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Major Banks Predicting 8% Crash Will Actually Cause Prices to Rise | Property Experts · The Follio Property Podcast

• 0:00
  Economists are warning Australian property prices will continue to fall.
• 0:04
  Banking giant HSBC forecasts prices could fall by up to 8% by the end of 2027.
• 0:09
  ANZ have Sydney at negative 8.4% and Melbourne at negative 7.7%.
• 0:16
  Negative 3.3% declining medium house price.
• 0:19
  So across the board, their economists have actually predicted sharp decline across the board in 2027.
• 0:24
  So they're forecasting it's going to fall off like a cliff.
• 0:27
  At the moment, Sydney's down between 4 and 5%.
• 0:31
  The worst federal budget arguably in history handed down on the back of two rate rises and a war in the Middle East.
• 0:36
  And the volatility of negative house price growth that we've seen for the last three months will be the worst housing environment we will see in the next three years.
• 0:44
  You've got to be crossing numbers at the moment.
• 0:45
  You need to know your parameters, your debt to income, price to debt, and your cash buffers.
• 0:49
  Do you think this will actually happen?
• 0:51
  So let's go back and fact check some of the things that I've called out.
• 0:57
  You're listening to the Folio Property Podcast.
• 1:00
  I'm Rhys Bettle and I'm here each week with my co-host, Lachlan Delahunty.
• 1:04
  Lachlan, there's been a lot going on on the property market.
• 1:06
  A lot of predictions out there as well.
• 1:07
  We spoke on an episode last week about KPMG's predictions.
• 1:10
  You've had some serious hate on a recent podcast for some predictions you've rolled out as well.
• 1:15
  And we've got some more predictions here that have come through the big four with some similarities across the results, but also some really interesting forecasts into 2027.
• 1:24
  And I'd love to get your opinion on A,
• 1:26
  do you think this will actually happen?
• 1:28
  B, are they playing conservative and not coming out with an actual prediction?
• 1:33
  Yeah, there's so much mixed opinions and everyone's entitled to one.
• 1:37
  It's a free world.
• 1:38
  But some of these I certainly don't agree with.
• 1:41
  And I guess to address my forecasting, I think it was a little bit misunderstood, but conversation for another day.
• 1:47
  All right, let's get into it.
• 1:48
  So you've got ANZ for a 2027 prediction.
• 1:51
  Now, this out of all the majors, their economists have actually predicted sharp decline across the board in 2027.
• 1:57
  All the other majors have either had some positive growth or neutral.
• 2:00
  So just to rattle some numbers out here, Lachlan.
• 2:03
  negative 3.3% declining medium house price, so across the board.
• 2:07
  All Sydney, Melbourne, seeing actually on their predictions, the less of a decline.
• 2:11
  So I'm assuming off the back of what they think in 2026, those markets taking the biggest hit, they're going to recover in some sense, or not really, but still not as much of a burden as what say Brisbane is at 4.6.
• 2:24
  So out of all the majors, this is the one I want to start with because they've actually predicted prices declining from medium house price perspective.
• 2:30
  What's your thoughts on that?
• 2:32
  Do you disagree with their commentary?
• 2:35
  And in terms of looking at all the markets, at least a 3% decline.
• 2:40
  For those listening not being able to see this visually, just go from top down Sydney through to Adelaide.
• 2:46
  What are their predictions?
• 2:47
  So from Sydney...
• 2:49
  negative 2.9%.
• 2:50
  Melbourne, negative 2.3%.
• 2:53
  Brisbane, negative 4.6%.
• 2:55
  Perth, negative 3.1%.
• 2:58
  Now, Adelaide's not included.
• 2:59
  This isn't our graph.
• 3:00
  I know we got called out because we don't include Adelaide on some of our graphs.
• 3:02
  So this is ANZ.
• 3:03
  I'm sorry for the Adelaide listeners, but this one is from ANZ.
• 3:07
  Yeah, and it's interesting to where they would have pulled...
• 3:10
  that information from, right?
• 3:11
  Because again, we always revert back.
• 3:13
  It's boring, it's repetitive, but it's supply and demand dynamics.
• 3:16
  And when we went through our supply podcast a few weeks ago, you might be able to reference that in the notes about the difference in the availability of stock currently, but going back in who's probably overproduced housing for the last three years and who's under, Brisbane and Perth have significantly been in and under supply, right?
• 3:34
  That is really supply because on the supply side,
• 3:36
  They're still the most undersupplied capital cities.
• 3:39
  And then on a demand side, you just have to look at the local data sets in terms of days on market, sales volumes, auction clearance rates in those markets specifically.
• 3:47
  It's counterintuitive to what ANZ has forecasted.
• 3:50
  So I completely disagree with some of that forecasting.
• 3:53
  I do think there will be tough market conditions.
• 3:57
  probably early on, but I do think it will ease up to sort of the mid to back end of 2027.
• 4:01
  I don't believe that Sydney will outperform Brisbane, Melbourne or Perth.
• 4:06
  I think it will underperform those markets.
• 4:08
  I still think Brisbane will, you know, might have slight negative decline, but won't be the worst performing capital city as predicted.
• 4:15
  And I'm still forecasting some level of positive growth for both Melbourne and Perth.
• 4:19
  And the data suggesting exactly that.
• 4:22
  So interesting, Rhys, when you go back in time and who got COVID completely wrong in terms of their forecasting, A and Z were factually the most...
• 4:32
  incorrect in terms of their predictions when they predicted negative, I think it was 55% to 60% negative house declines in Australia over a two-year period.
• 4:41
  So not going to carry a lot of weight with ANZ's credibility when it comes to forecasting.
• 4:46
  They actually have the rest of 2026 forecast as well, and ANZ have Sydney at negative 8.4% and Melbourne at negative 7.7%.
• 4:55
  So just net that out.
• 4:57
  They think that at the moment, Sydney's down between 4% and 5%.
• 5:02
  So they're forecasting it's going to fall off like a cliff for the next four months or the five months remainder of the year.
• 5:07
  So we're talking almost a percent negative growth.
• 5:09
  And there's going to completely ease as we turn the new calendar year, just going to completely put on a handbrake and we think it's clearly going to stagnate out.
• 5:16
  I don't know how that can take place so aggressively.
• 5:18
  So it's just, they're going to have their predictions.
• 5:20
  I disagree with them.
• 5:21
  Let's go through to NAB as the next predictor there.
• 5:24
  So looking at 2027, as a national average, they think there's going to be negative 5% in terms of a national, but this is where the big differentiators are between A and Z.
• 5:36
  Can I just jump in here just to cut you off, Rhys?
• 5:38
  Hey guys, quick thing to share.
• 5:40
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• 5:45
  It's called the National Investment Report and it's our brand new monthly deep dive into exactly where the market is moving, what the data is saying and what the smart investors are looking at right now.
• 5:55
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• 5:58
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• 6:03
  What you'll find, and this is why predictions are always wrong, it's funny.
• 6:07
  The banks and their economists should, and have enough data over enough years, shouldn't be predicting on today's sentiment, but they do.
• 6:16
  It'd be a bold prediction to say that there's going to be positive house price movement next year.
• 6:21
  It'd be a bold prediction.
• 6:24
  in the current environment where we sit here today.
• 6:27
  And probably why I copped some backlash saying the worst is behind us in a recent podcast.
• 6:32
  But I truly do believe that the significance and the volatility of negative house price growth that we've seen for the last three months...
• 6:40
  will be the worst period or the worst housing environment we will see in the next three years.
• 6:45
  That is my prediction.
• 6:46
  You don't go through a period of time where you see the worst federal budget arguably in history handed down on the back of two great rises and a war in the Middle East.
• 6:56
  Like you don't get, I haven't experienced since COVID and COVID was a pretty big extreme such
• 7:02
  Volatility, so that's why I believe that three months following that have been the worst market conditions.
• 7:08
  Do I think house prices will go up in the next five months nationally?
• 7:11
  No.
• 7:12
  Do I think the significance, the severity of the decline will start to moderate?
• 7:17
  Yes.
• 7:18
  I don't think we're going to see a full percent negative growth in Melbourne every month for the remainder of the year.
• 7:24
  I don't think we're going to see two percent negative house price movement every month for the remainder of the year.
• 7:30
  I was reading out, I was mentioning there NAB at the start before we went on the rant, negative 9% for Sydney and negative 9% for Melbourne.
• 7:36
  That is what their prediction is for this year, I should say.
• 7:38
  Okay, I agree.
• 7:39
  So, that's where I think this year, negative 5% nationally.
• 7:42
  Now, what NAB, they're kind of sitting on the fence for next year in some sense, or are they showing signs of recovery?
• 7:48
  They're showing from a national level 1% growth, actually.
• 7:51
  And every market, Perth being the only one at 0%, they've completely sat on the fence with this one, no growth at all.
• 7:57
  about Perth, they're East Coast business.
• 7:58
  Well, Adelaide unfortunately isn't even on the list either.
• 8:01
  But looking at the rest of the markets, Brisbane up 2%, Sydney, Melbourne 1%.
• 8:05
  So this out of all the ones- It's more consistent and in line with the data that we would track, albeit I think they've missed on Perth significantly and I do think we'll get more growth out of that than the markets.
• 8:15
  That is a baseline that we can work with.
• 8:17
  Okay, now let's go to CBA.
• 8:18
  So CBA again, positive for next year.
• 8:20
  Of course they are.
• 8:21
  They want home loans.
• 8:22
  They want people buying property.
• 8:23
  So CBA, the Bank of Australia, they are going to be very positive.
• 8:26
  3% nationally.
• 8:28
  Now Sydney and Melbourne by 3%.
• 8:30
  Brisbane and Perth at 4%.
• 8:32
  So this is- Very bullish, yep.
• 8:33
  This is slightly more bullish.
• 8:35
  I mean, you're comparing to ANZ where it's almost like flipped on its head in terms of what their predictions are.
• 8:40
  We're talking about a 10% differential between ANZ and CBA.
• 8:44
  And now we move on to Westpac, which was probably the most interesting predictions out of a lot of them.
• 8:50
  3% national, so similar to CBA.
• 8:53
  Yep, exactly the same as CBA.
• 8:55
  Now, where they're pretty bullish on is Perth.
• 8:58
  They think Perth will do 5% next year, and then they also think Melbourne will do 5% next year, with Sydney doing 2% and Brisbane 3%.
• 9:06
  I think, was that Westpac?
• 9:08
  That was Westpac.
• 9:08
  Obviously, podcast listeners read it.
• 9:10
  Because that sounds more in line.
• 9:13
  Based on the data, again, this is not – we don't – we have an opinion.
• 9:15
  Of course I do, and I was pretty vocal before.
• 9:18
  But this is looking at the data sets, not the media, not the sentiment.
• 9:22
  Obviously, sentiment plays into the short-term fundamentals.
• 9:24
  But when you're looking at the data sets that we track on a daily basis, Rees, that to me is a sensible check.
• 9:31
  Looking at how the economy is playing out –
• 9:33
  Look at what's happening with the inflation data currently.
• 9:35
  Last week, there was a pause in interest rates.
• 9:37
  The commentary around that is they think the target range will be met.
• 9:41
  So that 2% to 3% inflation target range will be met middle of 2027.
• 9:45
  So even the RBA are becoming a little bit more optimistic in terms of where the cash rate is going.
• 9:51
  And if we see that inflation number fall, well, there's likely going to be some rate cutting.
• 9:56
  And that could take place as early months of 2027.
• 9:59
  I don't think we're going to see it in 2026.
• 10:01
  I know we had a bullish broker on recently from Sydney that called eight rate cuts.
• 10:04
  I don't think we'll be seeing that in 2027.
• 10:06
  But the moment money becomes more accessible and cheaper, you will see an immediate response from the Sydney and Melbourne market.
• 10:13
  And that's why I think you need to have a little bit more of an optimistic view for 2027, because if money is cheaper, those markets will absolutely rebound.
• 10:22
  I don't think we're going to see that in 2026.
• 10:24
  I think we're going to see the severity of the decline start to minimise, but we'll still see falling market movements within the Sydney and macro Melbourne market for the next remainder of 2026.
• 10:37
  Michael, next thing I want to talk about is the five deposit scheme.
• 10:40
  Now, we've been pretty vocal.
• 10:43
  Five percent deposit scheme?
• 10:44
  Correct, yeah.
• 10:45
  So for those that are listening to us for the first time, we've been talking about the government scheme where there's no LMI, lenders mortgage insurance, with a 5% deposit.
• 10:54
  Subsequently, property prices have gone negative in some of those areas.
• 10:57
  And the message we've probably been trying to portray in some instances and some locations is a lot of these first-time buyers who are vulnerable and are in negative equity.
• 11:06
  There's a recent article that came out from Luke Redmond, who's an economist analyst at realestate.com.au.
• 11:11
  And he said out of the 48,000 properties through the 5% deposit scheme that came out in October in 2025, only around 87 households are in negative equity.
• 11:21
  Do you think, look, this is a macro review, I'm assuming, of this?
• 11:25
  Do you think this is in line with what we've seen in the markets or are there going to be severe outliers that are more than those 87 households?
• 11:32
  Yeah, there's a counter article to that, Rhys, which I think there was $2 billion of negative equity and 30,000 first-time buyers are in negative equity, right?
• 11:40
  So you've got to fact check where these guys get their information on.
• 11:43
  The fact is from realestate.com.
• 11:45
  He'd be using, I expect, realestate.com valuations, which we know are extremely bullish.
• 11:49
  And that's important because the data on these domains, so if you're going on to realestate.com, domain, or using bank valuations, your price that you're seeing, or even cotality, the price that you're seeing your house being worth is probably somewhere between 5% to 10% overinflated.
• 12:07
  And I'm seeing that pretty consistently across the board at the moment in markets across Australia.
• 12:12
  It's not subjective to one market.
• 12:14
  And the reason is that is because naturally the banks are incentivized to push your VALs because the more equity you can pull out, whether it's fake equity or real equity, they are going to give you more favorable VALs.
• 12:23
  But these desktop mechanisms, so yourrealestate.com, they're using lagging data and they are typically more aggressive.
• 12:30
  So what we're finding is people are using those, trying to go to market with the expectation that they're going to get 1.2.
• 12:36
  sentiment in the marketplace isn't there at the moment, Reece.
• 12:38
  We know that.
• 12:39
  We're speaking to agents.
• 12:40
  We're speaking to people on the ground.
• 12:42
  So that 1.2 valuation that they're seeing on realestate.com is playing out at sort of 105 or 1.1.
• 12:49
  It's 10, sometimes 15% below what these valves are.
• 12:53
  So I'm not saying that's the whole reason he's completely butchered that article, but there's a very good probability he's using data that's not up to date.
• 13:00
  Fascinating point, Lachlan.
• 13:01
  I think a lot of our listeners would be, myself personally, before I start having access to some of the data that our business use, we would be using realestate.com or domain to understand property valuations within my portfolio.
• 13:13
  Is that the same case depending on where the market is?
• 13:16
  So, could they be under...
• 13:19
  valuing properties in a heater of a market.
• 13:21
  Let's just look at maybe an example of Perth in 2024, 2025, or Brisbane in 23, 24.
• 13:27
  Would you be going onto those websites and actually, because the market's moving so quick and the data's delayed, it's actually overvalued?
• 13:31
  Yeah, and we know that to be true, right?
• 13:33
  So when we're buying in those markets, if you've got an uneducated real estate agent that's selling a property out of area,
• 13:39
  we know the common trick is to go to realestate.com or RP Data, check what the estimate is, and that's typically the quoted price that they give.
• 13:46
  And that's fantastic news in a rising market because they'll be saying, oh, we think it's worth somewhere between 9, 950, and that's the range on RP Data when you know something just sold around the corner that's similar for 1.05 million.
• 13:56
  So in a rising market, that can be your best friend as a buyer and probably hurt you a little bit as a seller because it under quotes.
• 14:02
  Again, there's a lag in that data and it's pretty significant.
• 14:06
  There are algorithms to clearly take a couple of months, sometimes six months to adjust to what's actually happening on the ground.
• 14:14
  I've seen it in areas where there's low sales volumes, regionals or small pockets of suburbs where there's not a lot of sales activities.
• 14:21
  It can be 12 months before it realigns to what's actually happening in the market.
• 14:25
  It's just important to make sure you actually, when you're buying or selling, you're keeping in touch with what's actually happening on the ground.
• 14:32
  And the only way you can do that is speak to experts or agents or valuers that are in these specific markets every single day.
• 14:39
  And just on that front, Lachim, what would you recommend?
• 14:41
  If someone is out there, amateur, maybe they've only got their principal place or the one investment property, they use,
• 14:48
  Let's just say a realestate.com or if they've got access to RP data through maybe one of their financial partners or property partners, use that as a guide and then start having conversations with local agents to understand, okay, what is my property actually worth?
• 15:01
  Or in some instances, right, does it actually matter what they say?
• 15:05
  If you're not looking to sell, it's probably what the bank are going to value that property.
• 15:08
  And in a lot of cases you've mentioned there, they are just running on those figures and sometimes actually adding on 50, 100 grand on top of that.
• 15:14
  Yeah, they can inflate them by 5% to 10%.
• 15:16
  Well, it depends of your purpose.
• 15:17
  If you want to actually know where your numbers are, which I'm like, knowing your numbers is the most important thing in this game.
• 15:22
  So do you want to feel good about yourself and get an inflated figure?
• 15:25
  Well, if that's what you do, look at these websites or get a bank vault, desktop vault, because it's going to make you feel really good.
• 15:31
  And if that's great for your mental health, go do that.
• 15:33
  But you actually want to know your fears so you can make informed decisions, then go through the process of educate yourself.
• 15:39
  So yes, use that as a baseline, look at comparable evidence, start speaking to agents.
• 15:44
  And then I often get agents through my property with the notion that, hey, I'm thinking about selling, which I'm not, but I actually want to know what it's worth.
• 15:51
  And knowing that they will inflate it to try to get the listing, take five to 10% off what they're offering, get a value through, he's probably more conservative if he knows the
• 16:00
  And you're going to get a very informed figure or at least a range that's going to be within sort of three or four percent.
• 16:07
  How often would you do that with your properties?
• 16:10
  It really depends on the situation, Rhys.
• 16:11
  If in this market where things have, you know, you got to, can't talk about it enough, you got to be across your numbers at the moment.
• 16:16
  You need to know your parameters, your debt to income, price to debt and your cash buffers.
• 16:22
  I can't be naive at the moment.
• 16:23
  I can't put my head in the sand thinking everything's going to be okay.
• 16:25
  I'll just weather the storm.
• 16:26
  So I'm doing that on a quarterly basis now.
• 16:29
  Mm-hmm.
• 16:30
  Slightly different approach.
• 16:31
  I'm using professionals within our office to do an independent, and I know they're very thorough and probably on the conservative side, but I'd rather be conservative than bullish in a market like this where I need to make educated decisions.
• 16:41
  Next article I want to speak to you about, Lachlan, is...
• 16:45
  It's actually probably we're starting to see this in the Perth news cycle now where we're at the top.
• 16:51
  You know, we're seeing days on market double, but it's coming from like ridiculously historic lows.
• 16:56
  It's gone from five to ten.
• 16:57
  We're seeing listings that were at historic lows this year, early this year, late last year.
• 17:03
  3,000 to 6,000.
• 17:04
  So we're starting to see a bit of negative sentiment.
• 17:06
  Now, there was an article that recently got posted, but it was actually kind of saying the Perth suburbs where prices fell and tides are turning on the housing market.
• 17:14
  That's the title.
• 17:15
  It was a WA Today article for reference.
• 17:18
  Now, what's interesting is they gave some property, some suburbs on that list, but they only referenced one of the suburbs, which was completely different to the others.
• 17:25
  So what I actually wanted to get your opinion on is
• 17:28
  Doing the report is groundwork a little bit and actually starting to reference some of the suburbs they had on here that have had declining price growth.
• 17:36
  And I want to get your opinion to why you think they have.
• 17:39
  So, I know we're not going to say declining house price growth, declining medium house values.
• 17:43
  Now, I want to talk through the biggest one of the lot, and that is a suburb called Jandacop, where it says the annual change is down nearly 17%.
• 17:50
  Medium house price is $725.
• 17:52
  Sales volume is about $121.
• 17:54
  Now, this is an outlier by more than double of the second place suburb on that list.
• 17:59
  Talk to us about Jandicot and why you're thinking it, especially over the last 12 months where Perth only recently is starting to stabilize, why are you thinking an area like that has had significant declining price movement?
• 18:10
  Yeah.
• 18:10
  And that's why you've got to be careful with data, Rhys.
• 18:12
  To answer that just straight, there's not enough...
• 18:14
  sales in Janicot.
• 18:15
  If you know where Janicot is, it's got a massive airport in the middle of the suburb.
• 18:18
  So 60% of the suburb doesn't have housing because it's got a big airport there.
• 18:22
  So there's very few sales and the sales that are in there are typically larger lifestyle blocks.
• 18:28
  So they're low volatility of sales.
• 18:30
  People don't sell those type of properties frequently.
• 18:33
  It's not a suburb like Wellard or Yanchip or Allenbrook where there's thousands of the similar house that transact on, you know,
• 18:40
  Every second year, there's street sales, essentially.
• 18:43
  So it's a low sales volume suburb with not a lot of residential, standard residential established stock.
• 18:49
  It doesn't surprise me that there's significant fluctuations.
• 18:52
  It wouldn't surprise me next year that Janditok has the highest growth in all of Perth because there's one sale that sells for $7 million when the median's at $750,000, and then it shoots and skews all the data.
• 19:03
  This is the problem.
• 19:04
  That's poor work by whoever wrote that article because he's clearly got no fundamental knowledge about real estate.
• 19:11
  That should have been excluded.
• 19:12
  That is an outlier.
• 19:12
  It's like putting Pep McGrove into that conversation when some years there's less than 30 sales in the suburb, the median can fall by 20% based on very few sales.
• 19:23
  Equally, it can rise dramatically and have a 30% growth year when the housing market's actually declining.
• 19:29
  You can't use such a small sample size of sales
• 19:33
  to write an article on.
• 19:34
  So very poor written article.
• 19:35
  And the second piece of that is the headline.
• 19:37
  What was the headline?
• 19:38
  The Perth suburbs where prices fell as tide turns on housing market.
• 19:41
  This is what annoys me.
• 19:42
  So clearly he hasn't done his homework and he's done it on a very small sample size.
• 19:45
  Shouldn't have the ability to publish that with a headline that's just there to capture your attention.
• 19:50
  And we know negative news sales, Rhys.
• 19:52
  negative news sales.
• 19:53
  I was asked the other day, it's like, why is there so much headline media that's just, speaking to a financial planner, couldn't believe his news.com feed of the AFR.
• 20:03
  All it is is property and it's falling.
• 20:06
  Every headline is about property and house prices falling because negative news sales.
• 20:10
  As soon as there's a positive news story, people are okay with that.
• 20:14
  I don't need to read that.
• 20:15
  Things are back to normal.
• 20:16
  The saying is nothing's ever as bad as what it seems.
• 20:17
  Nothing's ever as good as what it seems.
• 20:19
  If you look at the spectrum of nothing's ever as bad as it seems, it's because these idiots write articles and put headlines out there with absolutely zero substance behind what they're writing.
• 20:28
  And that's a perfect example.
• 20:29
  He's used Jandercop.
• 20:31
  The suburb with an airport in the suburb to define house prices in Perth are falling 10%.
• 20:36
  He should be banned.
• 20:38
  I wanted to let you keep going there because actually one of the suburbs in there was Applecross, which had 94 sales in the last 12 months.
• 20:47
  At 94 sales, and he's used that to make a headline.
• 20:49
  It makes sense.
• 20:50
  So he's two suburbs, Jandicot and Applecross.
• 20:52
  Collectively, there's probably 100 sales between those two suburbs.
• 20:56
  We'll bring it up.
• 20:56
  So this is some of the domain data that he's reading through.
• 20:58
  But the second biggest one, this is like, I'm not going to get through the whole list, but-
• 21:02
  I want to get your opinion on this because a lot of – I see this in the comments when we do any Perth update and a lot of people do ask about these types of areas from an investment standpoint.
• 21:10
  But number two on the list is Eglinton.
• 21:12
  So had the most transactions out of any of the suburbs on the – looks like here the top six from a negative price growth.
• 21:19
  Went down 8.2% in the last 12 months with a medium house price of $4.29, which is surprising for Eglinton being so low.
• 21:26
  So I don't know if there's a lot of smaller –
• 21:29
  flute houses in after the area.
• 21:30
  And this is what you've got to, again, you've got to understand, and this is what he wouldn't have written, when a suburb goes through periods of change, when density changes, and those larger allotments get subdivided.
• 21:41
  So instead of selling for $1.4 million for a full block, they get subdivided and sell for $700,000 each.
• 21:47
  That's going to bring the median house price down.
• 21:49
  So you're going to probably see the likes of
• 21:52
  Wanaroo, or East Wanaroo, suburbs that are typically characterised by two hectare lots that are going through a massive shift where there's going to be a lot of small allotments that will be selling for a cheaper price, likely sort of 300 to 500,000 in terms of allotment value.
• 22:07
  So you could see that median house price fall by 60 or 70%.
• 22:10
  It's not because the market's going backwards or there's no demand for it.
• 22:13
  It's because the area is gentrifying and they're subdividing.
• 22:15
  There's going to be more sales, but they're going to be at lower price points because they're not as big a block.
• 22:19
  So again, data's data.
• 22:21
  It's how you interpret it.
• 22:22
  It's important to understand the narrative behind it.
• 22:24
  So I'm disappointed in this, as you can tell.
• 22:26
  What about, you just raised a good point there when you're talking about the East Wanneros where there's subdivisions going on and new land getting created, so more supply getting created in that area.
• 22:35
  Now, you've rightfully mentioned there are going to be smaller blocks to what's currently out there, so obviously it's going to drive the medium house price.
• 22:41
  How much impact in an area like that would it have on your actual property price if you were in that standard medium house?
• 22:50
  In that area?
• 22:50
  In that area.
• 22:51
  So, I'm looking at an area that's probably- So, neighbouring.
• 22:54
  that you've got obviously suburbs like eglinton or joondal up etc there's going to be a lot of supply you've got suburbs surrounding monaroo that that are going to be impacted by this the answer is straight if you were in a complete balanced environment take away macro market conditions you would likely see it had to have a significant negative impact on your current market value because all of a sudden in an area where there's zero supply
• 23:16
  And we know what drives values, right?
• 23:17
  Supply and demand, scarcity.
• 23:19
  And when you bring on, there's talks of up to 20,000, 30,000 allotments to be brought on over the next 10 years, well, that's a lot of available supply.
• 23:27
  That is detrimental.
• 23:28
  And in a balanced market, you would likely see negative house price movement for the surrounding suburbs.
• 23:33
  Yep.
• 23:33
  What about like an area, so for instance, Mount Lawley, you know, bigger blocks generally, character homes there, you know, there is some social housing and whatnot.
• 23:42
  So those that aren't from Perth, there's a big university in Mount Lawley and there's plans to put through development and they keep going through local council.
• 23:51
  Even when you're looking at an area where you're –
• 23:55
  housing supply is so different to what is getting brought into the market, that will still affect property prices because there's an increase in supply.
• 24:02
  So what I'm getting at is it's not a comparable asset, right?
• 24:04
  No, that's it.
• 24:04
  You've got to compare apples and apples.
• 24:06
  And say someone, you know, at the moment, there's a lot happening around Australia with –
• 24:10
  Infield, Sydney's just had their changes to their regulation, which is going to mean in the eastern suburbs, it could be a lot of apartments come on due to the zoning changes.
• 24:18
  Same is pretty much happening consistently across Australia.
• 24:21
  Density is becoming part of the fabric of most capital cities in Australia.
• 24:25
  But what you want in a property is something unique that stands out.
• 24:29
  So if they're building apartments in your suburb, you're like, well, that's going to bring on supply.
• 24:33
  Therefore, my beautiful four by two home with a pool is going to reduce in value.
• 24:37
  No, because yours is unique.
• 24:39
  It's different.
• 24:40
  It actually creates more scarcity because as they build more apartments, there's less houses, established homes with backyards.
• 24:47
  There's an argument that suggests it could increase the value.
• 24:49
  Yeah.
• 24:49
  So it's not always, you've got to compare apples with apples.
• 24:53
  So it's all about comparable stock.
• 24:54
  The difference between that conversation versus the outer fringes where there's thousands of lots going to get reduced, you're typically building very similar stock to what already exists.
• 25:03
  You know, 450 square meter blocks, maybe 350 square meter blocks, three by twos, four by twos.
• 25:09
  I can buy one that's 10 years old for 900,000 or I can build one that's brand new for 900,000.
• 25:16
  I'll do that.
• 25:17
  So that established one becomes $850.
• 25:19
  So that's a sort of flow on effect.
• 25:20
  And that's, you know, we talk about it all the time.
• 25:22
  Don't buy in the out of fringe areas where there's lots of house and land packages.
• 25:25
  Rule 101 investing, even post-budget.
• 25:27
  Last one I want to talk about is SMSFs.
• 25:29
  Big couple of weeks of news with, I guess the government came out saying they were going to restrict the lending in residential.
• 25:37
  I know as a business, we saw people that had,
• 25:39
  had already been in progress with their accountants to get these set up and they were looking for support.
• 25:44
  We saw a lot of inquiries come through.
• 25:46
  There's a few articles out here saying applications doubled in weeks before the borrowing ban.
• 25:51
  There was articles talking about people that had signed up and had pulled out of commitments on some new build off the back
• 25:57
  it, but rather than talking about those individual articles, what I was keen to get your opinion on is now SMSF lending is banned through residential property.
• 26:05
  What would be generically?
• 26:06
  I'm not expecting you to give specific advice here.
• 26:08
  It's not banned for everyone and everything.
• 26:10
  Let's just say that.
• 26:11
  There is two ways.
• 26:12
  Talk to me through that.
• 26:13
  We can't on a public podcast.
• 26:14
  But yes, it's definitely...
• 26:18
  significantly harder than it was previously.
• 26:20
  Now we don't have that.
• 26:21
  And actually, one of the social media staff members actually got me to do a reel earlier today talking about SMSFs.
• 26:29
  What the forecast is you need to have is about 600K, but the average person is having 220K in there.
• 26:33
  Locking you a lot of talk, obviously, inundated with inquiries.
• 26:37
  There's now, with the government pulling the handbrake on self-managed super fund through residential property.
• 26:43
  If you were a millennial, Gen X, Gen Z, looking to maximize your wealth and not having to rely on your employed income to get you there from a superannuation piece, what sort of strategy would you pivot in now, knowing you can't utilize that self-managed super fund from residential?
• 26:57
  I think it puts...
• 26:59
  All the pressure back into your personal world, right?
• 27:02
  So the beauty of that self-managed super fund structure, we could take some power back to our retirement fund.
• 27:08
  That power's now been taken away.
• 27:10
  You can have, when we say it's been banned, it's lending for residential property in that.
• 27:14
  There's still things you can do in that, but speak to a financial planner, more on how to protect and preserve your wealth.
• 27:20
  I don't see a clear path forward if you can't use property, residential property.
• 27:24
  to get that level of protection.
• 27:26
  So now the onus is on you as the individual to make your wealth in your personal name and in your personal world.
• 27:32
  And these younger investors, the games change a little bit.
• 27:36
  They're going to have to be more astute and across markets.
• 27:40
  They don't have the luxury of
• 27:41
  pre-budget times that some other investors had.
• 27:44
  So cash flow has become incredibly important.
• 27:47
  And when I speak about cash flow, it's as levers you can pull.
• 27:49
  You can focus on increasing your wage in terms of your income, maximizing that because it's going to maximize your serviceability, but it's also maximizing incomes that you generate from your property.
• 27:59
  So there's so much pressure and weight on how you can do that.
• 28:02
  And obviously we do it as a business all the time, Reece, through value-add strategies is, you know,
• 28:07
  where can we spend a dollar anywhere across your portfolio to make two or three back from an equity point of view, but to try to make another $100, $150, $200 a week from a cash flow point of view.
• 28:18
  And that's the difference between buying one to two properties or buying four to five.
• 28:23
  You've been listening to the Folio Property Podcast.