Latest RBA Rate Hike, Middle East Conflict & What It Means for Australian Property

George Markoski Hello, George Markoski, the Positive Property Show. I’m here with my co-host, Christina Markoski. Hi, Christina. Christina Markoski Hello. Hi, George. Thanks for having me back. George Markoski Well, the RBA has rate hiked us. Yes, they have. They have rate hiked us, they’ve hiked the rates again and now we’ve gone up to 4.1%. So that’s the headlines, that’s what we’re going to talk about. But what I want to talk about before we talk about that is the reason they’re doing it, and what we expect. The funny thing is, the more we talk about property investing, the more we talk about the global economy and politics, because I never really wanted to talk too much about global economy and politics, but unfortunately they’re intertwined. They really are very intertwined. And that’s what we’re going to talk about. Really what’s happening is this has all got to do with the war in the Middle East. Christina Markoski And that’s why we’ve now got higher interest rates. So, thank you very much. George Markoski Yes, let’s talk about what’s happening at the moment in the world and then let’s talk about petrol, let’s talk about fertiliser and then we’ll go back to rates and then we’re going to land this plane and talk about what’s going to happen in the property market and try to predict what’s going to happen. Because at the end of the day, there’s a lot going on. A lot of people are scared of what’s going to happen. Australia produces petroleum and is one of the biggest exporters of gas, but we don’t have a lot of domestic. We export it all out. We’ve got two refineries. And funny enough, we used to have five oil tankers but they’re gone now. And guess how many we got left? Christina Markoski Zero. George Markoski Zero oil tankers. Christina Markoski How can you go from five to zero? That’s crazy. George Markoski Well, the thing is, as a big nation like ourselves, we need oil tankers because an oil tanker is a bit like, you know, imagine you got a family car, and there was an apocalypse. At least you got a car where you can go from A to B if you need to do things. Right now at the moment, even if we start refining a lot more of our own petroleum, we can’t actually physically move it around Australia. We need to get someone from another country to come over and do it for us and pay them to do it. Christina Markoski So we’re not self-sufficient, in other words. George Markoski Not self-sufficient at all. And if you look at our fuel reserves, we’ve normally got around about 90 days of fuel reserves in Australia, which is the lowest out of all the Western countries. Christina Markoski Not a lot. George Markoski Most countries have got a lot more than that. And fuel reserves are very important because a lot of people don’t realise, but fuel equals food, equals transport, equals everything. Christina Markoski It makes the world go round. George Markoski Well, our supermarkets in Australia are just-in-time supermarkets. So what that means is they get deliveries every single day. It’s all fresh. We don’t have a lot of supply left in there. We don’t have a lot of petrol supply. And the thing is, we produce a lot of food. We produce enough food in Australia to feed 75 million people. However, the hard part is how do we get it to everyone without diesel? Because diesel’s the first thing that runs out. Christina Markoski Not diesel. They deliver it all to the supermarkets in big trucks. George Markoski Yeah, and they’re all diesel trucks. And the crude oil that we’ve got in Australia that we actually drill is actually very light and only a very small percentage is diesel. For diesel you need heavy crude oil, which comes from the Middle East. So what’s happened is, as probably everyone knows, Israel and America started this war with Iran recently and they’ve been going backwards and forwards. And then recently what happened was Iran closed the Strait of Hormuz. Now, the Strait of Hormuz is 20% of all oil in the world. Christina Markoski So it’s a big percentage. George Markoski Yeah, but you’re thinking, well, 20%, surely we can do about 20%. The challenge is with supply chains the way they are, what happens is 20% makes a big difference because then you’ve got to resupply and all these things take a long time. Christina Markoski It sounds like Australia is quite fragile with those daily deliveries too. So if anything disrupts that, it could have a big impact. George Markoski Daily deliveries are not the problem. The problem is our actual fuel supply and our reliance on other countries to refine because our refineries aren’t doing a lot. Also, funny enough, because we’ve got such high standards in Australia, a lot of the things we refine we can’t use here. We have to export it because it’s not good enough for Australia. Christina Markoski Interesting. George Markoski But they’ve changed that now. Christina Markoski We’ve lowered our standards so we can use our own supplies. George Markoski We have. A good idea. Absolutely. Now, the other thing is, what’s happening is the other thing people don’t realise is 79% of all fertiliser comes from the Middle East as well. Christina Markoski Right. Okay. George Markoski So the challenge is if this war stops tomorrow, we’ve still got a big backlog. Petrol’s already gone up from $70 to $104 per barrel. It’s going to go up more. That’s going to create a lot of inflation around the world. Christina Markoski Do you know what sort of time frame that hike went up over? A couple of weeks, right? George Markoski Yeah. Very small time frame. The Strait of Hormuz got blocked. Two tankers tried to get through. Trump said, you can go through, don’t worry. Two tankers got bombed as they tried to go through and now it’s all just stopped. That’s the other thing. So let’s look at the supply chain and have a look how much we’ve got. Because the government told us we’ve got a lot of supply and I don’t believe it. Christina Markoski I’d like to look at the facts on that. George Markoski The state of the nation. 10 to 18 days before Australia runs dry. Christina Markoski I thought it was 90 days. George Markoski We’re supposed to have a 90-day supply, but this is the challenge because a lot of that supply is tankers that are not landed in Australia yet. Christina Markoski Now someone could really call it our supply, can we? George Markoski Well, it is because we contracted them and they’re coming to us. But someone might bribe them and say, hey, we’ll give you more money and do that. Christina Markoski That’s interesting to know. George Markoski The Prime Minister told us Australia had 36 days of petrol and 34 days of diesel, the highest level in 15 years. Those figures include fuel sitting in vessels that can be diverted to whoever pays more. That fuel is not in Australian tanks yet. So adjusted for that for 15 days of depletion and at 20% to 30% demand surge for panic buying, the real numbers show we have about two weeks of fuel supply left unless we ration and do things like that. So this is the pipeline. Even if they were going to restart the refineries in the Middle East, it takes one or two weeks to restart the refinery because you can’t just turn a switch on and switch one. There’s a lot of stuff you’ve got to do. This is very high pressure oil underground. Then you’ve got three or four weeks of loading, then five to seven weeks of refining and then the first supply shows up in eight to 10 weeks, worst-case scenario. So we’re looking at a four to six month lag getting here. Christina Markoski It’s a process. George Markoski It’s a process. But see, we get a lot of fuel from Thailand and China, but China have said they’re not exporting fuel anymore. Thailand has stopped. I don’t know what Singapore’s doing, but they’ve got force majeure. So the challenge is the countries that are refining it and sending to Australia, they’re probably going to take the lion’s share for themselves first before they send it to us. So the RBA hiked again and they expect two more hikes in 2026. So we’ve had back-to-back hikes, February plus March, the cash rate’s now 4.1%. What was the trigger? The Middle East conflict drove fuel prices sharply higher, pushing short-term inflation expectations up. So the futures markets are actually pricing in a 4.6% interest rate by December 2026. So the rate hike cycle may not be over. That’s what they’re predicting. But I’m going to give you my predictions as well because I think they could be wrong. So this adds $473 a month to the average mortgage. So the people who are going to be challenged especially are the first home buyers who entered on a 5% deposit. Christina Markoski So it’s an extra $5,600 per year. George Markoski Yeah, and the RBA is really setting up Australia for the second GFC. That’s what they’re doing. Because you look at 2007, 2008, look at this graph. 2007, 2008, they went crazy. They were hiking like crazy. And it was like 7.5%. I remember very clearly back in 2007 when I was buying properties and I was like, man, this interest rate sucks. Because it just made it really hard to service. But I kept going anyway. And then what happened was we had the GFC and then they just started chopping like crazy. Look at this graph, how much they chopped all the way down really quick down to 4.25%. Christina Markoski That seems like a very short time frame in which they did it over like a year or two. George Markoski Yeah, they did it really quick. And then as we know, after that rates went up again, then they went slowly down, kept going down. And then we slashed rates like crazy with the COVID pandemic. And now look at the graph, what they’ve been doing with the rates. Look at 2021. Straight up. Now the thing is, if you look at the graph between 2009, 2011 and 2019, the gradual movement, that’s what a smart fiscal policy does. You move a little bit by bit and see. You drop a little bit of the rate or put it up a little bit and see what the market does and take your time. Let it come into play and test. Christina Markoski It does seem very erratic to go up, down. It’s like a roller coaster. George Markoski Yeah. And really that’s just being overreactionary. But also what the challenge of the RBA is, the RBA, they are looking short term, not long term. So what’s happened? Fuel prices have gone up, therefore that’s inflationary. However, putting rates up ain’t going to stop this inflation. Because to stop the inflation what you need is more fuel, not higher rates. Does that make sense? So when it comes to interest rates, they are a very blunt instrument. And if people are spending too much, and that’s why inflation’s happening, then you can put interest rates up a little bit and it will slow everyone down and that actually stops inflation. But when there’s a supply, and we always talk about supply and demand, don’t we? When there’s a supply and demand problem, what they’re doing with RBA is they’re trying to reduce the demand without touching the supply. Because the problem at the moment is we don’t have enough supply of fuel. So they’re trying to reduce the demand to stop inflation. But fuel is essential. We still need food, we still need to travel. We’ll still need all that sort of stuff. So you’re not going to stop the demand. All you’re doing is putting pressure on everyone for nothing. It’s ridiculous. But if you look at what happened during the GFC, what did they do? They slashed like crazy. So even though everyone’s thinking that rates are going to go up to 5.6 by the end of the year, by December, I’ve got a feeling if this war continues, then there’ll be a global recession. If there’s a global recession, they’re going to start cutting rates really fast to push everything, make everything work again. Does that make sense? Christina Markoski Yeah, because they normally cut rates whenever there’s a major crisis to try and stimulate the economy. George Markoski But first home buyers are rushing in, rates be damned. They don’t care. They’re going in because they got FOMO and they don’t want to miss out. So in quarter, last quarter, 2025, 31,500 first home buyers bought properties. That’s the highest in three years. So what they’re doing is there’s a big support structure for the bottom end of the market with all the first home buyers and everyone else. Bit like what happened during the GFC. So during the GFC, what happened was the properties that were good value didn’t go down much at all. Some actually went up, but all the high-end properties, they went down quite a bit. Christina Markoski Because cheaper properties. George Markoski Yeah, there was a property, really expensive properties. There were properties worth $12 million selling for $6 million. Christina Markoski Wow. George Markoski That’s what the GFC was like. It was crazy. And what’s going to happen if we have a global financial crisis again? That top end of the market is going to get smashed. Christina Markoski I know it affected a lot of high-rise penthouses. George Markoski Yes, the penthouses. That’s right. Those high-rise penthouses, all that sort of stuff. That’s what’s going to affect. That’s why what you need to do is you need to buy really carefully. Christina Markoski All the stuff that’s way overpriced, it’s going to be affected eventually. George Markoski So mortgage volume is up 6.8% with first home buyers. That’s a lot. So every hike costs you more. So basically on a $740,000 loan, the 4.10%, that’s the monthly payment is $4,413. If it goes up to 4.6%, it’s going to be $4,652. So that’s another $200 and something dollars per month, which is probably around $22 a week. Can people cope with $22 a week? Yes, they can. Christina Markoski It’s not that dramatic. George Markoski They can cope. But the challenge is what’s happening is it’s going to lower people’s borrowing capacity. So what it’s going to do, it’s going to slow the market down. And you know what we say, we like a slow market. I like a market that’s slow because a slow market’s a comfortable market where you can make good decisions and buy good property. So the markets that are really fast, they’re the tough ones, they’re the hard ones. So what’s your next move? Well, this is the deal. Let me explain. Rate trajectory. So what you need to do really is plan for the future and look at your 4.6% serviceability when you’re committing to a loan. So basically the first home buyers are flooding the entry-level market. That competition is keeping price supported in that level. So what you want to do is you don’t want to buy blue chip at the moment. Also, I’m keeping an eye on what’s happening in different suburbs to see what’s happening with overleveraged buyers. But if this becomes a recession, the RBA will cut hard and fast, borrowing power will surge, and the people that are set are going to do well out of that. So while others react, our members prepare. Rates change, markets shift, the headlines get louder. But we don’t panic because we’ve got the right properties, the right structure, and the team that keeps them ahead of what’s coming. So let’s talk about some real investors here. This is Paul. Paul bought in Capalaba in 2019 for $419,900. Deposit $42,000. Currently valued at $929,000. Current profit $509,000. 1,212% return on his investment. He’s a yellow belt. He’s got two properties. Now, what I want to talk about here is a lot of people now are scared because there could be a recession coming and they’re worried about property prices. And what I say is you got to get in early because you’ve got to lock in your equity growth and that’s going to protect you. Christina Markoski So Paul here, one property, he’s made half a million dollars. George Markoski So let’s say there’s a correction and his property drops 10%, which is huge. Like, that’s worse than GFC. Then his current value would be $829,000. His current profit will be $400 and something thousand. Let me work out the calculation. Christina Markoski $420,000. George Markoski So is he still ahead? Christina Markoski Yeah. George Markoski Is he protected? Christina Markoski He’s ahead $400,000. George Markoski Yes, he’s protected. And that’s the thing. What happens is time in the market protects you. So there’s two types of people in the property market. There’s the people trying to time the market. They’re like, okay, let’s time it. And it’s a classic because I saw this during the GFC and I saw this during the COVID pandemic. So the GFC hit. A lot of people were trying to time the market and waiting to get a bargain and trying to time the market. What did our group do? We were buying before the GFC, we were buying after the GFC because we just kept buying constantly and letting our properties grow. Now these people that were waiting for the right time got caught unawares and missed out. Then COVID hit and a lot of buyers stopped buying in COVID. We kept buying because the principle is you got to constantly invest in long-term money. That’s the way you make money. It’s all about long term. Christina Markoski If you break this down and look at it from annual perspective, George. So he purchased in 2019, it’s now 2026. He’s making an average of $72,000 per year extra profit. George Markoski That’s right. $72,000 a year. That’s right. So $72,000 a year. That is someone’s wage. Christina Markoski Yeah. George Markoski So he’s literally got two properties. Basically what he’s doing, he’s literally got his property going out, working a job for him and making money, which is great. Christina Markoski That’s powerful. George Markoski Yes. But on top of that, he’s got $509,000 profit now. He put $41,000 in there. So he’s got $550,000 equity. You know how much that is? That’s around about $500 a week. So he’s also making $25,000 a year on top of that $70,000. So he’s making around about $95,000 a year. Christina Markoski Wow. George Markoski And that keeps going up every year. Christina Markoski Yeah. How did you work out, how did you get from the $72,000 to the $95,000? George Markoski So what I did is got $42,000 deposit. $42,000 plus $509,100. That’s $551,100 equity times around 5%. That’s $27,555. Christina Markoski I see you’re timesing it by the 5%. George Markoski Yep, 5%. And I cut a couple of grand off just for expenses and everything else like that. So let’s make it $25,000. $25,000. And you said how much money? $72,000. Christina Markoski Yep. George Markoski $72,000 plus $72,000. That equals $97,000 a year. Now let’s say there’s a massive crash, and the property drops 10%. Let’s say 10%, that’s going to be $93,000. So he’s just lost one year, but he’s still got all those other five years of money that he’s getting. Does that make sense? Christina Markoski Yeah, but also what’s really impressive about this is the ROI. So you look at his deposit, he’s paid $41,900 to get this property. But the ROI, it’s over 1,000%. George Markoski Yeah, well, but listen to this though, listen to this. Let’s say you got $42,000 and bought a Jim’s Mowing. How much would you make out of that? Less than $72,000 a year. Less than $97,000 a year. You wouldn’t make $97,000. Christina Markoski Depends on how much you work. George Markoski Yeah, but I’m saying you have to work full time for it. You got to maintain your little lawnmower, you’ve got to pay franchise fees and you’ve got to work. But this, instead of buying a Jim’s Mowing, you’re buying a house. That makes you money instead. That’s why property is so powerful. You know, so many people think business is so good. Business sucks. 70% of businesses go broke in the first two years and 90% go broke in the first five years. But with property, you keep property 10 years, you’re going to make money. Christina Markoski Yeah, that’s powerful. George Markoski Angela, she bought Lawnton in 2024, cost $536,000. She paid $54,000 deposit. Now it’s valued at $790,000. Current profit, $253,500. Christina Markoski So she’s made that in two years, that money. George Markoski How much is that? How much is that per year? Christina Markoski Well, you take that $253,500 divided by two. I’m going to get super accurate here. $126,750 per year. George Markoski But not only that, $253,000. If we get $253,000 times that by 5%, she’s also getting $12,000 rent on top of that. Now the reason I’m saying $12,000 rent, there’s more rent than that. She’s probably getting about $800 a week. But the other rent is actually going towards the mortgage and the equity is going towards her. But she’s got an orange belt. So she’s got three properties. There you go. And she’s probably done the same. I’d like to get the whole picture. She’s probably making $200,000 or $300,000 per property per year. Christina Markoski Her property? Yeah. George Markoski And she’s got a high-powered job. Christina Markoski Oh, she would have easily made over a million dollars. Easily, yeah. George Markoski Which is pretty awesome. Okay, now we’re going to go into our Q and A. Christina Markoski Okay, let’s take a look. Okay, here we go. In the media in Australia, there’s a lot of talk about there being one month’s fuel reserves. There’s also a lot of talk about solar batteries coming down. Regional areas in Australia are starting to run low on diesel. Farmers are starting to blame government for not forward planning. George Markoski Our government doesn’t forward plan at all. I mean, considering that we’re resource rich and we actually export so much gas and oil overseas, it’s crazy. Christina Markoski I find that just unbelievable that we’re such a resource-rich country, yet we don’t plan for our own country and our own people. Like that’s just insanity. George Markoski Christina. It’s funny, but I’ll tell you a story. I’m not going to mention their name. We’ve got these friends that live in West Lakes and we go to their house and what happens is we’ll bring a bottle of wine for dinner and they’ll have a bottle of wine and after one bottle they’ve run out and they have to go to the shops to get another bottle. And what they do is go to the shops. Now we’ve got a cellar because I’m old school, I like to have supplies of everything. And you know, we could be drinking for a month straight with 50 people and we still would have alcohol left. Like it’s crazy. Christina Markoski Depends on who those people would be though. George Markoski Yeah, but you know what I’m saying. I think as a country we need to be more savers and save more of our resources and have a bit more of that. Norway, they’ve got like six months supply of oil. They produce oil. Christina Markoski I would expect that out of them though. George Markoski They’re a very good country. Christina Markoski We should all base our standards on what the best countries do. So you have to question whether this is the plan as Venezuelan oil is only worth refining when oil is $135. 4D chess. George Markoski Rebecca. Interesting. And look, well, Trump controls Venezuelan oil and now he decides to attack Iran. And then they were playing, they weren’t attacking each other’s oil and energy sectors. But recently Israel attacked one of the biggest gas fields in Iran and America said, we didn’t want them to do that and told them off. But who knows, maybe they asked them to do it. But that’s interesting. Christina Markoski And when property values also go down in a crisis, it’s possible. George Markoski Yes. Christina Markoski And we did touch on that, particularly the blue chip. George Markoski Yeah, look, property prices, it’s possible for property price to go down during a crisis. The thing is, it’s very hard to predict. Really hard to predict. When it comes to property, you can predict the long term, you can’t predict the short term. And that’s why you need to play long term. Because I know in 10 years property prices are going to double, but I don’t know what’s going to happen tomorrow or in six months time. And if I did say that approach. Christina Markoski Property is playing the long game, guys. You can’t just be one or two years ahead. It’s a total long game and you’re in it for over 10 years plus. George Markoski And if you play the long game, you’re going to win in property. You play the short game, you’re not going to win. And people have been very spoiled over the last six or seven years. You see people, they buy a property, it goes up $100,000, goes up $300,000, $200,000. It happens over and over, week in, week out. We’ve literally done thousands of properties over the last four years, five years, where every single one of them went up really quick. And we’ve been spoiled. Don’t expect that all the time. But the one thing you can expect is property prices are going to double every seven or 10 years. Christina Markoski It’ll still go up. It just might be a little bit slower. George Markoski Yeah, exactly. But as long as you’re planning for the long term and if things go better for you, that’s a pleasant surprise. But I bought many properties where they did nothing for a while. You look at Tennyson, right? But when I bought that. So what happened was when we bought that, it was interesting because I saw this house and I really wanted to buy it and it was an owner-occupier. So it’s a bit different when owner-occupied to an investment, because it wasn’t the top 100 or anything like that, but I wanted to buy it. And Christina, I went to look at it and I loved it. As soon as we saw it, we saw that view of the beach. I was like, wow. And I whispered to Christina, I go, Christina, pretend we don’t like it. We don’t want the real estate agent thinking that we like it. And we’re going through. And I’m like, yeah, it’s all right. And it was lucky because the owner was overseas and it was overgrown with weeds. You couldn’t even see out the front yard. Christina Markoski And even though it was, the street appeal was ruined. Completely. George Markoski Street appeal was ruined. And that was lucky for us. It was good because that makes it easier. And it was empty, too. No furniture. So because having furniture makes a house look better. Christina Markoski They didn’t dress it for sale. Yeah, they did all the worst practices you could possibly do to sell it. George Markoski The backyard was terrible. Weeds everywhere. It was a little bit run down. But anyway, we negotiated and took a while and got a really good deal. And it didn’t do anything for a long time. But now it’s tripled. And that’s the thing. So, you know, I remember when I bought before the GFC, I bought this property, and it took a while because what happened was I bought it, the GFC hit, but it went up. It did well. So the thing is, you got to play the long game. That’s the one thing you have to realise. The long game is the only game in town. Christina Markoski We’ve got a good question from Malcolm that’s come through here. So should we restructure our mortgage? And is it true that they offer us 4% interest and the banks really make it 6% to 7%? So interest rates shouldn’t really affect us. George Markoski Look, should you restructure a mortgage? The fact of it is, if you’ve got a mortgage at a lower rate, you don’t restructure at a higher rate. Christina Markoski Unless it’s got to be a better deal. George Markoski Yeah. Christina Markoski Unless the better deal justifies restructuring it. George Markoski So what I would say, when rates go up, I don’t want to restructure. I only restructure when I’m buying a property. I don’t actually restructure to save money very often because it’s a lot of effort. The old days, it was easy, but now you’ve got to put a lot of effort to get a loan. And what I like to do is restructure and get a property at the same time, when you’re putting all that effort in. Christina Markoski And at the moment, anyway. George Markoski But at the moment, if you restructure, it could cost you more. Could be the same. Depends. Because rates dropped and they went up again. So depending on your loan, I suggest you talk to your mortgage manager and work it out. Christina Markoski Absolutely. Look at the numbers. Let the numbers do the talking. George Markoski But, Christina, what you said was true. The deal is you look at the numbers. If the numbers are advantageous to you, do it. If they’re not, you don’t. And that’s what we always do with everything. Christina Markoski Let that do the decision making for you. 100%. George Markoski Absolutely. Christina Markoski Okay. If you want to start a small business, just buy a big business and wait 12 months. George Markoski It’s true, it’s true. Look, some people are gifted at business and do a really good job. That’s the fact of it. And, you know, I think being an entrepreneur, I’ve been an entrepreneur for a long time and I enjoyed the challenges of being an entrepreneur. But it is stressful. You know, it can be stressful. I enjoy it. Keeps me busy. Christina Markoski Challenges. George Markoski It’s my hobby. Well, it’s my hobby because at the end of the day, property investing is boring. And if you do it well like I do, you don’t have to do anything. Literally, I could retire right now and I’d make more money than I could spend on my property investments. And I could probably make more money by focusing on myself investing instead of everyone else, but it’d be boring and wouldn’t be fulfilling. Christina Markoski Yeah. George Markoski So I enjoy these challenges. It’s good. Christina Markoski From Claudio. Trump controls the distribution of oil to choke China to US dollars. George Markoski Maybe. Maybe. What’s happening at the moment, funny enough, is Iran and Russia are actually sending a lot of oil out and Trump hasn’t stopped them because he needs the oil supply to keep going because people are going to get pissed off. Christina Markoski Do you see Cairns being the next hotspot for properties? George Markoski Look, I’ll have to look at the chart. What I do is every quarter go through the chart, we get the top 100. Our team looks at the 100 suburbs because what needs to happen is, one, there’s 15,000 suburbs in Australia. So we’re going to narrow down the top 100 that have got the most potential. Two, we’ve got to find properties that are available in those suburbs in order to do deals because there’s no point finding one or two properties in the top 100. We need to find 30, 40, 50, 100 to be able to do it. So there’s a lot that goes into it. Christina Markoski Yeah, absolutely. The Victorian government has eased the red tape for townhomes and low-rise development. Opportunities abound. George Markoski Well, they need to because there’s a massive shortage of supply. And what’s going to happen is the thing is, I mean, you look at the Gulf States, you look at Dubai and everything else like that, everyone’s leaving Dubai. They’re probably going to come here to Bali. Christina Markoski Yeah. Do they actually rate us on a higher rate? George Markoski By the time we’re talking about Bali, we’re actually in the middle of Nyepi at the moment, which is Silent Day. And literally there’s religious police going around. You’re not allowed to leave the house, you can’t have any lights on, no music, nothing for 24 hours. Christina Markoski It’s supposed to be a day of meditation. George Markoski Yes. And I did meditate mostly today, but I had to keep my commitment and come live for one hour, then I’m back to meditating. Christina Markoski Lenders look at serviceability and add on a buffer of 2% to 3%. Or should it be more, George? George Markoski Yes, they do. So there is a buffer already. So at the moment, what I said about 4.6%, the serviceability is actually a lot higher than that anyway. So they do put a buffer in. Absolutely. Which is good and bad. Christina Markoski Look, I find it a double-edged sword because being conservative, but sometimes they can be too conservative. George Markoski I’ll tell you what, I like the buffer for the average person, but I think if you’re a professional investor, if you know what you’re doing. Christina Markoski Sophisticated investor. Yeah. George Markoski I don’t need a buffer. I want less buffer. See, in America you can buy without the buffer at all. Like, remember Robert Kiyosaki when he bought that $30 million building, 2% interest for 30 years, like there was no buffer there at all. The deals you can do in America are huge. They’re insane because the banks are a lot more flexible and there’s less red tape. But then you look at the GFC, how did the GFC happen? The banks in America were lending to everyone. Subprime markets. That’s how they got in trouble. Now when you look at that, you look at Australia, our lending is very. Christina Markoski Very, very careful, very conservative, very safe. George Markoski Yeah. So our property market, a lot of red tape, it’s got a lot of strength under it. There’s a lot of strength. So you look at the American property market, it’s a bit of a house of cards because of the lending practices and a lot of stuff that’s going on there. But you look at Australia and when it comes to fiscal policy, when it comes to lending, when it comes to the housing market, it’s very robust, very stable, very strong. And yes, some blue chip went down a lot during the GFC, but you look at the stuff that was in the top 100 that didn’t get affected. So probably I’d say about 95% of the people in our program, their properties didn’t even go down in value. Some properties went down a little bit on paper, but not in real life. Christina Markoski And then they bounced back. George Markoski There was a correction. They bounced back. Christina Markoski Exactly. George Markoski My properties, a few of them didn’t move, then they went up again. I just had to be patient, wait a few extra years. So that’s what’s happening at the moment. Pretty crazy time, I feel like in the world at the moment, so much is going on compared to what used to happen. We had the pandemic, then Black Lives Matter, there were the big elections. Christina Markoski I feel like there’s always some crisis going on in the world. Like I’ve almost become numb to it in a way because I’m like, yeah, what else can they throw at us? Like there’s always going to be some crazy thing happening in the world. George Markoski Then we’ve got AI happening and people losing jobs to AI and the world is just moving so fast. But the thing is, the fact of it is, no matter what happens in the world, what we’re going to do is really stick to the right principles. And for example, when it comes to investing, if you stick to the long-term principles of investing wisely for the long term, you’re going to be fine. The people that get undone is the people that want to get rich quick, that have got some clever crazy scheme, all those clever crazy schemes of trying to make more money from your property because you’ve done this or that or something weird. Get-rich-quick scheme, Bitcoin, shares. At the moment, the share market dropped quite significantly in Australia. Christina Markoski I’m not surprised with all those things. George Markoski They haven’t got the right foundation. And when you stick to the real core principles, investing, I’ve distilled these over many years and if you stick to the principles, you’re always going to do well. The people that have done really well at property, they all stuck to the right principles and they’ve accumulated property. They don’t trade property, they buy for the long term. They buy and hold and they keep growing their portfolio and make money. And if you stick to that, you’re going to do well, that’s what you’re going to do. Really. Stick to the principles. Christina Markoski Yeah, 100%. Sticking to the fundamentals, sticking to the basics, not getting sidetracked and just following best practices. Really, it’s what it comes down to. Do you think there’s going to be a recession in Australia? George Markoski Yeah. Christina Markoski In like the Keating era? George Markoski Could there be a recession in Australia? The lack of oil is very inflationary. What happens is, look at COVID, right? With COVID where the supply chains got disrupted and what happened from that created inflation. Now, everyone expected a recession, a depression, because you think about this, during COVID a lot of people didn’t work, so we had less productivity, we lost a lot of money, but things went up anyway. Ultimately, this oil thing, even though it’s inflationary in nature, could create a world recession. Christina Markoski Right. George Markoski Because it just can disrupt things. But looking at what countries do, that’s what we’re going to look at. Because you think about this, right? What do countries do these days? Back in the Keating era, what did they do? They printed a little bit of money and tried to help out. But what happened during COVID? What did governments do? What did the world banks do? I tell you what they did. They did this thing called quantitative easing. But I’ll give you what it really means. Quantitative easing is a long word for saying print lots of money. And they turned on the printing presses and they started printing like crazy. And they started borrowing like crazy. So our government started borrowing lots of money, printing lots of money, printing, borrowing, printing, borrowing. And this is the playbook that they do every time. I wouldn’t be surprised if it happens. This could happen. What’s going to happen is they’re going to get interest rates and drop them right down. Once they drop the interest rates, they’re going to print a lot of money, borrow a lot of money, throw it back into the economy. That’s going to make everyone flush with cash. Everyone’s going to spend money. It’s going to create inflation. Property price is going to go up, a lot of other stuff’s going to go up, and we’re back to where we were after. Christina Markoski It’s a cycle that keeps repeating time and time again. George Markoski It wouldn’t surprise me because the COVID situation was played very different to the GFC. And I can’t see the GFC happening again because governments are a lot more keen to drop rates and print money instead. So if I was a betting man, I would bet that they would do it. Okay, let’s close it down, everyone. Thank you for watching. Thank you very much. Big love to me and Christina. Christina Markoski Have a great night.