud, it was criminal, and it was a disgrace. They were not worth the paper they were written on.

All of the above is what caused the crash in the US property markets and then the impact on world markets and world economies. And even with the above dissertation, I am not doing the explanation justice. So how could they, in one minute of an episode of Four Corners, do justice to that crucial example they used, let alone discuss Ireland (probably a result of the GFC), Spain (a huge construction oversupply) and Tokyo (possibly a result of the Asian currency crisis and stagnant population increases) and then relate all that to Aussie land?

What a joke!

That is not Australia’s situation. Our banking regulations, the capital adequacy ratios, having the Australian people as lender of last resort, population increases – there is so much more that must be taken into account.

And that’s before we even start to discuss the fact that there are thousands and thousands of residential property markets in Australia. There are inner urban major metropolises, high density inner urban, outer urban, new subdivision medium density homes, low density residential homes, regional, resort, rural towns, NSW, Victoria, Tasmania and all the other categories we could divide into. Not to deal with each separately is naive to say the least, extremely misleading in reality, and possibly criminal.

For example, the focus of this particular episode of Four Corners was on Western Australia; Perth and Mandurah were singled out.

The report showed how people had invested in property in these locations and lost money.

It is awful to see the consequences for some of these people. Really awful.

But to use these markets and circumstances as examples of what is pending for all Australian residential property markets is wrong. It is sensationalism.

To explain those impacts in the west, as an argument for the rest of Australia as the commentators on Four Corners did, is very simplistic and unhelpful.

The situation in Western Australia is due to the detrimental impact the downturn in the resources economy has had on the Western Australian economy generally and then consequently its property markets; it has been in turmoil.

(By the way, a bit of good news, I have been anecdotally told that there has been movement and uplift in the resources sector in recent months. Particularly in renewed exploration.)

You can’t have the value of iron ore go from $160 to say $60 and have the West Australian Government have to adjust its balance sheet by what I believe to be around a billion dollars, have vacancy factors in commercial space reported by some at up to thirty per cent, and not have huge impacts on its property markets, particularly up and down the coast in near resort locations, outer urban residential, in mining towns and Perth as well.

To infer that these circumstances can be used as solid analogies for the rest of Australia is very, very, wrong.

But we only have ourselves to blame for reports such as these. Bad and shocking news sells. Unfortunately, the stories that should be told are not.

If you can take anything away from this, know that I am professionally and personally, on behalf of all Australians, very glad we have the Reserve Bank of Australia, our major banks and other financial institutions and regulators keeping an eye on our debt to income levels. It’s not all doom and gloom – there is always light.

There are always opportunities for long term property investors.

Game of Thrones and seven lessons in economics and finance

An adaptation of the best-selling book series A Song of Ice and Fire by author George R.R. Martin, Game of Thrones is a smash-hit HBO television series. Set in a fantasy medieval world, Game of Thrones tells the story of the Seven Kingdoms and a struggle for power in a changing time where dragons have returned from extinction and the Children of the Forest and White Walkers are no longer fables told by old maids to scare little children. As different as it may seem from the real world we live in today, there are some lessons in economics that we can learn from the Seven Kingdoms that are applicable to our world (sometimes frighteningly so!).

So at the risk of ruining Game of Thrones, here are seven lessons that the series can teach its watchers about economics and finance. Oh and before we start…

Original image source: IMDB. Words added.

Lesson one: Cash is king

The (former) Tyrells of the Highgarden were a rich family, desperately courted by the Lannisters to help with the dire situation in King’s Landing. The Lannisters understood that kingdoms need people, and people need to be fed and clothed – all of which requires money. The people need to know their leaders are going to be able to provide for the economy in order to place trust in their rule.

In the real world, we look over to Donald Trump – a man who has filed for bankruptcy multiple times. These bankruptcies can be seen as strategic; his net worth today is 3.7 billion USD. The fact that he is a successful businessman has awarded him with support from many people (read ‘commonfolks’) who do not necessarily agree with his stance on human rights issues and often cringe when they read his tweets. Their reasoning? He’s smart with his money therefore presumably he’ll be smart with the government budgets. In order to gain popularity, the leader of a nation needs to show how smart they are with their finances.

Lesson two: Defence comes at a cost

Be it the battle of the five kings, or the struggle for power between Daenerys and Cersei (the “Mad Queens”), the balance sways to the side with the greatest number in their infantry. It matters how many men are fighting for their leaders. Whether the Knights of the Vale are involved, the Dothraki, the army of the unsullied, or even the ginormous dragons, wars are won by the strongest armies; and the various kings and queens make it known to the others that they are not against using their power in numbers to win the coveted Iron Throne.

Much like Westeros, the real world can be a volatile place to live. Every year, a big portion of many national budgets is allocated to military defence (armies, air forces, navies and other defence forces). The Australian Federal Budget in 2017 included a $34.2m allocation for the military security required for the 2018 Gold Coast Commonwealth Games. This might seem exorbitant when you consider other social issues like the rise of homelessness in Australia, but defence is an important mechanism in the face of rising terror activities. Furthermore, as North Korea tries to place itself on the map as a formidable force with nuclear weaponry, defence spending seems wise.

Lesson three: Insurance is protection

As the aforementioned Tyrells were destroyed by the Lannisters, their gold and food were taken by the victors as spoils of war. Then down came Daenerys and her dragon Drogon – burning the loot carts and destroying the Lannister army in what seems like mere seconds.

The lesson here is easy; you need to have proper insurance in place, just in case your enemy comes down on you with their fire-breathing baby! Okay, maybe that’s a little extreme – but in today’s uncertain world, it’s absolutely imperative to have proper insurance in place. Whether it’s life insurance or income protection, it pays to plan for the worst no matter how old you are. It may be ominous to put it in those terms, but it’s better to be prepared than get caught off guard and unprotected. Fact: 100% of all people will die at some point in their life, and it’s unlikely you’ll be coming back as a White Walker.

Lesson four: Banks are powerful in their own right

The Iron Bank of Braavos is a powerful bank operating from Essos and has significant influence over the major houses of the Seven Kingdoms. We saw how the Iron Bank intimidated the likes of Tywin Lannister, and how having them on your side makes you seemingly invincible.

After the Global Financial Crisis (GFC), we’ve seen governments crack down on the major banks to become more transparent in their reporting, and most banks have introduced checks and balances to ensure their internal controls are followed to the absolute letter. Despite shaky confidence in the world’s major banks, Australia’s four major banks still have a great impact on our economy and are able to exert significant influence over major government projects.

Lesson five: Industry is essential

Now that the power hungry royals in the Seven Kingdom are all slowly becoming aware of the threat from the White Walkers, it is easy to see that they will require mass production of armoury and weapons if they have any chance of surviving. Blacksmiths are the unsung heroes of this show.

While the real world is not gearing up for a war against an army of the dead, our industries are moving towards mass production in order to gain economies of scale and survive in the shaky aftermath of the GFC. Ours is a world of cash flow problems, unstable stock markets and increased competition caused by new technologies opening up channels of distribution and marketing. While socialists might argue that mass production is nurturing consumerism, it is simply a case of feeding demand with supply. Our world might not need dragon glass, but industry is essential for growth.

Lesson six: Violence slows growth

Wild fire destroyed the great citadel of King’s Landing, taking with it the lives of thousands of people and inexorably destroying the city’s infrastructure. There is a part in season seven of the show (where Ed Sheeran reminded us all that Game of Thrones is only a work of fiction) where we are told of the horrors faced by the people of King’s Landing after this attack.

This reality is not too dissimilar from the war ridden areas of our world – like Syria, Afghanistan and Iraq – where the fight against terrorism is persisting alongside the struggle to establish a semblance of governance and industry. When you’re greeted with a battleground every day, it’s hard to funnel energy into anything else beside the war effort. Growth is slowed, halted, and sometimes even reversed.

Lesson seven: We’re all in this together

The common enemy of the kings and queens of the Seven Kingdoms is the army of the dead lead by the Night King. Eventually the protagonists of the series will need to put aside their differences and embrace unity in order to defeat this evil.

Similarly, the countries of the world cannot exist independently; we all need each other to fill the gaps of the trade deficits, to import the items our country is short of, and to export the things we have in ample supply.

For example, studies show Japan’s population is largely aging, and ultimately they will have more jobs available than they have workers, which suggests that Japan will require skilled immigration to fill in the gaps. While the world struggles with political and instability and will never truly be able to agree on things, we have to come together and help humanity in order to progress the human race.

While the show has undoubtedly taught us a lot, it is important to realise the limitations. Personalised lessons in economics and finance are best obtained by speaking to the experts. When it comes to your personal situation, there is nothing like speaking with a financial planner. Whether you want to learn about planning for the future, exploring different investments, or protecting your assets through insurance or estate planning, we’re here to help.

Be the ruler of your own kingdom and contact us today.

Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.

Your new property purchase is only a hop, skip and a jump away!

Think you’ve found the perfect property? Great! But do you know what happens next?

Finding a property is only the first part of the story – there’s a lot that happens after finding your dream home or investment, so it pays to get expert advice before you sign on the dotted line.

So where should you start?

HOP . . .

The first thing you’ll want to do when you’ve found a property you’d like to purchase, is to determine if you can afford it! A mortgage broker can help you set some realistic price expectations and take into consideration your existing savings, borrowing capacity and ongoing financial commitments to help you work out if the property in question is appropriate for you.

Once you’ve had the all clear and received pre-approval for a mortgage, the next person you should get in touch with is a legal adviser.

Your legal adviser will be responsible for checking the details of the contract. They’ll ensure it contains nothing detrimental to the purchase or intended use of the property, and you’ll be able to discuss and negotiate any special conditions you may require in the contract. Imagine if you bought a property and assumed you’d be able to renovate, then discovered after you’d settled that there are heritage restrictions around what you can and can’t do. Disaster! A legal adviser can help you identify these issues before it’s too late.

If you’re satisfied after having investigated the contract and received expert advice , it’s time to seal the deal. Once everything is signed, discuss any conditions you may have with your solicitor. This can include ensuring your finance is approved by the due date or any work that needs to be done by the seller.

Leading up to your settlement, remember to prepare everything for the big day with the help of your solicitor. Whether it’s signing bank loan documentation, checking up on moving arrangements, or your solicitor keeping transfer documents in order; preparation is crucial!

Understand settlement

Property settlement is the process of a seller passing their ownership onto a buyer. It’s an official transaction usually conducted between your legal and financial representatives and those of the seller. The seller (also known as a vendor) sets the settlement date in the contract of sale and this is normally 30 to 90 days after the deposit is paid and the contract is signed. It’s the responsibility of the buyer – in this case, you! – to ensure they can pay the balance of the sale price on this settlement date.

HOP . . . SKIP . . .

You’ve signed the paperwork and have a settlement date locked in, now what?!

Organise insurance

Your lender will usually recommend you take out building and contents insurance, effective from the date the seller signs the contract. This is to safeguard their interest in the property, as well as your own.

Understand outgoings

During settlement, all outgoings are adjusted between you and the seller. The seller is responsible for rates up to and including the day of settlement; you are then responsible for these from the day after settlement. You will also be required to pay stamp duty on the sale. Typically, a conveyancer will help you settle these costs and make sure each party only pays for the share of bills that applies to them during the period in which they’ve had ownership of the property. This includes council rates, water rates etc. You can find more information on this via the State Revenue Office website.

Arrange your final inspection

During the week before you move in, you are entitled to inspect the property at any reasonable time as long as you arrange an inspection with an agent. When it’s handover time, the seller must leave you the property in the same condition as when it was sold. Check all the items listed in the contract are there and in the right condition.

Check measurements

Your legal practitioner will send you a plan of the land in which you’ll be able to check all the measurements and boundaries corresponding with the Certificate of Title. If everything looks normal, send confirmation; on the other hand if there’s any discrepancies, alert your legal practitioner immediately. You’d hate to lose a corner of your backyard that you’re entitled to, so now’s the time to be pedantic and ensure you get what you’re paying for. Also remember to provide documents and other information promptly when requested, as delays can be costly.

HOP . . . SKIP . . . JUMP!

Settlement date has arrived, but what does that mean?

Collect the keys

If everything has progressed smoothly, your solicitor or bank will hand over the money to the seller on the settlement date, in exchange for the transfer documents to the property. These documents may also include release of mortgage documents, and anything else that is needed for you to obtain clear title to the property. And you know what ‘clear title to the property’ means? The keys are yours for the taking!


Crack open the champagne, now it’s time to celebrate! Finally, the property is yours to enjoy. Your solicitor or bank will register the transfer into your name shortly after you move in and they will attend to finalising any outstanding matters.

As you can see there’s a lot to think of when purchasing a property, but thankfully The Hopkins Group is here to help! We have extensive experience in helping people not only find a property that’s right for them, but also with all the nitty gritty details that happen next. From seasoned property investors through to first time home buyers, we can help anyone on their house purchase journey. Our team of professional advisers can hold your hand through all the stages including financing, property selection and ultimately purchase! If you’d like to learn more, contact an adviser today.

Stay up to date

Get the latest news and insights from The Hopkins Group, as it happens.


This field is for validation purposes and should be left unchanged.
The Hopkins Group

Street Address

Level 23, 500 Collins Street, Melbourne, VIC 3001

Postal Address

GPO Box 4347, Melbourne, VIC 3001

Office Hours

8:30am - 5:00pmMonday - Friday (after hours by appointment)
© 2023 The Hopkins Group | All Rights ReservedPrivacy PolicyDisclaimer PolicyDeveloped by Digital Six