What's spiking property prices now? + Don't miss this shiny investment

Hi everyone,

A lot to get through this week when it comes to looking after your money.

I’ll analyse the latest economic growth figures released this week in a moment, but part of that package revealed that Australia’s government debt-to-GDP ratio is among the lowest in the developed world. It stands at 35 per cent, and its bonds carry a top AAA credit rating, providing some reassurance amid global fiscal worries.

In this week’s newsletter:

• The economy is picking up pace ... but is still lacklustre.

• Households continue to spend up.

• The silver lining everyone is overlooking.

• All signs are that the property boom is set to continue.

• Why we all have to think about, and prepare, to die.

• Why you need a financial adviser.

• Insurance company loyalty tax under attack.

The economy is picking up pace ... but is still lacklustre

Interesting economic growth figures out this week for a number of reasons. The good news is that in the June quarter the economy grew by 0.6 per cent, which was slightly above the market forecast of 0.5 per cent and double the 0.3 per cent growth in the March quarter.

On an annual basis, the economy grew by 1.8 per cent compared with to the 1.4 per cent at the end of the March quarter - the fastest annual growth rate for two years.

The other good news is that consumers and the private sector were driving the economic growth rather than government spending.

In my view, business and consumers should always be driving economic growth rather than relying on government spending - which is currently at record levels. That’s fundamentally bad for the health of the economy.

So that’s the good news. But to put that in perspective, Australia’s economic growth is almost half that of the US which has an annual growth rate of 3.3 per cent. So, we are still lagging behind America.

Also, when accounting for immigration, Australia’s per capita economic growth was an anaemic 0.2 per cent in the June quarter - an improvement on the 0.2 per cent contraction recorded in March.

It looks like falling interest rates and federal government tax cuts are starting to boost household spending as consumers took advantage of End of Financial Year (EOFY) sales.

Household consumption rose 0.9 per cent in the June quarter on the back of increased spending on travel, food, accommodation and recreation as people took time off work during the extended Easter-Anzac Day holiday period in April.

Discretionary spending lifted 1.4 per cent driven by tourism-related categories, such as recreation and culture (up 2 per cent), transport services (up 1.7 per cent), furnishings and household equipment (up 1.7 per cent), and hotels, cafes, and restaurants (up 0.7 per cent). Spending on new cars lifted 2.4 per cent.

The ABS reported, “Electricity, gas and other fuel (up 2.9 per cent) rose as electricity rebates reduced across jurisdictions, particularly in Queensland and Western Australia. Reductions in electricity rebates are treated as a shift in expenditure from government to households in the national accounts.”

Promotional activity from major grocers and supermarkets also boosted spending on food, up 0.9 per cent in the second quarter.

Falling interest rates and higher wages increased household disposable income by 0.6 per cent in the June quarter and was 7.1 per cent higher than a year ago. The household savings ratio eased back to 4.2 per cent as consumers chose to spend rather than save.

Private business investment remained weak, inching up 0.1 per cent in the second quarter, contributing little to GDP growth. Dwelling investment grew just 0.3 per cent amid weakness across dwellings and renovations activity.

Government spending, which was the engine of activity last year, also added little to growth as investment in roads, rail and health plateaued.

The ABS noted, “National and State government investment in roads, rail and health led the fall as projects across several jurisdictions approached completion. National defence investment also contributed to the fall, although remains at elevated levels.”

As for the trade impact, the ABS reported:

“Exports of goods (up 1.4 per cent) led the rise driven by non-rural goods as iron ore production volumes recovered from adverse weather impacts in the previous quarter. Rural goods also contributed to the rise with ongoing strength in grain exports resulting from the strong 2024-25 harvest. Exports of services (up 3.3 per cent) further contributed to the rise driven by travel services with increased short-term arrivals for other personal travel, while education related travel was relatively flat.”

“Export prices fell 1.7 per cent with falls across major mining commodities. Iron ore prices fell as global demand for steel declined and supply bounced back from both Brazil and Australia. Coal prices fell as China continued to transition to renewable energy generation and announced cuts to steel production. LNG prices fell with increased global supply led by the USA. The export price declines were slightly offset by continued increases in meat prices with high demand for Australian beef in the United States and China.”

On the back of these figures, financial markets are still expecting the RBA to keep interest rates on hold at the next board meeting later this month. The view is still that a rate cut will be made at the November meeting.

But if the economy keeps picking up steam, there is now debate about whether there will be many more rate cuts after November.

Households continue to spend

While household spending provided a real impetus for these latest economic growth figures for the three months to the end of June, it looks like it could continue into the next quarter as well.

Household spending for July came in at 0.5 per cent, up from 0.3 per cent in June and in line with what the market was expecting.

Strong demand for health services, travel, accommodation and dining out spending, again suggest that lower borrowing costs, rising wealth from higher property prices and growing household incomes, are finally flowing through to the broader economy.

Spending on services rebounded by a solid 1.6 per cent in July, while spending on goods fell by 0.3 per cent in the aftermath of the EOFY sales events.

The ABS observed the increase in non-discretionary spending was, “driven by increased spending on total health services, motor vehicle repair and maintenance, and medicines, medical aids and therapeutic appliances.” While discretionary spending was, “driven by increased spending on other services, accommodation services, and air passenger and sea transport.”

The silver lining that’s being overlooked

Much of the investment focus has been on the gold price which is on another run at around US $3,500 (and a whopping $5,400 Aussie dollars).

But have a look at the chart below and the returns on silver. Often seen as the less sexy, poorer cousin of gold, it has shot the lights out in terms of returns.

The problem is there are very few listed companies focused on mining or exploring for silver. Those that do include Adriatic Metals (ASX:ADT), Silver Mines (ASX:SVL), South32 (ASX:S32), Andean Silver (ASX:ASL), Sun Silver (ASX:SS1), Boab Metals (ASX:BML), and Manuka Resources (ASX:MKR).

Among the ETFs, you’ll find Global X Physical Silver and Global X Physical Precious Metals Basket.

Everything points to the property boom continuing

Last week I talked about the Federal Government’s crazy decision to widen its 5 per cent deposit scheme as a way of helping first home buyers into the property market. The reality is that the only way to solve the housing affordability crisis is to increase the supply of new homes coming onto the market.

I know that means making hard decisions and all levels of government working together to foster building programs. But that’s the only solution.

What the government has done with widening this scheme is just plain naïve and puts political expediency ahead of finding real solutions. They have simply increased demand and ignored the supply problem.

As a result, we are seeing auction clearance rates over 75 per cent for most capital cities and buyers competing for a limited amount of stock on the market. And the boom Spring Selling Season hasn’t even really started.

That scarcity, along with falling interest rates, is fuelling a new property boom.

Cotality’s National Home Value Index (HVI) rose 0.7 per cent in August, the strongest month-on-month gain since May last year. The result pushed the annual change higher for the second month in a row, to 4.1 per cent.

According to Cotality, the growth cycle has been gradually building momentum since the February rate cut, with buyer demand spurred by a lift in borrowing capacity, real wages growth, rising confidence and what is likely to be a growing sense of urgency as advertised stock levels remain tight.

Cotality’s research director, Tim Lawless, sums it up:

“Once again we are seeing a clear mismatch between available supply and demonstrated demand placing upwards pressure on housing values.”

The annual trend in estimated home sales is up 2 per cent on last year and tracking almost 4 per cent above the previous five-year average. At the same time, advertised supply levels remain about 20 per cent below average for this time of the year.

The mid-sized capitals are once again leading the growth trend, with Brisbane (+1.2 per cent) and Perth (+1.1 per cent) recording the highest monthly gains. Adelaide wasn’t far behind with a 0.9 per cent lift in values.

Look ... we have to think about, and prepare, to die

I am stunned with new research which has found only 42 per cent of Australians have a will ... which means that 58 per cent don’t.

The national study, commissioned by leading online will platform Safewill, found nearly half of Australians (46 per cent) would rather face a dental appointment, argue with customer service, or even tackle a tax return, than sit down and write their will.

So, it’s no surprise then that over half of Australians (53 per cent) have witnessed or personally experienced family conflict over inheritance. Delving deeper into the research, interestingly, over two-thirds of Gen Z (68 per cent) and Millennials (62 per cent) reported seeing this kind of family conflict firsthand, despite being the least likely to have a will themselves (63 per cent do not have one).

So, why are Australians avoiding something so important?

The study further exposed the top reasons people haven’t written a will:

• They don’t know where to start (31 per cent).

• They think they’re too young (30 per cent).

• They feel it’s too confronting (22 per cent).

• They assume it’s too expensive or complex (20 per cent).

To help people get started, Safewill have shared these top tips:

Don’t wait for a “perfect” time

Start the basics - name an executor, outline who should receive your key assets, and note your wishes for children or pets. You can always update it as life changes. Modern tools like Safewill can make this easy and cost-efficient without the complexity people fear.

Keep it clear

Most inheritance disputes aren’t about greed, they’re about confusion. Avoid conflict by having a legally valid and signed will, and also explain your decisions clearly to loved ones in advance if you feel comfortable. Clarity now, saves pain later.

Think beyond money

Your will covers more than assets and can include guardianship wishes for children or pets, or even your funeral preferences. It’s your voice when you’re no longer here, so use it to reflect what truly matters to you.

Revisit it regularly

Even if you already have a will, check that it reflects your current life and wishes. Major life events - like children, buying property, or divorce - are all moments to review it. Out-of-date wills can cause confusion, delays, and sometimes the exact disputes they were meant to prevent.

When do you need a financial advisor?

Money matters, especially at certain times in your life, can feel overwhelming. And as life gets more complex, so do our finances.

But help is at hand.

Whether you're buying your first home, planning for long-term financial security, or figuring out what to do with an inheritance, money can be tricky to manage. Getting some guidance could be the difference between a life of financial stress and one where you feel secure and set up.

This is when engaging a financial advisor could really help. Here’s what to consider if you’re thinking about going down this route - and how to find the right one for you.

What do financial advisors do?

Before we get to the when and who, let’s look at how a financial advisor can assist you.

In short, these are trained money professionals who help you create a financial strategy that supports the life you want to live - now and in the future.

They’ll guide you in growing your wealth and making confident money decisions, and can help with:

• Investment advice and getting started.

• Investment portfolio management.

• Consolidating debt and superannuation.

• Retirement planning and strategy.

• Tax efficiency (often in partnership with your accountant).

• Insurance and estate planning.

• Inheritance management and investing.

Some advisors specialise in specific areas like shares or property, while financial planners take a more holistic view, helping with everything from wills and insurance to long-term retirement planning.

When do I need a financial advisor?

This is the golden question - and really, the answer is: it’s up to you.

If you feel confident managing your own finances and have clear goals, you might not need one right now. But for many of us - and I’d say most - money and how to invest it wisely can feel complex.

So, just like you’d hire an electrician to wire up your home, it’s completely reasonable (and smart) to engage someone who works with money every day.

While you can reach out to a financial advisor anytime, there are a few specific life stages when their guidance can be especially valuable. For instance:

• Buying your first property - advice on boosting your borrowing power and how much of a loan you can realistically manage. Also assistance in finding the right broker or lender for you.

• Having kids - working out strategies to save for their education or future.

• Planning for retirement - working out how much you’ll need and how to get there (super contributions, investing, etc.)

• Receiving an inheritance - managing or investing assets like shares or property.

• Facing illness, divorce or life changes - estate planning and financially navigating a change in circumstances.

And then there are those more subtle moments when you just feel uneasy about money. Maybe you're lying awake wondering:

• I’d like to invest, but don’t know where to start.

• I feel overwhelmed and need a clear plan.

• What level of investment risk is right for me?

• Should I hold, sell, or reinvest my current investments?

• I don’t have time (or interest) to manage my finances - but I want to grow my wealth.

A good financial planner can help with all of this and create a strategy that suits your goals, risk comfort, and stage of life.

Most importantly, they offer peace of mind. Just knowing someone’s on top of your money can help you sleep better at night.

How to find a good financial advisor or planner

Choosing the right money professional for you is important.

Here’s what to consider:

1. The type of advice you need

Some financial advisors are like medical specialists - focusing on an area of expertise, such as investing in global shares, private credit or crypto. Others, such as financial planners, are more like GPs, helping with your overall financial health. Some planners also double as mortgage or insurance brokers. Who you choose depends on your needs.

2. How they charge

Advisors usually charge in one of three ways:

• Fee-only - a flat fee or hourly rate, no commissions.

• Commission-based - they earn by selling financial products.

• Fee-based - a mix of both.

Many people prefer fee-only advisors and planners for their transparency. If there’s no commission, there's less chance of bias. And remember, any advice fees are tax deductible.

3. They have the right credentials

In Australia, financial advisors must:

• Hold a relevant bachelor’s degree (or higher).

• Pass the Financial Adviser Exam.

• Be licensed - hold an Australian Financial Services Licence (AFSL) or be authorised under one.

Always check credentials and licensing before committing. Dodgy financial advice is well, dodgy.

4. You feel comfortable

It’s also important to feel comfortable and confident with your financial advisor. It helps if you ‘click’ as people - after all, you’ll be discussing your financial situation and life goals in detail. You want the relationship to feel open, supportive, and easy.

Most planners and advisors are happy to have a ‘meet and greet’ so you can decide if you’re a good fit.

Remember 

You don’t need to be rich before you work with a financial advisor.

In fact, the right advice early on can help you avoid costly mistakes and secure your financial future.

Whatever stage of life you’re at, a financial advisor can offer clarity, strategy, and confidence in your decisions.

Money matters don’t have to be all on you. Help is out there.

Insurance loyalty tax put to the test

As you know through my association with Compare the Market, I constantly warn against being sucked in by insurance companies and their ‘loyalty discounts’. Instead I advise never automatically renewing an insurance policy and always checking for a better deal.

So I was interested this week when leading law firm, Slater and Gordon, announced they’re investigating a potential class action against AAI Limited/Suncorp Group Limited.

This is on behalf of millions of home and auto insurance policy holders who may have been misled about the way their insurance premiums were calculated - potentially leading to customers paying a ‘loyalty tax’.

This group operates insurance brands including, AAMI, Apia, GIO and Suncorp Insurance.

According to Slater and Gordon, publicly available information suggests that AAI/Suncorp Group may have been engaging in undisclosed ‘price optimisation’, which means adjusting customers’ premiums based on a customer’s likelihood of changing insurers, rather than just on the risk of providing insurance to them.

If this is proven, then loyal, long-term customers are likely to have been charged more than newer customers - and a ‘loyalty tax’ has effectively been built into their premiums, but without their knowledge.

Insurance premium increases have been a major driver of inflation over the last few years. In February, consumer advocacy group Choice found that some home insurance premiums had risen by around 30 per cent on the previous year, with over a third of insurers surveyed raising premiums above the 16 per cent average.

While premiums are going up, Suncorp Group recently reported a net profit of $1.8 billion for the 2024/2025 financial year - that’s a 52 per cent increase on the year before.