Sunday, November 18, 2018

Brisbane Housing Market Update [video] | November 2018

Brisbane’s housing market is holding reasonably firm, with dwelling values unchanged over the month and only 0.3% higher over year to date.

Core Logic has released their newest housing market update for November 2018.

House values are the primary driver of the steady conditions, helping to offset an improving but still negative annual change across the unit market.

Brisbane unit values remain 11.2% below their previous record high recorded back in 2010, however with high supply levels moving back towards balance and rising demand, we may start to see this sector showing a consistent improvement.

Housing values in Brisbane remain $342,000 lower relative to Sydney and $173,000 lower relative to Melbourne.

This comparative affordability is likely to be a key factor attracting more migrants into the Brisbane region.








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from Property UpdateProperty Update

A majority of vendors sell below their original list price

Property sales over the past 12 years and compares them to the original advertised price to see if they sell for more, less or the same as that price and whether these trends are changing.

Over the three months to October 2018, more than three quarters (75.4%) of properties that sold transacted for less than their original purchase price.

By comparison, over the same period, 7.0% of properties sold for their originally listed price with the remaining 17.6% selling for more than the originally listed price. Real Estate Sale

Over the past decade, even in periods where dwelling value growth was quite strong, the majority of properties sold nationally continued to sell for less than the original list price, highlighting that even during the boom times vendors will need to be flexible on their price expectations and buyers will seek out room to negotiate.

Since the middle of 2015, which is prior to value growth starting to slow but at a time where credit availability was tightening and transaction volumes were starting to fall, the share of properties selling for less than the original list price has been trending higher.

Geographically the rising trend of a greater share of properties selling with a discount is being driven by the Sydney and Melbourne markets where buyers have endured a long period of low advertised stock levels, rapidly rising prices and intense FOMO (fear of missing out).

As housing market conditions have weakened, buyers have more stock to choose from and far less urgency.  


They are gaining more leverage, negotiating harder and a growing proportion of vendors are selling at prices lower than their original advertised price.

Outside of Sydney and Melbourne the trends are quite different, with the proportion of properties selling below the original list price holding reasonably firm.

Hobart, where housing market conditions have been strong relative to the other cities, is the exception, with an ongoing reduction in the proportion of properties selling below the original list price.

Across the combined capital cities, 73.6% of properties sold for less than list price over the past 3 months compared to 21.5% for more than list price.

Between 2013 and 2015 value growth was particularly strong and at that time a relatively high proportion of properties were selling above their list price.


It’s a very different story across the combined regional markets over recent years with very few properties selling above the original list price.

At its peak, 18.1% of properties sold in excess of the original list price, by comparison over the past three months 78.9% sold for less than their original list price and 13.0% sold for more than the original list price. Buildings Of Sydney. Wonderful City Skyline

Sydney has been one of the strongest markets for value growth over recent years however, a big spike in listings and tighter credit conditions has made selling much more difficult.

At one point in mid-2015 more than three quarters of properties sold for more than the original list price.

Fast forward to the current market and 83.3% of properties are selling for less than the original list price compared to 13.3% selling above the list price.

Sydney vendors are now discounting their asking prices by 7.3% on average in order to make a sale, compared with only 5.4% a year ago.

At the peak in October 2015, 25.8% of properties in Regional NSW sold for more than the original list price highlighting that over recent years selling conditions were never quite as strong as those in Sydney.

Over the past 3 months, 82.0% sold for less than the original list price while 9.8% sold in excess of that price.


Melbourne is currently seeing 76.3% of properties selling below the original list price which is the highest share in at least 12 years.

As recently as April last year, when values were rising at a double-digit annual rate, 34.4% of properties were selling for less than the original list price.

By comparison today, only 18.7% of properties have sold over the past three months for more than the original list price and vendors are, on average, discounting their prices by 6.1% to make a sale.

There has never been a particularly large share of properties selling above their original list price across Regional Vic.

Currently, 9.5% sell for the original list price, 77.5% sell below list price and 13.1% sell above.


Brisbane’s housing market has seen very little value growth over the past decade and as a result a majority of properties has consistently sold for less than the original list price. Brisbane

Over the past three months, 65.7% of properties sold for less than the original list price compared to 28.8% selling in excess of the list price.

Vendors are discounting their asking prices by an average of 5.7% in order to make a sale, which is roughly the same level of discounting relative to the same time last year.

The weakness that has been evident across parts of Regional Qld, especially those areas associated with the mining and resources sector, has seen a significant majority of properties over recent years sell for less than the original list price.

Over the past 3 months; 76.5% of property sales were less than the original list price compared to 17.0% selling for more.


When the Adelaide market was experiencing surging values in 2007 more than 60% of properties were selling above their list price however, over recent years, with housing values holding reasonably steady, very few properties have sold above the list price.

Over the past 3 months; 72.8% have sold below the list price and 21.3% have sold above the list price.

The ongoing weak housing conditions in Regional SA means that in terms of the original list price most purchasers have bought at a discount to that figure.

Over the current period; 86.3% of properties sold for less than the list price and 5.9% sold for more than the list price.


The ongoing weak housing market conditions in Perth over the past decade has meant that the majority of properties have sold for less than the original list price. Perth Property Update

At their peak in mid 2011 (a time at which values were declining), 90.2% of properties sold for less than the originally listed price.

Over the past three months; 76.8% of properties sold below list price which is slightly lower than a year ago but still elevated and 19.0% sold in excess of the list price.

Housing conditions in Regional WA have been weaker than those in Perth culminating in almost all properties selling for less than the originally advertised sale price.

Over the past three months; 84.4% sold for less than their list price and only 9.9% sold for more than their list price.


As value growth has strengthened in Hobart, an increasingshare of properties have sold for above the initially advertised price.

This is a function of relatively few properties for sale and values rising at an almost double-digit rate over the past year.

Over the past three months; an historic high 74.6% of sales have occurred in excess of the listed price compared to 21.7% below the list price.

As the rate of dwelling value growth is accelerating across Regional Tas, an increasing share of properties are selling in excess of the initially listed price.

Over the past 3 months; 34.8% of properties sold in excess of the list price compared to 55.9% selling below list price and 9.4% selling at list price.


With dwelling values falling for a number of years, very few properties in Darwin sell for more than the originally advertised sale price. Darwin

Over the past three months; 86.5% sold for less than the list price and 7.7% sold for more than the list price.

Reflecting the tough selling conditions, Darwin vendors are discounting their prices by an average of 11.7% in order to make sale which is substantially higher than any other capital city.

Regional NT is experiencing stronger housing market conditions than Darwin and subsequently a higher share of sales are occurring above the originally listed price.

Over the past three months; 16.7% sold for more than the list price and 70.8% sold below the list price.


A much higher share of properties in Canberra are selling at their original list price (14.4%) compared to other regions across the country.

Canberra is also seeing a relatively high proportion of properties selling above the list price (44.3%) although it is trending lower as sales below list price lift to 41.4% of all sales.

The recent decline in sales above the original list price is reflective of the softening housing market conditions across the city.


The data highlights the importance of setting an appropriate asking price on a listed property, and allowing some room for negotiation on the property transaction.

Finding the right balance can be a fine art.New Estates Melbourne

Although the list price is often (not always) known a sale is a negotiation and as this data shows very few properties actually sell for the original list price.

As a result most properties end up selling below their original list price except in very strong markets such as Sydney and Melbourne over recent years and Hobart currently.

The data also shows that in very strong markets, vendors and real estate agents are at times not able to accurately gauge what price a property will sell for with many selling above the list price.

Equally in weak or falling markets a heightened number of properties only sell after the initially targeted sale price is reduced.

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from Property UpdateProperty Update

Saturday, November 17, 2018

Why hard times are good for business

I write a lot about the cycles of investment and the importance of playing the long game.

Short-term thinking is what kills a lot of investors and stops people from ever becoming financially successful.

And tough times are interesting times.

RecessionpersonWhat do I mean by that?

Well, it tough times that sort the wheat from the chaff.

As an example, the Melbourne and Sydney property markets are in a cooling-off phase, and I reckon this will test a lot of property investors who were just in the market to make a quick buck.

That’s why a tougher business climate is actually great for customers and consumers.

You can really see who knows what they’re doing and who has been riding the wave of success on the coat tails of others.

Tough times can also be good for business.

Sounds impossible right?

Let me explain why…

mentorship-program_ad2017_300x250_FINALYour competitors leave

A tougher business environment will often see your competitors get out of the game.

In a sense they weren’t really your competitors to begin with because those that get out when times are tough often weren’t in it for the long haul.

Not all the time, mind you.

But often booming industries, such as property, attract people without the passion or commitment, who want to make a quick buck and get out.

Tough times really do expose people and those that are running tidy ships will survive. Meanwhile, those that have no business plan and have not factored in softer business conditions will really flounder.

Those that can weather the storm often emerge with even more ground to stand on than ever before.

Time To Re Invent ClockIt forces you to reinvent

When times are good, it’s easy to get a bit lazy.

You might not have your eye on developments in your industry, potential threats or ways you could do things better.

It’s natural (and very human!) to want to take a break when times are good.

But there’s also something to be said for the pressure of a tough economic climate.

You’re forced to streamline you operations, and look for savings.

You look around at what other industry leaders are doing and think about how you could apply those to your own.

You learn how to reinvent your business, which often opens up even more lucrative channels that you previously had!

ResilienceYou gain resilience

Maintaining success in the face of hard times requires a toughness that can only be learned through experience.

Once you’ve relied on yourself to turn things around and come out the other side, you have a resilience that will serve you well down the track.

You’ll no longer fear failure or those tough times because you’ll have proven to yourself that you’ve got the staying power to make it really work long-term.

You appreciate the good days

Most importantly, though, you’ll really enjoy the good times after surviving a tough period.

Nothing brings what you do, and the reason you do it, into focus like a rough spell.

So, as much as you can, enjoy those tough times.

You Appreciate The Good DaysTry and see them as opportunities rather than the end of the world.

If that’s a step too far, well, maybe it will help to think of them as inevitable.

Because that’s what they are.

Not one successful person — whether it’s Warren Buffett or Richard Branson — has avoided tough times.

If all you want is good times without any challenges, then you’re better off getting a regular job and letting someone else do the worrying for you.

But you’ll never achieve financial freedom that way.

Running your own business, investing successfully, these are not without challenges.

But from someone who has done it for many decades let me tell you that the y personal and financial rewards are more than worth it.

You’ve just got to start thinking of bad times as ‘good times’.


from Property UpdateProperty Update

19 great quotes for top achievement

Recently success coach and best selling author Robin Sharma shared 20 of his quotes for getting bold dreams and bright goals done.

They came from his books, blogs and tweets.

Here they are:

1. Dream Big. Start small. Act now.

2. Victims make excuses. Leaders deliver results.


4. Education is inoculation against disruption.

5. A problem is only a problem when viewed as a problem.


7. If you’re not scared a lot you’re not doing very much.

8. Where victims see adversity, extreme achievers see opportunity.


10. Small daily improvements over time lead to stunning results.

11. Criticism is the price of ambition.


13. Ordinary people love entertainment. Extraordinary people adore education.

14. Your daily behavior reveals your deepest beliefs.


16. Focus is more valuable than IQ.

17. To double your income, triple your investment in self-development.


19. An addiction to distraction is the end of your creative production.

Bonus quote:


from Property UpdateProperty Update

You’ll never believe how much Google knows about you [Infographic]

It’s no secret that Google knows a lot about its users.

But as I looked into this topic a bit further I found out Google knows a lot more about me (and you) than you probably think it does.   metropole

Today’s infographic comes to us from TheBestVPN and it shows what Google knows about you, how the tech giant gathers that information, and a few solutions to stop Google from tracking you.

As a quick sampler, as I read about this idea, I discovered Google knows a lot about me include my age and my recent Google web searches, the websites I’ve visited and the You Tube videos I’ve watched.

I don’t have an Android phone otherwise it would know a lot more about me including exactly where I’ve been over the past several years.

Through its various apps and services, Google can craft a robust profile on you and your activity on the internet.

Google, like Facebook, uses this personal information to target customised advertisements for you, but my friend Chris (the conspiracy theorist) tells me there’s a deeper darker agenda.

So at the bottom of the infographic I give you details of an article on CNBC that will show you how to find out exactly what Google knows about you and how you can limit this.

And then, don’t forget FaceBook and Apple are also watching you.

What Google Knows About You

If you want to find out what Google knows about you and limit the data it collects read this article – it’s got some useful links.

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from Property UpdateProperty Update

What you need to know about mortgages

So, what is a mortgage?

Well, it’s not something to fear because it can make the difference between living a wealthy life and one that sees you stuck on a hamster wheel struggling to make ends meet.

Simply put, a mortgage is the facility that people use when they borrow funds from a lender to buy real estate.

But in times past, it was actually referred to as a “death pledge” but it’s not nearly as grim as you might imagine.

Mortgage Calculator, House And Key With CalculatorThe word is derived from a French term, used by English lawyers in the Middle Ages.

The first half denotes death (think mortal), and the second part is denoting a commitment or pledge (think engagement).

It was used to refer to the moment that a pledge ended (died) when either the repayment obligation was fulfilled (which is a good thing) or the property was taken through foreclosure (which is a terrible thing that we make every effort to ensure never happens!).

Of course, definitions evolve over time.

It’s different from a simple loan, because a mortgage loan is secured by the property itself and that means that if everything goes pear-shaped – which is very uncommon – the lender has more rights over the property than the borrower.

If they have failed to make the required repayments, ultimately that means that the lender can repossess and then sell the property to repay the loan, but in Australia that remains a rare occurrence.

Mortgages unpacked

A mortgage has a number of different components which we outline below.

ad_build_wealth1. Collateral

When you have a mortgage, you have legally committed to repaying the loan plus interest and other costs by the end of the loan term, which is usually between 25 to 30 years.

The property you have bought is classed as collateral for the mortgage because real estate generally goes up in value so it’s a relatively safe bet that the lender will be able to recoup its money either when you sell the property, pay it off, or have to sell it themselves as mentioned above.

2. Principal

In the world of finance, principal is not the headmaster or mistress of a money school, but it is a vitally important part of the equation, because it is the sum of money that you borrowed to buy the property in the first place.

The principal is the amount that you have agreed to pay back, plus interest over the life of the loan or sooner.

3. Interest

Interest is the “fee” that you have to pay to borrow those funds, which is usually a percentage interest rate.

Interest ratesSay, for example, you borrow $500,000, which has an interest rate of five per cent per annum.

That means that $25,000 of your repayments in the first year will be interest charges based on the principal amount.
As your principal reduces, the interest you pay will also reduce, so you’re paying more off the loan.

It’s important to understand that interest rates do change depending on various things such as economic conditions.

Plus, with most mortgages being 25 to 30 years in length, you are likely to experience periods of low and high interest rates.

4. Deposit

Lenders require some sort of deposit before they will approve a mortgage on a property purchase.

Depositphotos 42842487 S 2015While this figure does change depending on financial conditions, it generally is between five to 20 per cent of the purchase price.

The deposit can be from cash savings, but it can also be drawn from equity in another property.

If the deposit is less than 20 per cent, you will generally have to pay Lenders Mortgage Insurance (LMI), which is a policy that protects lenders against borrowers who default on their home loans.

This fee does vary depending on how much deposit you have, as well as the State or Territory where the property is located, but it can be useful for first home buyers as it helps them get into the market much sooner than they could if they tried to save a 20 per cent deposit.

LMI can also generally be capitalised (added) on your mortgage, too.

5. Paying off a mortgage

At the end of the day, there are only two ways to pay off a mortgage.

Gbr V1One is to pay off the principal and interest components over time – which can be the life of the loan or more quickly if you make extra repayments.

The other, of course, is by selling the asset at some point in time.

Whichever strategy is the right one for you, you will eventually have to reduce the debt on your loan to pay the lender the back its money.

You can use our suite of calculators to work out what the principal and interest repayments might look like for you.

Issues to consider – are you ready for the responsibility?

As we said at the outset, mortgages can seem a little scary because they are a commitment of 25 to 30 years.

However, mortgages are a vehicle to improve your financial position by investing in assets that generally grow in value over time while the principal you borrowed stays the same.

Mortgage Concept Focused On The Coins And KeysFor example, say you bought a house for $600,000 and borrowed $500,000 from a lender.

After 20 years, the property has increased in value to $1.3 million, yet your mortgage has been reduced to just $150,000 because you’re been making principal and interest repayments.

Of course, that means that you have equity in the property of $1.15 million!

That is the power of using other people’s (meaning the bank’s) money right there in action.

Before you apply for a mortgage, though, it’s a good idea to consider the following questions:

  1. Can you comfortably make the monthly mortgage repayments, especially in the event that interest rates change?
  2. Are you confident that your financial status (job, health, family situation, etc.) will not adversely impact your financial responsibilities over time?
  3. Can you manage any resultant changes to your lifestyle if required?
  4. Are you aware of the legal impacts of being unable to continue to finance the facility?

Choose MortageWhich type of mortgage is best for you?

There are a number of different mortgages available these days, with specialised products for different types of buyers.

At Intuitive Finance, we have access to hundreds of financial products from dozens of lenders that suit every type of buyer from upgraders, investors, expats, home builders, guarantors, and first home buyers.

Some of the most common home loans include:

Basic variable rate home loan

This loan typically offers lower interest rates, but fewer features than a standard variable loan.

You often have the option to pay for any additional feature required.

As it is a variable loan, interest rates and repayments will vary throughout the loan term as rates change either up or down.

Fixed Interest Rates ContentFixed interest loan

Under a fixed interest rate loan, the interest rate is fixed for a specified period, usually between one and five years.

This loan gives you the certainty of knowing exactly what your monthly repayments will be as well as peace of mind knowing the repayments won’t rise.

However, the downside is that you won’t benefit if rates go down during the fixed term.

Split loans

This type of loan combines the security of a fixed rate home loan and the benefits of a variable loan.

A split loan allows you the freedom to choose how much money you assign to each loan.

Common split loan ratios are 50/50, 70/30 or 60/40 with one portion fixed and the other variable.

Line of credit

A line of credit loan provides you with access to the equity in your home or investment properties up to a pre-approved limit.

You access the funds as you need to, plus the interest rate on a line of credit loan is usually a variable rate and repayments are interest only.

offset-account-300×1691Offset loan

A 100% offset loan is very similar to an all-in-one loan.

Rather than putting all your salary and other income into your loan, it goes into an offset account that is directly linked to your home loan.

Any balance in the offset account is 100% “offset” against your home loan.

This reduces the amount of interest you have to repay, making your money work harder for you.

Standard variable rate home loan

Home+loan+borrowers+should+budget+for+p&i+repaymentStandard variable rate loans are Australia’s most popular type of home loan.

The interest rate varies throughout the loan term.

These loans generally offer excellent flexibility, low fees and often offer features such as an offset facility, redraw facility, no limits on additional repayments and in most cases, no early pay-out penalties.

We’re here to help

Intuitive Finance has a 100 per cent approval client rating and has helped thousands of Australians improve their financial futures.

No matter what type of borrower you are – a first-time buyer or investor, a property upgrader, a sophisticated investor, or you’re self-employed or an expat living overseas, the experienced team at Intuitive Finance are perfectly placed to help you create wealth-building strategies that work.

The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs

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from Property UpdateProperty Update

Some better signs are emerging for our property markets | ANZ Bank

If you’re confused about the mixed messages about our economy and the future of our property markets you’re in good company

There were some strong fundamentals reported last week:House Prices Down

  • ANZ Roy-Morgan consumer confidence was up,
  • NAB business conditions remain well above average (though the index did fall),
  • wage growth accelerated with the diffusion index the highest since 2010 and
  • the labour market continues to be strong.

Yet all the news seemed to be about our flat or falling property markets, low auction clearance rates and the crisis in confidence of home buyers and real estate investors.

A recent report from the ANZ Bank put it well…

If it wasn’t for the weakness in housing there would almost be nothing to worry about.

The ANZ noted there has been a debate about whether the weakness has been driven by softer demand or tighter credit.

The bank agree with the RBA that both are at work, but we think the trigger for the weakness was tighter credit.

The turndown in the market in early 2017 coincided with the macroprudential limit on the growth in investor lending and the impact this had on credit supply to investors.

By late 2017, early 2018 it seemed like the property market was stabilising – with the auction clearance rate rising and house prices essentially moving sideways.

Then the next wave of weakness occurred when the Royal Commission got underway.

And this led the ANZ to conclude that the trigger for the renewed weakness of our property markets was credit supply.

Last week the ANZ noted that the auction clearance rate and housing credit impulse were heading in different directions.

The housing finance approvals data suggests that the upturn in the credit impulse may be short-lived, however.

Be that as it may, there are some indicators that point to a possible stabilisation in the housing market: internet searches for home buying continue to move higher (see the chart of the week) and more people think it is a good time to buy a house.

If housing does stabilise then the path for the RBA becomes much clearer.


Here are more details of the ANZ report to it’s wholesale and institutional clients:-

A solid week for data, overshadowed by continued housing weakness

It has been a pretty good week for data in Australia.

Consumer ConfidenceANZ Roy-Morgan consumer confidence rose again and has now more than reversed its plunge at the time of the Wentworth by-election.

While NAB business conditions moved lower they remain well above average and continue to imply above trend growth.

Consistent with this, the labour market is strong.

The economy added more than 30,000 jobs in October and the unemployment rate consolidated its recent sharp drop to 5%. Perhaps of more importance, wage gains are broadening across more sectors of the economy.

Our measure of wage diffusion rose to its highest level since 2010 (Figure 1).


The generally positive tone of the data is not being reflected in the headlines, however.

Rather they are tending to be dominated by the weakness in the housing market.

At the national level dwelling prices are down 4.6% in the year to October and there are numerous warnings of bigger falls to come.


In trying to explain the reason for the fall in house prices there is an ongoing debate about the extent to which reduced demand for housing or tighter credit supply are responsible.

We agree with the RBA that both are at work.

Price FallBut we think it clear that the initial trigger for house price weakness was tightening credit supply.

We can see this in Figure 2 when we consider the start of the two big declines in the auction clearance rate since the start of last year: April 2017 and April 2018.

In both cases the turn down was preceded by a credit tightening event: the ‘speed’ limit of investor lending growth set by APRA in March 2017 and the start of the financial services Royal Commission in March 2018.

After the initial impact of the APRA policy shift in 2017 the housing market was in the process of stabilising by late 2017/early 2018.

This is evident in both the auction clearance rate and house prices themselves.

We then see a sharp turn lower in both following the start of the Royal Commission, with its initial focus on mortgage lending.

Regardless of the trigger, dwelling prices at the national level have been falling at a seasonally adjusted rate of 0.7% per month since July.

The falls in Sydney and Melbourne have been larger, with no evidence that the pace of declines is slowing.

house auctionA bearish signal with regard to the outlook has been the continued decline in the auction clearance rate (though technically the auction clearance rate is broadly coincident with prices rather than leading).

So far for November a smaller share of auctions has cleared than in October.

In last week’s commentary we noted the divergence between the auction clearance rate and the housing credit impulse.

This led us to ask the question of whether the signal from the auction clearance was the same as in the past given the changes around mortgage lending – principally the time it takes to secure a loan.

Even if this is the case, the modest uptick in the housing credit impulse looks like it will be short-lived given the weakness in housing finance approvals (Figure 3).


But there are some forward indicators of house prices that are pointing to possibly better news ahead.

house price double growthOur chart of the week is the ANZ House Search index.

This shows a strong uplift in internet searches related to home buying.

This has proved to be a reliable signal in the past that downturns in house prices were coming to an end.

Another positive indicator is from the Westpac consumer confidence survey in the form of its ‘time to buy a dwelling’ index.

This has risen strongly in recent months and has also reliably led the turn in house prices in the past (Figure 4).


We have to be alert to the possibility this time is different.

Not least because the trigger for the house price weakness was a change in credit conditions rather than a tightening of monetary policy.

CreditCredit conditions could also tighten further, with this in part dependent on the findings of the Royal Commission.

Until the outlook for house prices becomes clearer we think the RBA is on hold.

Indeed, we think a necessary condition for the RBA to tighten is a clear sign that the housing market is stabilising.

This doesn’t mean that prices need to have stopped falling, but we think it needs to be clear that the rate of decline is materially slowing.

If we do get evidence of this over the course of a few months then we think the path for the RBA become much clearer.

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from Property UpdateProperty Update