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Australia’s Booming Property Prices – A Christian Perspective

by | Tue, Mar 2 2021

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On Vision’s 20Twenty program, Neil Johnson was joined by finance expert Alex Cook from Wealth With Purpose, to share his thoughts on Australia’s red hot property market.

As part of this new regular segment in 2021, Alex will be addressing all your questions around money. Whether it’s a biblical perspective on topical investing, practical investing or a Christian world view on money, Alex wants to hear from you.

In this discussion, Alex talks about things happening right now, namely the red hot property market.

“It’s been an absolutely fascinating six months,” says Alex. “When Covid hit, the market plummeted but it’s taken off like a rocket again in the last 6 months. Cheap money is the driver at the moment. With fixed loans being offered at less than 2%, that has really put a massive rocket under the housing market.

Mortgage growth is at 30%, with people borrowing huge amounts of money and driving up prices. And now, regional areas are thriving with people being able to work from home and move out of the big cities.”

But Alex acknowledges there are also parts of the market that are not doing well in this current climate.  Apartments and units are doing very poorly, due to the lack of immigration and international students.  It’s an extremely diverse market.

Alex Cook
Alex Cook from Wealth With Purpose

So how do we as Christians respond to this type of market?

Alex says he finds all of this deeply concerning. “Cheap money draws people into huge amounts of debt, which can lead to us becoming slaves to our debt. You need to be asking yourself, could I service this loan at 5% or 10%? By servicing such large repayments, we run the risk of not being able to live generously.

I urge caution. Prices can go down, and I advise against buying just because you’re afraid of missing out. Take the conservative approach and be very careful about how much you borrow.”

Alex also offers some helpful advice for first time entrants into the market.

“I always encourage them to buy on the basis of one income. Young couples who are about to get married often have kids within the first two years, and can quickly go down to one income. Can they afford to service the loan on one income, as well as pay all the bills? This is a classic trap for young couples.”

Alex cautions people to start small and work their way up. “Buy a humble dwelling that you can afford, service the debt, and more importantly make additional repayments. Have a 3-5 year plan to upgrade to your dream home. Don’t just rush in and borrow as much money as you can.”

Alex has similar advice for those looking to invest and negative gear their properties.

“Again, I urge caution. Rents have not kept pace with property market prices. The key thing you need to think about when investing is does this give you a reasonable income stream to service the debt.

When you negative gear a property, you gain a tax benefit through the loss. You are losing money tax effectively. I recommend at the very least being neutrally geared, but positively geared is better. But beware that costs go up if interest rates go up. I don’t recommend negative gearing, but whatever you decide be careful.”

Neil also asked Alex for his advice on how to apply Biblical wisdom to the current financial context.

“Think of the money that God has blessed you with as His. In a Christian worldview everything we have is His to be used to build His kingdom. The love of money can be the root of all kinds of evil. It’s very easy to fall in love with money and develop an accumulation mindset.”

Alex believes we should strive to be good stewards of our money for God’s glory and to help advance God’s kingdom. How we handle our money is a heart issue.

Another common question Christians often ask is whether socialism or capitalism better fit a Biblical philosophy. “It’s important to define socialism and capitalism”, says Alex. “Socialism requires governments to be the dominant owners and controllers over property and manufacturing, but also assumes competency of governments to determine prosperity.”

In a free market, everything is privately owned and markets determine the pricing effects.

Alex believes Christians need to think through the ramifications of poverty in both of these models.  “We should look at each economic issue through a biblical framework. Pray for good and righteous government to create policy that enables people to flourish. Private property ownership is supported by scripture. The 10 Commandments point towards a free market. Thou shalt not covet implies human ownership. But that becomes an issue when big corporations have massive influence over governments. Neither system is perfect, and we need to pray for good righteous government and try to influence policy that leads to human flourishing.”

The Bible points to liberation and freedom in the Christian faith. But freedom can lead to negative situations. We need to speak into society and come up with solutions to these issues, not just problems.

“We should be encouraging this in all societies around the world.”


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