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A surprise pocket of property opportunity · The Money Puzzle

0:09
Speaker 1: Hello, and welcome to The Australian's Money Puzzled podcast. I'm
0:13
Speaker 1: James Kirby. Welcome aboard everybody. There's so much I want
0:16
Speaker 1: to talk to you about this week. I think we're
0:17
Speaker 1: going to have to actually break it up. We have
0:20
Speaker 1: some really interesting changes in the property market happening before
0:24
Speaker 1: our eyes, and to be honest, perhaps not entirely reported
0:28
Speaker 1: on or fully analyzed yet, and hopefully we can get
0:30
Speaker 1: you ahead of the pack here on this I'm talking
0:33
Speaker 1: about changes in relation to property taxes that are coming
0:37
Speaker 1: down the line, property grants that are coming along, both
0:41
Speaker 1: federal and state, and also some very really bad results
0:46
Speaker 1: coming out of the unit and apartments market, which again
0:49
Speaker 1: we haven't had a chance to talk about on the show.
0:51
Speaker 1: Just quickly. Also, we had a response, We had a
0:53
Speaker 1: storm of response I think on Jackie Clark's most recent
0:58
Speaker 1: featuring on the show, which was the show where she
1:00
Speaker 1: was talking about crypto, that is, she was talking from
1:03
Speaker 1: the skeptic side about crypto, and we will deal with
1:08
Speaker 1: it afresh on Thursday's show. There's a lot to talk
1:11
Speaker 1: about both the markets and I think perhaps the changing
1:16
Speaker 1: certainly among our audience here changing response to crypto, But
1:20
Speaker 1: on property, I want to get straight into it.
1:22
Speaker 2: I have.
1:23
Speaker 1: I thought I had everything, actually all my ducks in
1:25
Speaker 1: a row here, and then just as we were about
1:27
Speaker 1: to start the show, I see the Queensland premiere in
1:32
Speaker 1: a race, perhaps to exceed the generosity of the Albanesi
1:36
Speaker 1: government has this morning announced a first home buyer guarantee scheme.
1:41
Speaker 1: We do you hear this? And all you need is
1:44
Speaker 1: a two percent deposit up to a million bucks, so
1:47
Speaker 1: you can buy a million dollar home on a ninety
1:50
Speaker 1: eight percent deposit and if that is good for the market,
1:54
Speaker 1: I'm not sure. I know someone who will know, though,
1:56
Speaker 1: which is Cameron Kusher. How are you Cameron?
1:59
Speaker 2: Yeah, I'm both like Gimes. How are you good?
2:01
Speaker 1: And good to have you on the show, folks. Cameron
2:03
Speaker 1: is with Cameron Kusher of Kusher Consulting. He is someone
2:07
Speaker 1: who is an expert in property analysis and I've known
2:10
Speaker 1: him for a long time. Goes back to at least
2:13
Speaker 1: ten years ago with Core Logic, where he seemed to
2:15
Speaker 1: be there for a decade or so. I would think
2:17
Speaker 1: he was with Ria or real estate dot com dot you,
2:20
Speaker 1: a neose core company for several years, and now he
2:24
Speaker 1: has gone out on his own. And I love when
2:25
Speaker 1: people go out on their own because they are free
2:29
Speaker 1: to talk in a much in a much easier fashion
2:32
Speaker 1: than when they are inside a larger company. And that
2:35
Speaker 1: goes for anything. If we could, Although I've already teased
2:38
Speaker 1: people with this home loan guarantee, what's going on there?
2:41
Speaker 1: I really would like to talk to you about taxes
2:43
Speaker 1: and property. I'll tell you why. I mean, everyone's always
2:45
Speaker 1: talked about land tax in property, and that was people
2:49
Speaker 1: are always unhappy with it, in it on realized gains
2:52
Speaker 1: basically paper gains that you end up tax on the
2:54
Speaker 1: unimproved value of the land. And now the new super
2:56
Speaker 1: tax is a similar sort of thing. But also well
3:00
Speaker 1: there's the gym Chalmers. It's going to do a major
3:03
Speaker 1: review of tax. Tell me you've got instinct justical where
3:07
Speaker 1: property investors will be in this review.
3:11
Speaker 2: Look, I think in terms of property investors, there's probably
3:14
Speaker 2: a risk that tax on investment properties go up. We
3:17
Speaker 2: have already seen in Victoria obviously that the state government
3:20
Speaker 2: there has increased taxes on property investors quite substantially. And look,
3:25
Speaker 2: I think if any tax is going to any tax
3:28
Speaker 2: change is going to come for the property sector. It's
3:31
Speaker 2: probably not going to be a blanket move to land
3:33
Speaker 2: tax and removing stamp duty, although I think that's the
3:35
Speaker 2: thing that probably makes most sense. I think it would
3:38
Speaker 2: likely be some sort of increase in taxes on investors,
3:43
Speaker 2: and I think the reasoning that they would give for
3:45
Speaker 2: that is that we try to level the playing field
3:47
Speaker 2: for first home buyers. Whether that actually does happens or
3:51
Speaker 2: not probably debatable. And I think the other thing when
3:55
Speaker 2: you lift taxes on property investors is that you get
4:00
Speaker 2: rests or fewer rental properties. Now that might not actually
4:03
Speaker 2: be an issue if you're getting more people buying first times.
4:06
Speaker 2: But at the same time, the federal government and state
4:08
Speaker 2: governments are giving a lot of tax breaks to build
4:11
Speaker 2: to rent developers, which are institutional investors from overseas. And
4:15
Speaker 2: one of the analyzes I'd love to see is how
4:17
Speaker 2: do the tax breaks that individual investors get for property
4:21
Speaker 2: stack up to how many tax breaks we're giving overseas
4:26
Speaker 2: capital as tax breaks to come in and build to rent.
4:29
Speaker 2: And I haven't seen that analysis anyway.
4:31
Speaker 1: Yes, because they do it at a big level, don't they,
4:33
Speaker 1: And they get some exemptions that people wouldn't be familiar with.
4:35
Speaker 1: But in terms of the perceived vulnerability if you like,
4:41
Speaker 1: of the property investment residential property investment sector two tax lifts.
4:45
Speaker 1: We've seen them in state governments. If Chudres was to
4:50
Speaker 1: find it a way to do that in property, what
4:52
Speaker 1: do you think would be the route.
4:55
Speaker 2: Look, I think if that was the reasoning for doing
4:57
Speaker 2: it would, as I said, I think, be about leveling
5:00
Speaker 2: the playing field. But really it's probably more about revenue raising,
5:03
Speaker 2: and what you would see is people that own investment
5:07
Speaker 2: properties currently they would probably change their plans and look
5:10
Speaker 2: to exit those investment properties and they go and park
5:13
Speaker 2: their capital somewhere else, and then over time you would
5:15
Speaker 2: get fewer people investing in property. And I think that's
5:19
Speaker 2: probably more problematic because yes, there's a big encouragement of
5:24
Speaker 2: buil to rent here in Australia at the moment, but
5:26
Speaker 2: it's still very much at its infancy and a lot
5:29
Speaker 2: of what is being delivered in the build to red
5:30
Speaker 2: space is premium rental product, so it's actually cheaper than
5:34
Speaker 2: what the established market already has and it's.
5:38
Speaker 1: Not at a big enough scut But in terms of
5:41
Speaker 1: the tax for investors, what do you think you'd go for?
5:44
Speaker 1: Is it downe tax, is it stamp duty, negative gearing.
5:47
Speaker 2: Look, I think it'll be a move on land tax
5:49
Speaker 2: and possibly negative gearing. But I don't think he'd be
5:52
Speaker 2: brave enough to change negative gearing or capital gains tax
5:55
Speaker 2: discount without taking that to an election first, because I
5:59
Speaker 2: think if they they did that, they would blow an
6:01
Speaker 2: awful lot of their political capital. So I think the
6:03
Speaker 2: most likely one is landtak.
6:05
Speaker 1: Okay, all right, yeah, interesting, And I suppose the precedent
6:10
Speaker 1: is there. They put the superinuation tax up on Riolann's
6:14
Speaker 1: gains fifteen percent on a month's on earn ex months
6:17
Speaker 1: above three million, they put it up, they won the election,
6:21
Speaker 1: so that is a very kind of sound process for
6:24
Speaker 1: them politically to move the pump. Okay, yeah, interesting. Now
6:28
Speaker 1: you've said in the past the property isn't effectively taxed anyway, So.
6:34
Speaker 2: What's from I view? I think, and not looking necessarily
6:37
Speaker 2: just from an investor's perspective. Obviously, investors do play land tax,
6:41
Speaker 2: whereas owner occupiers don't. I think if we look at
6:44
Speaker 2: the tax system with property, the biggest challenge or the
6:46
Speaker 2: biggest problem, is that we still rely on stamp duty. Now,
6:50
Speaker 2: if you look in any given year, only about four
6:53
Speaker 2: and a half percent of all the properties in the
6:55
Speaker 2: country transact, and that accounts for the state and local
6:59
Speaker 2: governments through about twenty five to thirty percent of their
7:02
Speaker 2: tax revenue, So you're getting so you're basically relying on
7:06
Speaker 2: four and a half percent of the people that transacted
7:08
Speaker 2: property a year to fund your coffers. Now, that leads
7:12
Speaker 2: to very volatile revenue year to year depending on how
7:15
Speaker 2: the housing market's going. I think you should scrap stamp
7:19
Speaker 2: duty completely and replace it with a land tax on
7:21
Speaker 2: all properties, not just on investment properties. That way, state
7:26
Speaker 2: governments have got guaranteed revenue. In fact, if you've got
7:30
Speaker 2: land tax in place, one of the ways to grow
7:32
Speaker 2: that land tax revenue will be to approve more housing
7:35
Speaker 2: and encourage more people to come and build new houses
7:39
Speaker 2: in your market. So I think moving the land tax
7:42
Speaker 2: is both a good efficiency for the housing market, but
7:46
Speaker 2: it could also really be good for delivering a lot
7:48
Speaker 2: more housing in the market as well, because you might
7:50
Speaker 2: find that all of a sudden, local and state governments
7:53
Speaker 2: become a lot more pro adding new housing supply because
7:57
Speaker 2: that means more people paying land tax.
7:59
Speaker 1: A lot of people on the show I've complained that
8:01
Speaker 1: in Victoria it's actually a model of what you don't do.
8:04
Speaker 1: They just stacked property taxes up, ten of them in
8:06
Speaker 1: a rule on property and guess what, it's got the
8:08
Speaker 1: lowest investor activity. It's got the worst numbers there is there.
8:10
Speaker 1: Do you think that's the explanation or do you think
8:13
Speaker 1: that one led to the other? Look.
8:16
Speaker 2: I think in Victoria definitely led to another, but it
8:19
Speaker 2: was more it was very much just focused on the
8:21
Speaker 2: investor market. I think that if I think there should
8:25
Speaker 2: be land tax on all properties, at the moment you're
8:27
Speaker 2: only paying land tax on investment properties, not on own
8:29
Speaker 2: or occupied properties. I think it's a much more reasonable
8:32
Speaker 2: system to have land tax on all properties, but have
8:36
Speaker 2: it and do away with stab duty.
8:38
Speaker 1: Right, So, if we're listening listeners who have investment property
8:42
Speaker 1: in terms of the outlook for tax, then you what
8:46
Speaker 1: do you think is this sort of most likely tax
8:50
Speaker 1: issue forming for them?
8:51
Speaker 2: I think that the most likely tax issue forming for
8:53
Speaker 2: them is that there is an increase in land tax
8:56
Speaker 2: to investors. But there's no introduction of land tax for
9:00
Speaker 2: owner occupiers. So we're not going to do away with
9:02
Speaker 2: stamp duty. But what the federal government potentially looks at
9:06
Speaker 2: is just lifting land tax further on investors and discouraging
9:09
Speaker 2: investment further. And I think for investors that's problematic. I
9:13
Speaker 2: think what we really need to be doing is removing
9:15
Speaker 2: stamp duty and having a land tax on all properties,
9:19
Speaker 2: not just on investment properties.
9:21
Speaker 1: Okay, very good, and I suppose I know it's unfortunate.
9:24
Speaker 1: But one thing that backs into what you're saying that
9:27
Speaker 1: land tax could lift is that there is a precedent
9:30
Speaker 1: with the supertax where there is unrealized gains tax, and
9:36
Speaker 1: that is they're sticking with that, so it would actually
9:38
Speaker 1: be consistent. The last thing I imagine many investors want
9:41
Speaker 1: to hear. Okay, we'll take short break with me back
9:42
Speaker 1: in a moment. Hello, Welcome back to the Australians Money.
10:00
Speaker 1: I'm James Kirby and I'm talking to Cameron Kusher of
10:03
Speaker 1: Kusher Consulting, a veteran of the property analysis market in
10:08
Speaker 1: Australia and well known by investors and property professionals alike.
10:12
Speaker 1: Now we were just talking there just in the first segment.
10:16
Speaker 1: I think we were talking about tax. What might happen
10:19
Speaker 1: with tax in this big review in relation to property
10:22
Speaker 1: for you as an investor and how does that matter.
10:23
Speaker 1: It's interesting. I talked to Louis Christopher SQM, another very
10:28
Speaker 1: well known researcher Friday. He said capital gainst tax for sure,
10:32
Speaker 1: he thought it was a probability over a possibility. Cameron
10:36
Speaker 1: is actually of the opinion it will be land tax.
10:38
Speaker 1: And how that would work, of course, is that it
10:40
Speaker 1: would be fed camer in conjunction with state governments, and
10:44
Speaker 1: that is entirely possible of course with the current sort
10:46
Speaker 1: of political alignment that we have across the country. So
10:49
Speaker 1: stand by. But I think it's pretty clear property is
10:52
Speaker 1: not going to escape a major tax review. Okay, Now
10:56
Speaker 1: another thing I wanted to talk to you about. This
10:58
Speaker 1: oneing Cameron was about the ullnits market. I had no
11:01
Speaker 1: idea it was so bad. The apartment loss is g
11:05
Speaker 1: I mean, one in five apartments sold in Melbourne sort
11:08
Speaker 1: in a loss. Ninety percent of all loss making properties
11:11
Speaker 1: in Sydney apartments. What's going on?
11:16
Speaker 2: Yeah, I mean this is actually a trend that's been
11:18
Speaker 2: around for a while. I think it's being exacerbated at
11:21
Speaker 2: the moment by the fact that the Melbourne housing market
11:23
Speaker 2: is generally quite weak. But this really is driven by
11:28
Speaker 2: the fact that what drives the increase in property values
11:31
Speaker 2: is the increase in land value. And when if we
11:34
Speaker 2: have a look at apartments, they've got a very tiny
11:37
Speaker 2: component of that property, which is land, so typically they
11:41
Speaker 2: don't appreciate, and especially when you buy brand new properties,
11:45
Speaker 2: they will typically depreciate because the idea is you buy
11:47
Speaker 2: a brand new property, you pay a premium for that
11:50
Speaker 2: brand new property, and you'd depreciate all the fixtures within
11:55
Speaker 2: that property and it's generally reduces in price over time.
11:58
Speaker 2: So I think firstly, from an investment perspective, we find
12:02
Speaker 2: that apartments tend to not be as good of an
12:05
Speaker 2: investment as houses because houses sit on land, the land
12:09
Speaker 2: increases in price. And secondly, I think there is this
12:13
Speaker 2: big push at the moment to get more housing density
12:16
Speaker 2: into our cities, get more people living in apartments, and
12:19
Speaker 2: I think there's a limit to how strong that push
12:21
Speaker 2: is going to be because I think most people in
12:23
Speaker 2: Australia want to buy a property and want that property
12:26
Speaker 2: to increase in price over time to make them feel wealthier.
12:30
Speaker 2: And I think a lot of people realize if they
12:33
Speaker 2: go and buy an apartment, they're not going to get
12:35
Speaker 2: that same level of capital growth as they would get
12:37
Speaker 2: with a house.
12:38
Speaker 1: All right, So it sounds to me I think you're
12:39
Speaker 1: a faitalistic or whatever, but you're not of only opinion
12:42
Speaker 1: that this gap has gone to narrow. There was this
12:44
Speaker 1: theory that, you know, units would surely catch up with
12:46
Speaker 1: houses and the gap would niril and that maybe first
12:49
Speaker 1: tom buyers would move in and buy off investors. That's
12:52
Speaker 1: not clearly not happening in the big cities, no.
12:56
Speaker 2: I mean, I think some first home buyers buy an
12:58
Speaker 2: apartment initially mainly because they want to live close to
13:03
Speaker 2: a certain area and they can't afford a house in
13:04
Speaker 2: that market. But I think a lot of the apartments
13:07
Speaker 2: that are being built now you know you've got smaller
13:09
Speaker 2: one and two bedroom apartments, there's not a lot of
13:11
Speaker 2: those being built at the moment. And they might be
13:14
Speaker 2: good when you're young, when you sing, or when you're
13:17
Speaker 2: in a couple, but once you get to this point
13:18
Speaker 2: where you're having kids, they're no longer really viable to
13:21
Speaker 2: live in those properties. A lot of what else is
13:24
Speaker 2: being built at the moment is large three and four
13:27
Speaker 2: bedroom product, and that's largely targeted at people downsizing out
13:31
Speaker 2: of big homes in premium locations into these and they're
13:35
Speaker 2: just not affordable for most people that are on a budget.
13:38
Speaker 2: And realistically, a lot of those new apartments that are
13:40
Speaker 2: being built, when you look at the price of them
13:42
Speaker 2: and you compare it to the price of a house
13:44
Speaker 2: in the suburb they're in, or a house in a
13:46
Speaker 2: suburb reasonably close by, you're probably going to find the
13:50
Speaker 2: people are going people that are not downsizing are going
13:53
Speaker 2: to preference buying a house in a nearby suburb rather
13:57
Speaker 2: than the apartment in that suburb.
13:58
Speaker 1: Right, yes, yeah, yeah, So one of the underlying things
14:01
Speaker 1: there I think you're saying is that it's also deer anyway,
14:04
Speaker 1: it's also expensive, and so your yields are poor, right,
14:08
Speaker 1: its are pretty bad in any event. Yeah, yeah, I mean.
14:12
Speaker 2: There's some exceptions. Obviously, Apartments in places like Darwin have
14:16
Speaker 2: very good yields. Even Canberra has quite good yields on
14:19
Speaker 2: apartments as well. And surprisingly, or maybe not surprisingly, rental
14:23
Speaker 2: yields on apartments in Melbourne at the moment are really high.
14:26
Speaker 2: They're quite strong. So if Victoria didn't have this higher
14:30
Speaker 2: rate of land tax to invest it, you would probably
14:32
Speaker 2: actually see quite a lot of people investing in inner
14:34
Speaker 2: city Melbourne apartments at the moment, I think the yield's
14:36
Speaker 2: the best it's been in about twenty five years. But
14:39
Speaker 2: obviously people are not doing I mean that's the gross yield.
14:43
Speaker 2: The net yield obviously, because you've got that higher land
14:45
Speaker 2: tax is going to be lower. But just looking at
14:47
Speaker 2: the figures, it actually stacks up pretty well in Melbourne
14:50
Speaker 2: at the moment, but you're not getting people investing in
14:53
Speaker 2: that product type at the moment.
14:55
Speaker 1: What are the grosser yields compared to national average?
14:58
Speaker 2: So I haven't looked for couple of months, looking at
15:01
Speaker 2: about five and a half percent in Melbourne at the
15:03
Speaker 2: moment the groscio for a unit nationally you're probably looking
15:06
Speaker 2: at about four point four percent, so it is significantly high.
15:10
Speaker 1: So half for a city of five million. It sounds
15:12
Speaker 1: at face value very good. But of course the reason,
15:14
Speaker 1: as you say, as you imply, the reason is what
15:16
Speaker 1: the prices have been going nowhere and the gap between
15:19
Speaker 1: the gross and the net has probably widened. That's very
15:22
Speaker 1: interesting now at this point, I ask you, so we
15:26
Speaker 1: know that the market is sort of distorted in various ways.
15:29
Speaker 1: Like you mentioned, how people will clearly overpay for properties
15:32
Speaker 1: that are downsized of properties in the suburb they used
15:35
Speaker 1: to live in. People are not prepared to overpay for
15:38
Speaker 1: inner city units and we've seen very poor turns in
15:42
Speaker 1: that market. I guess the backdrop of a passable, relatively
15:46
Speaker 1: solid market for dwellings generally because that is underpinned by
15:50
Speaker 1: house prices. Now into this mix we get something that
15:55
Speaker 1: someone has pointed out to me, which is there's going
15:58
Speaker 1: to be because we have, first of all, a unit
16:00
Speaker 1: versal federal first Home Buyer scheme. Now where all you
16:04
Speaker 1: need is five percent, anyone or you need is five
16:07
Speaker 1: percent and you can buy your first home anywhere in Australia.
16:12
Speaker 1: There's no limit to how many people can participate in
16:15
Speaker 1: the scheme. The only issue is that the limit, there's
16:18
Speaker 1: a limit, and how much the house is worth. The
16:20
Speaker 1: deerest the house can be is nine hundred grand in
16:22
Speaker 1: Sydney and then it drops from there. So this is
16:25
Speaker 1: going to disturb the market. Then on top of that,
16:27
Speaker 1: this morning, just this morning, you pointed out that the
16:30
Speaker 1: Queensland government has just introduced a new scheme, same deal,
16:36
Speaker 1: excepted to two percent deposit two percent and you can
16:40
Speaker 1: buy up to a million dollar property that means they
16:43
Speaker 1: are encouraging people. Yes, they are encouraging people to become
16:47
Speaker 1: first owners and that's all fine. They are also encouraging
16:50
Speaker 1: ninety eight percent mortgages. So tell me what will the
16:55
Speaker 1: impact of that be and what I'm driving towards. Is
16:57
Speaker 1: it true that there will be a lot of demand
16:59
Speaker 1: basically immediately below the threshold, and then when you get
17:02
Speaker 1: to the threshold there's a big drop.
17:06
Speaker 2: I think that's Firstly, I think these schemes are going
17:08
Speaker 2: to be well supported because we know that one of
17:10
Speaker 2: the biggest barriers to entering home ownership is the fact
17:14
Speaker 2: that you have to pay. You have to pay lenders
17:17
Speaker 2: mortgage insurance, and obviously people have a preference to save
17:20
Speaker 2: a bigger deposits, so they have to pay a lower
17:23
Speaker 2: amount of lenders mortgage insurance. Now, if you don't have
17:25
Speaker 2: to pay lender's mortgage insurance, you'll be able to buy sooner.
17:29
Speaker 2: So the national the federal scheme doesn't start until January
17:34
Speaker 2: next year. The Queensland budget hasn't actually been announced just yet.
17:38
Speaker 2: This was a leak from the budget which comes out today.
17:41
Speaker 2: I suspect it we'll be starting sometime next year as well,
17:44
Speaker 2: but I think for me, the problem with these schemes
17:47
Speaker 2: is all they do is encourage more people to buy
17:51
Speaker 2: at the high prices we've got at the moment. And
17:53
Speaker 2: also when you're getting the federal government or the state
17:56
Speaker 2: government involved in housing and effectively on the book for housing,
18:02
Speaker 2: there's they're going to be more encouraged to push property
18:06
Speaker 2: prices higher. Now, I know, listen this to these podcasts.
18:10
Speaker 2: Your podcast are investors, and higher property prices will help investors.
18:14
Speaker 2: But from a more holistic position, you know, is that
18:18
Speaker 2: really what we need getting more people into the housing
18:21
Speaker 2: market at already very high prices. And you know, all
18:25
Speaker 2: of basically everything that any government in Australia does at
18:28
Speaker 2: the moment is trying to get more first home buyers
18:31
Speaker 2: in the market at higher prices rather than lowering prices.
18:35
Speaker 2: And I think the other challenge is that every time
18:38
Speaker 2: they do this, next time prices are more expensive, so
18:42
Speaker 2: you have to give an even greater stimulus. So we're
18:44
Speaker 2: at a ninety two percent deposit, you know, do we
18:48
Speaker 2: then get to the zero percent deposit that the government
18:50
Speaker 2: is actually covering all of your deposit, you don't have
18:53
Speaker 2: to have any money down. Do we get to the
18:55
Speaker 2: point where you've got ninja loans like they had in
18:57
Speaker 2: the US during the GFC, you know, no job loans,
19:01
Speaker 2: and I feel like it's a slippery slope. When I
19:05
Speaker 2: first started in property, it was the seven thousand dollar
19:08
Speaker 2: first home bio grant, then it was fourteen thousand, and
19:11
Speaker 2: then it was twenty one thousand. Here in Queensland it's
19:14
Speaker 2: now a thirty thousand dollar first home bio grand. If
19:16
Speaker 2: you're buying a brand new property and it's a two
19:18
Speaker 2: percent deposit, I feel like you're just kicking the can
19:21
Speaker 2: down the road. And every time, you know, every couple
19:24
Speaker 2: of years, they have to go to something bigger and
19:27
Speaker 2: more outlandish to try and help people get into the
19:29
Speaker 2: housing market. And at the end of the day, it's
19:31
Speaker 2: not actually increasing home ownership rates, particularly for younger people.
19:35
Speaker 2: So whilst it looks good, it's not really addressing the
19:40
Speaker 2: slide in home ownership we're seeing here in Australia, and
19:43
Speaker 2: just on.
19:43
Speaker 1: The investment point of view. So is there a merit
19:47
Speaker 1: in that argument that when you have these schemes, that
19:51
Speaker 1: it's the strata just above the threshold where the value
19:54
Speaker 1: is because everybody's competing, but they have the grant in mind,
19:58
Speaker 1: they know what the top lot is. You can't be
19:59
Speaker 1: more the nine hundred thousands in Sydney, you can't be
20:02
Speaker 1: more than a million in Brisbane, and then the million
20:05
Speaker 1: ten thousand is certainly sort of wide open opportunity I think.
20:10
Speaker 2: So I think, you know, for anyone looking to invest
20:12
Speaker 2: I think there's a great opportunity for them because they
20:15
Speaker 2: know where these caps are and you know that you're
20:17
Speaker 2: probably not going to have any, or if you do
20:19
Speaker 2: have any, it's going to be very little competition from
20:21
Speaker 2: first time buyers. So it's kind of this forgotten pocket
20:25
Speaker 2: in the market. So that's where the investor opportunity is.
20:27
Speaker 2: And obviously the other opportunity for investors is governments have
20:31
Speaker 2: now got a lot more skin in the game as well, so.
20:34
Speaker 1: You think coming back that keep coming back with a
20:37
Speaker 1: larger space of incentives as you suggest, all exactly. Yeah,
20:42
Speaker 1: very good, really interesting insights there from Cameron. Thank you Cameron. Okay,
20:46
Speaker 1: we're going to stick with us for some questions. I
20:48
Speaker 1: have some very good curated property questions from our ever vigilant,
20:54
Speaker 1: highly intelligent audience back in the moment. Hello, welcome back
21:05
Speaker 1: to the Australian's Money Puzzled podcast James Kirby with Cameron
21:08
Speaker 1: Kusher of Kusher Consulting. You probably know Cameron, You've known
21:12
Speaker 1: that he's been associated with the both RIA and Chre
21:15
Speaker 1: logic over the years. Than he is now an independent
21:17
Speaker 1: consultant in this space. Brest asks, I recently purchased one
21:22
Speaker 1: hundred acre rural land property outside of Perth. The price
21:25
Speaker 1: was comparable to bind five acres elsewhere. Seemed like a
21:30
Speaker 1: great opportunity. However, he now realizes a few things and
21:35
Speaker 1: he lists them out worth hearing. Number one, insurance is
21:38
Speaker 1: classified as rural is more expensive. Two, building costs are
21:41
Speaker 1: cons significantly higher in rural areas. Three, there are ongoing
21:47
Speaker 1: requirements in terms of maintenance of course over a larger space.
21:51
Speaker 1: And perhaps most surprisingly, banks seem hesitant to lend on
21:56
Speaker 1: land of this size. Interesting, he said he'd like to
21:59
Speaker 1: hear what we have to see about these issues, except
22:02
Speaker 1: I would just preface whatever coment says that. I'm sure Brett,
22:06
Speaker 1: you were quite aware that ruralaland was actually rural farmland
22:10
Speaker 1: has been a hot property, hasn't it. It's been the
22:12
Speaker 1: best performing over quite a few years until very recently.
22:17
Speaker 1: Is that right? Comment?
22:19
Speaker 2: Yeah, it has. It's been incredibly well performing. But you know,
22:23
Speaker 2: as Renton's kind of highlighted here, there's certainly some risks
22:26
Speaker 2: by that property. Your insurance costs are higher, obviously, your
22:30
Speaker 2: maintenance costs are a lot a lot greater. The build
22:34
Speaker 2: costs probably depending on how close this property actually is
22:37
Speaker 2: to Perth, it shouldn't be significantly higher. But you know,
22:41
Speaker 2: he said it's rural and near Perth. I don't know.
22:44
Speaker 2: Obviously w A is big. The idea of near to
22:46
Speaker 2: Perth might be different.
22:47
Speaker 1: They might be different than someone else's, Yes.
22:50
Speaker 2: But I mean wa in general, you know there's an
22:53
Speaker 2: undersupplied people building houses. We've seen really rapid escalation and
22:57
Speaker 2: construction costs over recent years.
23:00
Speaker 1: I imagine that's something that probably a general issue that
23:02
Speaker 1: in genuinely rural areas, obviously the supply skills would be
23:05
Speaker 1: less and more of an issue to get people. Quite simply,
23:08
Speaker 1: there's always been the case. This is never investment advice
23:11
Speaker 1: across information only. All right, thank you Brett, and best
23:14
Speaker 1: of luck with that. I think it was very useful.
23:17
Speaker 1: Thank you for writing in and telling the audience our
23:19
Speaker 1: listeners your experience. Paul are grants for houses and he
23:24
Speaker 1: also adds house batteries and electric vehicles. These grants are
23:29
Speaker 1: there always just for people who are working? I think
23:33
Speaker 1: broadly the answer is yes on that one.
23:36
Speaker 2: Yeah, as far as I'm aware, it's mainly for working people,
23:39
Speaker 2: not for people in retirement phase.
23:41
Speaker 1: Yes, yeah, yes, that is the nature that the logic
23:44
Speaker 1: I supposed behind most of these grants is to assist
23:47
Speaker 1: certain people and certain demographics at certain times of their lives.
23:50
Speaker 1: So it's not so much that it's exclusionary, but it
23:53
Speaker 1: is effectively exclusionary at the end of the day. Okay,
23:56
Speaker 1: thank you, Paul Carl with the ccarlital gains tax a
24:01
Speaker 1: key issue for all property investors, and we mentioned on
24:04
Speaker 1: the show that some analysts believe that capital gains could
24:07
Speaker 1: be in the sights of the Treasury in this forthcoming
24:12
Speaker 1: tax review, that it would be perhaps one of the
24:15
Speaker 1: easier moves on the sector compared to other things like
24:19
Speaker 1: negative gearing or stamp duty, and the political sort of
24:23
Speaker 1: politically expedient one is often the one to hang on
24:26
Speaker 1: to folks. But we'll see. Carlas, can you have a
24:29
Speaker 1: capital gainst tax with no taxable income if you don't
24:32
Speaker 1: have a taxable income do you still pay capital gains? Well,
24:37
Speaker 1: if you have a capital gain, you pay capital gainst
24:39
Speaker 1: tax and it is autonomous to anything else in your life.
24:44
Speaker 1: But that's basically it isn't it.
24:46
Speaker 2: I don't know of any other loopholes. I think, you know,
24:48
Speaker 2: if you're making a capital gain, the government wants a
24:51
Speaker 2: little bit of that capital gain.
24:52
Speaker 1: Whether I think you make a capital gain and you're alive,
24:56
Speaker 1: then you are, you are up for capital gains tax
24:58
Speaker 1: and you're or nothing else really matters. It's the best
25:02
Speaker 1: of my knowledge. If anyone can dispute that, let's here
25:05
Speaker 1: it all right, terrific. Hey, and thank you very much
25:08
Speaker 1: Cameron Kusher of Kusher Consulting to be on the show
25:10
Speaker 1: this morning. Thanks for having me, James lovely to talk
25:14
Speaker 1: to you. Okay, folks, we will, as I say, on Thursday,
25:17
Speaker 1: we're going to have a look at well, very lively markets.
25:20
Speaker 1: Actually they're not very lively markets. That's the irony. Very
25:23
Speaker 1: very lively news, global news around markets that are oddly
25:28
Speaker 1: complacent and relatively now volatility considering what's happening that we
25:33
Speaker 1: will cover and also we will cover crypto. And on
25:37
Speaker 1: the last show we had someone who's skeptical of crypto.
25:41
Speaker 1: In the next show, I'm going to have Shane Oliver
25:44
Speaker 1: from AMP and AMP was the first major financial institution
25:48
Speaker 1: in Australia to actually make a investment in crypto, and
25:52
Speaker 1: he will actually cover the other side of the argument,
25:55
Speaker 1: just to be fair. Okay, talk to you soon. Remember
25:57
Speaker 1: the email the money puzzle at the Australian dot com
26:00
Speaker 1: dot a U, the s of the Wood, the
26:08
Speaker 2: S