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


Episode 78 | The rent vs. buy debate continues | Andrew Price, Managing Partner EY Sydney


Is rent money dead money & what are the alternatives?

Andrew Price, Managing Partner of EY Sydney a global financial advisory business has qualifications in economics, applied finance & investment & he knows about the merits of renting versus buying. We look at the myths around:

  • The rent vs. buy debate - what is best?

  • How State Government incentives leads to silly choices.

  • Why we need to build sustainable housing for families.

  • The changing trend around what young families want to live in & where.

  • The important psychological & emotional value of owning your own home.

  • Why you shouldn’t take on too much debt at the wrong time.

  • Tips on suburb selection, asset selection & timing the market.

We come at this episode from a number of different angles & hope you enjoy it!

Warren Hogan - Ep 75
Scott Phillips - Ep 69
Cameron Kusher - Ep 77
Fool & Forecaster Report - Ep 61
Good Deeds Blog - Have Sydney house prices stopped falling?

Work with Veronica?
Work with Chris?

Andrew Price - EY Sydney


Veronica: You're listening to the elephant in the room property podcast where the 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 Foxtel's location, location, location Australia.

Chris: And I'm Chris Bates, financial planner, mortgage broker and wealth coach.

Veronica: And together we're going to uncover who's really making the decisions. When you buy a property.

Veronica: Please stick around for this week's elephant rider bootcamp 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: Is Renting really dead money? What a great dinner party conversation starter. I guarantee everybody will have an opinion. You get diehards on both sides of this debate. There'll be staunch rent vestors. You think you'd be mad to have a mortgage and live in a modest bungalow when you can rent an apartment with the harbor view for the same monthly outlay and you'll also get the money market guys, you think property is perennially overvalued and would never dream of putting all their eggs into one lumpy investment basket and then there'll be the traditional Aussies. You won't feel they've made it until they own the modern equivalent of a quarter acre block. And also the real estate agent who thinks that all property is a good investment as long as you buy it at the right price, everything goes up in the long run. Right? Well, do any of these people actually know what they talking about?

Veronica: Is there even one simple answer to this question? Does anybody really know that answer? Well, we think we may have found someone who does. In this episode we pick the brains of Andrew Price, a man who wears two hats. One is managing partner of EY Sydney and secondly as a lead partner on the audit of some of EY's largest clients. And what, I hear you say does a man who works for a global financial advisory business? We qualifications in economics, applied finance and investment know about the merits of renting versus buying. Well, I'm glad you asked. He's one of the authors of a very interesting report on this very topic and we're about to find out some very surprising things. Thank you for joining us, Andrew.

Andrew: Great to be here.

Chris: Thank you Andrew. I really appreciate you giving us your time. Um, the rent versus buy debate is, um, something that pops up a lot in my world and uh, it's not as straight forward as people think. They always just assume that they should go out and buy, but you know, what's the truth behind that story? What's some of your research suggesting?

Andrew: Yeah, great. It's a, it's a great question and certainly the reason we commissioned this research EY is that the average age of our employees is 27 and these are the people who are in the process of making this dilemma about do you rent versus buy and to pick up on your introductory comments that often their parents will be given. The giving them the lessons that were relevant for them in very different ages were interest rates were very high, property prices behaved in different ways. So we did some research and, and what we did was to look over the period between 1994 and 2017 and said, look, if people buy property, they typically buy it for say 10 years. And so we did a comparison of the rent versus buy decision from a return point of view over that period across 43 different local government areas in, in Sydney.

Andrew: And actually just compared that decision and what that study found was there in 60% of cases you would have been better off from an investment point of view of actually having a good equity portfolio. And I'll come back and explain what they use rather than, than in fact buying a property or indeed an apartment because we're targeting at the younger end. We're looking at the apartment market. Now, the interesting distinction here as I mentioned, is in fact the idea of that being a leveraged equity portfolio. And so leverage in, you know, just thinking, make sure everyone understands what that means is that if you're buying it a million dollar property and you have a $200,000 deposit, you are in fact very heavily exposed to the fact that that $800,000 difference is being funded by the bank where you pay a fixed amount. But obviously if the property market goes up, you get all of that benefit.

Andrew: But if it goes down, you, you wear that loss. And so property is inherently for Um, new buyers is always very heavily leveraged. And so if you just compare that to other things you might do from an investment point of view, typically they're not leveraged. Um, and so the comparison that we did was to say, well, let's compare buying a portfolio of stock and a big part of the challenge for a young folk is they wouldn't know where to start to do that. Whereas with property, you know, you know what a bank looks like, you know what a real estate agent looks like, you can touch and feel it and you feel that the knowledge barriers to entry are actually quite low. Whereas if you say to people, well, let me buy a stock portfolio, wouldn't know where to begin. Yeah. And so part of this for us is a discussion around financial literacy. So in fact people can have a more informed discussion.

Veronica: Wow, I just have to interject for a minute cause this is fantastic. And about financial literacy. I mean, look, I'm a property specialist. I find that when you say a low barrier to entry with property, um, I find that people think they should know, but mostly they don't know what, what people don't know is blindingly scary. And yet in what we're talking about here is making it even more complex, which I think is fantastic that we all need to really up our game and in this, but what an interesting, you know, approach. I love it. Yeah, keep going. Sorry, I just had to sort of, I was getting off jumping in my seat, getting excited here. So

Chris: Yeah, I mean before we kind of go and kind of look at the analysis, which I think is really interesting and what we'll attach all the links in our show notes for people to kind of play around with. You mentioned the really interesting point about the parents. Your staff members are going to parents, the parents for advice and a lot of that's very true. The parents are telling the kids to go out and buy. You must have an home in. Do you find that a lot of the reasons why a lot of young people feel like they shouldn't rent, they should just go and buy?

Andrew: Yeah. I mean clearly that's been for people of my generation, that that's typically been that the path to success and you think about property prices, when I first bought a property 25 years ago in interest rates were 13%. And if you do the math, basic financial mathematics, when interest rates go from 13% to say 4%, now either the value of assets just increases dramatically as a result of that. And so, um, a lot of people have ever had that benefit. And so if you think about what you do from a why, why you own property, you really do it for two things. One is, you know, is to, is a place to live. You need to consume, uh, you know, housing and you can either rent or you can buy that. Yeah. Um, and all of the tax systems in the, um, arrangements as far as tenants rights and all those things push you in favor of actually owning.

Chris: Yeah. Just want to stop there as well because when you said consumer housing. That's a really, it's at some point that people forget about, they assume that rent is dead money. And they think that I'm not getting anything for, I'm just paying off someone else's mortgage, et cetera. And the reality is you are getting something for you, you're getting somewhere to live and you're getting somewhere to, to sleep at night and the security and you actually are getting a benefit. And a lot of people don't put a value on that end. I just think that, you know, they're just wasting money. Well, no, you're actually getting something. And I think people would naturally assume that getting a mortgage is a much better option. Um, you mentioned there about leasing and these are some of the reasons why people don't rent, you know about the guest, the benefits of leasing.

Andrew: Yeah, exactly right. And so part of what we're calling for in our discussion is, is better tenants rights. So if you look at other jurisdictions around the world, you know, in Germany and in America and so on, tenants have much better rights. Leases are much longer. You can do minor refurbishments and renovations and paint, you know, the property, et Cetera, in your own way. And therefore you've got much better rights.

Veronica: Well, that's quite a bit of a theory on this. Okay. My sister lives in Italy and um, and absolutely over there, tenants have enormous rights, but, and, and apparently if you have a child, you cannot be evicted. It doesn't even matter if you stop paying your rent. So that's pretty, that's pretty big. Right, right. Um, there's, and there's all, sorry, and something I know and I don't necessarily want to go too much into this in this episode, but the multigenerational, um, property ownership and that's certainly something that is a hallmark of these, um, older if you like these older countries, you know, oh, sure. In terms of a property point of view. They want to know in terms of how they've been. Yes. In terms of property. Yes. Um, you know, Sydney's or Australia's had property being built since what, 1788 and that's it. You know, these are, these have got centuries and centuries of built properties.

Veronica: Um, and so the whole concept of home ownership is very, very different. I remember having conversations with my brother in law a number of years ago about the fact that it, no property market in Italy. And I, I couldn't get my, could not wrap my head around the fact that there's no effectively no inflationary push on property prices and, and, and we had many, many discussions around this. And, and I, I've come to the conclusion of maybe, you know, it'd be interesting to see what you say with your research is that with population, they've got large populations, you know, and banks don't lend as much money, um, to people to buy property and you've got families owning property and people tend to live in them or they leave them vacant because of the tenants rights in many cases. Um, but there is this very much, a very, very different attitude towards property ownership there. And I'm suspecting that we're heading that way.

Andrew: Yeah. And, and, and as you say that, our market is very different and use a new market and a lot of our houses are relatively new. Um, and also, you know, what people see as a house or an apartment has changed over time. If you think about, you know, when I grew up in it was a quarter acre block and a relatively modest house with one bathroom, et cetera. Whereas now, you know, each child thinks they need to have their own bathroom, et Cetera, and don't worry about the backyard. Let's in fact, um, you know, lets have extra bedrooms. So I think that discussion around what is the societal expectations around it, um, you know, is something that we all need it to face into. Um, and so coming back to the, the question then on, you know, where that pressure is coming from.

Andrew: I think, so if we say we consume housing, um, but also we're investing in saving at the same time. And so what we're talking about in the, in this research piece is to say you can decouple those two things. Um, and in fact you should, you know, if we all have a better conversation around financial literacy, you can in fact be thinking about how you might invest differently if you are in a saving phase, particularly with very low interest rates where you know, putting money on deposit with the bank is, is, you know, is would hardly seem worthwhile. But in an intervening period where you are looking to save and maybe you're going to save for three or four years before you can get enough for a deposit, you think about where that money actually goes. And that's why, you know, the sort of thing of actually investing in a diversified portfolio might make sense or be it that does come with volatility. So it needs to, it's not where, and we're certainly not advocating that would be the answer for everyone. Yeah. And we're not giving financial advice, but it's actually to consider more opportunities than what you might think of the moment, which is either, you know, have your money on deposit at the bank, not getting much while you save for a deposit.

Chris: I think it really liked that idea. So what is one of the things I talk about with clients is, you know, I get this myth that they, you know, they have to buy, you've got the money in the bank, it's wasted. You know, you can't leave the money in the bank. You're only getting 2%. Um, and they, you know, they're not ready to buy a house. You know, they're, let's say they're in their mid twenties, early, late twenties, and that's where they, where this problem I think is very, you know, prevalent. Um, and they'll rush out and buy something, you know, with no, you know, view of that home or that apartment to ever be suitable for them longterm. And the reality is, you know, they, they shouldn't actually buy a lot of the time because the cost of buy, you know, the stamp duty and then the cost to sell. And then when you add up the, the additional amount they have to pay in a mortgage over renting, a lot of the time it doesn't make sense. And what you're saying is, is that you're decoupling, you know, what's the actual cost to rent plus the additional amount for what a mortgage would be and all the costs. And you actually are saving that money. And people don't really put a value on what they're actually saving. They just think, I can't rent, I can't rent. Just wasting money.

Andrew: Yeah. And particularly for folks in the, you know, in their twenties in particular who are thinking about their career. It's still evolving and so on, you know, having the flexibility to say, you know, if a great opportunity came up in Melbourne to actually move there, um, you know, that's, that sort of flexibility is there. So, so we think, um, the people need to think perhaps differently about the conversation, but also there's stuff that the government can do to actually put the, put the balance back in favor of renting. Because at the moment all of the tax concessions and everything else goes to buying. Um, but if a government were to think about change some changes in policy around tenants rights but then also stamp duty, you know, and you know, as anyone who studies economics will tell you, uh, a tax on transactions is a bad tax, um, ain because it stops people doing things in over the last 20 or 30 years Australia has got rid of most of those transactions taxes. The big one that's still there is stamp duty in the ICT over the last five years or so. They've gone through a process of moving from a transaction, from stamp duty to a broad based land tax. And we think that that is good policy. And in our suggestion here in, in New South Wales for example, is to allow people to, when they do buy a property, you can either elect to pay the stamp duty or you can elect to not pay stamp duty and go to a land tax system. And that property then becomes less land land tax based going forward. So you give people the choice and over time things you would expect would migrate to a system whereby it's much more land tax based rather than transactional based. And that will help in the other piece of research that we've done, which showed that in on census night in 2016 there were 600,000 surplus bedrooms in Sydney because people have got no incentive either because of stamp duty or of the way the retirement system works to actually downsize. And if you take away that disincentive, the, you know, older couple who've got a three or four bedroom house, um, who really only need one extra bedroom for when the grandchildren come over will not have any disincentives to not move to a smaller place and allow another family to have that four bedroom house, you know, which is just better use of our housing stock.

Veronica: We had a conversation on exactly this. We was it Warren Hogan. And it's very complex because the thing is that, you know, the older couple, you know, the downsizers moving out of the house, well that house may not be in demand anymore because different type of house, it might be one of those three bedroom bungalows with only one bathroom for instance. So therefore it then enters the market, not in its current form, Ie not used in the current way, but as potentially a development site or something to knock it down and rebuild, et Cetera, et Cetera, et cetera. And so that, that will change obviously the landscape of of housing stock. But on the flip side, what do they do with that money? And quite a lot of these downsizes and thinking, well they might want to help their kids out. So that might actually help bring more people into the marketplace. So this could some interesting behavioral outcomes from opening up this has any modeling being done on that.

Andrew: So we haven't done specific modeling on that. The research we did was very much focused on determining how many surplus bedrooms and we'll used the word surplus, not empty. So surplus was more than one above one empty bedrooms. I wasn't, so it wasn't a case of saying, you know, that that older couple should have a one bedroom apartment we get, we get, so this is two and above and so 600,000, if you think about, wow, the number of people who are coming into, into New South Wales in particular, Gee that's, that's many years of housing stock that could be unlocked now clearly not going to unlock all of it. So be realistic about it. Um, but it is around getting good public policy around the way that works with the pension system. Cause again, you've used that example of an older couple. They might go, well in fact if we, um, if we release several hundred thousand dollars of equity, that actually affects the pension and even if we do give it to our children, that comes into the pension test as well. So, um,

Veronica: Or even if they rent out those extra rooms on Airbnb, yes. Yeah.

Chris: It's a really interesting one. I think long term it will come up in conversation. You know, there'd be more taxes out there that pop up in the home in when you are in retirement. You know, there's a few issues. Um, yeah, your house is growing tax free. And so a lot of the older generation understands that that's their biggest asset. It's where most of their wealth is and you know, for them to downsize into another property, even if that makes more living sense, it might not make financial sense and a lot of older generations want to give that house to the kids. And I don't want to leave the house because you know, they know that's their best asset, that's growing tax free. And secondly is the pension issue. You know, there is a, an exemption now for when you are in retirement that that's not included in your pension. So there's not actually an incentive to sell it for the two major reasons. And so, you know, I guess that, but you know, the state government will,

Veronica: what if somebody gets a reverse mortgage and they can't afford to sell it?

Chris: Well, yeah, that, that will come up. But I mean that's kind of not really what the government really wants to help with housing affordability. Right? I mean it might help spending, but it's not really going to create that kind of demand or those open up those.

Andrew: No, that's right. And so from an individual point of view there probably that discussion probably doesn't help because the rules are what they are. And it's a very politically sensitive topic. So if you think about, you can think about both stamp duty and I'm the exemption for, of the family home from, from basically the tax regime. It will be a very brave politician to tackle either of those issues. We would the stamp duty one, there are examples of where you can make that change. Um, and cause as with any tax system, it's all about the, the real issue is how do you get from one system to another. And we think that there's, there's examples of, of being able to do that.

Veronica: Yeah. Tell us some of those. Because I have read of you and I've forgotten them. So

Andrew: the primary one is the ACT where they, they went and effectively they just mandated that they were going to do it over a period. So we think the better example of and suggestion on how to do it as the one I've described, which is allow people that choice because what people don't want to do is to say, well, I've, I've paid a lot of stamp duty and I've just bought a place and now I'm going to be effected. And so by allowing people to make that election, no one's going to feel that they're disadvantaged.

Veronica: Although the person that bought and paid all the Stamp Dudy just before that comes in, he's going to be disadvantaged because then they, they runways a lot longer in terms of a payback period for that.

Andrew: Yeah. Always I'll have a longer time where they're not paying land tax. So, um, but I agree and that's, as I say, with any intergenerational and transfer from one tax system to another, the real issues. How you manage transition.

Chris: Yeah, it could create a bit of a building boom, couldn't it, you know, because you know, from a flippers point of view, you know, one of the things I have to make sure is there's enough profit in the build to cover the stamp duty to cover the selling costs. Um, and if you take away stamp duty, replace that with something like land tax, you could create that. There's a lot of, you know, more demand for people just to go in and flip buildings. I guess there'll be, you know, there's all these kinds of, if you change the tax codes, there's all these kind of knock on effects that you don't really know that could be positive, could be negative. And so why you might be trying to help first home buyers, you might be creating, you know, more demand for builders. You know what I mean? Like it's just, there's so many interconnectedness. Yes.

Andrew: And so perhaps if we come back to the research we've done, cause there's one more point I do want to make, I mentioned the concept that in fact it, the our Analysis includes a leveraged equity portfolio

Chris: Our analysis gets a very different result. If it's not a leveraged equity portfolio,

Veronica: can I ask what your assumptions are on that? Because yeah, and this is the thing. People think they pay rent and they don't think, well what are they going to do with the surplus? So this is what, what you're using that surplus for and then you're obviously borrowing in order to invest elsewhere. So what sort of assumptions that you make as typically you can't borrow as much on shares for instance, as you can in property?

Andrew: Yup. No, that's very, very good point. So the assumptions we used in our modeling was that the money would be invested in a portfolio of ASX 200 companies. So not trying to pick stocks directly, just invest in the market. Exactly. Right. And then it's leveraged to 50% yeah. Okay. And so when we put this research out, I did have some people ring and say, you know, have you thought about whether there's going to be any margin calls in that time? So if you think about how that works is that equity is inherently more volatile than property in price. And if you have a mortgage loan and it's 50%, if you get circumstances where that, that um, equity markets go down they can have a what's known as a margin call and they require you to top that percentage up. Yup. Over the research period that we've had, the only time they would have been a margin call is in the GFC when equity markets went down significantly.

Andrew: But again, as with all investing you do if you do it over time. And that's so the advantage of this is you in fact, you would be able to invest each year in the stock market and, and, and have that volatility somewhat averaged out rather than in a property investment where you in fact go, well, I'm going to go all in, you know, and it's, what does that property look like at that point? And that's why we've seen many different outcomes, um, where, you know, if you invest in the wrong area and the wrong type of property at the wrong time in the cycle, you are significantly disadvantaged.

Veronica: We'll get to that in a minute. But I, cause I've been playing around with, there's a report, we will put the link in the notes. Um, and there are various interactive bits of this report where you can plug in dates and suburbs and all the rest of it's very, very interesting. And in fact, I just did some research myself and I end up, I've got a blog, which I'll put the link in for that as well. And I was wanting to look at, um, and this is around timing, right? So I was wanting to look at properties that have bought in the lead up to the peak. So in the 18 months up to June, 2017 and then on sold between then and say June, 2019 and how many of those sold at a lost versus than at a again and all the rest of it. The the premise being, I knew that not everything lost money. Um, even though Sydney averages, you know, had gold median price had gone down. Um, I wanted to really just look into and dive into and understand that I would, I, I started with a hypo hypothesis that it'd be around the property type would, would be the differentiator, but over that short period of time and the property type itself wasn't enough. Right. Um, what I found was the timing was really important, really important. Um, and obviously these are short term transactions, which we never encourage with property so over long periods of time if you buy quality as it doesn't matter the blip in time. Absolutely blip in time. But yeah, I found it absolutely fascinating. This timing thing, cause I've always said it doesn't matter when you buy property in Sydney, as long as you buy a good asset and you want to hold it for long enough and that, that actually holds out. But um, yeah, so there's some interesting stuff in this and I'd love to hear more of your insights.

Andrew: Yeah. And so certainly if you think about the period that we're doing from 1994 to 2017 so you know, almost 40 years. And to your point, we are looking at 10 year blocks because otherwise, you know, the, the, the timing issues become significant. You think about what's happened over that time, you know, equity markets have generally gone up, but, but I've also had significant falls, the most significant of which was in 2018 I'm sorry 2008. Thank you. Thank you. I was listening and, and the other thing of course is the property in various local government areas has been re-rated. And so if you think about it, certainly in some of the inner city areas, you know, in, in think about where we are here today in, in Redfern and Surry Hills, you know, when I went to university here, you know, no one would think about living here, which is a very different environment now.

Andrew: And also to your earlier point, what people are looking for is also quite different. So when I was going through having young children, you would never think really of living longterm in an apartment. And that was the societal norm. Oh, you've got children now. Okay. You might have them in the, in an apartment for their first couple of years, but after that, you know, whereas in other places around the world, that's not the case. And, and, and it, and indeed, increasingly in Australia, people are saying, no, no, we as a family, we are quite happy to live, um, in, in, in an apartment. Um, there's actually a nice park next door, you know, et cetera, et cetera. And the whole way we live is very different. And again, if you think about how children grew up, you know, the, you know, 30 odd years ago, you know, they would play cricket or, or netball or so on out on the streets, etc.

Andrew: Now, the whole way our society lives is very different and therefore the types of property that people are looking for. So to, um, you know, the whole point of that discussion is then to come back to, you know, suburbs have been re-rated according to what people are looking for. And our research shows what, what I think we all intuitively know is that the property growth has been in and around the core more so than in the outer. Um, and that does reflect the fact that travel times, you know, with, um, with, you know, more traffic and so on, you know, are getting longer, so therefore people are prepared to make that trade saying I want to be closer in. Um, and I'm happy to live in a, in a smaller, um, a form of accommodation, um, for that convenience.

Chris: And in terms of, um, does a few things on the research that, you know, I love the research because at least it's starting to open up the debate between not just always going and buying, let's just consider. Should we rent, should we just rent an invest? And a lot of people in equity markets for example, think like that and they think they shouldn't buy, they do everything to convince themselves they shouldn't buy and then they end up just investing and then maybe they don't leverage it, et cetera. So I wonder what you research kind of found in terms of houses and units because you know, there are different demand and supply issues that are kind of playing to those markets. We did you find that houses kind of did perform better than the apartment?

Andrew: Yeah. So, so just to be clear, our research was focused on apartments because we think that that's an easier thing to do as far as, well one, it's because you're talking about, you know, there's sort of a younger first home buyer demographic. Um, uh, but also, um, it's a more homogenous commodity to look at apartment prices, whereas we know what a house looks like now compared to what it looked like in 2000, sorry, 1994. It is very different. And so in fact, you know, your average, uh, you know, while the price has gone up, so has effectively the cost and what you actually get for them because typically the average house now is, is bigger and has more amenities within.

Chris: Yeah. And I think the, you know, I think when you're, you know, you might find with that research is that it probably is a little bit different than when you are buying houses over apartments. And you know, that's a lot of that comes down to the supply that keeps getting built and there's no more houses getting kind of built in the inner ring. And I think that inner ring versus outer rings a big, you know, a lot of the returns, I guess we're buying house and land packages versus buying a house in the inner ring will be completely different. Someone buying a house in the inner rings, probably more likely to be better off buying than say renting. Um, where someone in the outer ring, is probably better off to be renting rather than buying a lot of the time. Is that what you found in your research?

Andrew: Yeah, indeed. Certainly in the outer ring that that proportion of times when you are better off renting is in fact higher in the outer ring. Um, and so that, and clearly that reflects the fact that there has been proportionately less growth in, in apartment prices in, in that period. So I think that that their point is, is right. And so therefore, you know, we would come back to, you know, where you live is a lifestyle decision, but it's also there's an investment decision there as well. And just just be clear to uncouple and be really clear in your own mind why you're doing what you're doing.

Veronica: And this is a, I look a love this debate and this is where we have the elephant in the room to talk about this stuff that nobody else is talking about, but we know is there, you know? Um, but I think it's important to draw that distinction with apartments. It's such a shame you can't do this. And I understand why you can't do this research for houses because basically there's no way to measure one house as it was, as you say, in 1994 and as it is today, it might have been demolished and rebuilt on the same lot of land and it might've been completely renovated it, there's so much that can be changed around houses, whereas like you say with apartments, it's much more contained to that, so therefore it's more measurable. Um, and I think that's an important thing for listeners to want to think about too, that this, this research is about apartments. But is it somewhat skewed then? And look, I'm not in favor of the you know, the, the outer extremities of our cities. I'm not in favor of that. Um, but how many apartments are really out there and how many apartments were out there and not, in 1994,

Veronica: you know what I mean?

Andrew: Indeed. So, uh, agree. I mean, I think that that is right. That is some of the challenges of data that, you know, you do have that change in trend and certainly

Andrew: so I have to say I love, you know, confirmation bias. I just want to go straight along with it, but tired of trying to contain my own elephant here. Yeah,

Andrew: Indeed. And, and certainly, um, thinking about Sydney, you know, the, the way the whole transport infrastructure is working, you know, cause people talk about a 30 minute commute to work has been ideal. Um, and at the moment there's massive investment in infrastructure and a lot of that is then also pointing towards Paramatta as a city hub rather than just the CBD. But a lot of that still work in progress. So I think over time, you know, if you do go to outer suburbs, there will be um, apartments, uh, increasingly apartments around the transport hub, you know, so think about the new metro and the other metros that have been developed. You know, you will see that there will be, um, you know, that that sort of, um, you know, housing density will be there again on the basis that people are saying, well, we're quite happy to leave a little bit further out if it's above a train station or near a train station where there are parks and other amenities nearby. But that still means I can be a 30%, sorry, 30 minutes commute into work.

Chris: Yeah, I think there's a few really interesting points. Think, um, so I do a lot with first time buyers and um, you know, a first time buyer, will be very happy if they've got a 20% deposit. I think that a lot of them, whether they're getting a family guarantee or a loan from mum and dad, it's not really, yeah, money. Um, you know, very few have actually saved up a full 20% plus stamp duty. And you know, yes, there is stamp duty exemptions, depending on state you're in, et cetera. But, um, you know, most of the time it's 10, 10 would be a really good outcome. So I think a lot of the research would probably be squiffed. If you've only got, you know, $100,000 for a million dollar property rather than $200,000, you're then to, even if you leverage it, you'll only have $200,000 investing in the stock market rather than 4$00,000.

Chris: And a lot of that will probably squift the returns. But the, uh, what I love about in the last two years unfortunately, is that it has shown that, um, property prices go down. And you know, a lot of people don't really understand how risky property is because just how much you leverage it. You know, if you're putting $100,000 in to buy a million dollar property, you're 10 times leverage. And if the price of that property goes down, you're the one who loses all your money first, not the bank. And I think that's one of the benefits of actually looking at these things because a lot of people think, I can't lose on property. I'll sell it for at least of what I purchased it for. And it's just not the case. And you know, I think, you know, people should just start to consider should I rent for the next five years and then buy my home rather than just go buy an apartment.

Andrew: Yeah. And, and I think that's a good point. And particularly at the moment with housing affordability and the proportion of people's income that needs to go into serving existing, um, property at, at the, you know, the current interest rate at the current prices, you know, it, that would kind of suggest that in fact, interest rates can't go really much lower. And therefore the multiplier effect of interest rate reduction on asset prices that I spoke about earlier is unlikely to be there. If interest rates go from one 2.75, they're going, that actually really is not going to move asset markets in the same way as what they've gone when they're going from five or 7% down to 1%. So

Veronica: yeah, the look just for those who haven't studied economics like me. And so, um, and that is really because you free up and put more money into the economy, more people can buy property and the more people buy property pushes the prices up. And that's what happens when interest rates are lower. Right. It just makes it more affordable initially. And then ultimately, because basically all everything finds its own level, um, it gets to a point where it's, yeah. new market value Right.

Andrew: Yeah. Yeah. And also that does come to how much the banks are prepared to lend. So if you take a really simple example, if the banks are prepared to lend half of what they used to yep. Then you from a facey property prices will have, because people who are going along to bid, it's the same way as if we all put a zero on the end of our dollars. Like when you go to some other countries, property prices will go up tenfold, right? Yeah. Because So, so therefore it is how much money is in the system does drive it. And I think that's the other thing that, um, you know, with what the government and the regulators have been doing on banks, on responsible lending, um, which I think, you know, there American, um, but, but, but that will in fact just dampen the market because people are able to borrow less.

Andrew: And we regularly hear their stories as to how long that actually, um, you know, how long it takes to get approval and so on. And so I think that's the other thing that buyers are now learning, which hasn't been there previously, which is, um, you know, don't, don't assume that bank's gonna approve your loan quickly. Whereas a few years ago, you could in fact, you know, go to a mortgage broker or to the bank and they'd say, yes, you can be confident you would get this and that would happen pretty quickly. That's no longer the case.

Chris: I really looked at it like it's a lot of people think about tailwinds and headwinds and a lot of the property market has had a lot of, you know, tailwinds. Um, you know, because you know, in the 80s, for example, you know, maybe one person in the family was working, um, now you know, most couples are working, a double income, you know, a lot of maybe, one was earning good money and one wasn't. Now they're both earning double incomes and high incomes and so that's a huge push up because the more income in a household means more money they can borrow and we can't go to three people, households that are working or four et cetera. So that's unlikely we're not going to get that kind of tail wind, you know, interest rates going from 18%, you know, down to 1% once it's down once, once. That's factored into the economy. We're not going to get that again, which is what you're saying. Um, so I think a lot of people think that what's happened over the last 30 years will happen over the next 30 years. The reality is we haven't got these strong things pushing up the market as much besides kind of immigration and things like that. Um, you know, I guess I, that's probably the thing to, for buyers to think about is that just what's happened in the past isn't going to happen in the future and you need to start thinking alternatively.

Veronica: Yeah, yeah. I look, it's interesting. I remember only a few years ago in the middle of the boom, I get clients coming to me and they'd be saying, oh, the bank will lend me $3 million, but I don't want to spend that. And now you get the opposite saying, oh, three years ago I would have been able to get $3 million. Right now we're going to get $2. And I don't know I can't buy what I want. So it's a very, very different conversation. But, but I still feel that despite all the press, most, you know, maybe I haven't spoken to enough people maybe, but most people still don't realize that the difficulty in getting financed applies to them. You know, I still think it's going to take a while for that to actually filter through into common. Just a common acceptance.

Andrew: Yeah. And I think there's also a lifestyle debate to be had around how much to borrow because again, if you go to a bank and they say, well you can, we'll lend you $2 million. Do you really want the stress of having a mortgage of $2 million? Say using your examples in a way in fact that might get you or not a bigger house with an extra bathroom and an extra bedroom say would you rather have a more manageable mortgage and have actually the the absence of that stress. Um, and certainly I think you know a lot of um, you know, banks and others are thinking about what indeed is the responsible amount to lend to people rather than what is the maximum amount.

Veronica: Yeah. And look interesting back to your research as well. Cause I wondered around the actual psychological or emotional value in owning your own home. You know, because of course when we just looking at comparing, renting to, to buying in a purely financial sense as an investment. And this is something that I encourage all of my, certainly all of my clients that are owner occupiers. So thinking of their at home as an investment, a lot of people say, Nah, it doesn't matter. I just want to home, I want to live in it. And I was like, well that's okay. You may think that I'm going to remember it is an investment. We are, we'll remember it's an investment throughout the whole process. But um, yeah. How do you, I mean you can't really quantify that, can you?

Andrew: So the interesting one, which comes back to the discussion around tenants' rights. I regularly hear people say I have to buy or renting a particular area because I have a pit. And particularly as we get a larger number of households that are single person as we've got aging and all sorts of other demographic changes, um, you know, that, that the ability to actually have pits and to be reasonable around that isn't, is an interesting one. So yeah. Um, that, that I think does, um, often from a, from an emotional point of view drive a decision and we know, which is fair enough if you know, you know, if you've got a, you've got a dog or cat, he knows if he'd say, oh, well all just exit that relationship. Um, this will be the last thing that you will, you will go. But it does drive people to say, well, if I buy a house, I can actually then have a pet. And in fact I can do the renovations and other things. So,

Veronica: And you mentioned that then. That's an interesting one because quite a lot of people come to me too and they say, right, I'm ready. I always ask them, why have you decided you want to buy now? And it's like, well, I'm sort of sick of living in someone else's house. At home that I can't actually put up pictures, what I want, paint the walls, blah, blah, blah. And yet as an a property investor, you know, oh I know this is a really difficult line to walk, isn't it? How much renovation do I want my tenant doing on my home, you know? Yeah.

Andrew: So but, you know, how would you feel about a five year lease? Cause again, if you go to Germany, you know, five and 10 year leases are quite common. Um, and you know that why people do have certainty, they do have more rights about what they can do. Clearly they can't damage the property and all the rest of it. But, but just balancing that up a bit.

Veronica: It's like a commercial lease. And so this is the thing, you know, it's set in Italy, back in Italy. Um, when you move into a rented property, you actually taking your own bathroom and kitchen, you know, you basically rent the shell and, and it's a like a commercial lease here. If you rent an office, you usually go in there and fit it out, you know, and then when you, you leave that, you finish that lease, you rip out all your fittings, you know, and it's, it's, it's very similar in that way. So you know, that maybe that's going to be a future. You rent the four walls and

Chris: yeah, I think there's a lot of, around the long leases. I've thought about it a lot. Um, you know, property managers don't like it. Um, they don't have any incentive. They love to get their leasing fee every couple of years and to up the up the rent and keep engaged with their tenants. And the longer rent increases can be factored into the, into the lease. Yeah. And I guess a longer lease, after a while you could dump your property manager and, you know, not have a property manager. So there's, there's a, there's a perception change there in the property management side,

Andrew: but at the moment you're talking as individual investors where you've got one or two or three perhaps properties and you know, whereas if you, if you go to other places and indeed if you do start going to 10 year leases, you have a very different type of investor. Yeah. So you have the big property companies and to be the big superannuation funds who actually go, no we own this building. And in fact as if that was a, um, a sort of a, an office building, I would want it let out for 10 years. And so, you know, the, the ability for the build to rent market to further develop and so on, it brings in a different type of investor as well rather than as you say, if you've got one investment property, you're going to watch that like a hawk. Whereas if you've, if you've got a, um, an institutional fund manager, they will make sure it's managed, but it will be managed in a, in a, in a, uh, a less short term. Yeah.

Chris: I think there are a lot of the, I mean the institutional side hasn't really worked here because our yields are just so low on property and you know, they're trying to make build to rent work and longer leases will be part of that and it will suit. But I think it will really suit a kind of affordability rather than it aspirational renter unless they've really high end and then they're gonna cost build costs and things like that. So it's going to be very interesting to see if the build rent model actually works. I think the other problem with longer leases is that if you do sign a lease, you can't kick your tenant out if you want to sell the property. And the reality is if you can't kick your tenant out, um, which, you know, they, they might furnish it however they want. Um, so you, it's very hard to sell it with their furniture in. Sometimes you want to style it or, and the reality is if, if you're trying to sell it to our home buyer, um, they can't move in for say, two, three or four years. And so a lot of, you know, investors will won't want to sign a longer lease because unless they can kick the tenant out to sell it, they won't want to do it. And so that's something that would have to get managed as well. So there's all these kind of even if they do bring in an option for longer leases, I just don't think a lot of investors will take it unfortunately. Yeah. For those reasons.

Veronica: Yeah. But, but again, if investors want liquidity, if you think about how you changed the market, well in fact you just have a fund that owns the building. Um, and in fact, if you want to say a invest a couple of hundred thousand in that fund. If you want to get out, you get out of the fund, not out of the building. It's a very, you know, it does because as a country, does it make sense for all of our residential property to effectively be owned by individuals when we've actually got, well a lot of money, you know, our biggest asset is, you know, currently the, the family home over time that will increasingly become superannuation and where is that going to be invested? So it's again, it's one of those things I think we need to have a, a more mature discussion to actually think about what's the problem and then how might we solve it. And cause, you know, the market dynamic for property will change over time.

Veronica: And I, I'd look at, we'll absolutely, and certainly I think the yields are the issue at the moment. And, um, even with longer tenaencies, I'm not sure that it's necessarily going to change, but yeah, it's a really interesting because it's a problem that needs to be solved at some point, at least discussed.

Chris: But I think the problem is it's not so much for singles and couples, um, you know, who wants to rent, you know? Yes. You know, there is a housing homelessness problem that can't afford to, you know, that's definitely, there's a growing bigger problem. I think, you know, if you speak to most younger kind of couples, you know, they're not, they're okay renting. It's more when they want to buy and they don't, they're not that bothered buying when the, you know, single or in a couple, I just feel there's a pressure to buy because they're worried about the market moving on them.

Chris: So it's a, it's more of a, I have to buy because I don't want to miss out where the real pressure isn't. The problem is, is when they started having kids, and I don't want to rent because the buildings that they have to rent a generally apartments and that can't afford houses and a lot of the apartments that are built just don't suit families. And you know, they're in areas where there's lots of other renters and there's parties and there's supply. So, even if we do, you know, create better rental options, unless they suit families, we won't really solve the problem because that's where the, the real problem is, is when, as soon as the kid comes along, people want security and they want schools and they want stability and there's just not enough rental accommodation for that, you know, have you thought about, you know, I guess, you know, things, you know, I guess that conversation in terms of, you know, building more suitable housing for families.

Andrew: Indeed. And I think that, you know, again, you know, the property developers and the councils and others are aware of that. And if you think about, you know, the, the densification that's going along are major transport routes, you know, that is very much been driven by that. So if you think about the local area where I live, you know, they are, they are building multistory apartments but they're also building parks and you can only, and the local council and so on can only fund that by actually capturing some of the value that comes from, from rezoning the property. And that whole value capture system, um, is something that I think as a society, we need to make sure that in fact, you know, as a society, we're not by rezoning and allowing densification. The society is benefiting from that rather than just the property developer.

Andrew: However, accepting that the property developer is taking a big risk and therefore will need to be rewarded for that. So just getting the balance right in that, in that conversation. But back to the comments earlier, I think I hear you about what young families are looking for, but we would see that trend is changing in that people, you know, might be more prepared to say, well, we'll, we'll live in an apartment because there is a park next door and there is indeed childcare potentially in the bottom of that building. Um, and much more moving to a sharing economy where you're, they're going, well, in fact, if I can live in an apartment that was child friendly, that did have childcare on the bottom of the building, you'd have a gym and a swimming pool. You know, you know, the swimming pool can be bigger than you would ever have in your own home, et cetera. But a lot of those at the moment are more geared for individuals and, and sorry, people without children. But we think that trend will change as we know, more apartment developments become family friendly.

Veronica: It's, yeah, my friend lived in Hong Kong for seven years. I'd go and visit every single year and they live in an apartment building and it was very much like that play room down the bottom and it was um, the, you know, the pool and the gym and all that sort of stuff. It was um, very much like a village and it was a classic. Nobody had a matching set of wine glasses anymore cause I used to just sort of rock up and take their glass of wine with them into their friend's apartment. It was a really nice, it was like a grown up Melrose place, you know, grown up mirrors place with kids vertically. Um, and I think that that can be a really wonderful community. And certainly when she came back to Australia, she said she felt very isolated in her house, you know, so, so there's lots of merits for that. If it's well designed, I think the big problem is that there's only some developers that are catching on and actually designing that type of property. And, and up until very recently, there's been far too much focus on basically building investor stock rather than that. So it's gonna be interesting to see what happens in that space. But fast forward a few years, um, you know, when you're retiring, I mean, so this idea about it's not always better to buy over rent, um, and then looking at all these alternatives to make renting more palatable, more desirable, that sort of stuff. But what about entering into retirement without owning your own home? I mean, it's still pretty, you know, there's a lot of research around the disadvantage or people are disadvantaged, significantly disadvantaged if they don't have their own home hitting retirement.

Andrew: Yeah, absolutely. And that, that clearly is, that is a policy issue. We know that the people who are often affected by that are in fact older women who, who for whatever reasons aren't in that position. And that's where, uh, also, you know, they older women also tend to have much lower superannuation balances. And so that's one way. If you think about, um, you know, to date our sort of the, the safety net has been out pension system, um, and you know, being able to build into the pension system, you know, the uh, you know, and the horrible states. Yeah, no, no, no indeed. And so, and so that, that's again one way having certainty is very important to people. Um, and you know, we'll think, I think we're going to see over time, um, on the superannuation side of things, people are going to be going, well in fact only I need to live off that. And they are going to potentially invest it in different ways. So perhaps more in annuities and lower volatility type things because people saying, oh, I can't afford to lose 20% of my income and so on. So I think that is another example of where people do need certainty at that point because you know, the young folk have actually got enough time to be able to ride out market bumps. Whereas if you're in retirement then you don't have that flexibility.

Chris: And that's the perfect customer for a build to rent model. Right. You know, the building is tailored for older generation, you know, and you know, they want to lease for, you know, five, 10, 15 years, you know, cause they don't want to have the, you, they haven't got the income to kind of rents to go up too much so you can have fixed rental increases. So you know, I think that's a brilliant spot where you know, that generation are competing with first time buyers and investors and you know, they're trying to get somewhere to rent and the rents are going up, but they haven't got income so they can't keep on paying higher rents. And so that's a big part of the problem. And homelessness is very prevalent at that age.

Andrew: Yes, indeed. And again, that's obviously, you know, there's, there's state and federal governments will not, we'll need to do more to help in that regard. And again, they are doing that and particularly having more affordable housing closer in, you know, because it's easy to say, well, you know, there's somewhere in the outskirts you can have affordable housing. That's actually not where people are connected to that community and so on. Um, and so I think, you know, the governments are very active in, in recycling social housing in a way that still keeps it, um, you know, closer in. But in fact these is then recycled as suburbs are re-rated any, any indeed refurbished, uh, and redeveloped.

Chris: Yup. And I guess the final thing, I'm just on the research, I kind of want to, you know, when people are looking at it is um, the problem with, with the equity investing, and I've had this problem for quite a few years where clients will come to me and a lot, I don't think you should buy because I am good enough. From a deposit point of view, you're going to buy something that you're not going to grow into. And I can kind of already foresee that in three years time you might be single. Now you're going to meet someone and then you're going to want to not live in that apartment. And so you bought an investment and that investment you're going to have to sell because that's all the money you've got. Yeah. Um, and so I can kind of foresee this problem that they don't foresee. They just feel like they've got a buy back to your point around parents, I think the other problem is they go, well I can't leave it in the bank. And so then I go, I'll have to invest the money. And I go, well I want to go put into stock markets. The problem with stock markets right now is where we're at the end. It will, who knows when the end is. But we've had a 10 year bull market, probably the longest run of equity process. And it's hard to argue that stock markets that cheap and you know, and you know, we're an all time highs in the US & all time highs in the Aussie and a lot of people, that's not a better option just to go in there with a short term mindset who invest into the stock market. So I guess how do you kind of deal with that challenge?

Andrew: Yeah, it's a, it's a very good question. And again, just be clear, not wanting to give financial advice cause everyone's circumstances are different, but bet in fact, um, there are, there are many different in assets you can invest in often through the stock exchange that in fact are not just shares. And so you think about it, there's um, you know, there's, you know, corporate bonds, there's bank hybrids and there's various other things that have, do, have higher risk associated with them but in fact are not as volatile stocks. And so again, you know, investing, any financial advisor will tell you use to have a diversified portfolio. So I think that theory would also apply. So, in fact, you know, perhaps the better analogy to compare is in fact rather than saying as we've done in our research, put it all in equities. In fact, you would actually put a, put it in a balanced portfolio. So, you're, and that includes the in foreign currency investments and all the rest. And so, and of course that becomes complex. But if people wanted invest in that type of thing, there are funds that you can invest in that do bring you that diversity. So, so, uh, but your, your point is well made. You know, the people we're talking about don't want to run the risk of having what happened in 2008 where you use 50%, particularly if it's leveraged, because in fact you will lose more.

Veronica: Yeah. And look, it is interesting. Back in episode 69 we interviewed Scott Phillips from Motley Fool and we talked all about that. So as soon as, if listeners, if this is a interest to you, go back to that episode. I think the thing too is around, um, this belief that you can't lose in property and there's this idea that you can still see it even if it's lost value, you know, you can, you can still see it as opposed to, you know, people getting wiped out of the share market in 2008. Um, but it's a bit of a false belief as well, you know, in a sense that, and one of the other things I keep banging on about as it's CoreLogic's quarterly Pain and Gain Report, which I love one of my favorite reports and we interviewed Cameron Kusher as well, so a couple of episodes back. And um, and that is just a constant reminder that property doesn't always go up in value.

Andrew: And, um, you know, and I think bringing back to some of the research that you've offered, some of the outcome of your research with showing that location is really important. Number one, we always talk about that. But timing, um, and over what periods of time is very interesting I'll have to say, um, because I think you have to layer into that. Obviously as an investor that's critical. But the problem is you don't know any of that until in the rear vision mirror. Do you, so therefore I think what isn't, it's not part of this deal or it hasn't been part of this conversation too much, but I'm not sure if you looked into this and the research but that type of asset cause there's apartments and there's apartments, you know, so I would, I would hazard that some apartments a crap. I know a lot of apartments are crap and some are amazing investments so

Andrew: And clearly by using Everage data for local government areas, we don't pick up on it until we just shine on average. But your, your point, your point is well made. But you know, we are looking at the aggregate data and looking at that trend over time.

Veronica: But I think it's a foundation to look at those foundations say, well these are the general principles, overarching principles now really diving in and understanding better what is happening in the market at the time.

Veronica: I think the first time buyers that, you know, and it's the height of the boom was, you know, really where we're starting to see all the problems now because it's three years and a lot of them went and bought off the plan apartments. Um, I mean there's one at the moment. I'm dealing with these, you know, client bought a, you know, a unit in Merrickville, you know, at the height of the boom, it's settling right now. Um, you know, I paid $670, you know, it's probably only worth like $600 at best. Um, you know, and you've got all the, you know, if he sells that he's going to be worth $570 so he's lost his $70 grand, you know, and there's no way out of it. You can't actually really sell it because if you sell it, you know, you've lost all your money. So he's lost his 10% deposit. And so you know, a lot of these people in 2016, 17 just this pressure to buy pushed in and it's, and we haven't really started to say all these first time buyers had been stitched up because unfortunately the State Government was offering a lot of incentives. They put a go and buy a new property and you know, they're not really kind of, you know, taking ownership here that pushed people into poor assets and now it's kind of unwinding

Chris: Every week we hear incredible stories of the dumb things, 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 Andrew, can you give us an example of a property dumbo? We can all learn what not to do from these stories.

Andrew: Oh look, I think the, the biggest mistake I've seen people make is, is to borrow too much money and therefore they just, they just in the ambition to have a nice place actually, you know, really ruin their lifestyle because they don't have that, that flexibility. And they have the stress associated with it. So it's a very general one, but that, that, that will be the, the Dumbo for me. Yeah.

Veronica: And they just, yes, it's that drive to own and then what then I live with that stress on trapped by, by property.

Chris: I think it's very, it's very true. I think it says that usually happens in their mid forties. Um, you know, as the peak of their earning cycle sometimes. And you know, that's when they'll kind of go home that they can borrow the most. They've also seen that it's worked for them in the past, you know, because of, you know, this, the strategies always borrow as much as you can when you're in your early twenties and thirties. Stretch yourself is what the parents say. Right. And they do that, but then they stretch at the wrong point in time. They stretch when they get to their peak of their earning cycle and then the pay rises don't come. You know, there's maybe redundancies, um, you know, kids, the kids, you know, schooling's costs are there, you know, costs are going up and what ends up happening in their living expenses go up, but their salaries don't go up. And you know, that's when I see the biggest problem is April taking on a lot of debt when they're in their mid forties. And so I guess that's just something also to throw in there. You've got to make sure you don't take on too much debt at the wrong time. Um, because you know, things sometimes don't go to plan.

Veronica: I think that has to be the bootcamp for this episode. Well Andrew, there's been a really fascinating conversation. Thank you so much for joining us.

Andrew: It's been good. Thank you.

Veronica: Love to get you back another time and talk about more about this accessibility of the property market in some of the big, big questions and big thinking around that. So, um, you know, hopefully we can, we can get you back sometime.

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

Veronica: Let's talk about timing. You know, a lot of people ask me about when's the best time to buy. And certainly it's a topic that we were talking about with regards to Andrew's research as well. And certainly encourage you to get into that report that we'll put the link in the show notes and there's an interactive map there so you can pick suburbs and pick timelines and all the rest of it. So that's interesting, but it's also a little bit dangerous because the thing is, and Andrew was talking about this research had done over 10 year periods and there are times when it would be better to buy a, sorry, better to rent than buy. But if you have decided that you are going to buy your own home, so the decision has been made, then you can't be focused on trying to get the timing right. It's, it's a real danger. Right. But, but I'll caveat that by winding back and saying, as long as you have decided that you want your own home. Okay. So if you're looking at it as an investment decision, Ie., Oh, should I invest in property or should I in shares or whatever well that's a different conversation to be had. You know, nobody can predict it. I mean if you interested in predicting things then download our fool or forecast a report which is on the website, and you'll find out the following in predicting so you can only know in retrospect whether you got the timing right or not. So that's why the asset selection is so important, but I wind it back to if you have decided to buy a home, then the then what you need to do is work out what you want to buy, where you want to buy and all that sort of stuff. You need to start looking and when you find the right property you need to buy it. You need to not be focusing on timing the market because you will tie yourself up in knots and you won't get it right anyway because nobody absolutely gets it right at the outset. It's only in retrospect when they know whether they actually did or didn't.

Veronica: Please join us next week for an episode with a difference. We are talking to Kat Burgess, Kat's a specialist in marketing residential property developments and you know how Chris and I were a little bit biased against buying brand new property, so you are going to have to tune in if you want to find out whether we get into a bit of Argy bargy on this one. Well maybe we actually learnt a thing or two.

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

Veronica: Or, you can connect with us on 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 Rehsk editorial by Gordy Fletcher.

Veronica: 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