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Yes, I'd use my super to buy a home - here's why · The Money Puzzle

• 0:10
  Speaker 1: Hello and welcome to The Australian's Money Puzzle Podcast. I'm
• 0:13
  Speaker 1: James Kirby, Wealth Editor at The Australian. Welcome aboard, everybody.
• 0:17
  Speaker 1: I think you know, folks, there's an election coming down
• 0:20
  Speaker 1: the line when the government starts coming out with politically shrewd,
• 0:24
  Speaker 1: if ultimately arcane, news moments like a threatening only, by
• 0:29
  Speaker 1: the way, to eliminate debt card charges, which seems to
• 0:33
  Speaker 1: be grabbing the headlines all week. Probably something everyone can
• 0:36
  Speaker 1: relate to when you really dive into that. It's not
• 0:40
  Speaker 1: going to make an awful difference to the many people
• 0:43
  Speaker 1: who are aware and irritated by those charges. What would
• 0:46
  Speaker 1: make a difference, I think, is if they started to
• 0:48
  Speaker 1: tackle some of the really big issues in housing. And
• 0:52
  Speaker 1: it's not just investors. Everyday Australians want to be able
• 0:58
  Speaker 1: to buy a home to know they can, particularly younger Australians,
• 1:01
  Speaker 1: first home buyers. Everyday Australians, millions of them are property investors.
• 1:06
  Speaker 1: They're important. They're actually crucial. to how the market operates.
• 1:11
  Speaker 1: The market is, it's a market and it's run by
• 1:13
  Speaker 1: private investors. That is not an exaggeration. It's a fact.
• 1:16
  Speaker 1: And they want a balanced playing field. My guest today
• 1:19
  Speaker 1: is right across this. She's Sarah Petty. She's been on
• 1:23
  Speaker 1: the show before. She's a real estate reporter at News Corp,
• 1:27
  Speaker 1: her son. She's a potential, I think, first home buyer.
• 1:31
  Speaker 1: So she has multiple qualifications to talk to us. How
• 1:34
  Speaker 1: are you, Sarah?
• 1:35
  Speaker 2: I'm good. How are you, James?
• 1:37
  Speaker 1: Very good. Thank you. Very good. Some of the things
• 1:41
  Speaker 1: I was alluding to there was around all sorts of
• 1:44
  Speaker 1: ideas being bounced around at the moment. I've just seen,
• 1:47
  Speaker 1: would you believe, before as I walked in to do
• 1:49
  Speaker 1: this on the screen, I saw a senator and she
• 1:55
  Speaker 1: is on air as we speak, suggesting that mothers, women,
• 2:01
  Speaker 1: single mothers get special early access to super to buy
• 2:05
  Speaker 1: a home. Other people in the Liberal Party, Tim Wilson,
• 2:09
  Speaker 1: for instance, pushing hard that anyone can get access to
• 2:13
  Speaker 1: super to buy their first home. And then in recent days,
• 2:17
  Speaker 1: we've also had the notion that mortgage buffer, this is
• 2:21
  Speaker 1: the 3% extra that the bank must add on to
• 2:24
  Speaker 1: your rate to assess you accurately, that should be removed.
• 2:28
  Speaker 1: If listeners don't understand that, we'll explain it to them
• 2:31
  Speaker 1: in a moment. But all these things are all efforts
• 2:33
  Speaker 1: to get people into the market. You're reporting all the time.
• 2:38
  Speaker 1: Just give me straight off in terms of someone on
• 2:41
  Speaker 1: the ground every day on real estate. What's the tempo
• 2:44
  Speaker 1: in the market like just at the moment, Sarah?
• 2:47
  Speaker 2: In my opinion, it's a bit of a two-speed market.
• 2:49
  Speaker 2: So you have capital cities like Melbourne, Darwin, Hobart, which
• 2:55
  Speaker 2: are all have actually seen a drop in prices over
• 2:58
  Speaker 2: the last 12 months to September. But in Perth, Adelaide
• 3:02
  Speaker 2: and Brisbane, prices are rising steadily. prices has increased by
• 3:07
  Speaker 2: about 22 from the last I saw. So it's very
• 3:11
  Speaker 2: much dependent on where you are and, yeah, I guess
• 3:14
  Speaker 2: what kind of buyer you are as well.
• 3:15
  Speaker 1: It really is two-speed. Melbourne prices are falling, right?
• 3:19
  Speaker 2: Yes. Melbourne's actually the worst performing market at the moment.
• 3:23
  Speaker 2: Last time I saw her, I think prices were down
• 3:24
  Speaker 2: about around the 3% mark. So, yes, there's a lot
• 3:28
  Speaker 2: of reasons for that, which I'm sure you're aware of, James.
• 3:31
  Speaker 1: They have been echoed on the show, but I think
• 3:33
  Speaker 1: it's worth– everyone knowing, listening, that we have this extraordinary
• 3:39
  Speaker 1: and extraordinary situation where the second biggest city in the nation,
• 3:42
  Speaker 1: which is about to become the biggest quite soon, is
• 3:46
  Speaker 1: the cheapest. It is cheaper than Sydney. That was always
• 3:49
  Speaker 1: the case. Cheaper than Canberra, relatively new. Cheaper than Perth. Surprise.
• 3:53
  Speaker 1: Cheaper than Adelaide. Come on. City of five million people
• 3:57
  Speaker 1: is cheaper than Adelaide. That doesn't stack up. So something's amiss.
• 4:01
  Speaker 1: And I wonder if we zone in on that, Sarah.
• 4:04
  Speaker 1: Is it telling us something? Because there are certain issues,
• 4:07
  Speaker 1: isn't there? They did pile on the taxes in Victoria
• 4:10
  Speaker 1: and the property investors, they certainly headed for the hills.
• 4:13
  Speaker 1: But I just want to ask you whether on the
• 4:17
  Speaker 1: ground in the market, people are.
• 4:20
  Speaker 1: Of an opinion that they can wait and the prices,
• 4:23
  Speaker 1: even price growth will soften in some cities or in
• 4:26
  Speaker 1: particular cities like Melbourne, they're waiting for the prices to
• 4:29
  Speaker 1: actually fall further. Do you get people saying that to you?
• 4:32
  Speaker 2: Sometimes. I think as the more supply comes onto the
• 4:34
  Speaker 2: market because of rental providers or landlords selling up and
• 4:38
  Speaker 2: perhaps moving elsewhere, I think property prices could remain either
• 4:42
  Speaker 2: flat or even drop more. I think that could be
• 4:45
  Speaker 2: the case nationwide as well in terms of maybe as
• 4:49
  Speaker 2: more supply comes into the market. But I guess prices
• 4:52
  Speaker 2: have to hit their peak in some areas at some point.
• 4:55
  Speaker 2: So that'll be interesting. But yeah, we'll see whether or
• 4:59
  Speaker 2: not I think the market slows down. I think there's
• 5:02
  Speaker 2: still a lot of reasons as to why it could
• 5:04
  Speaker 2: go up, especially when interest rates drop. I think a
• 5:07
  Speaker 2: lot of buyers will then, that may have been waiting
• 5:10
  Speaker 2: to get into the market, may choose to get into
• 5:12
  Speaker 2: that point.
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  Speaker 1: You're sceptical about that all the economists, including property economists,
• 5:16
  Speaker 1: think price growth was slow. We were talking earlier before
• 5:19
  Speaker 1: the show about, is it Paul Monckton, that chief economist
• 5:22
  Speaker 1: at Bank of Queensland and his report there, which basically
• 5:25
  Speaker 1: says that. So do you think it won't happen at
• 5:29
  Speaker 1: all or do you think it'll just be a window
• 5:32
  Speaker 1: of opportunity for buyers?
• 5:33
  Speaker 2: I mean, if I had a crystal ball, that would
• 5:35
  Speaker 2: be fantastic. In my opinion, I think maybe as there's
• 5:38
  Speaker 2: more of a push to build more properties and more
• 5:41
  Speaker 2: pressure placed on, yeah, I guess governments to build more,
• 5:44
  Speaker 2: they could the prices may begin to slow. But yeah,
• 5:47
  Speaker 2: I think it's dependent on the market. I think perhaps
• 5:50
  Speaker 2: in Perth, prices might start to slow down because they've
• 5:53
  Speaker 2: been so rapidly increasing. But I think it's definitely dependent.
• 5:57
  Speaker 1: It's amazing, isn't it? How on earth can you have
• 6:00
  Speaker 1: one city going up by 20% and the other one
• 6:03
  Speaker 1: falling in the same national economic state? I wonder, has
• 6:08
  Speaker 1: there ever been such divergence between the cities? in terms
• 6:12
  Speaker 1: of price action. I can't remember a time, certainly. There
• 6:16
  Speaker 1: was another time where Perth had a big roll-up on
• 6:19
  Speaker 1: the commodity boom in their pre-GFC, and I expect it
• 6:23
  Speaker 1: was something like that then. So just looking across then,
• 6:27
  Speaker 1: in terms of how people are viewing property and action
• 6:30
  Speaker 1: in the market, you're in an unusual situation, aren't you,
• 6:33
  Speaker 1: that you're on property all day, but you're also... You
• 6:37
  Speaker 1: are one of the very people we're talking about, right?
• 6:39
  Speaker 1: Trying to get into the market.
• 6:40
  Speaker 2: Yeah.
• 6:41
  Speaker 1: So what do you think of these notions of letting
• 6:43
  Speaker 1: you access your super early or cutting the assessment rate, basically,
• 6:48
  Speaker 1: what they call the buffer, where the banks assess you
• 6:51
  Speaker 1: on 3% more than your mortgage. So if your mortgage
• 6:54
  Speaker 1: is sixth, the bank actually... assesses you on the basis
• 6:58
  Speaker 1: that your mortgage is nine, et cetera. If it's seven,
• 7:01
  Speaker 1: they assess you on the fact that it's 10. How
• 7:03
  Speaker 1: does that affect you? How do you think it affects
• 7:05
  Speaker 1: people in your position?
• 7:07
  Speaker 2: Well, I'll start with the super. I think that being
• 7:09
  Speaker 2: able to access your super, I think potentially if you're
• 7:12
  Speaker 2: a low income earner and essentially you're just looking to
• 7:15
  Speaker 2: put a roof over your head, I think it could
• 7:16
  Speaker 2: be a great incentive in one way. However, Sometimes these incentives,
• 7:22
  Speaker 2: if everyone has more cash in their book and access
• 7:24
  Speaker 2: more cash in their pocket, this can drive property prices
• 7:27
  Speaker 2: up and negate that bit of extra cash. So I
• 7:32
  Speaker 2: think it's definitely dependent on the situation and what type
• 7:35
  Speaker 2: of buyer you are. In terms of the serviceability or
• 7:39
  Speaker 2: the mortgage buffer, I think it, in my opinion, can
• 7:42
  Speaker 2: be a bit outdated in terms of the bank assessing
• 7:46
  Speaker 2: if you could pay, what, an extra 3% on top
• 7:48
  Speaker 2: of that interest rate. I think based on how much
• 7:54
  Speaker 2: money you need to be able to put down today,
• 7:58
  Speaker 2: which is a lot, I think it could be a
• 8:00
  Speaker 2: little bit outdated or it could be at least dropped.
• 8:04
  Speaker 1: Okay. It could be dropped because rates are dropping.
• 8:06
  Speaker 2: Yeah, 100%.
• 8:08
  Speaker 1: So let's say you were really close to buying a house,
• 8:10
  Speaker 1: really close. You know you have it, but you need
• 8:14
  Speaker 1: an extra, right? I've got to pick a number. You
• 8:18
  Speaker 1: need an extra $ 18, 000. And if you get that, you
• 8:21
  Speaker 1: can have it. And you can tap your super for it.
• 8:26
  Speaker 1: And it's the one you've been trying for years. You've
• 8:28
  Speaker 1: found it. All your ducks are in a row. There's
• 8:31
  Speaker 1: no other way you can get this money. Would you
• 8:34
  Speaker 1: tap your super?
• 8:35
  Speaker 2: Gosh, this is almost like you're asking me personally.
• 8:38
  Speaker 1: I am asking you personally. I'm asking you with your
• 8:41
  Speaker 1: two hats on as both a buyer of the type
• 8:44
  Speaker 1: we're talking about, property buyer, professional property reporter, I'm asking you,
• 8:50
  Speaker 1: would you do it? And what do you think then
• 8:52
  Speaker 1: the cost to you ultimately would be? Would it be
• 8:55
  Speaker 1: worth it? Do you think?
• 8:57
  Speaker 2: I think honestly, 18,000 in terms of, yeah, if that's
• 9:01
  Speaker 2: how much I would need to get a specific property
• 9:05
  Speaker 2: copy a little bit over, but in terms of, it
• 9:08
  Speaker 2: would be very tempting to do so because especially as
• 9:10
  Speaker 2: your first home and especially if you think it's worth
• 9:15
  Speaker 2: that amount extra. It would be very tempting. In terms
• 9:18
  Speaker 2: of the fact that I'll be in the workforce as
• 9:21
  Speaker 2: a 26-year-old for the next at least, I don't know,
• 9:25
  Speaker 2: 45 years or so, yeah, potentially the pros outweigh the
• 9:30
  Speaker 2: cons in my situation.
• 9:32
  Speaker 1: It's hard, isn't it? You know that you're pulling the
• 9:34
  Speaker 1: legs from under your super, basically, and it's all about compounding,
• 9:37
  Speaker 1: but then you also know that you're going to get
• 9:39
  Speaker 1: into the housing market. It's not just that. You're not
• 9:42
  Speaker 1: going to be paying rent, and it's not just that.
• 9:44
  Speaker 1: It's your gateway into the entire All the tax privileges.
• 9:50
  Speaker 2: Yes, exactly.
• 9:51
  Speaker 1: The majority of them are linked with home ownership, aren't they?
• 9:55
  Speaker 1: Right through capital gains tax exemption is only the start.
• 9:58
  Speaker 1: In 45 years, when you go to retire, it's still
• 10:01
  Speaker 1: a winner. And so I think you're turning the question.
• 10:05
  Speaker 1: I know I did turn the question on you and
• 10:07
  Speaker 1: it's a difficult question. If you turned it on me,
• 10:09
  Speaker 1: I would say, unfortunately, I agree with you because unfortunately,
• 10:15
  Speaker 1: I know that the tax system is so loaded in
• 10:18
  Speaker 1: favor of homeowners. that unfortunately it's worth taking the money
• 10:24
  Speaker 1: out of super in certain circumstances to get the house,
• 10:27
  Speaker 1: to get the house. So then when do you stop?
• 10:30
  Speaker 1: Just like the Senator this morning asking for particular issues
• 10:32
  Speaker 1: for women that single mothers, I think it was, and
• 10:36
  Speaker 1: I should be across this, but it only literally just
• 10:38
  Speaker 1: broke an hour or two ago, but you can see
• 10:40
  Speaker 1: how you open the door and it never ends to super.
• 10:43
  Speaker 1: You said, let people buy their homes with super, let
• 10:47
  Speaker 1: people pay their insurance with super. Where does it end?
• 10:50
  Speaker 1: It's the other side of the coin, isn't it? We'll
• 10:52
  Speaker 1: take a short break. We'll be back in a moment.
• 11:04
  Speaker 1: Hello and welcome back to the Australian's Money Puzzle podcast.
• 11:07
  Speaker 1: I'm James Kirby and I'm talking with Sarah Petty of
• 11:10
  Speaker 1: the Harrelson and News Corp Property Reporter on the ground
• 11:14
  Speaker 1: who is regularly on the show and gives us a
• 11:17
  Speaker 1: very fresh angle really on the market from her perspective
• 11:21
  Speaker 1: and also her perspective as a potential first home buyer.
• 11:26
  Speaker 1: By the way, folks, just to clarify, when I was
• 11:28
  Speaker 1: talking in the first segment about new ideas around tapping super,
• 11:33
  Speaker 1: The woman I was trying to think of is Maria Kovacic.
• 11:36
  Speaker 1: She's a senator and she is a Liberal Party senator.
• 11:40
  Speaker 1: And just this morning, she has come out with a suggestion,
• 11:45
  Speaker 1: which is getting some attention as well, where single and
• 11:47
  Speaker 1: divorced women would get access to their super before they
• 11:50
  Speaker 1: retire to buy a home. She argues that such women
• 11:54
  Speaker 1: could otherwise be forced to rent forever or be left homeless. See,
• 11:58
  Speaker 1: it's that again, just like we were talking with Sarah
• 12:00
  Speaker 1: in the first segment, it's so vexed really in some
• 12:04
  Speaker 1: ways that the super is there, the money is there,
• 12:06
  Speaker 1: and you can do other things with it in theory.
• 12:09
  Speaker 1: What is the price of that? The price of that
• 12:11
  Speaker 1: is that the person, for instance, in this situation would
• 12:16
  Speaker 1: have less super than they own their home. And what
• 12:19
  Speaker 1: they would really need is a kind of a top
• 12:20
  Speaker 1: ranked financial advisor to do the numbers for them. And
• 12:23
  Speaker 1: they would never be able to afford that. That is
• 12:26
  Speaker 1: another part of the issue. Okay, so Sarah, on that
• 12:29
  Speaker 1: same issue, it just so happens, the first question is
• 12:33
  Speaker 1: from Cameron, and he says, about using super money and
• 12:38
  Speaker 1: getting a first home personally, Cameron says, I'm torn. I
• 12:43
  Speaker 1: already own a property, so if everyone gets an extra
• 12:45
  Speaker 1: 50K to pile into property, I'm all for it because
• 12:48
  Speaker 1: my house price will go up. I don't want this
• 12:52
  Speaker 1: to go ahead, though, as a future issue. property investor,
• 12:56
  Speaker 1: I'd like prices to stay reasonable. Looking at it from
• 12:59
  Speaker 1: a retirement point of view, I wholly agree that not
• 13:02
  Speaker 1: owning your home in old age is a significant disadvantage.
• 13:06
  Speaker 1: And overall, I think it probably should be allowed with
• 13:09
  Speaker 1: a few caveats. There you go. That's interesting about that.
• 13:14
  Speaker 1: Do you think any of these claims, if you like,
• 13:18
  Speaker 1: will come to anything, Sarah, that we're literally getting every
• 13:21
  Speaker 1: other week now ideas for what property ideas are about
• 13:25
  Speaker 1: what you can do with your super. Do you think
• 13:28
  Speaker 1: this will ever come to pass? We know that the
• 13:31
  Speaker 1: Liberal Party has a policy stated now that you can
• 13:34
  Speaker 1: get up to 50 grand out from your super. The
• 13:38
  Speaker 1: Labour Party is not budging on the issue at all.
• 13:41
  Speaker 1: If it came to pass, do you think people would
• 13:43
  Speaker 1: tap it?
• 13:44
  Speaker 2: I think so. I think absolutely. I think it could
• 13:46
  Speaker 2: be a really great way for first-time buyers to get
• 13:49
  Speaker 2: into the market at a young age and at a
• 13:52
  Speaker 2: time when they can afford to make money Maybe there's
• 13:55
  Speaker 2: risks or take those risks in terms of buying a property. Yeah,
• 14:00
  Speaker 2: I think it definitely does depend on your age though.
• 14:03
  Speaker 2: I probably wouldn't suggest doing it at the end of
• 14:06
  Speaker 2: your working career as that is your nest egg, but
• 14:09
  Speaker 2: it would be, yeah, I think depending on your age,
• 14:11
  Speaker 2: I think it could be a great idea.
• 14:12
  Speaker 1: But your point is that you've time to catch up.
• 14:16
  Speaker 2: Absolutely. It will give you time to catch up and
• 14:18
  Speaker 2: hopefully home prices increase enough that when you do sell
• 14:22
  Speaker 2: that property, you've make more money than you would have
• 14:25
  Speaker 2: putting it in your super account.
• 14:27
  Speaker 1: You wouldn't be paying rent anymore, which is the huge
• 14:30
  Speaker 1: issue that you would have to bake into any assumptions.
• 14:32
  Speaker 1: And it's a powerful issue that we're underplaying probably and underestimating. Okay. Now,
• 14:39
  Speaker 1: question from Donna. Hello, Donna. She says, what impact could
• 14:43
  Speaker 1: Elon Musk's $ 10, 000 boxable houses have on the property market?
• 14:48
  Speaker 1: It's interesting what Donna's referring to, and she sent us
• 14:50
  Speaker 1: a little video of Elon Musk, who somehow has the
• 14:54
  Speaker 1: time to do this along with everything else on Twitter
• 14:57
  Speaker 1: and Tesla and space rockets, not to mention the amount
• 15:00
  Speaker 1: of time he must be taking up appearing beside Trump
• 15:02
  Speaker 1: on his rallies. And it struck me that in our
• 15:06
  Speaker 1: own market, Jeff Harris, now some listeners might be familiar
• 15:09
  Speaker 1: with Jeff Harris. He was the co-founder of Flight Center.
• 15:13
  Speaker 1: He was amazing. He hit the jackpot twice. He was
• 15:16
  Speaker 1: co-founder of Flight Center. And then would you believe he
• 15:18
  Speaker 1: was effectively a co-founder and co-investor in Boost Juice in
• 15:26
  Speaker 1: the very early days. So he's got it right twice
• 15:28
  Speaker 1: in a row, big time. And he had a scheme
• 15:32
  Speaker 1: where they would build 60 modular homes for homeless people
• 15:36
  Speaker 1: in Melbourne some time ago based in the Footscray area.
• 15:41
  Speaker 1: I didn't catch up as to how that went or
• 15:43
  Speaker 1: whether he ever got it done. But it was really
• 15:45
  Speaker 1: interesting that it's like the tiny houses too. I've had
• 15:48
  Speaker 1: representatives from tiny houses on the show, Sarah. Do you
• 15:52
  Speaker 1: think people are a bit stuck in their ways about
• 15:54
  Speaker 1: when we talk about the housing and sorting out housing,
• 15:57
  Speaker 1: is this still a thing that everybody wants a house?
• 15:59
  Speaker 1: They're sceptical even about apartments, not to mention variations on that.
• 16:04
  Speaker 1: Do you think people should be a bit more open-minded? Potentially.
• 16:08
  Speaker 2: I think it could be, for one thing, I think
• 16:09
  Speaker 2: it could be a great at least in the meantime,
• 16:12
  Speaker 2: as we continue to build more homes. The government continues
• 16:17
  Speaker 2: to build more homes to, yeah, set up these, I guess,
• 16:20
  Speaker 2: portable homes to house the population as there are so
• 16:23
  Speaker 2: many people struggling to keep a roof over their heads. But, yeah,
• 16:28
  Speaker 2: I think it's actually a really great incentive and it
• 16:31
  Speaker 2: could be done in the short term. I think these
• 16:34
  Speaker 2: boxable houses only take about an hour to construct, if
• 16:38
  Speaker 2: I'm right. which is a lot quicker than building a home,
• 16:42
  Speaker 2: that's for sure.
• 16:43
  Speaker 1: Yeah, absolutely. Again, this is a difficult area, but which
• 16:47
  Speaker 1: would you prefer in your city? Lines of people homeless
• 16:52
  Speaker 1: under bridges or lines of people going into modular homes?
• 16:55
  Speaker 1: It's not an easy decision, but I think most people
• 16:58
  Speaker 1: would lean in a very clear way. Okay, we have
• 17:01
  Speaker 1: some really interesting questions from Paul from Rowan coming up.
• 17:04
  Speaker 1: We will be back in a moment. Hello, welcome back
• 17:10
  Speaker 1: to the Money Puzzle. I'm James Kirby talking to Sarah Petty. Okay,
• 17:15
  Speaker 1: a question from Paul. Hi guys, love the podcast. Question
• 17:20
  Speaker 1: for you. With the government's ambitious objective to get 1.2
• 17:25
  Speaker 1: million houses built, private developers will have a massive role
• 17:28
  Speaker 1: to play. Do you think there is likely to be
• 17:31
  Speaker 1: a repeat of the home builder grants that were offered
• 17:33
  Speaker 1: when COVID first hit? Whoosh, great question, Paul. Yes, David, absolutely.
• 17:39
  Speaker 1: showered the building industry with grants, home builder grants at
• 17:45
  Speaker 1: the time of COVID. And then on top of that,
• 17:47
  Speaker 1: of course, interest rates were extremely low. And so there
• 17:52
  Speaker 1: was a glut really of incentives to build. Here we
• 17:58
  Speaker 1: are some years later, and actually the only state that
• 18:00
  Speaker 1: managed to really build a lot is Victoria. And that
• 18:03
  Speaker 1: is the only state that has seriously good supply coming in,
• 18:07
  Speaker 1: which is, ironically, if you're an investor, the state where
• 18:10
  Speaker 1: house prices are falling. It's a significant issue about how
• 18:15
  Speaker 1: the affordability is better in Melbourne than it is in
• 18:20
  Speaker 1: other cities. And I'm just thinking even in my own world,
• 18:24
  Speaker 1: on the Australian newspaper, for instance, we are continually getting
• 18:27
  Speaker 1: people replanting themselves. from Sydney to Melbourne, for instance, where
• 18:31
  Speaker 1: this issue of the gap in what you can buy
• 18:33
  Speaker 1: is remarkable, considering you could have potentially the same job.
• 18:38
  Speaker 1: I don't know about more home... I think they might
• 18:40
  Speaker 1: have learned their lesson about going too quick on home
• 18:43
  Speaker 1: builder grants the last time, Paul. So I don't think
• 18:47
  Speaker 1: they will be showering us with more. I think they
• 18:50
  Speaker 1: will try other things, even if it's pretty hard knuckle
• 18:55
  Speaker 1: stuff like fining and shaming people councils that are slow
• 18:59
  Speaker 1: in approving. I see that as, for instance, a weapon
• 19:02
  Speaker 1: that's been considered at the moment. Have you come across
• 19:05
  Speaker 1: that story, Sarah?
• 19:06
  Speaker 2: Yes, I've heard it there. I think in Victoria, that's
• 19:10
  Speaker 2: one of the things that the other government's trying to
• 19:12
  Speaker 2: do is cut all that red tape and turn off
• 19:14
  Speaker 2: all the NIMBYs from development, slowing down development. Yes, I
• 19:18
  Speaker 2: think in some areas, that's definitely going to be an
• 19:22
  Speaker 2: important aspect for building more homes. And it's already underway.
• 19:27
  Speaker 2: So in terms of the home builder grants, I'm pretty
• 19:29
  Speaker 2: sure the Northern Territory has just started accepting applications for
• 19:33
  Speaker 2: its homegrown territory and fresh start new home programs, which
• 19:39
  Speaker 2: has grants ranging from $ 10, 000 to $ 50, 000. It'll be interesting
• 19:43
  Speaker 2: to see what that does for the building industry over
• 19:47
  Speaker 2: there and if we try and emulate something similar.
• 19:51
  Speaker 1: So they're still coming, Paul. The states, of course, can
• 19:55
  Speaker 1: move on these things autonomously. So you will find there
• 19:58
  Speaker 1: are home builder grants programs, as Sarah's pointing out, literally
• 20:02
  Speaker 1: being signed off. New ones as we speak. So there
• 20:05
  Speaker 1: you are. I had that one. I won't say I
• 20:07
  Speaker 1: had that one wrong. but the state governments will do
• 20:09
  Speaker 1: what they want to do. And as Sarah said at
• 20:12
  Speaker 1: the start, it's a two-speed market. So what one state
• 20:18
  Speaker 1: government needs to do in housing, say in WA, where
• 20:21
  Speaker 1: prices are going up by 20%, and another state government
• 20:24
  Speaker 1: might need to do in Victoria, where prices are falling,
• 20:27
  Speaker 1: would be completely different. Okay, final question from Rowan. I'd
• 20:32
  Speaker 1: be interested to hear your thoughts on whether capital gains
• 20:35
  Speaker 1: tax is holding back residential development and contributing to the
• 20:40
  Speaker 1: housing crisis. And he then talks about various twists and
• 20:44
  Speaker 1: turns around that. I really don't know. The capital gains
• 20:49
  Speaker 1: tax for property investors, anyone who's interested in property investment,
• 20:54
  Speaker 1: obviously there are two huge tax issues which are accessible
• 21:00
  Speaker 1: to the everyday Australian and which is one of the
• 21:02
  Speaker 1: reasons that the entire market is dominated by private investors.
• 21:06
  Speaker 1: negative gearing, where you can deduct the losses or excess
• 21:10
  Speaker 1: costs of your investment from your income tax. And then
• 21:13
  Speaker 1: the day you sell your property, if you hold it
• 21:15
  Speaker 1: for more than a year, you get a discount, 50%
• 21:18
  Speaker 1: discount on capital gains tax. And capital gains tax kind
• 21:22
  Speaker 1: of works out roughly what your tax rate is, income
• 21:26
  Speaker 1: tax rate, to simplify. Now, what Rowan is suggesting is
• 21:30
  Speaker 1: that we unleash even more private investors into the market.
• 21:36
  Speaker 1: If he says capital gains tax is holding back residential development,
• 21:39
  Speaker 1: then obviously if you removed it, that would mean it
• 21:42
  Speaker 1: would unleash it. I don't know. I think that's so unlikely.
• 21:48
  Speaker 1: I think actually Labour are actually talking, they're reviewing capital
• 21:50
  Speaker 1: gains tax and negative gearing, aren't they, Sarah, at the moment,
• 21:53
  Speaker 1: at least Treasury is.
• 21:54
  Speaker 2: Well, that's what I've heard. That's quite a contentious issue
• 21:57
  Speaker 2: at the moment as to what's going to happen with
• 21:59
  Speaker 2: negative gearing. I'm sure it's going to That's a really
• 22:02
  Speaker 2: fundamental part of our tax system, which is, yes, so
• 22:05
  Speaker 2: heavily geared around property investment and the tax incentives. Yes,
• 22:09
  Speaker 2: it'll be interesting to see. I think there would be
• 22:11
  Speaker 2: just a massive shake-up of the housing market if either
• 22:14
  Speaker 2: of these elements would change in any way.
• 22:18
  Speaker 1: Do you think people are worried about this review? The
• 22:21
  Speaker 1: review is officially Treasury, right, which is not officially the
• 22:26
  Speaker 1: government as such, not the Albanese government. But, hey, it's happening.
• 22:30
  Speaker 1: Do you think people are worried and do you think
• 22:33
  Speaker 1: anything will come of this review of capital gains tax
• 22:36
  Speaker 1: and negative gearing? Are people worried out there in the market?
• 22:39
  Speaker 2: Absolutely. I think a lot of people are. I believe
• 22:43
  Speaker 2: over 90% of properties or rental properties in the market
• 22:46
  Speaker 2: are owned by investors. So if you start to draw
• 22:49
  Speaker 2: back on these tax incentives for people to purchase properties,
• 22:54
  Speaker 2: I think we're going to have a lot of issues.
• 22:56
  Speaker 2: And especially in Victoria, it'll probably be the straw that
• 22:59
  Speaker 2: broke the camel's back.
• 23:00
  Speaker 1: Why do you say that?
• 23:02
  Speaker 2: Because Victoria is so hampered by taxes on property investors,
• 23:07
  Speaker 2: from land taxes to now the Airbnb tax even, which
• 23:12
  Speaker 2: is nationwide. I think that'll be, if it becomes too
• 23:15
  Speaker 2: costly to own an extra property, I think that'll lead
• 23:19
  Speaker 2: more people to sell up.
• 23:22
  Speaker 1: And it won't be good for the branch. That's the
• 23:24
  Speaker 1: million-dollar question, isn't it?
• 23:26
  Speaker 2: It is.
• 23:27
  Speaker 1: Yeah, yeah. Maybe there is evidence of that happening already,
• 23:31
  Speaker 1: isn't there, in Victoria, even without any changes to CGT
• 23:34
  Speaker 1: or negative gearing. Yeah.
• 23:37
  Speaker 2: Absolutely, yeah. I think it'll be more, especially problematic, and
• 23:41
  Speaker 2: as a current tenant myself, hopefully soon to be first-time buyer,
• 23:45
  Speaker 2: it would be very problematic if I was continuing on
• 23:47
  Speaker 2: as a tenant, that's for sure.
• 23:48
  Speaker 1: Yeah, interesting. I'll just leave the listeners with one last thing,
• 23:51
  Speaker 1: which is really worth thinking about. The negative gearing. People say, oh,
• 23:55
  Speaker 1: once upon a time, the Labour government tried to close
• 23:58
  Speaker 1: it down and it was Paul Keating and he didn't
• 24:00
  Speaker 1: manage it. And if Paul Keating couldn't manage it, who could?
• 24:03
  Speaker 1: But there's actually a much more recent example. It's New
• 24:06
  Speaker 1: Zealand and Jacinta Ardern, who, by the way, I apologise,
• 24:11
  Speaker 1: last week I called Jacinta a hern. I Irish'd her,
• 24:14
  Speaker 1: I didn't mean to. Jacinta Ardern went to close down
• 24:18
  Speaker 1: the negative gearing and CGT equivalent tax breaks in New Zealand.
• 24:23
  Speaker 1: And their rentals soared. And Nerida Conisby, who's been on
• 24:28
  Speaker 1: the show, made the point that they are now among
• 24:31
  Speaker 1: the dearest in the world. And guess what? The new
• 24:34
  Speaker 1: government in New Zealand has reversed those changes that the
• 24:40
  Speaker 1: Ardern government tried to bring in. It's very hard to
• 24:42
  Speaker 1: go near this issue successfully, but we'll see.
• 24:45
  Speaker 2: Okay.
• 24:46
  Speaker 1: Hey, thank you very much, Sarah, for coming on the show.
• 24:48
  Speaker 1: Great to have you on the show again.
• 24:49
  Speaker 2: Thank you. Thank you so much.
• 24:52
  Speaker 1: Always good to get your point of view on things.
• 24:55
  Speaker 1: It's a distinct point of view from people we often
• 24:57
  Speaker 1: talk about. We don't actually meet that often on the
• 25:00
  Speaker 1: show and we should do so more often. Thank you
• 25:02
  Speaker 1: very much, everyone, for listening. Do keep those questions coming in.
• 25:05
  Speaker 1: The email is thebunnypuzzle at theaustralian.com.au. Talk to you soon.
• 25:14
  Speaker 2: Thank you.