Investors ditch property + How to nab a holiday bargain

Hi everyone,

Hope you’ve all had a great week. I’ve been engrossed in Dan Brown’s (author of The Da Vinci Code, Angels and Demons etc) new novel, The Secret of Secrets. It doesn’t disappoint and is a great read. I can highly recommend it.

In this week’s newsletter:

• The job market is showing signs of weakness.

• The ongoing intergenerational wealth gap debate.

• Investors ditching property as an investment … not great for the rental crisis.

• The rental squeeze as vacancy rates are less than half of what’s needed for a balanced market.

• Top tips to spring clean your home finances.

• Superannuation fund returns stay strong.

• How to track down a bargain travel deal.

• Another reminder of why we’re all lucky to live in Australia.

Jobs market showing signs of weakness

While the latest unemployment rate (released yesterday), was steady at 4.2 per cent, there are growing signs the jobs market is weakening. Economic history tells us that in a slowdown the unemployment rate is the last to deteriorate but when it does, it does so rapidly.

It is concerning to economists.

According to ABS figures, 5,400 jobs were lost in August, falling well short of economists’ expectations for 21,000 new jobs to be added that month.

Fewer people are now looking for work, and over the past three months, employment growth has slowed sharply - averaging just 7,000 new jobs per month. By comparison, this time last year, the economy was adding around 33,000 jobs per month.

Employers are obviously very cautious as they are also adding more part-time positions than full-time roles.

Tasmania recorded the lowest jobless rate in August at a record-low 3.2 per cent, followed by Western Australia (3.8 per cent), New South Wales (4.2 per cent), and both Queensland and Victoria (4.4 per cent). The Northern Territory recorded 4.5 per cent, the ACT 4.7 per cent, and South Australia had the highest rate at 4.9 per cent.

Notably, it was Queensland’s highest jobless rate since December 2021, South Australia’s highest since March 2022, and the ACT’s highest since October 2021.

The intergenerational wealth gap debate

I’ve talked about the intergenerational wealth wars a lot in the past where younger Australians begrudge older Australians for everything from pushing up property values and living a more lavish lifestyle, to retiring on supposedly excessive superannuation payouts.

As I’ve said before, these intergenerational wars of financial envy are not new and will continue into the future. I envied my parent’s lifestyle and wealth just as my adult children do mine and their children will with them.

The wealth gap in favour of older Australians, of any era, is because they’ve worked longer, saved longer and invested for longer. It’s that simple and, frankly, that’s life.

The pressure on the current day Bank of Mum and Dad is a result of adult children wanting a share of their parent’s wealth and their inheritance earlier. Often to the detriment of the parent’s retirement lifestyle.

I was interested to read a column on the issue by economist Judith Sloan in The Australian this week. As I’ve suggested, Judith believes the wealth gap between generations has not really changed over the decades and many of the arguments are flawed.

She makes these really good points:

• Wealth still peaks at age 50 with wealth plateauing around the ages of 75 to 80, because of higher life expectancy compared with several decades ago.

• The current older cohort benefited from the purple patch of economic reform that occurred from the mid-1980s to the early 2000s. They are the reforms of Paul Keating and, to a lesser extent, Peter Costello as Treasurers. And that is why the Bank of Mum and Dad has the resources to meet family funding pressures.

• While today’s retirees and older workers appear to enjoy big superannuation payouts, their adult children will retire with vastly more wealth by comparison because of compulsory superannuation. Universal superannuation came into existence in the early 1990s with a contribution rate of only 3 per cent. It has taken more than 30 years for the contribution rate to reach 12 per cent. So today’s working adults will have received much higher compulsory superannuation contributions for much longer than their parents.

• It is misleading for some economists to claim that older Australians in retirement now have similar average incomes to working Australians and should therefore be taxed more. These claims often include unrealised capital gains as income, as well as government spending on health services for older Australians - neither of which are included in income measures for younger Australians.

If, as Judith suggests, economic wellbeing is measured by consumption rather than income, the picture of intergenerational inequality appears far less pronounced.

Compulsory superannuation, introduced by former Treasurer Paul Keating, has been a massive wealth builder for average Australians and the major beneficiaries will be young Australians. It is an incredibly good forced savings scheme - one of the best in the world.

But just out of interest, check out Singapore’s version below:

Investors ditching property is not great for renters

A record number of property investors are selling because of rising costs, legislative uncertainty, and concerns over proposed federal tax reforms. Basically landlords, much maligned by tenants and governments for ‘causing the current rental crisis’, are pulling out and investing their money somewhere else.

As I’ve warned previously, higher taxes and reducing the rights of landlords run the risk of property investors selling, cutting the number of properties available for rent and adding to the crisis.

The 2025 Annual Property Investor Sentiment Survey by the Property Investment Professionals of Australia (PIPA) reveals that 16.7 per cent of investors sold at least one property in the past year, up from 14.1 per cent in 2024 and 12.1 per cent in 2023.

It’s the highest rate of investor sales since PIPA began asking investors whether they had sold any properties in the past year. The results highlight a clear and escalating trend that threatens the nation’s rental housing supply.

When PIPA first asked this question in 2022, about 17 per cent of investors said they had sold at least one investment property in the previous two years - equivalent to just 8.5 per cent annually. That’s half the current rate of investor sales.

Queensland continues to lead the nation in investor exits, with 35.5 per cent of respondents selling at least one property in the state, up from 33.4 per cent last year. Victoria followed closely at 30 per cent, while New South Wales saw a sharp decline to 11.8 per cent, down from 25.4 per cent in 2024.

When asked whether they would continue investing in property if negative gearing was altered, 53 per cent said they would stop investing. An additional 25 per cent were unsure, leaving just 22 per cent willing to continue under a revised negative gearing policy.

Similarly, if the Capital Gains Tax (CGT) discount were reduced to 25 per cent after 12 months of ownership, 35 per cent of investors said they would exit the market. Another 29 per cent remained undecided and 36 per cent said they would continue investing under the revised CGT conditions.

Landlords are such an easy scapegoat for the rental crisis. But wouldn’t it be better to encourage property investment to increase the amount available stock for rent, rather than driving them out of the market with higher taxes, reduced rights and casting them as villains?

Rental market stays tight

Now, diving into the current state of the rental market …

A balanced rental market typically has a vacancy rate around 3 per cent, indicating enough supply to meet demand. However, according to SQM Research’s latest data, the national residential vacancy rate held steady at just 1.2 per cent in August - less than half the level needed for a balanced market.

So the rental crisis continues and shows no signs of improving.

Across the capital cities, SQM found:

• Sydney: Tenant demand continues to tighten the market, pushing the vacancy rate down to 1.4 per cent (from 1.5 per cent). It’s the lowest in over a year.

• Melbourne: Tight to stable vacancy levels persist as leasing activity slows, with the rate holding at 1.8 per cent.

• Brisbane: A modest rise in vacancies to 1 per cent, though the city remains one of the tighter rental markets nationally.

• Perth: Tightness continues, with the vacancy rate unchanged at 0.7 per cent.

• Adelaide: Very low vacancy conditions with the rate steady at 0.8 per cent.

• Canberra: A slight seasonal lift saw the vacancy rate rise to 1.6 per cent.

• Darwin: The market remains super tight, with the vacancy rate holding at just 0.5 per cent.

• Hobart: Strong rental demand pushed the vacancy rate down to 0.5 per cent (from 0.6 per cent).

How to quickly revitalise your home finances this spring

Is it just me or has this year just melted away? We’re nine months in and there have even been reports of Christmas plum puddings appearing on supermarket shelves. I’m not ready! If you’ve made it to this point without achieving what you wanted to financially, it’s not too late to make some progress before the end of the year.

Spring’s not only a good time to tidy up the home - it's a great time to get the family budget into order as well.

Here are some quick ‘spring financial cleaning’ tips:

Refresh your home loan

With the frost coming off property markets, spring is the peak season for lenders chasing new customers.

It’s a competitive loan market and good deals are popping up like daisies.

But you don’t need to be in the market for a new home to take advantage of better offers if you have a home loan. If your rate doesn’t have a five in front, it’s time to shop around.

Right now, there are two-year fixed rates as low as 4.79 per cent on Compare the Market’s home loan panel. Competitive variable rates for 70- 80 per cent LVR start around 5.34 per cent. That’s 0.46 per cent below the average variable rate reported by the Reserve Bank - meaning, a lot of homeowners could create a decent rate cut on their own.

For someone with an average loan of $678,000, switching to that lower rate could represent a reduction of $196 a month.

Polish your home cover

If the rising mercury makes you feel motivated to do a big deep clean, take the opportunity to do an audit of your stuff. Most people let their home and contents cover auto-renew without checking to make sure it fits their current household inventory.

But if you’ve made some upgrades, and haven’t adjusted your sum insured, you could find that your cover falls short of your needs. On the other hand, if you have cleared out the wardrobe, or removed some furnishings, you could find you are now overinsured!

Recent Compare the Market research found that as many as 39 per cent of Australians were unsure about how much their policy covered them for. Understanding your cover could save you stress in the event you need to claim.

Get ahead of storm season

Now is really a great time to check insurance before storm season kicks in. Because when disaster strikes, insurers usually put the sale of new policies on hiatus. Embargoes usually come into effect when warnings are issued for fires, floods and storms. Insurers may also impose a no-claims period on new policies.

The idea is to prevent people buying cover only when there is a much higher risk, without ever having any previous plans to be insured.

So, let’s say, for example, if someone had no flood cover - and a warning came into place overnight - it would likely be too late for them to purchase a new policy. The best way to beat an embargo is to make sure you purchase adequate cover well ahead of time.

The Bureau of Meteorology is tipping above-average rainfall across eastern Australia from September to November. Securing cover early gives you peace of mind before the big wet.

Cool your energy bills

You can’t control the weather, but you can control how you keep cool. With many Australians now working from home part of the week, our cooling systems get quite a workout.

Every degree of extra cooling in summer can increase your energy use between 5- 10 per cent, according to Energy.gov.

Setting your thermostat at a nice moderate point, between 24-26 degrees, can help. Ceiling fans are a cheaper alternative but mightn’t cut the mustard on those really boiling days.

Switching energy plans is another quick win. Around 80 per cent of households in the National Electricity Network could be on a cheaper plan if they shopped around according to the ACCC.

My challenge to you is to run a quick comparison now and see if you can reduce some household bills.

Super fund returns staying strong

Following a smooth start to the financial year in July, super balances continued to rise in August with leading superannuation research house SuperRatings estimating that the median balanced option returned 1.3 per cent to members over the month.

It’s the fifth straight month of positive returns from superannuation funds as financial markets have steadied after a tumultuous start to Donald Trump’s presidency.

The median growth option grew by an estimated 1.5 per cent in August, while the median capital stable option rose an estimated 0.8 per cent.

Pension returns also continue to deliver for retirees, with the median balanced pension option increasing by an estimated 1.4 per cent. The median capital stable pension option is estimated to have returned 0.9 per cent over the month while the median growth pension option is estimated to have returned 1.7 per cent for the same period.

My blueprint for cheaper travel adventures

Planning a summer holiday? The trick to getting a great deal isn’t one magic website. Instead, you should be putting together your own portfolio of great tools.

Here’s how I reckon you should approach travel bargains so you don’t get stung on money or insurance.

Where the best deals are hiding

Start with community power. OzBargain’s travel deals and coupons are a regular feed of member-posted discounts on flights, hotels, travel packages and more. It’s definitely a bit old-school, but if you check in every so often you’ll spot genuine bargains. On socials, follow Luke @savvynotstingy on Instagram for timely tips and flash-sale alerts.

For more turn-key packages, it’s worth looking at TripADeal for great-value tours and bundled airfares, as well as Luxury Escapes for curated premium stays that include buffet breakfasts, late checkouts and plenty of extras. And when you’re ready to price-check everything, Skyscanner is a meta-search engine where you can compare airlines, set price alerts and “Search Flights Everywhere” to find the cheapest destinations for your available dates.

Build a booking game plan

Bargains love flexibility. So if you can travel midweek or depart outside of school holidays, you’re likely to end up paying less. Use travel aggregators to see the cheapest days, then sanity check against the package sites and with your preferred airlines. When a deal looks too good to be true, check the total price after bags, seat selection and transfer fees. If you’re travelling with kids, compare two one-way tickets versus a return – odd combos can price lower than standard returns.

And it always pays to be strategic with your accommodation. Packages can be terrific, but DIY can win for city breaks. Mix and match – think two nights in a luxe hotel and then an Airbnb or mid-range hotel to balance the budget.

Travel money that won’t bite you

I like a blend: a small portion of cash for tips and taxis, a fee-free debit or credit card for everyday spending and then a prepaid travel card if you want to lock in a good exchange rate. Cash is universal but risky – carry only what you need and split it across your bags and persons. Prepaid travel cards let you load foreign currency in advance, so you’ll know exactly what rate you’ve locked, but beware reload and ATM fees.

Your everyday card can be the simplest option – just make sure it doesn’t charge foreign transaction fees and that you’ve set it up to be used overseas. Credit cards can add purchase protection and sometimes travel insurance, but never use them for ATM withdrawals (cash-advance interest can seriously hurt). If a merchant asks whether to charge you in Australian dollars or the local currency at the terminal, always pick local currency to avoid the sneaky ‘dynamic currency conversion’ mark-up.

Picking the right travel insurance

Don’t just pick the cheapest add-on travel insurance during checkout. Compare policies and always read the PDS. You want enough cover for any potential medical expenses, cancellations and delays, lost or stolen gear, and rental-car excess. Check adventure exclusions if you’re skiing, hiking above certain altitudes or hiring scooters/motorbikes – plenty of claims are denied on these types of technicalities.

Comparison websites like Compare the Market are a good resource to trawl through all the options and find the right cover for you.

If your credit card already includes insurance, double-check how to activate it – you might need to pay a minimum portion of the trip on that card. Also check age limits, pre-existing condition rules and the excess per claim. Beware that some credit card travel insurance cover is the bare minimum and may not suit your circumstances.

Pay like a pro overseas

ATMs are fine if your bank refunds international fees or charges low ones. Use mobile wallets wherever they are accepted – they add tokenisation security, and lots of terminals now accept them. For hotels and car hire, use a credit card (not a debit card) because security holds on debit cards can tie up your cash for days.

Also avoid buying foreign currency at airports unless you have no other choice. Their rates and commissions can be eye-watering – and frankly ludicrous. If you do need cash in a pinch, take the minimum and top up later in town. Before you go, set transaction alerts in your banking app and switch on location services so fraud systems don’t block any legitimate payments.

Final checks before you book

Price the whole trip, not just the headline fare. Add baggage, seat fees, transfers, visas, resort fees and data roaming to your budget. Always check whether your passport is still valid (something that’s easy to forget since COVID) and any entry requirements. Take digital copies of all your documentation and share details of your trip with trusted loved ones back home.

Lastly, be deal-ready! That means having a realistic budget, dates you can move on, logins set up at the deal sites I’ve already mentioned and having price alerts up and running. Great deals don’t hang around – so when the stars align, I reckon you should book fast.

Enjoy the holiday countdown instead of second-guessing yourself, and spend the savings on something to remember once you get there.

Just a reminder of why we’re all lucky to live here

I do get annoyed at how much we whinge about in this country ... and sometimes it is over the most stupid, trivial issues.

Look, I know we can be better at a whole lot of things and we shouldn’t stop trying to improve what we’ve got, but sometimes a bit of perspective can be a good reality check.

Below is the latest survey which ranks Australia as one of the top five best places to live in the world. It’s a good reminder of how great we have it here - although I am a little surprised the US is ahead of us, given its pretty ordinary healthcare system and the level of crime and gun violence.

Have a great week, everyone.