Latest / The Follio Property Podcast / Perth’s Housing Nightmare: Desperate Buyers, Prices keep soaring | Ep 29

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Perth’s Housing Nightmare: Desperate Buyers, Prices keep soaring | Ep 29 · The Follio Property Podcast

• 0:00
  Is the Perth property market overcooked? Right in that zone of being peak. Is it the winner's curse phase? What the hell is going on in this marketplace? Developers probably getting excited and want to fill their pockets of overbuilding, oversupplying. Because it's not a time to buy property on a whim. Well, we just had a 60% increase in overseas migration. But the vacancy rate is still really low. That's not market value because it's an open transaction. There's been willing buyers and willing sellers.
• 0:25
  The other scenarios in terms of where you can make that extra money is... When should someone fight a valuation? When should someone walk away? So race never is the answer. Don't fight the value.
• 0:38
  You're listening to the Folio Property Podcast. I'm Rhys Bettle and I'm here each week with my co-host, Lachlan De La Hunty. If you're enjoying the podcast, do us a favor, hit like, hit subscribe and leave us a comment so we can grow this channel and bring you amazing guests like the man in front of us today, an industry legend with over, you need to update your LinkedIn by the way, with over 29 years of experience. Yep. LinkedIn said 25, but I did my math. Yep.
• 1:07
  Property experience, including 20 years as managing director at Heron Todd White. Welcome, Brendan Ptolemy. Cheers, Rhys. Thanks for having me. Thanks for having me, Lachlan. Good to have you on. We've been excited to get you on. So, Brendan, just tell us a little bit about yourself and Heron Todd White before we kickstart it.
• 1:23
  Yeah, so HW started in Perth in 1993. I was overseas and came back in 99, jumped in there as still a graduate valuer back then, worked my way through the ranks, got my certified practicing valuer qualification and essentially the business was growing pretty quickly. I think there was only about 10 of us around then. We've got about 80 in our team now. And essentially I saw the opportunity because Herrington White back then was a franchisee off a franchisor
• 1:53
  could see that opportunity and just jumped in and thankfully became a shareholder, became managing director, and then we just kept growing the business over the period of time. So really good fun. I never, ever thought I'd been in the same job for, you know, 20 plus nearly 30 years. But it's been a really fun ride. And my role has kind of changed a lot over that period of time. So I've had that benefit of playing a number of different roles in our business, which is really good fun. Yeah. One of the more charismatic value is I would say.
• 2:18
  Let's get down to the nitty-gritty then, Brendan. Is the Perth property market overcooked? Well, so as we're recording, on the way in, listening to podcasts, looking at this morning's The West front-page news in terms of what's happening in the market. So I think we are right in that zone of being peak. I think there's a headline there today about throwing a grenade on a bonfire and we're just pouring petrol on something that's been bubbling away
• 2:46
  Referencing the first home buyer scheme. And so now that we've got a new incentive in there in terms of that first home buyer scheme, I think that that activity and the interest it's bringing to the market, coupled with the lack of supply, is essentially as hot as it's going to get. Not sure how long that heat lasts for. It's probably going to bash all the way into Christmas, I would think, from here.
• 3:07
  Yeah. Does it remind you, and I'm sure we'll talk about it in detail, of previous cycles? Yeah, yeah. Some people call this phase, and I'm reluctant, I haven't mentioned on the podcast, is it the winner's curse phase?
• 3:18
  Yeah, so this is, and I'm going to show my age here, but the 07, 08 pre-GFC market, I remember there was a couple of developments that those abiding memories, and one of them is the Port QG development that was just out of the ground and just being sold. Interestingly, from memory, that was an October, November of 07 type auction. So peak market and a lot of kind of,
• 3:44
  for want of a better term, purple circle going on down there. You've got to be in this, a lot of bubble happening under it. And just as an aside, a lot of that was happening down in Doorsville, around the Doorsville Cut at that point in time as well. But poor QG essentially went to auction for the vacant land back in that period of time, November 2007, I think I'm right in saying.
• 4:04
  And those numbers just went absolutely crazy. So I think on the way in, off the top of my head and that memory, I think valuers would have been thinking that numbers would have been kind of $2 million for a block of Canal Front land back then. And they all sold for three. They overshot by literally a million dollars. And on the Monday after the auction, everyone's just looking at each other going, what the hell is going on in this marketplace?
• 4:28
  And I hazard to guess that if we had a product like that at this point in time that was very well sought after and everyone understood that that was a limited product, then I think we probably would be in similar zones at this point in time because we're just seeing average houses through lots of different market levels, as in price levels, get huge amount of interest and huge amount of bidding in terms of essentially because we are an O&A type private treaty sale process.
• 4:58
  Essentially, multiple offers on every single property that's for sale. So, a good friend, Trent Fleskins, you feature a lot on his podcast, as do I. He's pretty bullish, and he's talking about this runway into 2030, right? He's very pro-Perth and very bullish on the market. Yeah. I'm certainly not – I don't carry the same view as that. But I can't – and everyone asks me, when's the –
• 5:19
  Now, when's the music going to stop? And it comes down to supply and demand. And we track an index of oversupply, undersupply in every market across Australia. And it was interesting going back and we went through the data back in 2015. We oversupplied the market that year by 900%.
• 5:36
  Right. So that's why when listings went out to 16,000 listings on market, we're currently sitting in 2,850. So Perth is notorious of developers probably getting excited and want to fill their pockets of overbuilding, oversupplying. And that typically is that, is that what we see the first sign of the market coin? And the second question is how can that happen? And I'm not seeing that at the moment.
• 6:00
  Yeah, well, classic REWAS stat happening at the moment, 1,709 single residential dwellings on the market as of the end of last weekend. So that is severe under supply, obviously. And then from where we sit now, it's really difficult to see how you would end up back at 16,000 dwellings on the market.
• 6:20
  One of those lead indicators that we might look at would be the rental market. What's happening there? What's that demand looking like? What are rents doing? Rents have been relatively stable this year, but the vacancy rate is still really low. And that demand for essentially down to the levels of individual rooms in houses is still really high as we adjust to that marketplace. In terms of that, watching our market change.
• 6:45
  It's really difficult to see how we as an industry, as a property industry, get a supply level where we get back to even 5,000 houses on the market, let alone 10,000. Hence, probably the bullishness of Trent's opinion in terms of pushing this out. From a really conservative valuer's point of view, definitely runs this year, definitely runs next year because we will be undersupplied. So then you get into...
• 7:08
  the year after saying, well, we probably end up in that next phase going, right, what's happening next? What have we been able to supply into the marketplace over 2026? And we're still short on the houses as well. I think when we were looking at the data, we're what, 10,000 behind at the moment in terms of?
• 7:27
  where we should be from a building perspective. In August, we had a 7% decline in dwelling approvals, which just that I couldn't fathom and could not predict. And every other market in every state in the country had a rise. We've had a decline. Yeah.
• 7:42
  Yeah, and so there's a bit going on there in terms of our biggest builders are open for business, for single residential. I would expect that what they're doing, though, is managing the number of starts, as in they don't want to overcommit. They learn from COVID. Yeah, absolutely. And they've seen some of their competitors essentially destroy their business model by taking on too much volume.
• 8:03
  And so they've been really careful about letting the right number of customers through the door. So where they might have been in a previous boom shootout to say 2,000 starts per large building company, they're actually sitting more like 1,500, 1,600 in terms of showing you the difference between those. And so we end up in a situation where there's just a controlled amount of supply coming into the marketplace, which is a really logical idea at this point in our market. Well, it's what we want to see builders do. Yeah. Yeah.
• 8:32
  Yeah, and we also want to see customers have a good outcome. So two of the builders, Summit and the ABN Group, would say that they can build you a single-story, single residential home in 10 months at this point in time. And so that's a really good outcome for a customer. It's actually a really good option for a first-time buyer in our current marketplace, potentially a good option for some investors as well, yeah.
• 8:54
  And then on the, when we go back to that 2015 stat, a lot of it, a large portion of that was high density, right? Yeah. And this is, I guess my opinion is the fact that, and you can probably validate this with the data, is no one's building in that sort of mid-tier space. I want to say mid-tier, there's still a lot of downsizer product. Yep. And that stuff that needs to sell for...
• 9:17
  $10,000, $11,000, $12,000 a square metre, but no one's building and above, and above, well above. And there's no one building where a lot of the supply in 15 was coming in that sort of, you know, one by one, two by one, East Perth sort of stock, which you could trade for, I think, what, $500 to probably $750. Yeah, yep. Where no one's building in that space, and it doesn't appear that there's any sort of stock in the pipeline over the next two years that's going to enter that space. Yeah, so Urbis...
• 9:44
  have a stat that essentially we're only going to finish about 800 apartments for the back half of this year in terms of that supply coming to the market. 800. Yeah. And when you're talking about those thousands, we know, Bruce, obviously a drop in the ocean. And then we have it in terms of starts. We have a real feasibility issue in particular for affordable apartments.
• 10:05
  So to give you those rates per square metre, in terms of construction, you're looking at about $6,000 to $8,000 a square metre to just build the building. Forget about buying the block of land. To build the building. And that's not super luxury spec? No, that's pretty standard, very acceptable spec. We'd all be happy to live in that location and, sorry, in that type of product. And you're talking about, say, a fin bar type product there. Yeah.
• 10:31
  Then in terms of what the sales rate on that is, we're still down at kind of $12,000 to $14,000 a square metre. So just while you're doing that margin, remember we've still got to go buy our block of land for that and make a profit out of it. And so you can see that that feasibility really starts falling apart quite quickly. And that's why most developers are in that luxury space. So near city locations, more than likely something they've owned for a fair period of time. So they've actually made some money on the underlying land value potentially.
• 11:00
  And then essentially they're selling to downsizers, high net worths, people that are essentially looking for a change of lifestyle in any city location. And those rates per square metre, they start at 14 and they're now going all the way to numbers like 30 grand a square metre. 30,000. Depending on the product. So we're talking about multi-million dollar apartments. We're getting back up to sort of Sydney levels, right, when you start talking $30,000 a square metre.
• 11:25
  And just a caution, you know, those high rates per square metre are going to be multimillion-dollar apartments in really good locations. Western suburbs often. Yeah, western suburbs, southern suburbs around Alpercross, that type of situation. But those rates per square metre, if you had have walked into our office last year and said,
• 11:42
  apartments will be achieving off-the-plan sales rates at $30,000 a square metre. In the middle of that last year, we would have laughed you out. We said we are not signing off on that. Absolutely, yeah. And hence the developers, if you've got capital and you've got a business that has the ability to develop apartments, you're going to go and put your capital into that type of product, right?
• 12:00
  Yeah, we're going to get better returns. So then forecasting out, it'd be unlikely to foresee any product in that sort of sweet spot of where the real demand is say between sort of $600,000 and $800,000. It's likely we're not going to see an abundance of that, certainly not an abundance, but maybe any of that stock because developers are not going to build stuff they're not going to make a profit on. Yeah, so there's a couple of developers thankfully have a model that will work and that's people like Finbar. They have their own building company attached to,
• 12:28
  essentially the developer, they have a methodology that can make money out of that lower price product and really well done to them. They've got two complexes that I can think of off the top of my head, one in East Perth at the old Chem Lab site and one out on, I think it's called Bel Air out on Great Eastern Highway. So there's some of that,
• 12:46
  cheaper product or more affordable product coming to market. But interestingly, what the government would really like to see is some of this stuff happen in the suburbs, and it just isn't feasible in those locations. In particular, if you take those MetroNet-type centres, those stations were built on the idea that you build some density around them. Fantastic idea, really good planning. But essentially, if you do a feasibility analysis on those sites...
• 13:11
  you nearly need to pay the developer to take the site off you to actually make it feasible for someone to produce some one-bedroom, two-bedroom and three-bedroom affordable apartments around there. Then we also have something that's changing really rapidly now. And so in those apartments,
• 13:27
  it doesn't become affordable product because essentially you can go and buy a single residential house down the road for the same money. So if you're talking about $600,000 to $700,000 for a two-bedroom, two-bathroom apartment around a station, but you can then go another 400 or 500 metres around the road and buy a single residential dwelling, most consumers are going to buy the single residential dwelling at that price. So we have a price point issue in terms of being able to make that product feasible in the market as well.
• 13:55
  From your lens, what's a simple fix on this? Yeah, so there's lots of answers to this and lots of people. I'll give you a couple of thoughts off the top of my head. So in terms of the overall supply solution, the most affordable, quickest way that we can bring
• 14:13
  Essentially, accommodation to our marketplace is student accommodation. And thankfully, capital has been attracted to the Perth market from overseas to invest in that. And we've seen Uni Lodge is just nearly finishing right now down on the corner of Pierre Street and Wellington Street.
• 14:28
  So that brings 750 beds to our marketplace. And I know everyone's wondering why the hell I'm talking about student accommodation. But if the students move out of the burbs and the shared houses they have, it frees up that accommodation. And the most important part is building that building is feasible and you can get it approved and start it really quickly.
• 14:46
  So that's number one in terms of creating some beds. Number two is to try and just get the government to efficiently supply some incoordination because they need to participate in this marketplace. What's partly broken, what partly broke our whole system Australia-wide is that government stopped supplying housing. So that's a massive issue. Now, the government are doing a really – state government are doing a really good job. They're trying really hard.
• 15:11
  but it doesn't happen overnight. So John Kerry is doing an amazing job of leading all of that. But what they're trying to do at the moment is bring 1,000 apartments to the marketplace. Then we get back to our feasibility issue because the government is still saying, well, this needs to be feasible, but they're kind of...
• 15:27
  politically have to just really throw up their hands and say, hey, look, it's going to cost us a lot of money to do this. Then we get our next issue. Sorry, just follow me on the journey here, people. But we don't have enough builders. So even though the government want to put those 1,000 well-meaning units in our marketplace and they've got 13-odd sites, they're doing that 1,000 across. So it's a good idea.
• 15:49
  But then they're going to take all the building supply or capacity out of our marketplace and make it less feasible in the scenarios we just talked about for essentially the private market to go and then supply the marketplace. So in this weird circular argument.
• 16:06
  So then we get back to just single residential. So we really need consumers out there essentially going to build houses and helping to supply that marketplace, whether that be investors or whether that be first-home buyers, second-home buyers. Hopefully some of those upgrade buyers will be doing some infill in their local suburbs, doing some subdivisions, and that private capital essentially helps supply the market. But none of that is – that second half of those two scenarios are not –
• 16:36
  fast or easy. Well, we just had a 60% increase in overseas migration from the latest data that we released. So let's hope out of that 60%, there's some highly skilled builders in that mix as well. Yeah. Yeah, and so we do have a really big issue with trying to bring skilled tradespeople to WA. Yeah. They're very stuck to the East Coast, and Lachlan, you might have some insight in terms of someone that successfully has moved to the West Side. Yeah.
• 17:03
  And so the stats on the Build a Life in WA, the government program that is in place, essentially if you're a trader, you get $10,000 for moving to WA, $5,000 first up and then stay for a year, get another $5,000. They've only had about 300 successfully move here out of 1,000 applications, I think, to date. And there's 10,000 places, I think. So...
• 17:25
  It just gives you some data around the idea that it's quite difficult. Now, our great hope, sorry to all the Victorians, our great hope is they've got a lot of government projects finishing and hopefully the workers that are working on those government projects essentially end up with an employment issue and start looking around for somewhere to get the next job really well paid in a good location.
• 17:48
  Because in Australia, we pay people more than anyone else in the country. Yeah, absolutely. And then you throw a 10K kicker on there, you'd be jumping at the fact to move across. Yep. I wonder, and speaking to various business owners, the problem for people is accommodation. Yes. So they want to move, but they want to buy a home they can't find. They've been looking for six months. They come to us. We're trying to move across. Yep. I've got employment, but I can't find a house. And some can't even find a rental. So that's the problem we're trying. We need to build more, but to get them here, where are they going to stay? We need more beds.
• 18:15
  Yeah, well, we almost need a worker, because we're really good at this up north. We need someone to build a workers' accommodation facility in Perth Metro. There's East Perth Power Station, I reckon. It's a great location. Right on the edge of the city. You know, a nice big car park for tradies, utes and tools and all that kind of stuff. And then somewhere nice to stay. Throw some tents and swags and they'll be right. Yeah.
• 18:35
  Let's kick it on more from a valuer's lens, someone who's got nearly 30 years of experience. I'm sure you've seen it all. What should an investor be looking at in a property that's going to be a high value property?
• 18:50
  Yeah, so obviously you're trying to get a return and you're trying to get in the market at the best price point and obviously you guys can help them with that. And so the other stuff that we see in terms of where people might go wrong is don't get too...
• 19:06
  carried away with that gross return just remember that there will be costs to the to the dwelling or the apartment that you buy in particularly apartments it's those things like strata fees and that kind of stuff that you need to make sure you're across and maintenance to a to a strata complex same with that single residential dwelling you know it just be across what needs to be done in terms of the maintenance into the future you don't want to go and buy an investment property and then have to replace things like hot water systems repaint and
• 19:33
  things that are kitchen cabinetry and appliances inside like dishwashers and those kinds of things. You're trying to keep it as simple as possible, trying to buy the biggest piece of land you can for your budget in terms of opportunity into the future. And then really you're trying to put on a renter's hat. So
• 19:52
  What am I looking for? Because they're looking more for lifestyle than capital. So essentially, do you buy something that might be closer to a cafe strip or the ocean, the river, public transport, university education type facilities that are going to underpin your demand for your rental into the future? So just a few ideas in terms of what you're looking for.
• 20:14
  And then essentially a bit of flexibility. So most bedrooms and bathrooms you can as well. I know this is all trying to nail down the perfect property that might not be out there, but they're the types of scenarios that might help you in terms of maximizing the rental on the property. What about increasing a property's valuation? So you mentioned there as far as good target market for what people should be looking at.
• 20:38
  not too dissimilar from the stuff I guess we would be looking at from a business perspective as well. But where have you seen examples or not to put you on the spot, there's a couple of examples here, but where have you seen properties that have had a sharp increase over a short period of time
• 20:53
  Obviously, market's going to do a lot of the heavy lifting for it. Yes. But what sort of value adds have they done to increase that property? Yeah. So the easiest heavy lifting from the market is that land type scenario, as in that you've bought a big block and there's some development potential in that location. And essentially, the demand comes through and prices jump really quickly. The other scenarios in terms of where you can make that extra money is, so if it's
• 21:20
  If you're a tradie that's into being able to renovate in this market, one of the best opportunities we see is the older timber frame homes that really need some love and care. There's a number of older suburbs in Perth that have that type of scenario where you can come in and get rid of problems, essentially. So you're solving the problem of the house, and that might be re-stumping it, might be getting rid of asbestos and adding character by putting things like weatherboard cladding and those kinds of things in there
• 21:49
  And then the stuff that everyone would be aware of, essentially re-changing configurations. So it might be bedrooms, bathrooms, that kind of stuff, and redoing kitchens and those kinds of things as well. But essentially taking it to that massive cleanup stage where essentially you're renovating the property to put it into a different rental class, but then you're also putting in a different class from the valuation point of view. What about fighting a valuation?
• 22:13
  Probably doesn't happen too often in this market when the market's moving so quickly. Or it may be with some people that are maybe overpaying at the moment or overpaying at this rate. But when should someone fight a valuation? When should someone walk away? And then are you seeing any that are being knocked back because of this market that we're in? So race never is the answer.
• 22:35
  No, so we were interesting in terms of the change in conversation this week in the office was three examples where the valuer has come back to us and said, so we're talking Mandurah, Westminster and Corina, the three examples that came across my desk this week. All three of them are challenging valuations because essentially the market's offering above what we see the current market level to be.
• 23:01
  And just for our East Coast listeners, they are three very different demographics as well in terms of sub- Yeah, so those price points, Mandurah, the price point that we think that market's at is $4.60 odd for, I think it was a one-bed unit. Yeah. Someone from New South Wales has offered $5.70 for a really similar product, so we're counting that, Val. Yeah.
• 23:21
  And that's just our opinion. So unfortunately, that person will have to go to another bank or go to a different valuer. Maybe they will essentially come up with a number they were thinking that it's worth. But we just don't agree with that in terms of that market at this point in time. Another scenario is the Korean one where we can see that market moving really quickly.
• 23:40
  scenario where the offer price or the listing price was offers from 1.6 mil. We've ended up, and I've got to be careful with confidentiality here, but the contract prices ended up well over 1.7. And the valuer's challenge is, well, if that sells again tomorrow, between a willing buyer and a willing seller, will it transact again at a similar number? It helps us as valuers to know that there was five offers in that scenario. And that was kind of the final number was high,
• 24:10
  And then the other one, the Westminster one, in terms of price point, is right in that current sweet spot, $6,700-odd thousand. And that is just a step change for us that we need to get our head around. So that suburb would have easily been $600 all day long for the last six months to a year.
• 24:26
  It's suddenly now at 660 type numbers and we're sitting there going far out. Has it actually moved? And so that first scenario of Mandra, don't challenge the valuation. You're $100,000 different. We just have a difference of opinion and we're not changing our opinion. Whereas the other two scenarios where the market's moving, you might, if the value is not on the same number as the offer and acceptance,
• 24:47
  you might just say, hey, look, can you really just have a look at this? The agent selling me, there were five offers. Clearly, the thing can probably sell at a similar number tomorrow. It's willing buyer, willing seller. And there's only, off the top of my head, there's probably 10 properties in Corona on the market at the moment. And so there'd be a large number of purchases willing to get into that space. And so you probably end up coming up to the valuation as the market moves along. Yeah, hopefully that's helpful. Because it is difficult, isn't it? If...
• 25:14
  My experience, if it's an open market campaign, it's been either auctioned or on market. And like you said, that scenario where there's multiple bidders, very difficult for a valuel to say that's not market value because it's an open transaction. There's been willing buyers and willing sellers. Yes, absolutely. And that's where the difficulty happens in our marketplace when it's moving so fast. You almost feel a little bit guilty at some points in time as a valuel where you're
• 25:40
  It's not our job to hold the market back. We're not there to tell the market that you're paying too much. We're there to follow the market as the sales evidence moves, in particular when we can see the evidence transacting consistently. And so we need to be across all of that new data, talking to local agents and understanding the market
• 25:56
  why the purchasers are prepared to pay those types of numbers. And in some scenarios, in some suburbs, that makes our job really difficult as the market moves really quickly. But then in other suburbs, you get the comfort level quite fast and you're like, okay, it's moved to this level, wait for it to move again. This is the new norm. Yeah. But the new norm is almost weekly at this point in time. Yeah.
• 26:18
  And that's it, we always talk about data and with sales evidence evaluations, you have to have sales within six months. In this market, it's more or less irrelevant having six months data. It needs to really be what's under contract, what sold last week. We're always telling our listeners the only way to buy in this market
• 26:34
  There's more than one way, but knowledge is super powerful. And it's knowing what just traded across the road or around the corner four or five days ago off market, because that will set a new precedent of what this is worth or deemed as market value, right? Yeah. And you guys as buyer agents will have that data and the local agents will have that data. The concept for the average punter to roll up to a... So that Corrine property, we're told by the agent, there was 104 people that went through that home open. Yeah.
• 27:01
  So if you think that you're just going to cruise out on a Saturday morning and go and buy a property at this point in time, just go and look in the mirror for a second and just reassess your strategy because it's not a time to buy a property on a whim. You need to be organized. You need to have your finance approved. You need to know what your budget is. You need to know which suburb you're targeting. And you need to have spoken to all of the agents in that suburb. They're all going to have a different story for you. And I know this is going to sound self-serving in terms of,
• 27:28
  promoting you guys, but I would be talking to a buyer agent as well in terms of how you are going to get yourself in the market because you just need different angles. Otherwise, you're just with the herd of 104 people. Yeah, and you'll be in the market for 12 to 18 months. And at the moment, it's doing 0.5% a week, almost 2% a month. So you net that out every year, you're going to cost yourself plenty of dollars. But-
• 27:48
  I know, Rhys, I probably jumped the gun here, but we're getting asked a lot to be interested in your thoughts of, we've had a really good run since 2020. Really bottom of the market, if you had to throw a dart, it'd be probably late 2019. Yes. It's hard, it's getting harder to find value in the market in terms of localities, asset types. What's sort of your gut feel or your professional opinion on where there's some opportunities left in the market?
• 28:16
  Yeah, and this is pretty broad, but easiest thing is to just talk through some of those city-type locations, as in local authority. So City of Canning and those large blocks sitting back down through there still look relatively attractive. South of the River, some of those larger blocks through there as well still look relatively attractive. City of Rockingham's pretty interesting with the whole defence side of things. I hesitate to use the AUKUS term,
• 28:42
  because everyone thinks you're talking about nuclear submarines. It's far beyond that. We're talking about an initial number of people coming in there of 3,000 odd people that blows out to workforce in the future of potentially 10,000 people. And it's still relatively sleepy down there. And there's still some large blocks of land to be had. So there's some of the areas. And then, you know,
• 29:05
  Northern suburbs of Perth has always been good. I'd go and pick the eyes out of that in terms of trying to be in the right lifestyle location, get as close to the coast as you can in terms of what your budget allows. My litmus test for that is just drive up West Coast Drive right on the coast any summer's day with the sun out and you'll see how many people are attracted to that coastline. So as close as you can get to that walking track is always going to underpin really good value growth into the future.
• 29:33
  And then asset types, obviously houses have gone on a massive surge in the last six years, units are catching up. Where do you see asset types, some opportunities? Yeah, so I'll hop back to the biggest block of land you can afford, but then I'd be really careful of stuff not to buy, as in...
• 29:52
  Villas in older suburbs, as in lower socioeconomic older suburbs. So we just think that they're oversold a bit, in particular that 600 to 700K type number. So Armidale type location, that seems oversold to us at this point in time. Heavily dominated by investors.
• 30:09
  Yep, so investors have driven it. If you're trying to buy in there at the moment, you're $600,000 to $700,000 for a three-by-two on 200 square metres of land, and I just think there's better options than that around the place. And then if you look at that price point, then maybe you're better off backing a one-better, I would say, even just South Perth, Coogee, Joondalup locations, you would get a one-better in all of those locations that's going to rent relatively well. I know we're talking apartment versus...
• 30:36
  land but that would be a couple of ideas in terms of where you'd look around and then just those middle northern suburbs in terms of price point some of those older suburbs have a little bit of stigma about them the old kind of homes west type location so Westminster and Nolomara there's still some okay value through there and that that price point again 6 to 700 is better spent in there than say Armidale would would yeah I completely agree yeah
• 31:02
  Yep. Let's get you out of one last question. How do you see the Perth market slowing down? So that scenario in 13, 14, when we had a real boost in values and to watch it end, what happened then is we had the mining construction boom. There was an old stat there that the Treasurer had back then. I think that was Eric Ripper, 45,000 Kiwis left WA as construction workers and went back to either the East Coast or Southwark.
• 31:29
  back to New Zealand. So some type of event like that needs to happen to depopulate Western Australia is one scenario. And what could that be? Well, you tell me, like, what are we going to do? So why would they leave? Because I'm trying to rack my brain on what it is. There's so much work and the pipeline's only getting bigger. Yeah, so you would need, and this sounds ridiculous, but you would need the iron ore industry, the lithium industry, the gold industry,
• 31:54
  and probably renewables industry, all to collapse all at once, really. And then that would free up a huge amount of workforce. Drive them to Perth to try to take up work and there wouldn't be enough work and then they'd go to the East Coast. Yeah, and they're also, the people that are involved in those industries, so at that kind of mid-tier to high-level management, are those people in the mining companies that might either own property or be renting property.
• 32:20
  expensive property in Perth and they vacate. They have the ability to vacate and go somewhere else in the world quite quickly. So they might have a South African background or a European background have come here as engineer type careers. So there's some sort of scenario that makes them depart our market really quickly. And that means that you get multiple properties thrown on the market. The only other thing that,
• 32:43
  It's probably more likely and could be a scenario would be investors profiting and then just essentially finding somewhere else to put their money. And this is what stops it. Where are they going to take their gains in Perth and then put them where they're really confident that they're going to make more money? I know everyone's going to talk about Melbourne, but I wouldn't be selling Perth to jump into Melbourne at this point in the cycle because you're still making really good money here on a high level of confidence as opposed to going into Melbourne on a –
• 33:12
  an idea that that market might take off into the future, I'd be hanging on to Perth. So again, it's a scenario that could happen, but is again, I think probably unlikely. Brendan Ptolemy, that was an absolute ripper, mate. Thanks for coming in. Thanks, Rhys. Thanks, Lachlan. You've been listening to the Folio Property Podcast.