Latest / The Money Puzzle / Negative gearing… who needs it anyway?

Transcript

Negative gearing… who needs it anyway? · The Money Puzzle

0:09
Speaker 1: Hello and welcome to The Australian's Money Puzzitle podcast. I'm
0:12
Speaker 1: James Kirkby. Welcome aboard everybody. You know. Since I talked
0:16
Speaker 1: to you just a few days ago, we've had news
0:19
Speaker 1: that the government is now modeling changes to negative gearing.
0:23
Speaker 1: To be specific, the government is testing the concept of
0:28
Speaker 1: having a cap of two properties per person on negative gearing.
0:32
Speaker 1: That's for real, folks. It's been modeled inside treasury and
0:35
Speaker 1: it goes hand in hand with clear science. The government
0:37
Speaker 1: is also planning a change to the discount on CGT
0:40
Speaker 1: that is effectively going to be a lift in the
0:43
Speaker 1: amount of CGT tax you will pay on properties specifically.
0:47
Speaker 1: So there are two major changes in the wind if
0:51
Speaker 1: you like, coming through for investors or anyone who's interested
0:56
Speaker 1: in buying a property, and you need to be across
0:58
Speaker 1: this and we're going to talk about it this week,
1:00
Speaker 1: particularly the difference that tax and government incentives are making
1:04
Speaker 1: inside the market. We've had some coverage on the show
1:07
Speaker 1: about the five percent home deposit scheme and the extent
1:10
Speaker 1: of which that has completely skewed the entry level of
1:13
Speaker 1: the market. So it's something that you need to be
1:16
Speaker 1: aware of. As I say, some great questions as well,
1:18
Speaker 1: and as I was mentioning of late, it would be
1:20
Speaker 1: terrific if you, as a fan of the show, would
1:23
Speaker 1: put a rating for us on Apple Podcasts. We'd really
1:26
Speaker 1: appreciate that. Now to steer us through this issue is
1:30
Speaker 1: someone who professionally steers people through issues of this nature.
1:34
Speaker 1: It's Jared McCabe from Weight and Property Group.
1:37
Speaker 2: How are you, Jared, I'm very objimes great to join
1:39
Speaker 2: your guest.
1:40
Speaker 1: Tell me here on the street right, you're you're on
1:43
Speaker 1: the hostings, you're there in front of auctions every week
1:46
Speaker 1: of the year. It seems to me that suddenly there
1:50
Speaker 1: is an actions of government is changing the nature of
1:52
Speaker 1: the property investment market in Australia and we've seen it,
1:54
Speaker 1: for instance rock Hard in the entry level sector where
1:57
Speaker 1: it is now the hottest sector in the market, ironically
2:00
Speaker 1: because it is where all the brands are. And now
2:03
Speaker 1: we see these potential changes coming in. Do they make
2:06
Speaker 1: an investor change their ways? Should they be alert to
2:11
Speaker 1: these changes? How would they affect them?
2:12
Speaker 2: Not necessarily?
2:13
Speaker 3: I mean a lot of these they're always short term
2:16
Speaker 3: changes to the market and most smart investors are looking
2:19
Speaker 3: probably more long term trajectories and Buying property is such
2:23
Speaker 3: an expensive exercise that the strategy around investing your property
2:28
Speaker 3: is usually more over a long term, So it can
2:31
Speaker 3: form part of your decision making, but it shouldn't form
2:33
Speaker 3: part of your overall long.
2:34
Speaker 2: Term strategy is to the type of asset that you'll
2:37
Speaker 2: be selecting.
2:38
Speaker 1: Okay, I did mention to you, and we talked just
2:40
Speaker 1: before the weekend with about negative gearing, something that I
2:44
Speaker 1: found quite alarming really, and I didn't know what was
2:47
Speaker 1: going on, which was that in negative geing. And we
2:52
Speaker 1: know that negative gearing and the negative beginning for you.
2:55
Speaker 1: So I've done it myself, many people have done it
2:58
Speaker 1: over the years, and it's very It's the outstanding tax
3:01
Speaker 1: break for someone who is on a salary. It's the
3:04
Speaker 1: outstanding tax break apart from super that's available to people.
3:07
Speaker 1: But there is a whole sort of mini industry, isn't
3:10
Speaker 1: there of getting people to buy multiple properties? And I
3:12
Speaker 1: was amazed. I talked to Veronica Morgan who runs that
3:15
Speaker 1: Buyer's Academy, she trains buyers agents, and she's just she
3:20
Speaker 1: literally said, there's a Ponzi scheme going on where there
3:23
Speaker 1: are these these groups. If you like getting investors to
3:27
Speaker 1: buy multiple properties. They're buying the properties for them. They're
3:31
Speaker 1: going into country towns. They're zoning in on a country town.
3:34
Speaker 1: They buy so many properties, the price goes up because
3:36
Speaker 1: it's a small town. They go back out to their
3:38
Speaker 1: client list and say look at Double look at Ballarat,
3:41
Speaker 1: look at some town, and they say the prices are
3:44
Speaker 1: Watch how the prices are going up. We get you
3:45
Speaker 1: in on this now. I kind of expected Veronica of
3:49
Speaker 1: a talk like that because I've talked to her before,
3:50
Speaker 1: but I was amazed to see the property council saying
3:52
Speaker 1: something similar a few days ago. So it looks like
3:55
Speaker 1: negative gearing. I mean it does like it does seem
3:59
Speaker 1: that there's dangers that mightn't be obvious to people about
4:02
Speaker 1: negative gearing and the machinery behind it that's grown over
4:05
Speaker 1: the years. What do you think, Yeah.
4:06
Speaker 2: Look at me.
4:07
Speaker 3: I read your comments with Veronica in your article fairly recently,
4:10
Speaker 3: and I thought I agree with a lot of what
4:11
Speaker 3: Varoni Descent were generally on pretty well the same page.
4:14
Speaker 3: And I do see that you do see that happening
4:16
Speaker 3: where there's that influx, and I mean on a different
4:18
Speaker 3: scale and from a different form. We saw that to
4:21
Speaker 3: an extent during COVID where there was people large trenches
4:26
Speaker 3: of people leaving say Meltmoine and go into regional areas.
4:29
Speaker 3: And it wasn't just a Victorian thing it was, but
4:32
Speaker 3: it was emphasizing victoria and it changed the dynamic of
4:35
Speaker 3: that local market and had that influx of people coming in.
4:38
Speaker 3: But then once that continued influx of people coming in
4:42
Speaker 3: stopped and they started to exit, that the market changed dramatically.
4:46
Speaker 3: And we've seen that this is not new to say
4:49
Speaker 3: that the cities that were mentioned, it's been a big
4:51
Speaker 3: thing that's occurred around mining towns. Again not necessarily from
4:55
Speaker 3: advocates or advisor advisory services focusing on areas. It's more
4:59
Speaker 3: been for some type of external reason that there's been
5:03
Speaker 3: a dragging of buyers into that market which is overinflated.
5:06
Speaker 3: But if it's not something that's going to be sustainable
5:09
Speaker 3: long term, then it's had to impact on values and
5:12
Speaker 3: it can impact both positively, but then when that change occurs,
5:15
Speaker 3: it can have a very negative impact on that same
5:17
Speaker 3: market as well. So those are the sorts of things
5:20
Speaker 3: that are mindful in terms of the negative gearing elements.
5:23
Speaker 3: I mean, there's still it's still very early days and
5:25
Speaker 3: there's a lot of different talk as to whether or
5:27
Speaker 3: not it'll be it'll be limited to all property investment,
5:31
Speaker 3: whether it'll be one property, whether it'll be more than
5:34
Speaker 3: if you own more than two properties.
5:36
Speaker 2: I don't mind the idea of it being for more
5:38
Speaker 2: than two.
5:39
Speaker 3: Properties, because I think that it makes the focus more
5:42
Speaker 3: from an investor's perspective, on people buying quality assets rather
5:45
Speaker 3: than just accumulating assets for the sake of it. Because
5:48
Speaker 3: typically when you focus more on accumulating as many assets
5:51
Speaker 3: as possible, that's probably when you start and you're in
5:54
Speaker 3: the cheaper market. That's when you are starting to compete
5:56
Speaker 3: more with first time buys, and that's where the first
5:59
Speaker 3: time buyers are looking into that space, and so investors
6:02
Speaker 3: compete with them.
6:03
Speaker 2: So I don't mind the idea of it.
6:05
Speaker 3: Focusing more on quality assets rather than as many as possible.
6:09
Speaker 2: Quantity over quality jips.
6:11
Speaker 1: Yeah right, Okay, did you one of the things about
6:14
Speaker 1: the negative gearing sort of machinery we were saying about
6:16
Speaker 1: this idea not an idea, This is there's evidence, hard
6:20
Speaker 1: evidence building that this is going on. The town's again
6:23
Speaker 1: targeted basically by big city buyers advocates who bring in investors,
6:28
Speaker 1: they push up prices. The next wave of investors see
6:32
Speaker 1: these above average price increases the egal way. That's and
6:35
Speaker 1: it's worse. That's like a stock market ramp. Isn't it
6:37
Speaker 1: like a pump and dump.
6:39
Speaker 3: Yeah, well it can be, and it does over inflate.
6:41
Speaker 3: As I said, that's what happens. It over inflates and
6:43
Speaker 3: it makes it unsustainable. So it means that first home
6:46
Speaker 3: buyers can't get into those markets, or even upsides. It's
6:50
Speaker 3: not just first home buyers. They might have owned something
6:52
Speaker 3: else and they're trying to just increase from a growing
6:54
Speaker 3: families perspective, and they're not able to do that because
6:58
Speaker 3: it's being over inflated by extra markets. Typically, though, what
7:01
Speaker 3: happens is that's not sustainable. So at some point in time,
7:05
Speaker 3: that market's not going to continue to increase and it's
7:08
Speaker 3: going to weigh the plateau, or it's going to start
7:10
Speaker 3: to reduce, because if you're not getting more and continuous
7:14
Speaker 3: increasing demand into those areas and buyers continually pushing them up,
7:18
Speaker 3: then it's not going to keep growing.
7:20
Speaker 2: Right.
7:21
Speaker 1: It sounds to me like you, if I was talking
7:23
Speaker 1: to you as an investor, you would be saying knowing
7:25
Speaker 1: that negative gearing is already an issue, knowing that there's
7:28
Speaker 1: exploitation there, knowing that there might be a cap of
7:32
Speaker 1: two per investor that you would see it was in
7:38
Speaker 1: your mouth. But logically what I'm needing too is it
7:41
Speaker 1: would seem to me that you would see stay away
7:43
Speaker 1: from the first time buyer area and if you're an investor,
7:46
Speaker 1: move up the scale because the value is better.
7:49
Speaker 2: Not necessarily stay away from it.
7:50
Speaker 3: I don't mean to stay away from it, but I focus,
7:53
Speaker 3: and we focus more for our clients on quality over quantity.
7:56
Speaker 3: So it's about buying a high quality asset. It's about
7:59
Speaker 3: buying it, you know, like where there's strong demand for property,
8:02
Speaker 3: where land is at it is a finite resource, and
8:06
Speaker 3: buying something that's got multifaceted demand. So you don't want
8:09
Speaker 3: it to be just reliant on investors, but you don't
8:11
Speaker 3: want it to be just reliant on first home buyers
8:13
Speaker 3: as well. If you can buy a property that's got
8:15
Speaker 3: different arms and different people wanting to buy into that.
8:18
Speaker 3: So whether it's first time wise, whether it's upsizes, whether
8:21
Speaker 3: it's downsizes, whether it's investors, because tenants like it, the
8:24
Speaker 3: more different buyt profiles, you can have the greater upward
8:27
Speaker 3: pressure from a demand perspective, and it means that you're
8:30
Speaker 3: not relying on one buyer driving the price up. There's
8:33
Speaker 3: a if there's a reduction in government support for first
8:36
Speaker 3: home buyers because it's been going for a couple of
8:39
Speaker 3: years and they take that away, there's still other buyer
8:42
Speaker 3: profiles that will help to lift that market and continue
8:44
Speaker 3: to have it pushing along.
8:47
Speaker 1: So if we put it all together, if we put
8:49
Speaker 1: the fact that there's been a whole series of government
8:52
Speaker 1: incentives into the property market which is skewing the market
8:57
Speaker 1: in the first time buyer layer, that is that the
8:59
Speaker 1: first tone buyer layer is actually the fastest, hottest part
9:03
Speaker 1: of the market. And if we put if we take
9:05
Speaker 1: it that it is very likely there's going to be
9:08
Speaker 1: changes to taxes now on property, certainly CGT effective lift
9:13
Speaker 1: and CGT tax that you will pay, and also perhaps
9:16
Speaker 1: a cap on negative gearing. How do you think that
9:19
Speaker 1: will change? How do you think that will change for
9:22
Speaker 1: the investor? What does the investor need to know about
9:24
Speaker 1: how that will percolate through the market.
9:26
Speaker 3: Tell you why be just property across other asset classes
9:29
Speaker 3: as well.
9:29
Speaker 2: So it's not just they specifically acted property.
9:32
Speaker 3: So for those looking at investment arms in what they
9:35
Speaker 3: can invest their finances in, it's not going to be
9:38
Speaker 3: as much of the decision around that.
9:39
Speaker 1: But Jared, the Senate inquiry is strictly owned property and
9:43
Speaker 1: all the talk is just down properly, So I think
9:46
Speaker 1: we have to say that it's possible it might just
9:47
Speaker 1: be properly.
9:49
Speaker 3: Will have an impact offering a few that where it's
9:51
Speaker 3: been more generic than that.
9:53
Speaker 1: So that's yeah, and I take your point. I take
9:56
Speaker 1: it it would be you know, creating all sorts of
9:59
Speaker 1: unfortunate consequences if they're isolated like that. But there's a
10:02
Speaker 1: chance there.
10:03
Speaker 3: May yeah, and that look, that may end up being
10:05
Speaker 3: the case, but look at something that has to be
10:07
Speaker 3: factored in. But it's still on a profit that you're making.
10:10
Speaker 3: So if you're going to we've looked at this, and
10:13
Speaker 3: there's been discussions around negative gearing and around and in
10:16
Speaker 3: different forms reducing it, whether it's been taking it away totally,
10:20
Speaker 3: whether it's been more income focused, and whether or not
10:23
Speaker 3: it's been not just the number of properties but the
10:26
Speaker 3: amount you're borrowing.
10:27
Speaker 2: There's been all.
10:28
Speaker 3: Sorts of things over the years and you've still got
10:31
Speaker 3: to it's you've still got to have a property that's
10:33
Speaker 3: going to be performing and building wealth in other forms.
10:36
Speaker 3: Just because you're losing money on the income side of things,
10:40
Speaker 3: it's got to be justified in the growth. And if
10:42
Speaker 3: it's not justified in the growth side of things, the
10:45
Speaker 3: negative gearings a waste of time.
10:47
Speaker 1: Yes, okay, interesting and we leave it right there. Pick
10:50
Speaker 1: up on that in one moment, the back in a second.
11:03
Speaker 1: Hello and welcome back to The Australian's Money Puzitive podcast.
11:06
Speaker 1: James Kirby here with Jared McCabe of the Wakelan Group.
11:10
Speaker 1: He is a buyer's advocate and quite outspoken one and
11:14
Speaker 1: well known in property circles and we have had him
11:17
Speaker 1: on the show before.
11:18
Speaker 2: You know what.
11:18
Speaker 1: Catches me this time about negative gearing, Jarard, is that
11:23
Speaker 1: everyone I talked to the CGT obviously is known for
11:27
Speaker 1: a few weeks the negative gearing came out of the blue.
11:29
Speaker 1: Matthew Cranston, who's my colleague on The Australian, actually found
11:31
Speaker 1: out on last Thursday. That is that the Treasury were
11:35
Speaker 1: modeling changes to CGT, which is the process of course,
11:38
Speaker 1: Treasury models the changes and the Government talked about it.
11:40
Speaker 1: Then they kind of floated, see how it goes. Then
11:42
Speaker 1: eventually they put it through. And that's a very sort
11:45
Speaker 1: of steadfast process which they have, and I think we
11:49
Speaker 1: can assume that they will follow this. But there's a
11:51
Speaker 1: lot of talk that the mood has changed. And I
11:53
Speaker 1: found when I talked to you on Friday, and when
11:55
Speaker 1: I talked to Victoria and when I talked to several
11:58
Speaker 1: other people in proper, they all say the same thing.
12:02
Speaker 1: I wouldn't mind it, it's okay. That's a very different
12:06
Speaker 1: response I got back in two nineteen. I think it
12:09
Speaker 1: was when negative gearing came up the first time or CGT.
12:12
Speaker 1: How many people shot it out of the park. The
12:14
Speaker 1: alp ple shortened. They lost the election partly of those plans.
12:18
Speaker 1: Put them together with trank dividends, and you could really
12:20
Speaker 1: justify the case that was the commercial financial reason at
12:23
Speaker 1: least that they didn't win the election. The mood seems
12:25
Speaker 1: to have changed, Your mood teams to have changed. What's changed, well,
12:29
Speaker 1: as hasn't changed. So we said the same thing last time.
12:31
Speaker 1: I mean, if you're only buying property for negative gearing
12:34
Speaker 1: and for tax benefits, then you're doing it for the
12:35
Speaker 1: wrong reasons.
12:36
Speaker 3: In the first place. It's not it's the tax benefits.
12:39
Speaker 3: And we've spoken about this for an extended period of time.
12:43
Speaker 3: The tax benefits are benefit. They're not the reason that
12:45
Speaker 3: you're buy an investment property, so you want to take advantage.
12:48
Speaker 3: No one wants to. They are carried back aside of you.
12:51
Speaker 3: You don't want to pay as any more tax than
12:53
Speaker 3: you need to, and no one does. So the negative
12:56
Speaker 3: gearing benefits helping that regard. But if that's the reason
12:59
Speaker 3: that you're buying and you focus purely on the tax,
13:02
Speaker 3: then you're doing it for the wrong reasons. You should
13:03
Speaker 3: be focusing on barking. It's going to give you the growth.
13:06
Speaker 1: If you're on a salary, it's your only tax break,
13:08
Speaker 1: and you wanted to do it, and the negative gearing
13:10
Speaker 1: meant the numbers that up for you. So you look
13:11
Speaker 1: at the yields and you said, oh, those rentals are
13:13
Speaker 1: tiny compared to how much I'm paying. H But then
13:16
Speaker 1: you put your you say, oh, it doesn't really add up.
13:18
Speaker 1: Then you do your negative gearing and go, oh, well
13:20
Speaker 1: it nearly adds up. I'm not after tax at the
13:23
Speaker 1: end of the year. This isn't going to cost me
13:24
Speaker 1: as much as I thought. If you take that away,
13:28
Speaker 1: what happens to the investment market, Well, it's.
13:32
Speaker 3: You're focusing more on the growth, and that should be
13:34
Speaker 3: you focus. You've got to find an asset that's going
13:36
Speaker 3: to achieve that for you. You've got to find something
13:38
Speaker 3: that's going to build wealth that way. If it's purely
13:42
Speaker 3: about the negative gearing and the tax benefits, you're doing
13:45
Speaker 3: it for the wrong reasons. The reason to buy investment
13:48
Speaker 3: property is to create wealth. You won't create wealth from
13:50
Speaker 3: tax savings.
13:52
Speaker 1: Right, Okay, yeah, yeah, so, and I suppose to that
13:55
Speaker 1: extent that's seriously under minds this. Are you just to
14:00
Speaker 1: that issue that I mentioned at the start of the show.
14:02
Speaker 1: Are you aware of that? Do you come up against
14:04
Speaker 1: that where you see people buying properties as part of
14:07
Speaker 1: sort of group buying that you just know is a problem.
14:11
Speaker 2: I haven't seen it, but I hear about it. Yeah.
14:13
Speaker 3: I can't say to you, yes, I know this person
14:16
Speaker 3: or that group's doing it or that group's doing it,
14:18
Speaker 3: but yeah, I've absolutely heard about it happening and seen
14:20
Speaker 3: that certain regional cities are being propped up in certain areas.
14:25
Speaker 3: I mean, you're not I mean there's not going to
14:27
Speaker 3: be a full demographic of an advisory company that's going
14:30
Speaker 3: to fully sustain and prop up a market like Ballarat.
14:33
Speaker 3: I mean, it's one hundred thousand people living in that township.
14:36
Speaker 3: It's not going to be sustained or propped up by
14:39
Speaker 3: one group coming in and buying properly there and inflating. Now,
14:43
Speaker 3: if they went and focused purely on a certain estate
14:46
Speaker 3: or a certain pocket, then that might be achievable.
14:49
Speaker 2: But they're not copping out Ballarat on their own.
14:52
Speaker 1: Yes, yes, fair enough, Yeah, okay. Just on the other
14:55
Speaker 1: side of this, not the tax side, but the incentive side. Again,
14:59
Speaker 1: for you out there every day in the market, tell
15:03
Speaker 1: me how the federal incentives, particularly the five percent universal
15:08
Speaker 1: home deposits scheme, is affecting the market and what changes
15:11
Speaker 1: it means for your approach. If I'm if you're standing
15:15
Speaker 1: beside me byers agents, and I'm saying to you, I
15:17
Speaker 1: only have a minion to spend on a residential property,
15:23
Speaker 1: and I know that puts me smack in the group
15:25
Speaker 1: where I'm competing with first time buyers.
15:27
Speaker 3: What do you say, Well, it depends on what your
15:30
Speaker 3: focus is and what your objectives are in terms of
15:32
Speaker 3: what's that market being doing.
15:34
Speaker 2: Yes, certainly.
15:34
Speaker 3: So we're obviously Melbourne focused because that's where we work,
15:37
Speaker 3: but this is the same across the board from my
15:39
Speaker 3: discussions with other people in other capital cities. In Melbourne,
15:43
Speaker 3: it's nine hundred and fifty thousand dollars limit. That's where
15:46
Speaker 3: the cap is, and I always assume it's there's varying
15:49
Speaker 3: degrees depending upon where the median house price seeds or
15:51
Speaker 3: the median dwelling price seeds.
15:53
Speaker 1: For a Yeah, I think it's one point five is
15:55
Speaker 1: the top, but it cascades down from there.
15:57
Speaker 3: So yeah, we are and we have seen at different
16:00
Speaker 3: stages over the years when these government incentives in different
16:04
Speaker 3: forms have come in. Sometimes they're hard limits, sometimes they're
16:08
Speaker 3: soft limits. When there are a hard limit like this,
16:11
Speaker 3: you very regularly see first home buyers drive up to
16:15
Speaker 3: that price and then stop them and it's a race
16:17
Speaker 3: to get to that figure who can get there first,
16:20
Speaker 3: And so you can quite often see value properties that
16:23
Speaker 3: are valued or should be valued just below that figure
16:27
Speaker 3: that them get driven up to that. Properties that are
16:29
Speaker 3: valued a little bit above start to struggle because they
16:33
Speaker 3: have been brought down, and buy as aren't prepared because
16:36
Speaker 3: of the free money that they're achieving. It's different in
16:39
Speaker 3: this instance because it's more it's done in a slightly
16:41
Speaker 3: different way. Sometimes in the past it's been a full
16:44
Speaker 3: cash incentive, or it might be stamp duty being taken away.
16:48
Speaker 3: In this time, it's giving people the ability who don't
16:51
Speaker 3: have the cash savings to have a twenty percent deposit
16:54
Speaker 3: to avoid that lender's mortgage insurance.
16:56
Speaker 2: It's giving them an opportunity.
16:57
Speaker 1: So if you've got a house, if there is a
17:00
Speaker 1: market and there's a layer where in each city there's
17:03
Speaker 1: a cap, so Sitney's one point five, it's very top
17:06
Speaker 1: and fifty in Melbourne, et cetera. So tell me about
17:09
Speaker 1: that layer above it. They're finding it hard to sell
17:12
Speaker 1: it because they're not getting the first time. Brus is
17:14
Speaker 1: depending upon.
17:15
Speaker 3: What the property types are, James, because some of those properties,
17:17
Speaker 3: once you get over the where the ridge is, might
17:20
Speaker 3: be suitable properties for upsizes. So people that might be
17:24
Speaker 3: coming from a smaller property, whether it be an apartment
17:27
Speaker 3: or a villa unit and looking to get into the house,
17:29
Speaker 3: and if the house is sitting above that range, then
17:32
Speaker 3: it may not be just as reliant on first home buyers.
17:34
Speaker 3: There may be upsizes coming into that market as well,
17:37
Speaker 3: whereas in the past where it's been at lower levels
17:40
Speaker 3: and it's been far more targeted at first home buyers.
17:44
Speaker 3: I think with the weather, we're certainly in Victoria where
17:47
Speaker 3: the limit sits at the moment, it's not as reliant
17:50
Speaker 3: just on first home boys. It's definitely been driven by
17:52
Speaker 3: them predominantly at the moment, and that's where the most
17:55
Speaker 3: activity is coming from, but there's not as much of
17:57
Speaker 3: a heavy reliance on that center.
18:01
Speaker 1: Okay, So the flip side of that is, is there
18:04
Speaker 1: opportunity just above the cup? So if I said to you,
18:07
Speaker 1: I've got nine to fifty to spend, would you actually
18:09
Speaker 1: see you might be much better off if you just
18:11
Speaker 1: had a million to spend in the market of a cause,
18:13
Speaker 1: if you've.
18:14
Speaker 3: Got it, I mean probably I wouldn't be as try
18:16
Speaker 3: and finesse it as much as that you're saying the
18:18
Speaker 3: nine to fifty to a mil. But if you've got
18:20
Speaker 3: one point one to one point two, then yeah, absolutely
18:22
Speaker 3: there's opportunities in that sort of price backup because you
18:24
Speaker 3: step above for a lot of the first time buyers.
18:26
Speaker 3: You then compete with some of the upsizes, and depending
18:29
Speaker 3: on the property type. It might be a good town
18:31
Speaker 3: based or it might be a good downsized type option
18:34
Speaker 3: as well.
18:35
Speaker 1: Right, And as that starting to play out in the
18:37
Speaker 1: market right now.
18:38
Speaker 2: Yeah, there's certainly that's certainly happening at the moment.
18:40
Speaker 3: The market down here though, is a little bit inconsistent,
18:43
Speaker 3: is probably the best way to put it at the moment.
18:45
Speaker 1: M Just tell us what you mean by that, Well,
18:50
Speaker 1: what does it consistent mean? Bad for some people, good
18:52
Speaker 1: for others?
18:52
Speaker 2: Yeah, that's right, it is.
18:53
Speaker 3: I mean those that are looking to buy, I think
18:55
Speaker 3: there's good opportunities around. But if you asked me the
18:57
Speaker 3: same question in sort of August September last year, was
19:00
Speaker 3: certainly starting to carry There's a lot of interstate investment
19:03
Speaker 3: inquiry and things were building through the spring. But when
19:07
Speaker 3: the inflation numbers started to come out towards the end
19:09
Speaker 3: of the year and the discussion around interest right rises
19:12
Speaker 3: rather than further reductions started to come to the fall,
19:15
Speaker 3: and then when they actually came into play last month,
19:19
Speaker 3: that's certainly changed the dynamic and change the sentiment around.
19:24
Speaker 1: Is that right? Is that interesting? So you think there
19:26
Speaker 1: might be something of a cooling of that interested bargain hunting, Yeah.
19:30
Speaker 2: Well, they're still there, but it's not as strong as
19:33
Speaker 2: what it was.
19:34
Speaker 1: Yeah, okay, because of course we had the interest rate
19:37
Speaker 1: rise and who knows, we may have another one. It's
19:39
Speaker 1: a line ball called but I see Michelle bullet this
19:41
Speaker 1: morning of the RBA mentioned in the oil place, says
19:45
Speaker 1: an issue that could have award pressure on rates and
19:48
Speaker 1: we have to allow for that. All right. I have
19:50
Speaker 1: some really good questions which I kept for Jared. I
19:52
Speaker 1: want to do them. We'll be back in a moment. Hello,
20:05
Speaker 1: Welcome back to The Australian's Money Puzzle podcast. Jared McKay
20:08
Speaker 1: with us today from the Watling Property group of buyers agents,
20:11
Speaker 1: but not one of those. What they've been new for
20:14
Speaker 1: us to be called the new wave of buyers agents
20:16
Speaker 1: been the new wave of buyers agents that are piling
20:18
Speaker 1: people up and pushing them into multiple properties in in
20:21
Speaker 1: country towns where there's something I think literally of a
20:24
Speaker 1: scandal brewing. I mean Michelle Morgan, who I talked to
20:28
Speaker 1: Buyer's Academy, went as far as to call it a
20:30
Speaker 1: Ponzi scheme, which I was, which is pretty strong language,
20:33
Speaker 1: I have to say. But you've been in this for
20:36
Speaker 1: a long time when did you when how long have
20:37
Speaker 1: you been a buyer's agent?
20:39
Speaker 3: BOYD Agents into fifteen sixteen years and a value for
20:42
Speaker 3: ten years before.
20:43
Speaker 1: That, and about sixteen years ago when you started I
20:45
Speaker 1: reckon you were still explaining to people what your job
20:48
Speaker 1: actually was. It was.
20:50
Speaker 2: It was very different. There's a lot of different things.
20:52
Speaker 3: Yeah, so the markets changed, the why things operate, the
20:55
Speaker 3: why way uprights changed a lot out of that period.
20:58
Speaker 1: Would be fair to say that buyers agents started originally
21:01
Speaker 1: at the top of the market where they were really
21:03
Speaker 1: just for premium and prestige product properties and as people
21:07
Speaker 1: saw the value of this and the ability to actually
21:10
Speaker 1: get a better price if you'll be using ONECOLTD down.
21:14
Speaker 3: I mean, I can speak to this business, our business
21:17
Speaker 3: which was started by Richard Waclin back in the mid nineties,
21:20
Speaker 3: and certainly the way he started this business focused very
21:23
Speaker 3: much on investment, properly buying and representing investors.
21:25
Speaker 2: So that wasn't in that premium market, prestige market.
21:28
Speaker 3: It was always in the single front of cottages and
21:31
Speaker 3: the one and two bedroom.
21:34
Speaker 1: But it was still investors. There were worthy people. I mean,
21:37
Speaker 1: agents are used by everybody now, it's.
21:39
Speaker 2: Not not always wealthy people.
21:40
Speaker 3: Though, James, and that's stuff, and it gets thrown around
21:42
Speaker 3: a lot with investors as though investors have a lot
21:45
Speaker 3: of money. And I can tell you we've had a
21:47
Speaker 3: lot of clients over the years that are not wealthy.
21:49
Speaker 2: But I'm looking to set themselves up.
21:51
Speaker 1: Sure now, what I mean is it seems to me
21:54
Speaker 1: that the buyer's agent started as a professional arm if
21:57
Speaker 1: you like an investor or, they were used at the
21:59
Speaker 1: top end of the market. But it seems to me
22:00
Speaker 1: now that buyers agents are used at all the ends
22:02
Speaker 1: of the market.
22:03
Speaker 3: Yeah, and look, a lot of parents helping children, wanting
22:06
Speaker 3: to make sure their children are making the right decision.
22:08
Speaker 3: So we certainly have got that a lot of clients
22:10
Speaker 3: that we've worked with over the years.
22:11
Speaker 2: You could still argue, though, that might.
22:13
Speaker 3: Well be wealthy people helping their children get into the market,
22:17
Speaker 3: So there's still an argument to be said there. But
22:20
Speaker 3: there's certainly a lot of first time wise that are
22:22
Speaker 3: seeing the value and wanting to make sure that they
22:24
Speaker 3: make the right decisions.
22:26
Speaker 1: I have would imagine it just makes sense if it's
22:28
Speaker 1: a competitive market. This is not to promote the buioer's agents, folks,
22:31
Speaker 1: but to say that, you know, if you wanted to
22:33
Speaker 1: give a certain amount to your kids to buy a house,
22:37
Speaker 1: well you could spend it a different way instead of
22:39
Speaker 1: adding to the deposits. You know, if you use the
22:41
Speaker 1: viisations and they were good and it's a gamble, if
22:45
Speaker 1: they got to a discount that more than cover their fees,
22:48
Speaker 1: then you win, simple as all right. Question from Kerry
22:51
Speaker 1: kay or why we've had the federal government annown selling
22:55
Speaker 1: off all these defense sites this of lef Why can't
22:59
Speaker 1: governments developed some of these sides themselves for a housing
23:03
Speaker 1: For the most part, residential land development uses the same
23:06
Speaker 1: skills as infrastructure projects. That's a really good point, Kerry.
23:10
Speaker 1: I expect that it's beyond them, I imagine. But there
23:14
Speaker 1: are some extraordinary spots coming up. Even though you mentioned
23:16
Speaker 1: you're based in Melbourne. The Victoria Barricks, think the word wow,
23:20
Speaker 1: the Fort Queenscliff Ford, my gosh, I mean wow, these
23:24
Speaker 1: pieces of land. How do you think all that will go?
23:26
Speaker 3: I was married just outside that Queen's Cliff, Fort James,
23:29
Speaker 3: so I know that spot down there.
23:33
Speaker 1: It's a sentimental spot with those defense sides. I under
23:38
Speaker 1: look at it Intidney too, they're spectacus.
23:40
Speaker 3: Yeah, and there's some great spots all over them, I mean,
23:42
Speaker 3: and they are in really good locations. And I don't
23:45
Speaker 3: disagree with the comment around some form of government involvement
23:49
Speaker 3: in what's to be built, because developers will build what
23:53
Speaker 3: suits developers and what's going to suit their pocket and
23:56
Speaker 3: how are they going to make a profit, And that
23:58
Speaker 3: doesn't necessarily line up with what's required from an accommodation
24:02
Speaker 3: perspective in certain locations. And I think that's certainly something
24:05
Speaker 3: that needs to be It's all well and good to
24:07
Speaker 3: have some high density living, but if you're going to
24:10
Speaker 3: continue to build one and two bedroom apartments, you're not
24:12
Speaker 3: going to attract families to move into those locations.
24:16
Speaker 1: I think specifically to your question Kerry, it's the government
24:20
Speaker 1: have evolved in such a fashion that it is very
24:24
Speaker 1: much partnership now, and all government developments, all the social
24:28
Speaker 1: housing is not done by government per se. It's farmed
24:30
Speaker 1: out and is developed from architecture of scope out right
24:34
Speaker 1: through in partnerships. So I expect they will not sort
24:37
Speaker 1: of change. They can't change in midstream. Okay, none of
24:41
Speaker 1: this is advice, needs to say, It is information only.
24:43
Speaker 1: And the question from Andrew I refer to Stuart Wems observation.
24:48
Speaker 1: Now Stuart Weims and you are you work together once
24:51
Speaker 1: more time, so you know who I'm talking about. In
24:53
Speaker 1: a recent podcast, you said Adelaide is a very small
24:55
Speaker 1: capitalist at one point four million, then growing. It's bigger
24:59
Speaker 1: than hell Sinki, Copenhagen, Prague, Oslo, San Francisco and Islamabad.
25:06
Speaker 1: So I think sometimes we lose sight of being medium
25:09
Speaker 1: cities in the world in world term, says Andrew. Thank you,
25:13
Speaker 1: and I wonder w are you based in Atlete?
25:14
Speaker 2: Don't know.
25:16
Speaker 1: I said to somebody at a reception the other night.
25:19
Speaker 1: They were from Adlete. They were a manufacturer Adlete, and
25:22
Speaker 1: I mentioned the point that Adlete was deer than Melbourne,
25:25
Speaker 1: and this person, who has a multimillion dollar business, did
25:28
Speaker 1: not believe me. And it's been like that for a while,
25:31
Speaker 1: hasn't it.
25:32
Speaker 3: Ali's great CDMA again, went to university over there. I
25:35
Speaker 3: lived there for three years. It's a great spot. But
25:39
Speaker 3: relatively speaking in terms of.
25:41
Speaker 1: Do you think it will stay more expensive than Melbourne
25:43
Speaker 1: on a medium price basis for along?
25:46
Speaker 2: Okay, but it's been unvalued for a long time as well.
25:50
Speaker 3: I think that's probably more than the point that it's
25:52
Speaker 3: and then with all of the benefits that it's saying
25:54
Speaker 3: at the moment, with the international events that are coming there,
25:58
Speaker 3: people are recognizing it as a great city and a
26:00
Speaker 3: really good city to live in. So I think there's
26:03
Speaker 3: certainly scope there. But on the grand scheme of things
26:06
Speaker 3: on a national scale, it is still smaller compared to
26:10
Speaker 3: a lot of other.
26:10
Speaker 2: Cities in this country.
26:11
Speaker 3: So it's not well, I think when Stewart talks about it,
26:14
Speaker 3: it's not as though it's going to be one of
26:17
Speaker 3: the top four or five from a population perspective in
26:19
Speaker 3: this country. So yes, it's not a small city compared
26:22
Speaker 3: to the ones that were mentioned, but it's still it's
26:25
Speaker 3: not even one of the top three within this country
26:28
Speaker 3: from a size per spece.
26:29
Speaker 1: Okay, very good, Well, I suppose being honest about it, Andrew,
26:32
Speaker 1: I imagine we all are susceptible to a touch of
26:34
Speaker 1: parochialism now and again, and I think the Melbourne people
26:37
Speaker 1: are somewhat disturbed by the fact that adletas dear on
26:40
Speaker 1: a medium basis. But I found it entertaining that the
26:42
Speaker 1: Adlet people themselves didn't believe it. All right, we might
26:45
Speaker 1: leave it right there, Hey, thank you, Jared, thanks having me, James,
26:47
Speaker 1: thank you, and thanks for listening our Today's show was
26:50
Speaker 1: produced by Leah Summerglue. Do keep the emails coming, The
26:53
Speaker 1: Money Puzzle at the Australian dot com dot au. James
26:56
Speaker 1: Kirby here, talk to you soon.
27:00
Speaker 3: The Wood, The
27:03
Speaker 1: S