The Elephant in the Room Property Podcast | Australian real estate
The Elephant In The Room Property Podcast with Veronica Morgan & Chris Bates

Episodes

Episode 77 | Property data - hot spots, trends & price falls | Cameron Kusher, CoreLogic

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What property data is vital & what to take with a grain of salt!

Cameron Kusher, CoreLogic’s Head of Research for Australia & one of the leading commentators on housing market conditions & trends chats about:

  • Why you shouldn’t assume ALL property doubles every 7-10 years!

  • Settlement risk - what is it & how it can be avoided?

  • Pain & Gain Report- the impact of a property market slow down.

  • What are some of the weaknesses in Australian property data?

  • What is the most riskiest data to take in isolation?

  • Why access to finance is impacting the property market.

  • Weaknesses of a Hedonic Housing Price Index

  • What are the strongest areas in the Brisbane market?

This is an epic data journey that explains the impact of economic & demographic trends & analyses residential property throughout the country.

GUEST WEBSITES:

https://www.corelogic.com.au/our-people#authors-speakers

Links:
https://www.corelogic.com.au/reports/pain-and-gain

Work with Veronica? info@gooddeeds.com.au

Work with Chris? hello@wealthful.com.au

EPISODE TRANSCRIPT: 

Veronica: You're listening to the elephant in the room property podcast where a big things that never get talked about. Actually get talked about. I'm Veronica Morgan, real estate agent buyer's agent and Co-host at Foxtels location, location, location Australia.

Chris: I'm Chris Bates, financial planner, mortgage broker and wealth coach and together we're going to uncover who's really making the decisions when you buy a property. Pease stick around for this week's elephant rider boot camp and we have a cracking dumbo the week coming up!

Chris: Before we get started. Everything we talk about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyer's agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking

Veronica: In this digital age, there is so much data available to us and today we'd like to understand a bit more about what the experts see is important to help us put it all into context. How many layers of data should we be interrogating and can any information be viewed in isolation. In this episode we pick the brains of Cameron Kusher Corelogic's, Head of Research for Australia and one of the leading commentators nationally on housing market conditions and tends. Cameron utilizes corelogic's vast array of housing data as well as publicly available data along with economic and demographic trends to provide in depth analysis of residential property market trends throughout the country. He's regularly quoted in the media and is sought after presenter for consumers, the Finance Development and valuation industries. Cameron is responsible for day to day output of corelogic's Australian residential research team and is the author of his regular reports, one of which you will have heard me refer to many times my personal favorite, the Pain and Gain Report and we'll explore that a bit today. Thank you so much for joining us Cameron.

Cameron: Thanks for having me.

Chris: Thank you Cameron. Good to actually to meet you. So that, that's always interesting when you say you're on the telly to a person. But, um, yeah, we do love corelogic and we do love your Pain and Gain Report. Um, and I think the Corelogic are pretty much the leader in, you know, big property data. I've got probably the best database out there. But what are some of the things that you know your little secret tips, and I'm a member of corelogic GoGet, I've got your app. What are the things that data in property that do you think are very good indicators just to look out for and the things that you go to first when you think about is a property a good investment?

Cameron: Yeah, the, I think there's lots of things to look at, but I think, I think the key ones are, you know, we don't, we can't really be led by what's happened historically. That's not an indicator of what we're going to see in the future. So I think whenever I'm looking at purchasing a property, I, I try and find out as much as I can about the area that I'm buying that property in. Um, I think if you're, if you're buying an apartment, for example, who the developer was what their history is, um, you know, what their track record of delivering, uh, delivering a product is. Um, but for me, I think that the main thing is just getting out and exploring the area that you're actually going to go and buy a property and it's all well and good to, um, you know, think that the numbers stack up and it looks like a great investment. But oftentimes these things are too good to be true. So you need, and I think, I think you also have to consider in the worst circumstance, if you, if everything was to go wrong and you were to only be left with this one investment property that you're buying, for example, would you feel comfortable actually living in that property? And for me, I think that's always an important consideration when you're looking to purchase.

Veronica: I think it's a really great advice, actually. It's funny. Got a data expert saying get out there and have a look. Yeah.

Chris: And it's, um, you know, it's not what a real estate agent would probably sometimes real estate agents hope you don't go look at it. Um, because, um, you know, the pictures, you know, I can tell, you know, a completely different story until you rock up and then you rock up and then you'd see the neighbor's house and then you see, you know, the, where it's located and then it's on a, you know, not a busy road than you thought. And the rooms aren't as big as you thought. And the, so I think there's no point in looking at data if you're not going to go and get on the ground experience. I think that's really good advice for everyone out there actually.

Veronica: I mean, you've been sort of in the game for over 15 years now. Right. And, um, you just mentioned that history isn't necessarily the best predictor of the future. So what are some of the things that really irritate you when you're reading commentary about the property market?

Cameron: Uh, my biggest Ireton is probably the, the, the common meme that, you know, property prices double every seven to 10 years. You know, they did for a 20, 25 year period. Uh, but if we look at the market now, not one capital city has doubled in price over the past decade. So, uh, you know, that there was a time where that happened. Um, if you look at a market like Perth for example, it's actually going backwards over the past 10 years. If you look at a market like Brisbane, it's grown about 12% over the past decade. Sydney and Melbourne have done much better than that. But, um, certainly there's areas where property prices will double every seven to 10 years or have in the past. But I don't think that's a reflection of what we're going to see in the future. And that's, that's one of those common misconceptions that I find a bit annoying.

Veronica: Yeah, I find that annoying too for a slightly different reason. I think I find it annoying because it comes down to the property itself. You know? So the entire, every single property in Sydney wouldn't do the same thing if every single property went well or if the Sydney median price went of 89% every single property in Sydney did not go up eight or 9% yeah.

Chris: I think a lot of people would love to do that cause they say, well they'll look at regional areas and they'll say, well we're regional areas might have done quite well and then they'll compare it to Sydney and they'll say, well hasn't Sydney hasn't beaten them by that much? Well for in Sydney general, it hasn't. But then certain pockets within Sydney and maybe the houses in these areas have gone up 150% over that period, but I think you're 100% right. That's one of the myths that you know, a lot of people say and there's a story and belief that they tell themselves and it society has told them and I just regurgitate it out like it's Gospel. But really there's nothing found and isn't even recent, research doesn't even prove it.

Cameron: No, that's exactly right. And I think your point is a really good one. For certain, it's all about the actual individual property. It's not about the broad trends. And I think often times by the time you see the data starting to turn positive and then you get the confidence to go and buy a property. Generally it's too late. You want to be able to go and pick that market before it started to see that price growth. Because firstly it's not going to show up in the data for a little while. Then it's going to take you a while to get your eggs in the basket and then, you know, you've missed out on all that growth you could have potentially already seen and uh, and you're paying much more than you would have maybe a year and a half ago

Cameron: On that. What do you mthinkg about Hobart?

Cameron: Yeah, look, funny story about how about I said to my wife about five years ago, I said, I reckon that Hobart's going to have a bit of a run. I never actually went and bought anything there. I wish I had. Um, but things like that to your wife, a lot. I do. At times I have, I have been known to sometimes pick the housing market turn before, before it actually happens. Um, and she says, well, why don't we buy a property? And you know, then that becomes a bigger argument that we didn't do that. Um, but in terms of Hobart, I mean, it was really affordable. You've got the tourism story there, you know, that they've got the, uh, you know, big festivals going on. Now the art gallery down there is very popular. The Chinese tourism story is very strong. Um, but if we look at Hobart now, the big driver of Hobart was that it was so affordable. It's no longer the case. I mean, based on a median dwelling value, it's more expensive than Perth.

Cameron: It's more expensive than Adelaide. It's more expensive than Darwin now. So yeah, it doesn't have that same appeal. And what we're actually finding in Tasmania is it's the regional markets now that are starting to see the growth. So all that growth was in Hobart. People have been priced out of Hobart, so they're now looking to Devonport down towards Bruny island, south of Hobart, uh, the west coast. Um, some of these areas I've seen quite strong growth. Um, but again, the challenge is always outside of Sydney and Melbourne unfortunately is just employment and a and career prospects for people if they're, if they're going to live in those markets.

Chris: It's funny you say that because once it's your right, like it's it wallets, you know, if you think that's driving you, there is affordability. Yeah. It's like a thing of being on sale. I buy their while it's on sale, but as soon as it's full price, I'm not going to go to buy there. I'm going to go buy somewhere else and it runs out of steam pretty quick. And that's what I think happened. Right. So if you look at the price of they're really aspiring places in Hobart, well, you know, it was $600 grand to live on the water and a beautiful place. Now that's $800 or $900. I don't want to buy there anymore. There's other better places I can get value for money. So you know, you've gotta be very careful when you buy in an area that is the only reason people want to live there is because it's affordable because at some point it might not longer be affordable and then you lose all those buyers.

Cameron: That's right. And I think that's what we're starting to see in Hobart. I mean it's very early days in our data, but we have seen two consecutive months where values have fallen. They've actually fallen fairly rapidly over the past few months as well. I think in two months it's down about one and a half percent, which again, very early in the data, but that's actually a faster fall than we saw in Sydney and Melbourne when those markets started to turn.

Veronica: Is that possibly could be because of the type of buyer that was buying their and and their sort of blow ins rather than you know, locals. Would that be fair?

Cameron: Yeah, I think that's certainly the case. I mean, I think that a lot of businesses are now accepting of people not maybe being in the Sydney or Melbourne head office every day of the week. So that does open up, Hobart as an option. You know, if you've got a job in Melbourne, you can commute to Melbourne two or three days a week and then you can work from home and I think people are attracted to that lifestyle.

Cameron: But as you say, it's probably not so much locals that have been driving that. I mean if we look at the first home by numbers, it's a similar story in South Australia. They're both very low for Tasmania in South Australia and ultimately the people that would buy a first home in Hobart or or South Australia, end up leaving for work after they graduate university and end up buying their first home probably in Sydney or Melbourne.

Chris: The brain drain. Exactly. Yeah. You said about data takes a while to hit, you know, like if something happens in the share market today or some, you know, bad report comes out, you know, as a financial advisor bad newspaper article came out yesterday, share price dropped 7%, you know, pretty much instantaneously. It doesn't really happen in the property market. How long does it take? Do you think too, what's happening today is actually starting to represent quality in the data?

Cameron: The challenge with the housing market obviously is that it's not a liquid asset like shares are. So I think, you know, there's, there's been all the talk that post election, there's been a bit of a rebound in demand, auction clearance, rights of jumps up, so auction clearance rates do indicate it fairly quickly. But in terms of our, uh, our indices, I think it probably takes around four to six weeks to start seeing it in the data. And if we actually look at that, our daily index at the moment, it is starting to show some more positive growth. And obviously the election now was about four weeks ago. So that it's only just starting to show up in the feed.

Chris: Interesting. A daily index on the property market, I'm sure people have wanted that for centuries. What a dangerous thing. Yeah, a little bit of a sugar hit. I've had clients send it to me as well. Like, you know, this is what's happening. You know, there's this daily index has gone up. What do you think and how's that actually how to, can you explain to our listeners how you create that and how much, uh, how much should they read into it?

Cameron: Yeah, so the, it's a hedonic model, which is different from most of the models you see out there in the and other providers do or what we've done in the past. And the premise behind the hedonic model is basically that instead of using the transactions that take place and just looking at those transactions to measure the market, what you do is you look at those transactions and you say, okay, based on those transactions and the attributes of that transaction. So if it's a three bedroom, two bathroom house or whatever, what would other three bedroom, two bedroom, two bathroom houses in this area transact for today given the market conditions.

Cameron: So instead of just looking at the five to 7% of properties that actually sell over a given year, you're using that information to revalue every single property in the market every single day. So that's the theory behind it. Um, it, you know, complicated mathematic formulas built by PhDs and this type of thing. Um, in terms of the, in terms of the actual looking, I mean I don't even follow the index every single day. What, I think the value is, is intra month between when we report out our figures, you can have a look at if there are turning points in the market. Um, you know, over the last four or five months we have been seeing the rate of decline in Sydney and Melbourne steady, steadily slowing so you can see, you know, the evidence of that during the month. Is that trend continuing? And at the moment it certainly is. Um, but yeah, I wouldn't be looking at it day to day. Um, you know, movements day to day can be a little bit volatile. Um, and just because it jumped today or yesterday and today doesn't mean that it might not pull back a little bit the following day. And we've never been, we've never had the visibility of this volatility in the housing market before so.

Veronica: it's interesting you say that that auction clearance rates are a bit of a lead indicator. Um, but even before that is really numbers through open houses, isn't it? And then people applying for loans and there's a lot of leading indicators that may be on or gathered in, in one sort of data house. Um, so this headonic thing, okay, so just let me get this clear. So basically you're looking at what has sold and you're saying, well, this is the, this is basically the stock that exists in the whole of Australia. And then you're applying those sales to the knowledge of what actually exists and saying, you know, there's, there's 100 3 x bedroom homes like that in that suburb. And so therefore that suburb is worth x for argument's sake. That's sort of what it goes.

Cameron: Yeah. Basically. I mean, you do this comparison, you know this, it's, it's value is get angry if I say this, but it's like a, it's like a robot doing evaluation. But you do say, okay, well this, this property sold for x amount here. This property here has got the same attributes but the lane size a little bit larger, it's in a, in a little bit better location. It's on a quieter street. So you then apply some, you know, escalation of that for the better location. It's all, it's all very complex mathematical equations behind it.

Chris: And that makes sense though, because if you've got a hundred properties and you're saying, you know, five to five or seven of them are selling each year, well you're forgetting the other 95 that don't sell. And if those five or seven, um, you know, you can't to say that they're going to be a true reflection on the whole suburb because you know, there's so many sub markets within a, you know, a suburb that the three bedroom market, it could be going up in price. A six bedroom market could be going down, the apartments could be up and down. So I think you've got to then, uh, you know, cut that data and then reflected basically what that suburbs, you know as a whole because you can very easily move a median. You know if more apartments sell than houses sell, then I think that's what I've seen at the moment. Um, have you seen it that, you know, a lot of people are suggesting that apartments have gone down less in value than houses and you know, that's because we built a lot of new apartments and that's pushing it a lot of medians.

Cameron: The, the apartment story's an interesting one. And we were actually kind of talking about this internally the other day because even our index is not showing as big of a fall for the apartment market as the, the a detached housing market. And then one of the reasons for that is when we were building the index, we were actually having the discussion, you know, when someone's buying an apartment, are they buying it at today's price or are they buying it at the price at which the apartment is going to be completed. And we never really came to a consensus and we, you know, we talked to other people externally and everyone seemed to have a very different opinion. So what we actually do with our index, and I think when we look now at what's happening in the apartment market, and we know they were paying, they were paying the prices at that day. But the way the index has been constructed is if, if you've got a property that has a settlement period of more than a year, we actually exclude it from the index until such time as we get a sale to match it with.

Cameron: Uh, so you might usually get that initial sale from the developer, then you'll use that next sale to start measuring the performance of the market. So we actually think there's a bit of a lag effect. And we know, you know, there was a story earlier this week that there was a hundred settlements that didn't go ahead in a, in a Melbourne tower. We know from talking to a lot of developers and a lot of banks out there, there are a lot of concerns around the high rise apartment market. So we actually think that even if, even though the broader market is starting to recovery, the recovery somewhat, don't be surprised to see a weakening of that apartment market over the next few years.

Veronica: And can you separate the data because this is the problem, I guess you've got existing and you've got as it unbuilt, you know, you've got green fields and you got existing and they are, they do behave very differently.

Cameron: They do. And, and the challenge is actually getting to the point where you can separate that data. So there's some fuzzy logic you can build around that, but it's very hard to actually build, the logic in 20 data to say this is definitely a brand new property and this is definitely, cause you know, some properties may not, our data is generally pretty good in New South Wales, Victoria and Queensland from about 1980 onwards. Or they could be properties that have sat in the same family for the last 70 years. So now you apply that same logic to it. You could have some grand estate that's been in this family for hundreds of years that's selling and you're now considering that a new property because you've never seen it transact before. So that's definitely one of the challenges in the market.

Veronica: And Oh look, I know, I mean we use API data, which is still caught up it out a professional isn't, it is. Yeah. And you've got those oldest older properties are sitting in there as a zero purchase price at, you know, in, I think it's a standard 1930 or something. First of the first 1930, all these properties transacted at $0.

Chris: Well it woudl be $1 anyway wouldn't, it's not like it's so was in pounds anyway. So yeah, exactly. Interesting because I think a lot of the medians, um, you know, if there's, uh, you know, lots of new stock or new apartments coming into the market and those apartments and higher priced than, you know, and a big portion of those are selling and it really move a median in a suburb dramatically. You know, a lot of these, you know, best suburbs or apartments are going up. Got to be really careful. Be careful what's actually represented in that market.

Cameron: That's right. I mean, we, uh, you know, it can be very much bias, particularly on low volumes. So one year you can get a lot of lower quality stock transacting in a market in the next year. You can get a lot of high quality stock transacting in the market and in the medium shows really strong growth. But the reality is you've just had the compositional change of what's actually sold. So again, that's why we were trying to move away from using median prices. And move towards this hedonic index, even at lower, uh, lower geographic levels. Now even that does get very volatile at a suburb and postcode level, but you can use some of the standard geographies and SA2 region for example, is the size of a couple of suburbs and that can be very representative of what's happening in the market and that's a lot more reliable than just using a median price.

Chris: Yeah. So I guess for our listeners it is just when you are reading median growth stories, etc. Just always take them with a big grain of salt because you know, there's usually all the stories behind sometimes affecting, that story

Veronica: Those top 10 lists are generally median.

Cameron: That's right. Generally generally median, median, anything, median time on market, median price, median rent. Um, so yeah, you just gotta take them with a little bit of a grain of salt. But obviously from a media perspective, they great stories. they love the top list of this, the best performing suburbs, this, the worst performing.

Veronica: Do you think the media rewards really simplistic data in press releases?

Cameron: So I mean, I love the media and do a little work with them. So I'm really careful what I say, but I do find that, you know, so I'll often write a story and I think it's a great story and the media's not interested in it at all. And it's a intelligent, yeah, it might require a bit of thought. No, no, no comment there. But you know, then you get the, you'll chuck together something like the five best performing suburbs in each capital city and that will get so much media coverage.

Chris: You have to feed the beast or there's, yeah.

Veronica: And it's, you know, and consumers feed it or beg it, you know. Gimme gimme gimme more. I want to know where to invest.

Cameron: And it's like, that is not where to invest. And that's, and that's why I said at the start, you know, the data can lead you to the right area to start looking at it, but nothing beats actually getting out there on the ground and walking the path and doing your own hands on first person research.

Cameron: Did you find that really hard though? As someone who looks at a big picture all the time and you understand the micro to the macro story, you find it very hard that you know, you can't really go into that detail cause a lot of the mass media want the macro story. They don't want the micro stories.

Cameron: Yeah. It's a real tough because you know we are a national company so when we are talking to the media we try and keep it national. But as you say that the micro stories are very different. You know, I get messages all the time. I'm sick of reading about Sydney and Melbourne, you know, tell me, tell me about Tamworth. And it's like well realistically 40% of the population live in Sydney and Melbourne. So that's why you hear so much about Sydney and Melbourne and I don't know, it's probably less than 1% of the population live in Tamworth. So

Chris: Barnaby Joyce, yes he just, he told us everyone should move to Tamworth is apparently that's, if you want a house, you just end the job moved to price. You mentioned something is really interesting. We're just looking online. Last, last night around some of your reports, he'd done a settlement risk report. How habit you, you saying this as an issue because you've got access to, you know, valuation daughter and a lot of banks use your software. Um, you know, and I use it to, you know, audit customer's valuations for, for loans and things like that. And I've seen, even though I do very little in the off the plan space, um, and unfortunately when I do do it, I do it cause I really want to help someone who's usually in a bit of a pickle. Um, how are you seeing the settlement risk and how are you seeing playing out in your data?

Cameron: Yeah, we're definitely seeing the risk escalate at the moment. So the, the latest data we have showed that about 60% of off the plan apartment valuations came in below the contract price in Sydney and Melbourne. However, how long a timeframe where we mentioned that each month. So the last month. Yeah. So it has been trending a lot higher from memory. I think Melbourne was about 45 or 50%. Uh, Brisbane and Perth have been elevated for some time. They're actually now starting to trend a little bit lower. But when you look at what's happening in Sydney and Melbourne now, a lot of people bought these properties three or four years ago thought that it was going to be worth more. The market's turned against them. Um, as I said, there was the story the other day in the AFR about, um, you know, a hundred people either defaulting or walking away from their, 10% deposit, presumably on a, on properties down in Melbourne. We think it's a big risk, particularly because when you look at New South Wales and Victoria, the number of units under construction is only just starting to roll over. So you've had unprecedented levels of construction. It's still way above the longterm average level. The market's turned against it. Yes. The market might be improving a little bit, but you know, the market's down 15% from where it was at its peak. So if you've put down a 10% deposit. That's, that's more than that already. So we do think it's a big risk. And, and we are very cautious about that high rise apartment market. We know talking to our finance customers and that it's certainly something that they're very focused on the risk around this. And I think the challenge with supply is that when you get to a point in the market, you need it. You can't create it quickly enough, but then when you don't need it, you can't turn it off quickly enough either. And we going to have an overhang for the next few years. Um, you know, developers will pull back on their, their construction and over time that's probably going to lead to a, a period where we actually do need a lot more housing again and we're not going to be able to get it to the market quickly enough. And that is going to lead to some price growth.

Veronica: Is there any data around about the composition of that new stock? Like as in, what is it, you know, two bedroom apartments and what is really needed in terms of supply? Because I guess so anecdotally I've seen that, you know, look, look at Brisbane for instance. Brisbane is not a city that people are used to living in apartments. How many two bedroom apartments does a city like Brisbane need? Um, do they being built for, you know, one period of time. There are obviously a lot of Chinese investors, for instance, a lot of Chinese money coming in and they buy with different requirements to the local investor or dare I say at the non-local Australian investor based in other cities chasing affordability. Um, you know, and so they keep building and they're still building and they're still offering, you know, three months rent free and an iPad, um, for a 12 month lease. And, and there's all that stuff that, cause like you say, the lag, they've got to continue finishing off whatever they started building. Um, and then you say the demand for the housing, but if the demand is not for two bedroom apartments, it doesn't matter because they've got all these buildings. It really, nobody wants to live in.

Chris: But the developers are thinking about it? Not on a macro level. What do we actually need their thinking? What can I sell?

Veronica: Of course. That's what I'm saying is, is there data around there, out there that it really sort of looks at the difference between what's really required versus what has been built?

Cameron: I don't think there's any real daughter out there, but I think there's a pretty strong acknowledgement that there are too many one and small two bedroom apartments that were built. And particularly if we are going to identify our cities in need more apartments that are actually, um, the sort of apartments or family could live in. I mean, I personally, I'll live in a three bedroom apartment. Um, and you know, there's, there's not that many of them and the challenge with three and four bedroom apartments typically is they're put at the top of the building and they're a penthouse and they cost a fortune. So they're, they don't, they don't tick the box from affordability perspective. In terms of the overseas story, I think that's, that's an important one as well. Because remember that you used to be able to sell 100% of your properties offshore.

Cameron: They've changed that to 50%. So a lot of these projects that are now underway or kicking off, they're not going to have the luxury of going and doing the Asian tour to go and find a buyer if they can't find enough local buyers. So developers are going to have to think a lot harder about what the, what the product's going to be and who's going to be that buyer. And who's the local person that's going to be that buyer.

Chris: Interesting you say that cause in the boom there was apartments that were advertised 100% in Chinese, right. Everything around that. There's no, there's no local advertising. Everything is directly to China or other places obviously. But you know, there was zero desire to sell it to a single local because everything you could say there was nothing marketed to any locals.

Cameron: No, that's right. And, and, but, and, and keep in mind as well, a lot of the developers that have come into the market have in our developers, Malaysian developers, Chinese, so had been very much, firstly probably not as familiar with what local Australian residents want, but they've been building for the people that they have on their database that want to buy properties in Australia. So, um, I think certainly some of those developers are going to face some headwinds going forward.

Veronica: I think that, you know what you're talking about there with the three bedroom apartments, the four bedroom apartments. Really interesting because we spoke, oh Chris and I had a conversation just before the whole Opal Tower debacle because I've been talking to an urban development planner who told me about Opal Tower and said, you know, it's not an entire complex that had apparently been as according to him, um, developed with families in mind, you know, three and four bedroom apartments at all levels. And I don't know, cause I've never physically walking in the building or even looked at a plan. But, um, and then, and then, well, that terrible thing happened. But it was interesting just the fact that you had one large developer who was actually looking at that. And I'd be very interested to find out how many are starting to go down that path or is that really still quite rare? I don't know whether you'd do?

Cameron: I don't really have a good feel for it. I mean, there are developers out there that have been known for their owner occupies stock. You know, Mervac always generally had a bit of a reputation in that area. Um, Lendlease to some degree as well. But I think that the challenge that they still come up against is they're seen as a high quality a product. So they charge that premium. And for most people, a lot of people that look to buy an apartment, some look to buy for an apartment for lifestyle, but a lot of looking to buy an apartment because they can't afford a house in the area that they want. So, and particularly in Sydney, you see some of the areas where a lot of these apartments have popped up. Well, what you're paying for an apartment is pretty similar to what you'd actually pay for a house in that same suburbs.

Cameron: It's interesting because end, do you have any data on this? Because what we've seen is that downsizes like to downsize in the same sub, which they're the houses and if they haven't touched their house safe for 40 years and it's, it sells to a young couple is going to renovate it or you know, effectively there's not of the changeover costs cost. Not much change from, from you know, a house on a big old block of land versus you know, a new apartment in that area.

Cameron: No, not that, that's the real challenge. And I think that's why we haven't seen this downsizing phenomenon really take off because I think people do the, do the sums and go, well, by the time I pay stamp duty, I pay any tax, other taxes that I might have. I go and buy this property. It's not worth it for me to downsize. So, look, I think that, you know, to begin to talk about the tax system and, and there's a lot of issues there, but I think that a, there's not really the incentive for people to move out of these homes. And that's why you see so many people still living in four and five bedroom homes when their kids have left because it's just too hard to downsize.

Chris: You may an interesting point there, just a throw away comment around we can talk about the tax system because I think it's going to be be. The Tax system isn't set in stone. I think last election kind of really, you know, open people's eyes up to especially even me actually around negative gearing. Um, and the changes that that and the impacts on the market. Cause, you know, I thought common sense, you know? Yeah. The government could see the big picture of how it was all kind of come together. But then when it came to the election, I think that code, they could just went and focused on winning votes. What do you think is some of the changes that they could make to the property tax, system to potentially create a more, a more equitable system?

Cameron: Oh look, I think, I think there's a few things that they could possibly do. Firstly, I think stamp duty is a terrible tax that needs to needs to go. Um, and I think the transition is a, is really the hard part because you get rid of stamp duty, you need to replace that somehow. Presumably that would be an increase in land tax and not just investors paying land tax. Everyone. Um, but you know, if I bought my house a year ago and they're going to make that transition, I don't feel very good about having paid $35, $40,000 in stamp duty a year ago and now having to pay, even if it's $1,000 a year in land tax. So, um, the transition period for that, is, is going to be the difficult part. I know.

Speaker 2: Also for the State Government right they don't want to move from a big high up front model to a long term like subscription model basically. Um, you know, they make a lot of money up front that they want to spend.

Cameron: They do. But equally, I mean, look at what's happening in New South Wales and Victoria now, they've been s they've been swinging rivers of gold from stamp Judy revenue and now the market's turned against them. They're going to have a big hole in their budgeting. So, um, you know, if you have surety about what tax you're going to get every year, it means you can plan better. You're not at the, the behest of what happens in the housing market. So I think that's important. I didn't think that the opposition's policies around negative gearing in the capital gains tax discount, where, where good policies. Um, and I think obviously the electorate kind of showed that as well. But I think that we should have a discussion about whether negative gearing should be still in existence or if there needs to be some changes.

Cameron: And I'm not adverse to some potential changes. But I think a smarter way is not to say you can get it if you buy brand new properties, but you can't get it here. I think you need a more holistic approach and say, well, if, if people are taking too much advantage of negative gearing, if we want people to have positively good investments, we should say you can claim losses up to x amount each year across however many properties you want. And that's, that's the rule for everyone. Um, but I, I don't, I don't agree that trying to funnel, uh, investors who largely buy, existing properties rather than brand new properties to go and buy brand new properties, which are generally more expensive, generally smaller in size, I don't think that was ever going to successfully work as much as they'd hoped.

New Speaker: Um, and interestingly enough, you, you back to data because, uh, there was, uh, some revelations throughout the electioneering that, um, some of the assumptions that the Labor party had been building their policy on, uh, namely around that proportion of investment dollars spent on new versus established properties that the, the imputs were incorrect. And I don't know if you know much about that, but the idea that they're working on this, 93% was used of investment borrowings used to buy exists established property versus 7% and they called that a big fail. Yep. Um, and that data source was the ABS. But the big question is where do the abs get the data from?

Speaker 4: Well, the ABS get the data from APRA and they get it from the individual banks. But I think this comes back to the, to the fact that the government's been defunding the ABS. So if you want quality data, you need to actually spend the money. I mean, we know that as a business we spend many millions of dollars on acquiring, capturing data and the ABS captures a lot more data than we do. If you want to be able to make good decisions about the housing market, about the jobs market, about the economy as a whole, you need to make sure you have the best data. So reducing funding to a body like the ABS is a, is not a great way to go about it. I mean, I know that they've got quite old systems and they need to overhaul those systems. Um, I think you also need to employ people that actually understand the, yes, it's good to have statisticians, but you actually need to get in people in there that understand how finance works. So you need to target the right people to be, not just collecting that data, but analyzing that data and making it available out there to customers.

Chris: We've talked to me about the apartment market. Um, another kind of settlement risk I guess is, you know, there's two, there's probably around the, you know, the town houses and the middle ring kind of, you know, smaller time developers that, you know, sold a town house for $1.2 in the boom, now it's only going to sell for a million. You know, I think that's a lot. Have you seen much data affecting the market? Um, where, you know, I guess in the inner rings, the Middle Rings, they're no longer as desirable because there's not this fear of missing out.

Cameron: Yeah. Haven't seen too much data on that, but, but certainly that has an impact as well. You know, someone that's got a large block that subdivided and built two houses and said, we'll keep one and we'll sell off the other one. But again, market's turned against those people. And we know that in property development, particularly if you're not a large developer, margins typically very narrow. And if you're doing this without experience, um, again, when the market turns against you, you can get yourself into some strives. So yeah, I think that there's going to be some heartache in those areas as well. Um, look, I'm, I'm a big advocate of townhouses. I think that they're a product that's not being delivered as much to the market as it should be because it is that kind of balance. It's not an apartment, it's not a house, but it sits somewhere in between.

Cameron: It gives you a little bit of land. Um, I think it's a very good product, but generally councils don't really seem very supportive of that type of product. And I think they, I mean, I, I'm in Brisbane and they're talking about, um, you know, banning townhouses in most sub, most middle and outer ring suburbs of the Brisbane City Council live in the outer ring. Yeah. Which is just crazy to me. Yeah.

Cameron: That's interesting, cause I can understand in the inner ring, you know, you've got very strong status quo, you know, Nimby mentality that they are trying to protect and you know, then the council says, well we want to keep our rate payers happy. We'd rather up the rates on them rather than more rights. Whereas I find in the outer suburbs that, you know, it's usually a little bit more relaxed and the council was just want to increase their rates and they will willing to approve them.

Cameron: Yeah. It seems like an odd move to me, but I mean you hear very similar stories in, in Melbourne, there's a lot of resistance to people, um, subdividing their properties and putting in townhouses as well.

Veronica: I know even some of the council areas in Sydney that we deal with, and I guess you can do it, but then they force you to do a strata subdivision on a lot of two, you know, a lot developments sort of a bit ridiculous really. I mean, and they forced to share insurance. They might not even know where their neighbor lives, you know, because it could be tentative and then there's privacy and there's a whole bunch of issues around that.

Cameron: Yeah, that's it. Yeah. So I think councils just need to get a bit more progressive with their views and you're always going to have those nimbys that don't want change. But I think ultimately when you buy into a suburb, you live in that suburb, but you don't own that suburb and you don't have, I believe you don't have the right to say this suburb can't change Just because I live here.

Veronica: now on the townhouses in terms of data, there is quite a frustration when we're looking at pricing up a property who might be looking at, at a townhouse and you're like, well what daddy do you use? You can't apartment data. I think the townhouse data is lumped in with apartment cause it's strata right. That's right. But it doesn't really apply. And then likewise housing data doesn't apply either in how do people interpret what's available.

Cameron: Unfortunately it's very difficult and it's a, it's a challenge we are trying to, take on at the moment of actually separating, so you've got houses, you've got units and then trying to separate it out to say from the unit segment. You've got apartments, you've got townhouses from the house sector, you've got attached houses, detached houses. Um, but it's, it's very difficult mainly because there's no one standard data source. So all of our data comes from each of the different state governments and they all produce the data in a different way. And then we're trying to package that up at a national level to say this is the overview of the housing market. So it's something we've been trying to do for some time that there's certainly a lot more focus on that now. And even with townhouses you've got very different types of townhouses. As you said. You've got strata townhouses, you've got non strata townhouses. I mean, on the Gold Coast, we've got developments at Sanctuary Cove, which all freestanding houses, but they're all in strata titles. So based on our rules, that would actually come in as an apartment when we know it's not. So what do you do with it internally? Well, for that we've made an exception and where we do, we make exceptions, but we've just got to build more intelligent systems to be able to, to, to make it exceptional. Exactly.

Chris: It's so funny. So could these say that actually, because you know, sometimes clients will say, what do you think of townhouses and I'm like well, there's townhouses and there's townhouses. And you know, like if you think about 1960s townhouses in premium suburbs, you know, know we had more space, you know. And so the bigger blocks this, you know, usually bigger townhouses, they've got more green spaces.

Veronica: Um, you know, I think it's the opposite. A lot of the older town houses we see a tiny, absolutely boxes. And, um, whereas some of the newer developments are actually larger and they're, they're a great alternative for families. Um, because I do have, you know, a better standard or higher, you know, larger accommodation. So I mean there's small more than ones as well, but that, I mean there's certainly, we see that in the areas of we buy. Yeah.

Chris: I think, I mean obviously there's different suburbs and different demographic, but I think a lot of the, you know, units for example, like, uh, um, you know, in Melbourne, you know, there's lots of little villa units and you know, they're actually not bad little investments because they're almost like little houses, you know, they're detched. Yeah. You've got a little garden, et cetera. So when you're looking at unit data, you've kind of got say, what was it, a high rise or as a medium density or is it like a four block, four units in a suburban or an ad deco blocking Bondi for argument's sake, it's completely different to, you know, something in Zetland.

Cameron: And that, and this is all the kind of stuff we're trying to tackle. There's no segregating, it buys at a high rise apartment cause that's very different to a low rise. Uh, but it's, it's one of the challenges with the data, but it's certainly something that we're going to be looking at going forward. And, and, and again, one of the reasons why yes, the data can guide you, but you need to actually go and do the legwork and understand what each property is, why you'd buy it.

Veronica: Well, you wouldn't buy it. What do you reckon is the most dangerous piece of data, or sorts of data to take in isolation.

Cameron: I honestly think it's, it's the median price change over a 12 month period or anything like that. And, or even looking at it historically and then going, this is what's going to happen in the future. I think those, those pieces of data are very dangerous to look at and just say, oh well that market's done very well. I'm going to go and buy that property in that suburb. Cause all, all properties aren't created equal.

Chris: No. Yeah. It's interesting you say that because I think I'm like, you know, you see those top suburbs and you know, you've, everyone, someone will say, oh, what's a good suburb to invest in. It's like, well, yeah, the suburbs, the easy part, you know, you can pick a good suburb because it's got all the livability factors, but it's what property within that suburb is really what matters. That's that the second element there, you know, the suburb is only going to drive so much. It's then within that suburb, within that suburb, within that suburb.

Cameron: And even within suburbs, particularly big suburbs, you need to be close to the amenity that drives the drives, the value of it. I mean, it's not, it's, you can be it, you can say I'm in x suburb, but yeah, if you're a three kilometer walk from all of the facilities will then. It's a, it's not what you want.

New Speaker: That's really interesting is actually because we got a client by at the moment, um, in Reservoir right here in Melbourne. And um, yeah, she was just, you know, made from a shooting. Oh, was it? Yeah, there's shootings all over the place. Yeah. It'd be forgotten about next week. God in Melbourne, you know, and it's kind of inner north suburb of Melbourne. And you know, we're looking at some map and, but just send me some examples of what you're thinking. That's true. Um, and yeah, she went for the nice ones, you know, as you would now the weatherboard and such like that. And then when I looked at the map where these work, these are a long way away from any public transport. Um, and, and the kind of like, a fan I guess the further you go out, the further you can be away from public transport because it's less scattered and yeah. Um, you know, there was, when you're comparing properties, there was one property that was 600 meters from the train children made from the shop, beautiful tree lined street. Um, you know, you know, great ticked all the boxes and it was the same price as something more than 1.5 k's away from the try. And you comparing apples and apples and apples. And this is obviously a much better property because of the location, even though it's the same price. And I think that's a really good point that you got to, even when you see the suburb, you've got to go whereabouts in the suburb is it? Because it makes a huge difference.

Cameron: Yeah. And I think, I mean the transport's an important one, particularly for me. I work in the city center, but we do sometimes forget that not everyone actually works in the CBD, the CBD accounts for about 10% of the workforce. So particularly when you get to those outer suburbs. I live in the inner city and I, um, you know, like a lot of people, I'm like, oh, I wouldn't go and live out in that suburb. But for some people they work out in those areas. Um, you know, they might be tradies they don't need to travel into the city every day. So I think that's another important thing to consider, that the CBD isn't the be all and end all for a lot of people. Um, they, they don't have a need to really ever go into the city center. So they're quite happy in some of those other areas. But certainly if you are commuting to the inner city, I think being close to public transport is a very important consideration because I, you know, I don't live in Sydney or Melbourne, but I'd hate to battle traffic in Sydney and Melbourne on a, on a weekday morning.

Veronica: Yes, rotten in both cities. I think the other thing too is are what people as their kids grow older, when their kids get into high school, they start to think all public transport is really important for our kids mobility. Otherwise we'd get them to become a four car family and you know, who wants that? Um, and also then you become mom's taxi and dad's taxi. You know, who wants that either you know I love the fact that my daughter can get on the train on her own. Um, so these are important considerations, not just for commuting to work as well. You know, it's just for getting, getting around generally now. Cann we talk about your Pain and Gain Report. So you're the, are you the author of this oh hands, you know, high five. I Bang on about this all the time because what I like to do, I like to remind people that it doesn't matter what the rest of the market is doing. Every single porter we get reminded that sort of 10% plus or minus a bit sells at a loss every single quarter in Australia. And um, but there's beneath all of this I love, I'd like to know it is there's the, I guess the recent downturn in Sydney and Melbourne particularly has had much of a change on that and also just the composition and of those certain sort of takeaways around what's more likely to lose money than not. I'd love to hear about that.

Cameron: Yes, I'm actually working on the new report which should be out in the next week or two. Um, and we are seeing now quite a big spike in the number of properties selling at a loss more evident in the unit market. So again, that's another reason why we think it's going to start to show up more in our indices data that weakness in the, in the apartment market, uh, historically apartments always underperform, uh, houses and I, I think that's logical. You know, the, the value of a house is driven by the land component or unit has a lot less land component,

Veronica: but also you've got that issue with new stock typically within the first 10 years falling in value at a much greater rate than anything else. That's a separate issue though, isn't it?

Chris: That's right. But I mean, we look at, uh, I was looking yesterday across the cities that, um, based on the whole period of the resale, um, how the areas are performing in particularly in Sydney, um, properties that have been bought within the last three years and then resold, you know, some of the, some of them 60, 70% likely to actually sell it a loss. There's also a spike about eight or nine years ago, um, where we are seeing quite a high share of properties, uh, reselling it a loss, particularly units as well. That's 2002, uh, so April 10, 2010, so

Veronica: I just sort of, you know, lost a decade.

Cameron: So coming out of the coming out of the GFC and just the people that bought just as that market turned, uh, post GFC stimulus. So we're seeing some weakness there as well. Um, you know, if we look at, uh, if we look at Perth, about 45% of apartments selling at a loss, that market's been in the downturn for about 10 years. Um,

Veronica: data like that, you know, why the hell are people still buying them for investments? You know, buy to live in is one thing, but buy as an investment when you got this sort of history of that, it's just mind boggling. But yeah, sorry.

Cameron: That's all right. Um, um, in Melbourne we've seen the share of units reselling it a loss from memory up to about 15 or 16%. I can't remember the figure for Sydney, but it is lifting quite dramatically. Brisbane, you're getting about a quarter of apartments reselling at a loss. So the apartment market is certainly doing it tough, but don't, don't underestimate what we're seeing in houses. Even in, in Sydney and Melbourne, the share of resales that are a loss for houses are also climbing quite rapidly. They're not anywhere near as bad as the apartments and they're coming off a very low base, but they're there.

Chris: They've got a renovation costs that you know, probably aren't factored in, you know, so they might've spent 50 grand on the house that has meant that it on paper it still looks like again. Um, but it really, you know, they bought it at one one, they sold it at one, two will they spent 60 grand on a reno. So that wouldn't have been factored in

Cameron: And no, it isn't. The holding cost son factored in as well. So exactly. The picture is actually worse than what that indicates.

Chris: And so have you thought about, you know, pain and gain report on steroids, I guess, you know, and if you really want to represent, how much is that a loss adding in, you know, just stamp Judy and adding in selling costs or adding in, you know, a little bit of a maintenance cost or you know, I know this data's, you know, it's very hard. It's easy to do a broad stroke

Veronica: It would be really interesting actually, you could be just guessing at what those numbers are? But you could actually, you've got the actual data of the sale prices. You could do the, you know, a calculation based on known, you know, stamp duties, et Cetera.

Cameron: We have thought about it. Um, but we haven't gone down that path. The moment. Ultimately what we would like to do is know the actual LVR that these properties are purchased that to see who's underwater or not. But unfortunately we have to go to our friends at the banks to get that information and they're not too forthcoming with sharing that information.

Veronica: That goes back to what you, you know, your answer to our first question, which is what's one of the things alarms you the most is that people just automatically assume properties double in value every seven to 10 years when you've got real data, real understanding about the risks of buying property and the very fact is that once you bought it and you know you might actually have negative equity, um, but you don't worry about that because until you go to sell it, it doesn't matter. Um, I think the conversation around property needs to get a lot more serious because the risk in the money and the commitment involved. So that's one of the reasons why I love this report. So, so, um, with this so, when you talk about the spike, and this is a bit of a problem though with the, the fact that all your data or your apartment data is amalgamated into one lot. You know, pulling it apart is a challenge, right?

Cameron: That that is, so separating out townhouses and apartments is, is very much a challenge. But I mean we can get some trends by looking at the suburbs where we're seeing a high portion of loss and it's certainly when you do that. I haven't done that with the new data yet, but the last few times I've done it, it's very much in a city areas where you are seeing the new apartment projects coming on that we are seeing very high levels of resales that are selling at a loss. And a lot of people reselling it because they're usually investors.

Chris: You know, they can't afford to go p and I or you know, they want to buy a house and they've got their money tied up or there's lots of reasons why, but home owners so much, you know, they ended up deciding just to stay and this is the big problem. I think that now the people who are bought in these apartments, you know, because they couldn't afford a house and they'll push it in or they just thought, I'll buy an apartment by buying the apartment. They make it work. They're the ones who most likely aren't going to go through the settlement risk because they end up borrowing every dollar from their family and getting in, but then they can't resell because the value of the properties now in negative equity and they end up just living there. They become trapped in the property. But investors just say, I'll take the loss.

Cameron: Yeah, that's right. I mean as I said, I'll live in Brisbane or I live in an apartment and you look at the inner city Brisbane market now it's gone nowhere for about 12 years. The person that bought my property, I bought it and it may have gone down a little bit in price, but God, the price that they paid for and initially I would think it's going to be another 1520 years till it gets anywhere near that price again. recently. No, no. The one that the bought off somebody. Yeah. Are you there a statistic in your pain and gain reporter? Yeah. Yeah.

Chris: It's interesting. Because you mentioned time there. And this is the other thing with cost and loss, the biggest thing is opportunity cost and that's time. Yeah. Um, I really reflect on a client who, i's a good family friend actually and um, you know, and you know, didn't know what he was doing. I went to a property investor expo, um, educational and seminar. You know, I've realized at a stage of life, you know, low home equity and you know, could, could invest and then went to an expo and then got sold a serviced department and um, you know, and it was in an area where, uh, you know, it's just not a great investment, just full stop, but that could have been an apartment.

Speaker 2: It doesn't really matter. But that apartment service department end up selling it for a hundred grand loss. Yep. Um, you know, 10 years later, could even 11 years and you know, just as a exercise, you know, that was in, you know, just south of Sydney. Yep. Um, you know, we, I want to do more stuff to show it to him, but I just had a bit of a quick look on your software, which is where this is the power of using the software what a house he could have bought at the same time in that suburb. I'm just out, we'll just should be close by. And the houses are selling at a similar price and that house had doubled. Yep. So not only lost a hundred grand and the negative gearing cause even though it was a service apartment, it was still running a loss. Um, over 11 years.

Chris: He actually lost all the growth of what he could have bought on that money. And then you think, well okay so that's $500 grand on the gains he could have made plus a hundred grand that he made in the loss. Plus it's the negative gearings at $700 grand. But it's even more than that. And because if he then kept that property cause he would've, while he sold the serviceed department, he would've kept the house now, yes. All the way through to retirement and for another 20 or 30 years. So he's now lost all the future gains. And so I think people would kind of assume go, well, oh, I lost a little bit on that apartment. But you know, you've actually lost a lot more than that when you start adding up all these costs. And I think I don't think many people do that.

Cameron: No, and I know it's surprising that people don't do that, given that buying a property is the biggest investment decision most people will ever make. And I think people do tend to take that a little bit lightly. Um, you know, I want to be in this suburb, I'll buy a property in this suburb. It's going to increase in value, but it's not always as simple as that. And you know, if you bought an apartment in Brisbane 10 years ago, we'll then, you've, you've made a big loss on that property.

Chris: What's happening in Brisbane, because we've got lots of guests in Sydney. We're going to Melbourne again soon and we'll do lots of, have been up to Brisbane, but we haven't got as many kind of people from Brisbane in the studio. So I'd love to know, you know, the multiple elements at Brisbane. Where's going really well? What ha as a really strong demand where there's potentially over supply. What's happening.

Cameron: Yeah the apartment market is obviously the area that's probably been the focus of over supply and there probably is still a bit of over supply in that market. It is moderating because a lot of the projects have come to completion and there's not a lot of new projects kicking off. Um, but it, I think there's, there'll probably be some decent buying in that market within the next 12 or 18 months as we come to the end of that new supply coming online. Prices have come back a long way. Uh, particularly if you start comparing it to Sydney and Melbourne, it is very cheap. The area of Brisbane that's probably doing the strongest is the western suburbs. Um, so for any listeners, you know, Indooroopilly Chapel Hill, uh, out that way, Fig Tree pocket, those are the areas where we're seeing, uh, the growth.

Cameron: Um, what's the mediumm price there?

Cameron: Ah, look Indroopilly would be probably about $750, $800,000. As you go a bit further out, it gets a little bit cheaper. But that, that's a, that's the area that's doing the best at the moment.

Veronica: Why do you think that is?

Cameron: I don't really know, to be honest. I've been scratching my head there. There's a little bit of infrastructure expenditure there. Um, you've got big blocks usually, um, you know, leafy outlook, um, down by the river. Um, I think that's, that's probably why, uh, it's still fairly close to the city as well, but the, the challenge in there is just the roads are actually pretty terrible. Um, there's no, there's, there, there is a freeway that's Centennery motorway. Um, but there's no train line really through that area. So that, that's still the challenge. The inner north is doing alright as well. Um, that's the most expensive area of the city. Ah, Wilston Windsor. Uh, uh, Paddington. Paddington's [

Veronica: Its confusing cause that river snakes. It does. Yeah. So I'm just confused as to what direction I'm moving in.

New Speaker: And I think that's been driven by people that are actually migrating up to Brisbane. I mean the most expensive suburbs in Brisbane, you're talking about a median of 1.11 point 2 million. So what you get Sydney, you get great value. I get so much house. Yeah that's right. So you know for 1.2 million in Sydney, you're living 20 k's out of the city for 1.2 million in Brisbane. You're living 4kms from the city.

New Speaker: Um, interesting though cause the, interstate buyers are having a big impact up there. You not only from a a home buyer point of view but also on the investor point of view. You know, they're shopping with potentially bigger budgets and they're competing with the first time buyers up there and there thinking about well what worked in Sydney and Melbourne was buying four or five kosher and the city housing. Yup. And so they're kind of buying in these, in a north, in the inner west. Yep. You know Balmoral around the river. Cause I know that's where the best growth is.

Cameron: They do and they've seen it happen in Sydney and Melbourne. You know, Brisbane's a, a growing city, but it is still a lot cheaper and I think those are the desirable areas. Um, so that's where it's doing quite strong. There's still quite a lot of new development going out, uh, around places like Springfield, uh, North Lake, so that there is a lot of new housing coming online. I mean, Brisbane certainly not restricted in terms of new housing like Sydney is. Um, there's plenty of places to, to put lots of new housing. The Ripley Valley, a out past the Ipswich, um, there's a lot of new housing going on in there and uh, there's talk about extending the, uh, train line through to there. Um, so, um, that's, that's a, a good, fairly affordable area for people that don't need to work in the city. And even if you do need to work into the city, you are, you are going to be able to commute in a via train pretty soon. But the Brisbane market's just really plugging along pretty slowly. You know, it's fallen a little bit over the last 12 months, not to the magnitude we've seen in Sydney and Melbourne. Um, you know, it's like anywhere. The challenge at the moment is actually getting finance. Um, I think we did see a little bit of a bump from, uh, in southeast Queensland more so the Gold & Sunshine Coast, uh, when Sydney and Melbourne were really booming.

Cameron: People were using the equity in their properties in Sydney and Melbourne and going and buying in those areas. That certainly seems to have slowed down quite a lot. Uh, at the moment, you know Gold & Sunshine Coast, some actually more expensive to buy property than Brisbane. So, uh, and we are seeing that migration level pick up. But I think Brisbane, Adelaide, Perth, all of these markets have the same challenge, that you've still got very high unemployment rates. The labor market's not really tightening very quickly. And from a career perspective, you don't have the same opportunities as you do in Sydney and Melbourne. And I was talking with, uh, with some people in finance in Brisbane about this the other week. And I was saying, yeah, for me, I've got a good job here, but if I want to go up to the next level, I need to move to Sydney or Melbourne for that job. So yeah. And I think that's always going to be the case unless the governments of those states can find ways to actually attract people, attract big businesses out of Sydney and Melbourne. And I don't know how they effectively do that because you've got talent pools of 5 million people in both of those cities versus just over 2 million in Brisbane, just under 2 million in Perth, you know, just about one and a half million in Adelaide.

Veronica: Yeah. And you've also got, where do the people that are that talented want to go and they want to go where there's be acknowledged into existing rather than being, can I go into an outlier? So you've got all those sort of other factors involved. I guess it's a bit of a danger too because anecdotally I've, I've heard in the last say two years, um, of a lot of people saying well right well Sydney, Melbourne have done they are kaput and I love how people think it's eat forever it has made me laugh. I'm getting out. It's done. It wasn't what these two will pass. You know? Oh I'm going to go to Brisbane cause that's it. That's it. Now Sydney, Melbourne never ever, ever going to do a, well let's go to Brisbane. So then you've got this affordability chase, which has obviously been something that's happening throughout the, oh I'm going to go and buy and Brisbane and Newcastle to be big places and Adelaide's popped up on the radar.

Veronica: It's affordable. And I keep saying, why are you chasing affordability when you're chasing an investment? Because at the end of the day you, you want to be chasing gains, you know, growth and all that sort of stuff. Affordability where you can get a two bedroom apartment there for the same price as a one bedder in Sydney. That doesn't matter if it's not going to do its job. But yeah, what I have heard anecdotally is it's been quite a bit of money going to Brisbane for houses in say the last 18 months to two years. So is that the thing artificially in flighting Brisbane's prices

Cameron: A little bit. I mean, you look at the growth in, in house prices, it hasn't been particularly strong. So I don't know that it's enough to actually artificially inflate it. But I think if, if, if you're in, if you're living in Sydney and you're at a point where you actually need to upgrade into a property and you've got to work, if you work for a business that's going to let you do your job from Brisbane, you know, maybe travel down to Sydney two days a week, work from Brisbane for three days a week. I mean you sell out of Sydney say you are in your mid thirties you sell out of Sydney, you know, maybe $1.51 million. You go and buying Brisbane, you can buy in a probably much superior area, spend about $1-1.2 million. If you've got that flexibility in your job, you've pretty much set yourself up, uh, pretty well for the rest of your life. You're gonna have a low LVR on your mortgage and you're going to be living in a nice area and you've got to end, you're working for someone that's going to give you that flexibility. And I think the only way that the other cities are really going to fire going forward is if more employees actually starting embracing that flexibility to, to have the Sydney or Melbourne job but not be located in Sydney or Melbourne.

Chris: it's funny you say that. Yeah cause I think there's, um, there's two clients I've got at the moment who are moving back to Adelaide and um, one was making really interesting point. One's in Singapore and um, I was like chatting to him, he's like he is quite a smart chat. And he was like, Oh, you know, moving, moving back. And he says, I can't move back yet cause I've got the job. He says I need to get the job first. Even though he's been extremely successful and he's like, I go to wait for the job opportunity and once I've signed the job then I'll move back. But I've actually got to wait for that job to come up because only a handful of them, he says I can't go back and expect those jobs to come up. Cause there's only a handful of them. That's common in Sydney.

Chris: Yeah. People you know who've been living in in Hong Kong or Singapore, some years it's very common. But there's probably still more opportunities moving around, more turnover and swapping because you've got more confidence to swap your job because there's more jobs. Whereas there there's actually only a handful. So people would just, yeah, so people get the job and then they stay there for 15 years and so he's basis on, well what do wait for someone to leave that and then I've got to get the job. And so what a lot of people in, for example, there is, they only move back into a high paying job. And so it's kind of like a chicken and egg, you know, those people just don't move back. And so it's kinda like interesting because they're only moving back then they're going back with a lot of cash and they can buy really good assets.

Chris: So you really need the job growth. That's you're right. You're right. The housing growth.

New Speaker: But is he from Adelaide originally? Yeah. Yes. Cause I was about to say that when I find, when I'm talking to people who are going to relocate, particularly to Brisbane and Brisbane is a big one here. And if they originally came from Brisbane, so they're going back to family networks, all the rest of it. That's a bit of a no brainer. Yep. And they'll look for those opportunities. If their English, for argument's sake or Indian or Chinese or whatever, and they've moved here and they don't have those established family networks, then don't necessarily have, you know, any real ties in Sydney or Melbourne for arguments sake they're going to be more likely to go there because I can see the benefit of, you know, they've already gone from one country to another.

Veronica: It's another city, an hour and a half flight. Um, but for someone to move up there and let go of all their family ties and you know, that, that chase for affordability and flexibility of work and having no mortgage and all the rest of it, that that comes with a lot more consequences, doesn't it?

Cameron: It does. I mean, I've spoken to people in Sydney and you know, it's easy to say, why didn't you move to Brisbane? People have said to me, they thought about it, but you've got to leave your family behind. You know, if you want to have a, if you want to have kids, there's no family network to support you when you're, when you're up in Brisbane. So that, I think that's, that's a popular one. You know, just move somewhere more affordable. It's not really that easy. You know, childcare is expensive. Um, and, and people do increasingly lean on their, their family to help them with that kind of stuff.

Cameron: And if you're, if you're living away from them, I mean I've, my wife is from Canada, so we are, my parents are in Brisbane and we've got help there, but you know, she's got no support from her side of the family whatsoever. So no job opportunities coming up in, in Sydney or Melbourne are going to entice you out of Brisbane. Who knows? But, and then the other challenges, the cost of living in a, in a market like Brisbane or Adelaide, if you've got a decent job there, there has to be a pretty big incentive to move away from Sydney or Melbourne because you know, the wage difference between Brisbane and Sydney is about 15% but the price difference is what, 60 or 70% difference in terms of a house. So there has to be a pretty big lure there to, to make you consider doing that.

Veronica: If that closes the incentives gone. That's right.

Chris: And I think what's happened now is that, you know, Sydney has become more affordable over the last two years. There's hope again for first time buyers. Whereas if I reflect on conversation just three years ago, Brisbane was coming up almost daily with clients. Um, and you know, and there's a client right now, you're, she's from Brisbane. He doesn't want to really move there, but you know, they've looking at what they can get for their money out there and they're thinking about now, but they're still thinking about Sydney. I reckon if that was two years ago, they'd be moving to Brisbane. Right. But I think there's a, you know, if we fast forward say three or four years time are, those are those pockets that the young families are thinking about now we'll probably do all right. Brisbane or come back on the conversation again. So, you know, I think long term, I do think there'll be a bit of a, you know, a push for people going up to Brisbane just because of affordability.

Cameron: Yeah. And I think livability as well. I mean, honestly, I'd traveled with Sydney and Melbourne quite often and I hate trying to get around the roads. I don't like traffic at the best of times. Fantastic. No, it's, it's, it's pretty bad as well, but I mean, I, you know, you come in, you come into the airport, you try and get out to Homebush, you've, you fly in at nine and it takes you an hour and a half in a cab to get out to Homebush. You're thinking to yourself, I'm going against traffic. I'm theoretically going against traffic, but it's taking me this long to get around the city.

Chris: So, and what are we going to Homebush for our presentation now? Yeah. Yeah. The final thing, sorry, is to talk about is around the greenfields, well, we talked about apartments, talked about townhouses. What's your experience of greenfields and you know, when it goes well, when it doesn't go well, and some year data shows when it doesn't.

Cameron: Yeah. Greenfield's probably not something we focus on too much just because the data is quite lagged again, it's kind of like the apartment market

Veronica: Can you just explain exactly what you mean by greenfields?

Chris: Oh,sorry. Well, greenfields are, in reality, it was a farm and then the farm became close to the city. And then the farmer sags, oh, hang on a sec, I no longer should sell it, you know, have cattle because I'm the head of rezoning and I can sell it for $70 million to Stockland or I can sell it. So, you know, et Cetera. Um, and so, you know, these, these, these were greenfields. Now there are actually lots of houses.

Cameron: Yeah. And as I said, we don't have a huge amount of data on it because it's got that time lag. And overall it's a pretty small portion of the market. But, you know, talking to some people, um, the, the challenge with Greenfield ultimately is the price. I mean, particularly in Sydney, I mean vacant lands about $450,000 and that's on the outskirts of the city. And then you pop a house on that. It's another $250,000. Um, the first home buyers stimulus that's been bought in, in New South Wales and Victoria seems to have supported that market reasonably well. Uh, but I think again, the big challenge at the moment is actually getting access to finance to go and take out, take out a loan on those properties. And I think there's been quite a few stories in the press about, um, you know, does some of these developers having to drop a big discounts?

Cameron: And I think that's probably scaring people off a little bit as well. And I think it's scaring the lenders off as well. Um, you know, there's, there's a reluctance to, to go and lend to that product at the moment. So, um, yeah, I think particularly in Sydney there's not a lot of land left, so I still think longer term that that greenfield stuff, stock will do reasonably well. You'd have a different story in markets like Melbourne and Brisbane where you've got, you know, you don't have the geographic constraints that you do in a, in Sydney, you know, you can keep doing urban sprawl as far as the eye can see.

Chris: Um, you'd be, it'd be a bit surprised. I think if you go for a drive out in towards kind of Penrith and then you kind of go south and north, there is actually, you know, I, lots of land, I think it, it feels like because we've gone and there is a mountain that's going to stop you ultimately. Well yeah, if you go directly straight to Penrith, yes. But then if you go north and south up towards Richmond to the north, um, there's still lots of land. If you go south, maybe towards like Campbelltown and Liverpool. Thee is still a hell of a lot of land. And you could very easily do this because if you go onto Google maps and look at a satellite, you can just see it. And, um, I think, ah, you're right that the builders are offering huge discounts. You're talking, um, you know, before it was like, we'll give you a free kitchen.

Chris: Yeah. Now it's like we'll pay your mortgage for a year or we will, you know, give you $60,000 off the build, you know, um, and you have to think why, how can they afford to do that? And the reason they can afford it was in the boom, they were basically making huge fat margins. And so they were selling a house of $300, which would, yeah, really they should sold for $250. And now they have to sell it for 250 because there's no one who's buying them. And that's the same for the land. Now the dropping the land prices as well because I cannot sell the land. So I think that, you know, there's lots of um, problems cause that data when they start in three years time, we'll start showing that,

Cameron: well we are starting to see in Sydney that land prices is dropping off. But you've got the other challenge that so many people have been hunting for those, those sites that I've paid overs for those properties and now they, they have to bring it to the market at a certain price so they have to sell it. So I think it'll be interesting over the next few years to see. Um, again, I think a lot of these foreign buyers that have come up and option these lands may be selling them off to some local developers that are going to grab that. But ultimately a lot of the land is controlled by a few larger developers and they can really control supply in some of those areas. So,

Veronica: In fact, I was talking too, I won't give away the suburb. It, my accountant lives out in a place that I've never been to and there is no train line. Right. And um, he sold his house because he wanted to be a family home and he was saying that there's, there's a very, very wealthy, family developer that owns a lot of land out there and they are just not dropping their prices, but they're not selling either. So they're quite happy to hold and they protecting, you know, their prices are, I wouldn't say the protecting the values, but they protecting the prices. By virtue of the fact they don't have to sell. I don't imagine there's a lot of people that are in that sort of financial position where they can afford to do that. But that is exactly where they're at. So He's forced that if he actually wants to stay there and he wants to put a new house on a block of land, he has to pay what he knows as inflated in terms of the rest of Sydney. It's just that if he wants to be there, he's forced to do that. So it's an interesting conundrum.

Cameron: And one of the things they could really do for housing affordability is try and Provo try and make an incentive for people to bring this land to market. So at the moment you don't really lose out by holding this land back from the market except that you're paying interest costs and that sort of thing. But you know, developers can lock up huge blocks of land. And then just drip feed the market to make a profit. If you start looking at ways, say if you're going to hold this land and not bring it to the market, then there's going to be a higher tax rate or something like that. I think those are the sort of things that could really start to help housing affordability.

Chris: Interesting. You say that because the drip feeding is exactly what they do. And so it's like the diamond market, yeah. Um, yeah, well that's right. You know, what's the, what's the price of a diamond, what's whatever they want to make it. Um, and uh, you know, and that's, it's so true that, and that's like if you're a smart developer you wouldn't and you've got, you know, hundreds of acres, you know, you sell acre off at a time, you know, and um, the problem with that is when you buy that first acre, it's still another 99, that are going to get released. And so the price of, you know, land doesn't really go up because as soon as there's more demand, there's more land. And so I guess it's just interesting for, um, you know, home buyers out in these greenfields is that unless there's a restriction of supply, you're just going to find this is going to be continual problem as developers just keep on releasing land.

Cameron: Yeah. And I mean, I think the sunshine coast is a really good test case because Stockland basically own every single parcel that every single decently sized parcel, uh, on the sunshine coast. And I don't want to have a go at Stockland, but they can control the market. They can bring on whatever they want when they want. Yeah. So, and that's, that's the challenge in that landmark. I mean a few people have the deep pockets to, to own those.

Chris: Those big parcels of land. So you've got your Stocklands, you've got your Lend Leases, people like that, that, uh, that control those markets very much. That's very hard for a small time developer to play in that market because if they do try it, there's nothing Stockland we stockland just saying, okay, well we released a hundred lots. Um, and then just flood the market and then make them not make any money necessarily. Right? Like, you know, there's so many things behind the scenes that people just don't understand that, you know, you're kind of at the mercy of, you know, things out of your control

Chris: Every week we hear incredible stories of the dumb thi s, property buyers do, dumb things that end up costing a whole lot of money and or creating a whole lot of stress mistakes that can be avoided. Please Cameron, can you give us an example of a property dumbo? We can all learn what not to do from these stories.

Cameron: I do. Well it's actually one of my property. Dumbos always love this and I think it comes back to actually doing your research about a property. So my property Dumbo was when I bought my previous House. I didn't spend enough time, uh, sitting at their house before I purchased it. And increasingly the air traffic to Brisbane airport has grown and grown and grown and I didn't check the, the flight paths and the flight path moved to directly over my house. So my wife and I got to the point where we couldn't even really have a conversation in our house because the aircraft's are actually bringing down their landing gear is right over our house.

New Speaker: And where are you in Queensland weatherboard, I was in a Queenslander and I'm the least handyman in the world, so I couldn't fix that. And so that was my property dumbo.

Cameron: But you know, I learned a good lesson from that. That again, when you're buying a property, it's not just all about the, the suburb. It's about actually spending the time to go to the property, sit outside the property. I mean, but the flight plot off changing that wouldn't have been there when you went anyway. And No, I mean we did already have planes going over there. Um, and I think what actually happens in Brisbane airport is they, there's a few suburbs, they move it over and whoever complains the loudest, they move it to the next suburb for a while but because the traffic picked up so much. And because there's only one runway, it was at nighttime, it was basically a constant stream. And of course you don't do the open home at night time. You do it on mid, middle of the day on a Saturday,

Veronica: in half an hour. That the open house, the time you got to go back it all the time.

Cameron: That's right. Yes. So that's the big lesson there for me is I lived there for about five years. It's suffered through turning up the totally. That's true. If we were watching Netflix having to stop Netflix while a plane went over.

New Speaker: It's funny, I was doing some videos today and it's all about in a road and we all went over different pockets of Sydney, like Paddington then went to nine, sorry hills and Covelly. And so with the videos you've got to wait for no planes and pretty much everywhere we went we were getting plane noise. Like we were in centennial. We are to stop there. We went to Clovelly, we had to stop there. And so it's surprising how much is actually affecting and it's obviously different levels of plane noise. Um, and you know, the, and the plane routes do change and new runways get built.

Veronica: And we got prevailing winds as well. Exactly. Different Times a year you'll find different flight paths affect different, different locations

Veronica: and different times of the day, you know, the planes, you know, you don't really care if it's at two o'clock, if the planes come over, but at six oh five when the ones coming from London, you know, and that's going over here apparently that can actually come in before 6:00 AM in Sydney. I think BA is like two flights or something.

Chris: Anyway. Not very sure a lot that one cause it's um, and you're right, I think the, you know, people do go, um, you know, the right time that suits the seller. Yep. Um, which is when the, it's a beautiful sunset or you know, it's great lighting or the snow school run or yeah.

Veronica: The parking and school run. They classics. You know, the old idea about, you know, when, when the house has got more natural light and you, you definitely know the agents will deliberately, uh, set a time around that. But also with the flight paths, it's quite perverse. It. Cause I remember when I was a selling agent, you had people that were selling under the flight paths are we want to make sure that, you know, we avoid the flight path. And I'm like well you can't control the wind and Murphy's law will be that you had the auction at a certain time and it will be that time when there's more planes than any other time it is just potluck.

Cameron: But it'll be interesting with Badgerys creek in Sydney because people out in those suburbs have never had to really, although the, the flight path was never a consideration for them, but it is going to become a consideration for them.

Chris: That's more of a transport airport. Right. That's more of a um, this is not people, these are go the cargo. Yeah we would, this is more around out on a, how do we get our stuff to the world and you know, that's most likely going to be more of a 24, seven I'm pretty sure like with airports as well. And so, you know, at 3:00 AM I don't think we're going electric planes anytime soon. Not to get rid of the noise. It's interesting though that when you say about the flight plane though, like when are going to open homes, you know there's something wrong when the music's on so. Um, you, I put the candles, that's fine. But when you go in there and I don't know what a candles masking. Yeah, that's true as well. But um, you know, there's, the music's going off in the kitchen on the back deck. Oh. I just kind of want to go in there and just turn the music off and as a bit of a stunt, just play around with the real estate agent .

Veronica: Turn the lights off that is what you really need to do turn the lights off and it's in a cave.

Veronica: Cameron thank you so much for coming and joining us has been very informative. Um, I hope that you've, um, had an opportunity to express some things that maybe you wouldn't normally express in a podcast. We tried to trap you a couple of times and you wouldn't bite. We really appreciate your time.

Cameron: Thank you very much for having me.

New Speaker: Thank you, Cameron.

Chris: We want to make you a better elephant rider. And this week's elephant rider training is,

Let's talk a bit about settlement risk. And this doesn't just apply to brand new property, it applies to any property that you might buy. And then you might think that if you need to walk away from it, God forbid that you are only going to lose the 10% deposit.

Veronica: Now this is absolute myth. A lot of people think, now let's face it, 10% you know, it's nothing to be sneezed at. Few million dollars. That's, that's $100,000 who wants to lose that. But some people think that if you get into, you've signed a contract on a property, it's gone on conditional, you've bought at auction, and for whatever reason, um, you can't complete on that sale or you can't settle then. Well, that's all right. I'll just have to walk away from my 10% well, it's not that simple. Okay. We actually did an episode ages ago. I'd kind of remember the number. It was probably in the first 10, maybe 11 or something like that, which was Australia's biggest property, dumbo. And, and actually we took you through a case study of a situation where um, a couple of very well known couple actually bought a property and didn't complete. And what happened and what can happen is if that property sells at less than what you agreed to pay for it, you're not just up for your 10% they can sue you for the difference and costs and a whole bunch of other stuff.

Veronica: So I this elephant ride a bootcamp is really about really understanding what you are committing to when you buy a property, you are committing to buy that property at that price within the time period, at the end of the settlement period. Usually 6 weeks in, in New South Wales, it can vary. It can go from 28 days up to six months sometimes. But whatever is the settlement period that is agreed, whatever the price is agreed, that's what you're signing the liability to come up with the rest of the money by that date and take ownership of that property. And you do need to understand and, it's a myth that a lot of people just do not realize that you can be sued for a lot more than that 10% should that own or be losing money. Now, it could be and certainly with developers, you know, if they're going to be forced with the prospect of going broke because a whole bunch of the people that they sold properties or apartments to off the plan can't settle, then you can bet your bottom dollar they're going to go and fight not to go broke.

Veronica: So they'll, you know, quite likely to be a lot of legal action of people being sued for all the other losses because they are not completing on the sales. So very, very important lesson there.

Chris: Yeah. Please join us for our next episode.

Chris: Don't forget we're on all the social channels. We're on Facebook, we're on Linkedin Brod, Twitter,

Veronica: Or you can connect with us on the elephant in the room.coy. You, the links are all there for you.

Chris: Please connect and send us a message. We'd love to hear from you.

Veronica: The elephant in the room property podcast is recorded at the Sydney Sound Brewery. This week's podcast was recorded by John Rhesk editorial by Gordy Fletcher.

Chris: Until next week, don't be a Dumbo!

Veronica: Now remember, everything we talked about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyer's agent who will tailor and document their advice to your personal circumstances with a statement of advice.

Veronica Morgan