Why does property keep working, decade after decade, in Australia?

In Chapter 4 of How to Retire on $3K a Week, Bryce and Ben unpack the history, psychology, culture and economics behind Australia’s love affair with bricks and mortar…

And why that matters for building long-term wealth.

This chapter builds the case for why property can reliably get you to your financial goal on time, especially in Australia.

 

P.S. Ready to design your own path to financial freedom?
Grab your copy of How to Retire on $3K a Week now! 👉 howtoretireon3k.com.au

Timestamps

  • 0:00 – Chapter 4: Why Property?
  • 0:32 – The history & culture behind Australia’s property obsession
  • 1:05 – Property’s “unfair advantage”: essential need + national identity
  • 1:38 – Why property is too big to fail in Australia
  • 2:15 – Volatility, leverage & why risk-averse investors favour property
  • 2:58 – The Paul Clitheroe insight that changed everything
  • 3:34 – Shares vs business vs property — what gets you to your goal on time?
  • 4:10 – How property + super + time = a powerful combo
  • 4:40 – Why this chapter sets up the magic of compounding

Transcript

Bryce
All right, folks, welcome back to the How to Retire on $3,000 Per Week podcast. I am here with Ben. are chatting about chapter four, which is Why Property? And Ben, what I really love about this book, I haven’t seen this chapter of this book, is I haven’t seen a lot in other ones that I’ve read, is we’ve gone into a lot of depth of the history, why. It’s one thing to say, oh, you should invest in property, it’s a great asset. But we’ve gone into a fair bit of detail on its history. Why it has a special place in the psyche and the culture of Australia, why the great Australian dream is alive and well and why it’s different to other countries. I think it’s one thing to say it’s a great investment vehicle, but to actually really just put the scaffolding around that for our listeners and for our readers, I think that was really important. I’m really proud of this part of the book.

Ben
Yeah, I agree. mean, at the end of the day, once you work out the unfair advantage of property that it’s underpinned as the great Australian dream and it’s too big to fail. Putting investment dollars into that space and expecting to get a return, well, you’ve been well-served in the returns that you’ve received over the last 50 years. And I don’t expect that to change anytime soon. So by being able to unpack that, talking about the volatility or lack thereof to allow you to then amplify that through leverage. mean, people do talk about that now, but I remember when we started out, but it’s that combination of the fact that shelter is an essential need and bleeding into the opportunity to then provide private rental accommodation for that moving group of people or by choice or whatever it may be is how this chapter resonates to me because it’s how I looked at property to sort of say, and someone who personally was a risk adverse investor, I loaded up on property once I understood these fundamentals.

Bryce
I think the key point of what you just said there was risk-averse, right? And I think that’s, you know, I can still remember when you, we quoted episode 200 in this chapter where we spoke to Paul Clithrow, still remember it, we were in our first office in Sydney when we’re having that conversation with him. And he was very much an icon when we were growing up. And the fact that we got to speak to him, but his comment was stark. He goes, I don’t care. Like if you’ve got property, get shares, if you’ve got shares. I can still remember like even the tone he said it right? But the amount of time, I used to staunchly defend property as a superior vehicle and I just don’t anymore. I actually think that there’s better vehicles. If you want to start and build a business and it’s successful, that’ll get you to well faster.

Over a long period of time, the share market’s proven pretty well performing, whereas the reason property is so good is because what we talked about there with that leverage. And to me, I no longer have an argument with anyone about which one’s better. I just say which one’s gonna get me to my goal on time. And if I wanna get to my goal on time, I can usually do that with leverage. And so, therefore, I can leverage better in properties. So therefore that’s the vehicle I go for. Well, in concert with 12 % compulsory super, two or three properties held for the long term and let time do its magical healing.

Ben
Well said. So it is the greatest taxation benefit this country has bar none. So folks, hopefully we’ve stated the case in this chapter as to why you should have eternal confidence, particularly in this country around property being that vehicle. So that was the goal of this chapter. Hopefully, that’s what has transpired because then once we combine it with the next chapter that we’re going to get into, Ben, which is around the magic compounding.

Bryce
Yeah. We bring it home. We bring it home in chapter 5, so there you go. And if you’re playing along at home, folks, obviously get your copy of How to Retire on $3,000 per week, and if you don’t have a copy, go to howtoretireon3k.com.au. We give you all the details there on how you do that. Ben, but should we go on to chapter five? Mic, drop the mic.