August 2020 – The Hopkins Group

The latest on Melbourne’s property market

Posted on 28/08/202025/10/2023 by daniel-admin

In Melbourne, 124 homes were scheduled for auction this week, down from 223 over the previous week and 545 this time last year.

With stage 4 restrictions in place until 14 September, open homes, private inspections and on-site auctions have ceased.

This has had a major impact on the number of auctions scheduled across Melbourne as the city continues to experience a decrease in sales throughout the lockdown period.

We expect this downward trend to continue for the next 3-4 weeks while buyers are limited to either making an offer sight unseen or via an online auction.

Interestingly the property withdrawal rate has been much lower relative to the previous lockdown period in April and early May this year.

The preliminary data collected indicates 31% of Melbourne auctions were withdrawn from the market this week, compared with a peak of 65% through the second week of April.

Of the 64 Melbourne auction results collected so far, 60.2% were successful, although this will be revised lower as the remaining auction results are collected.

Last week saw a final clearance rate of 60.8% recorded across the city, while this time last year, 69.3% of Melbourne auctions were successful.

Realestate.com.au reported that there were also 883 private sales in Melbourne this week, significantly fewer than the number sold last week (1,254) and the 1,262 properties sold by private treaty the week before.

What does the future hold?

It’s the silver lining to the COVID-19 recession for those fortunate enough to still have a job, who already own a home or are looking to purchase in the coming months.

Low interest rates are here to stay for the next 2-3 years based on reports from the RBA Governor Philip Lowe, leading economists and comments from Prime Minister Scott Morrison.

We also expect to see some great opportunities for investors and first home buyers ready to take advantage of prices either falling or remaining stagnant across the state.

Access to the new HomeBuilder grant is projected to stimulate the market with $25,000 available to anyone securing a house and land package or substantially renovating their existing home.

If you would like to confirm if you are eligible for any government grants please speak with a representative from The Hopkins Group.

Downward pressure on Melbourne rents

Asking rents in Melbourne have continued to soften, even though there’s been no further apparent increase in the vacancy rates this month.

Inner suburbs like Melbourne CBD, Southbank and Docklands have experienced some of the biggest falls in rent this quarter.

We think this is due to the increase in rental supply now owners are forced to search for tenants in the absence of overseas travellers.

Our property management team are stressing to clients the importance of caring for and maintaining your investment portfolio during this time as tenants won’t have to look far for a comfortable and affordable home.

The availability of online 3D tours is also proving to be a valuable asset for owners during these periods of isolation and social distancing.

Click this link to view a 3D property tour we recently shot for one of our clients in Ascot Vale.

This technology allows the user to view every corner of the property online from the comfort of their own home.

Why property investors shouldn’t be deterred from investing in Melbourne

Before coronavirus hit our markets, Melbourne property prices were surging with dwelling values up 12% on the previous year.

However, housing values in Melbourne moved through the fourth month of decline, racking up a cumulative 3.5% decline between the recent March peak and the end of July.

We believe this small and steady fall is no need for alarm as COVID-19 restrictions were almost certain to halt the markets progress.

The city’s housing market conditions have been weaker than Sydney and Brisbane, which we attribute to the states extended period in isolation.

Our lack of exposure to overseas migration and foreign students as a source of demand has also had a significant impact on recent figures.

Despite these weak conditions, buyer activity has improved over the past three months, after-sales fell by around 41% in April.

If Melbourne emerges from lockdown in 3-4 weeks’ time and cases continue to fall to similar levels in NSW, we expect a dramatic increase in activity and a similar resurgence to Sydney’s housing market.

Let’s talk property investment

So how is your property portfolio performing?

What are your short and long-term property investment goals?

Will your direction enable you to achieve the financial success and choices you’re looking for?

How are you assessing your investments’ performance?

The Hopkins Group property investment advisory team would love to help you answer these questions in an obligation free video meeting or phone call.

Melbourne’s population was forecast to increase by around 10% in the next 4 years and will remain one of the most liveable cities in the world when we get through to the other side of this pandemic.

If you’d like to talk about your circumstances and how we can help you discover sound investment properties across Melbourne please contact The Hopkins Group on 1300 726 082 or email info@thehopkinsgroup.com.au.

Interview with Damon Gosen from VanEck – Part 1

Posted on 26/08/2020 by daniel-admin

Talk Investment with Mark Wenzel speaks to Damon Gosen from VanEck Exchange Traded Funds (ETFs). In the first of a 2 part series, we learn about who VanEck are, how they are different from other ETF providers and how you can use them to boost your returns.

In this episode we discuss:

ASX Equal Weight ETF – ASX: MVA
Australian Real Estate exposure – ASX: MVB
China New Economy – ASX: CNEW
Quality global companies – ASX: QUAL & QHAL (Hedged)

There is great insight in this episode. We delve deep into accessing return through factor investing, why equal weight provides additional return to ASX investors, why you should have exposure to the Chinese consumer and how a quality overlay adds downside protection while delivering superior returns.

Compound your wisdom!

Talk Investment with Mark Wenzel is a podcast presented by The Hopkins Group. Visit us online at thehopkinsgroup.com.au

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Disclaimer

Please note the following podcast and information discussed within it are general in nature and don’t take into account individual situations, needs or goals.

Please do your own research, speak with an adviser or other relevant professional who will be able to make a recommendation based on your specific circumstances.

This podcast shouldn’t be relied upon as advice – you will need to satisfy yourself through independent means that any decisions based on this material are appropriate.

Mark Wenzel is an Authorised Representative and John Hopkins Financial Services Pty Ltd is a Corporate Representative of WealthSure Financial Services Pty Ltd Level 1 190 Stirling Street PERTH WA 6000 ACN:130 288 578 AFSL: 326450

All you need to know about Exchange Traded Funds

Posted on 26/08/2020 by daniel-admin

Exchange Traded Funds (ETFs) have grown in popularity since they first listed on the ASX in 2001. Yet, while the assets under management in ETFs has grown to over $60bn in the last 19 years, this still only represents 2.5% of the entire $1.6trn asset management industry.

The popularity of ETFs is a result of two main factors; the benefits they bring to investors, and the relative underperformance of most fund managers over the long term.

What are the benefits of Exchange Traded Funds?

The key benefits of ETFs are:

They’re low cost,
They’re tax effective,
They can diversify your portfolio in single trade, and
They offer flexibility – i.e. they can be long term buy and hold or offer trading exposure

What are some examples of ETFs in the market?

Traditional ETFs track stock market indices such as S&P500 (which brings together the 500 largest listed US companies), NASDAQ (US Technology companies) or the ASX 200 (Australia’s largest 200 listed companies).

These ETFs hold the same percentage of stocks as they represent in the index. For example, if CBA is 10% of the index, the ETF will hold 10% of your money in CBA. If BHP is 8% it will hold 8% in the ETF and so on.

With the popularity of ETFs, you have seen more ETFs added to the exchange which provides investors the opportunity to expose their portfolios to specific investment options. For example, one way to gain gold exposure is to buy a basket of global gold mining companies in one trade under the ASX code GDX.

Why would you consider investing in ETFs?

ETF providers have been innovative in their development to encroach on active managers ‘space’ with funds designed to capture ‘alpha’; with alpha being the return you receive above the index. They can do this by ranking the holdings according to ‘factors’ such as quality, value and income.

Using quality as an example, historical investment research highlights that companies showing quality characteristics, as defined by three factors have outperformed over the long term. These are:

High return on equity
Stable year on year earnings growth
Low financial leverage

These strategies have traditionally been exclusive to ‘active’ investment managers which have previously charged high fees to access. These ETFs provide exposure to ‘active’ style investment management at a lower cost.

Another area where ETFs have benefited investors is by providing exposure to investment themes that have traditionally been hard to access or single out as a trading theme.

For example, there are ETFs that can provide exposure to companies listed in individual countries which have traditionally been hard to access such as China, South Korea and India.

There are also themes within countries such China New Technologies, which invests in healthcare, technology, consumer staples and discretionary stocks in China. The theory behind this exposure is to benefit from the growing wealth of the Chinese middle class, a trend which is expected to be ongoing for many years as the Chinese economy prospers.

Further focused exposures include global healthcare, oil, food, cybersecurity, and banks. These ETFs allow you to trade your view and hopefully achieve higher returns than having a broad base exposure to the overall market.

Another investment theme that is continuing to attract consistent investor interest is ethical and sustainable investing. ETFs are a great way to expose your portfolio to this theme as they are low cost where funds have traditionally been high cost for retail investors.

These ETFs provide a basket of ethical and sustainable exposures in both Australia and globally. The ethical standards are clearly outlined by the ETF provider and you can rest assured these standards will be followed closely. If you believe companies that meet the ethical or sustainable criteria will perform better than companies that do not meet the criteria, this can be a good way to achieve returns higher than the traditional market cap weighted indices.

Where to learn more about ETFs

I have completed a two part podcast with VanEck Exchange Traded Funds talking in depth about why ETFs benefit investors and how their ETFs might provide returns that are different to the index. We also delve into six of their funds which I think will benefit investors and two that VanEck highlight as worthy of consideration. You can subscribe to the Talk Investment with Mark Wenzel podcast on your favourite platform or listen here.

Otherwise, if you would like to discuss ETFs and whether they will benefit your portfolio, please contact The Hopkins Group to speak with a financial adviser today!

Important Update – Still here, albeit from afar

Posted on 05/08/2020 by daniel-admin

You will have seen the news, read the headlines, been inundated with emails – Melbourne has now entered stage four restrictions as we try to claw back some control over the dreaded coronavirus.

As a result of these new restrictions, businesses around Melbourne must shut their doors for at least the next six weeks – and our business is no exception.

However, despite having to close our doors at Level 23, 500 Collins Street – our virtual doors are always open as our team continues to work from home and provide support to our clients remotely. Your financial planner, accountant, mortgage & finance, property management, property investment, and property sales advisers are standing by, ready to help in any way we can.

We could go on and on, but we’ll keep this brief. We’re here for you now as we always have been, committed to providing you support and the high level of service you’re used to, when you need it most.

Whether it’s a chat on the phone or a virtual “face-to-face” meeting via the wonders of Microsoft Teams video calling technology, The Hopkins Group team is always here for you – even when we must be physically apart.

Keep strong,

The Hopkins Group

Investment bonds: benefits and key rules

Posted on 03/08/2020 by daniel-admin

I recently had the pleasure of sitting down with Grant Hackett to record a podcast on investment bonds. While many will know Grant from his time in the pool and as a multiple Olympic champion, Grant is now the CEO of Generation Life, a company that specialises in investment bonds.

What are investment bonds and what are they used for?

The use of investment bonds in your wealth creation will depend on what you want to own the investment bonds for. They are flexible wealth creation or wealth transfer tools.

Investment bonds are created under the life insurance act and are therefore an insurance product not an investment product. This creates some significant advantages for people that use them.

The main advantages of investment bonds are that they:

are a tax effective investment structure, second only to superannuation. The maximum tax rate is 30%. Their tax effectiveness also increases depending on the investments option. The effective tax rate can be reduced to as low 15-20%;
do not form part of your will. This ensures the beneficiary you want to receive the proceeds of the investment bond will receive it, with no risk of legal challenges;
can be transferred without triggering a tax event, making them very flexible for wealth transfer when you are alive.

What are the benefits of investment bonds?

There are five broad areas where investment bonds are used for a strategic benefit. These are:

1. Alternative to superannuation

Investment bonds are the second most tax effective structure after superannuation. They may appeal to you as an alternative to super if:

You are reaching the maximum $1.6m tax free limit
You’re looking for alternatives to the constantly changing superannuation rules
You want access to the money before you reach age 65

If these situations apply for you, investment bonds could be a good alternative.

2. Trust distributions

Clients who have trusts that do not want to distribute money from the trust because it will pass a tax liability to the beneficiary can consider investment bonds as an alternative. The money is invested in the trust instead of distributing. After ten years the investment bond can be wound up and distributed to beneficiaries as a tax paid distribution.

3. Helping children

The most common reason people look to investment bonds in this example is to help you save for a child’s education. The parent or grandparent can start the investment bond and make regular contributions to pay for the child’s education.

This strategy can extend to helping a child save for a deposit on a house by making regular investments to the bond over time and passing the proceeds to the child tax free when they are ready to buy.

4. Estate planning

Investment bonds are not passed through the will meaning that they cannot be challenged. This effectively gives you a binding nomination on your passing.

The person or organisation you want to receive the proceeds of the bond will receive the proceeds of the bond.

Further advantages for estate planning are that you can ‘rule from the grave’ in that you can determine at what age the beneficiary receives the proceeds, you can provide a regular income rather than a lump sum and you can limit access for life events.

5. Aged care & Centrelink benefits

The rules around these are difficult to write in brief, but investment bonds can used to increase access to the age pension and to assist in funding aged care places. These are complex and will vary from case to case.

If you are around the limits of the age pension or you or one of your family needs to access assisted age care, speak to your adviser to discuss how investment bonds might be used to improve your situation.

What are some of the rules around investment bonds?

Aside from these benefits, there are also a few key rules you need to know about before investing in investment bonds.

You can invest as much as you like in the first year of the bond but can only invest 125% of the previous year’s contribution. Say you invest $20,000 in the first year, the maximum you can contribution in the second year is $25,000. If you contribute $25,000 in the second year, the maximum in the third year is $31,500 and so on.
If you don’t make a contribution in any one year, you will not be able to contribute to future years. You will need to start a new investment bond for further contributions.
You can access your funds at any time, but to get the full tax benefit from investment bonds, you need to hold the bonds for at least ten years.

Investment bonds can be a great tool for your wealth creation. The financial advisers at The Hopkins Group can advise on whether you will benefit from investment bonds as part of your financial plan. Contact an adviser at The Hopkins Group today to help you prepare your ideal future.

You can hear the full interview with Grant Hackett on the Talk Investment with Mark Wenzel podcast. You can listen to the podcast here or subscribe on your favourite podcasting player.