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

Episodes

Episode 81 | Will a crisis in confidence kill our apartment market? | Eliza Owen, Domain

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Could Sydney's property market ever fail?

We love talking to people who can make sense of property data & we’re delighted to meet such a bright, young, talent in property market commentary, Eliza Owen.  Eliza is a residential property analyst at Domain & she joins us to explain:

  • What the median price is & when it's useful.

  • Why recent sales data can be very misleading.

  • How big entities influence the property market.

  • Why having equity in your home is so powerful. 

  • Why we need to think about alternative retirement strategies.

  • What happens when your mortgage outlasts the structural integrity of your building.

It’s a great episode packed with market insights, we hope you enjoy it! If you want more you can listen to her TEDxYouth talk on property affordability.

WEBSITE LINKS:
Good Deeds Blog: Proof Sydney's house prices have stopped falling
Ep 37: Frank Gelber - How to understand the most cyclical property mkt in the world
Ep 25: Amanda Farmer - What hidden dangers can lurk in brand new apartments
Ep 10: Michael Ferrier - How to ensure you are protected by your B&P/Strata Report

GUEST INFORMATION: 
Eliza Owen - TEDxYouth@Sydney
Domain Research

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 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 Foxtels 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,

Chris: Please 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 buyers agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica: You know we love to talk to people who can help us make a sense of property data and today we're going to be talking to one of the brightest young talents in property market commentary, Eliza Owen. Eliza is a residential property analyst at Domain. Having previously been the commercial and construction analyst at CoreLogic. She's a bright young thing who holds a first class honors degree in economics from the University of Sydney and appears regularly on television, radio and has even presented on the Tedx stage and in fact her 2015 TEDx youth talk on property affordability is a doozy in it. She passionately exhorts millennials to use Google to learn about economics. She also clearly explains what the median price is and when it's useful, why percentages can be misleading and why having equity in your home is so powerful. We'll include the link in the notes. We don't really want to make this episode all about affordability though. Chris and I were recently at a talk that Eliza gave where she explained the end of the property boom using insights we don't often hear of. She's smart, she's got access to great data and she knows how to explain complex things so they make sense to non economists. Thank you for sharing more of the good stuff with us today. Thank you, Eliza.

Eliza: Thanks for having me by Eliza. Good to see you again.

Veronica: Yeah, you too.

Chris: Um, you know, when we caught up, I was six, eight weeks ago at that kind of post election kind of conference thing. Um, you were already starting to see some signs of activity in the biomarker was increasing, but what have you seen over the last probably two months, cause we're kind of the middle of July now. What, what have you seen?

Eliza: Yeah, so I think we do look to high frequency indicators to try and understand what was happening pre and post election. So when I saw you last, you would have seen the data that I presented that was looking at an average of um, check-ins for inspection of properties for sale, um, prior to the election, uh, versus check-ins after the election and the week after. And what we saw was actually, uh, an 18% jump in the number of people that were using the platform Home Paths, which is what, um, agents use to people for inspection. So the number of people per property that were coming to inspection jumped 18% the week after the election.

Veronica: So was that in Sydney?

Eliza: That what was in New South Wales. So we break that down by state. What was interesting though is that, uh, there was only a 2% increase in people looking to get valuations on their homes for sale. So there was this I think really strong, um, sentiment among people who had been saving up, um, during the property downturn yeah. In Sydney and Melbourne waiting to see what was going to happen. And then now sort of excited to participate in the market whereas sell is might be, um, a bit more cautious. Um, although we also, I've been tracking the new listings that get added to Domain and we did also see a jump in new listings, um, across Victoria, Queensland, um, a little less in, in New South Wales. Um, but there has been an increase in the volume of new listings post election as well.

Veronica: What's interesting in it, so there's pent up demand both on buyer side and seller side, but the sellers are less enthusiastic because they're probably gonna wait and see if prices rise a bit further.

Eliza: Yeah, exactly. I think people that you know have been looking to sell aren't wanting to do. So at the bottom of the market.

Veronica: And you also mentioned there people seeking valuations. Um, so do you have access to like is that market appraisals you're talking about from agents? So people considering selling that first step is to go out and talk to agents, get market appraisals, um, you can measure that?

Eliza: So I believe domain also has a platform that, um, measures the volume of valuations. Um, is that off of the top of my head? I'm not exactly, I'm guessing what the platform is.

Veronica: Yeah, I'm guessing it's those agents who would press a button on Price Finder for an automated valuation to include in their proposal.

Chris: Okay. Yeah, let's just on the Home Pass. Um, you know, cause it's interesting. I'm like flipping it properties, right. And then I add them to on a, on a Saturday search. And even if I don't go and see it, sometimes it says I've viewed it and sometimes it says I've actually been to the property. I feel like it knows what I've done. Can you tell me, I guess now like Domain are doing that and then how deep are kinda Domain going on that sort of data?

Eliza: Um, I probably can't speak to that to be honest, cause I'm not a product person and I sort of just sit quite independently in a research and editorial space in the business. Um, but if you're not actually going to the property but you're being told that you are, that's something that we probably need to look into.

Veronica: We need to get a product person in here.

Chris: Interesting now cause you know, like real estate agents, let's say I'm, they've got multiple offices, um, they'll be tracking you as a, you know, as a buyer and they'll start to put more credits on you. So if you go to three different properties at three different agencies, like say for example Bell Property would know that you've been to all these properties and they're starting to build these kinds of data about you. And I think that Domain are obviously doing that on buyers too, which is quite interesting cause then you can start to pinpoint a lot more activity in the market rather than people just searching online. You can now actually get on the ground evidence.

Eliza: Well we do have a lot of user insight data, but we need to make sure that people are protected in using our platforms as well. So for example, when we look at check-ins per property, we're aggregating that at a state level. So, um, there are layers of data that we don't really apply to one another in order to, you know, protect people's privacy and maintain trust with the consumer and things like that. Um, but we do try and aggregate user activity to get insights. Um, Domain research house, which we started, um, maybe about 10 months ago. Um, we're just sort of scratching the surface with what we can do with Domains, user data. So some of the cool projects that I've gotten to work on this year, for example, was looking at where people in Sydney were inquiring for properties outside of Sydney.

Veronica: Oh Wow.

Speaker 4: Yeah. I could see where people had sent buyer inquiries, um, a majority or not the majority, but about 40% going to southeast Queensland for example. Um, whereas, uh, a large portion of the rental inquiries were going from Sydney to Melbourne. So that starts to some supplement demographic data. Yeah. We look at these migration stats from the ABS and we say, okay, people are, um, you know, leaving, um, New South Wales persistently, where are they going? So that layer of inquiry data might tell us about, oh, well maybe they're buying an owner occupier in southeast Queensland, moving there for a, you know, affordability or lifestyle or, or whatever. So there's lots of cool things that we're trying to do, um, with that data.

Veronica: Wow. And in terms of making sense of that, so like you say, you know, it could be affordability. I mean, we often, oh, all good research starts with the whole hyprothesis, right? So you think, okay, it's probably affordability, the reason that people are going up there. So then how do you then dig deeper into it to find out whether that's true or not or what the nuances are within that?

Eliza: Well, I think we, we have various measures of affordability. So we look at things like the deposit hurdle. We look at the ability of people to service mortgages once they've overcome the deposit hurdle. Um, I suppose in terms of intention to move, you would need to go, um, more qualitative or maybe some kind of survey data, um, to, to get an understanding of the motivation. But even anecdotally, we hear of people that is sort of, I'm migrating to southeast Queensland because of the affordability and the lifestyle. It's essentially a 50% price discount on what you would see in Sydney, where your typical houses sitting just over a million dollars. Whereas in Brisbane you might be looking at about $560,000 or Gold Coast and Sunshine Coast. You're looking more at that $620,000 price point.

Veronica: And so this is all about the human or the Australian dream of owning a home that people will actually move states, um, in order to achieve that. It's an interesting mindset thing, isn't it?

Chris: And even in the city, you know, I've got a client, you know, who was, you know, all their friends are in Northern Beaches. You know, she's been in northern beaches, she's English, she's been living up there. Um, and they, she wants to move to kind of Cronulla so they can buy a home, you know, and it's complete other world. So, you know, leave the friends, leave what she knows the community to move down there just so they can get home ownership. You know, and I guess it's, it's pretty, it's pretty crazy. You know, that's how important it is for them to have a backyard and they're not going to sacrifice. So it's interesting. Our affordability kind of, you know, home ownership plays into our mindset so much.

Eliza: That's right. And I think that, um, when you do look at survey data of renters, we've seen surveys produced which are showing people in rental situations and not as happy with their living situation as those who are owner occupiers. We've got the HIA survey, which shows that over 90% of renters aspire to own a home one day. So, uh, I think in terms of creating a sense of security in your tenure owner occupation is very important where Australia still has relatively short term rental leases of that six to 12 month mark. Um, and, and so home ownership provides the stability and also ownership is one of the pillars of retirement in Australia. The way that it's been set up, the way that it's not means tested for your pension, the way that, um, you alleviate your housing costs if you own a home by the time you're at retirement age.

Eliza: Um, and in terms of the wealth that stored in the household as well, there's a paucity of data around how much people are accessing the wealth in their home. Um, University of Tasmania, I think, uh, looking at starting up a project to understand how older people use equity in their homes to fund things like retirement and healthcare and things like that. But the latest data we have I think is from, um, Australian Housing and Urban Research Institute. So a hurry. Um, they produced some research in, um, 2010 which suggested that about 18% of older Australians, we using wealth in their home. And health costs were a large aspect of that. Wow, and I think that's where, you know, when I've talked about young people and I've talked about affordability, um, whether it's investment or whether it's owner occupation, we have been set up to in a way kind of need to own a home, to achieve comfortable retirement.

Eliza: And if you've got people who are saying, well, just get over it, you're never going to own, okay, fine, but give me a stable renting solution, give me a different retirement solution because you've set me up to fail, you know, by, by, um, uh, I guess not having more of an affordable housing strategy.

Veronica: Yeah, there's really interesting things here because you're absolutely right. I mean, retiring without owning your own home versus retirement with your own home. Like, you know, apart from the fact that you've got a roof over your head that you don't have to pay for assuming, you've paid it off. Yes, there's all those other opportunities you have because of that equity. Um, but I guess that's part of the, you know, what's Paul Keating's vision with the superannuation, you know, in this country as well as just systematically or systemic offer something different.

Veronica: Um, but however women in particular suffer through that because you've got to earn money in order to be able to contribute to that and have your employee contribute to that. And of course, if you take time out to have kids and all the rest of it, and so there's so many, uh, you know, things and issues wrapped up in that. It's quite fascinating, isn't it?

Eliza: Absolutely. Superannuation. I think there was research that came out a few years ago showing that Australian superannuation was one of the least competitive in the OECD and had relatively low returns, um, in the way that it was set up. And um, that the fees, um, on on your super, were one of the main factors determining how much of a return you get. So we see that there's more review happening at the moment into the nature of superannuation into the competitiveness. I think that's, uh, as, as you say, um, it seems like a really reasonable, um, way to kind of protect people after they stopped working.

Eliza: But we also need to make sure that that is a functioning solution and that it's competitive as well. And yet the issue with, with women spending less time in the workforce because of childcare or caring for another dependent, that is something that we need to think about as well.

Veronica: And, and on that too, um, just regarding superannuation because it comes back to property because Oh, you know, it's not so much a prolific at the moment, but this is setting up the self managed super funds. And the bit of a trend in the first decade of the, you know, the noughties, um, for everybody think I can't afford to buy an investment property, but I've got all these money in my super and I can do it that way. And of course there's proliferation of spruikers and terrible advice. Um, and quite often people who've actually chewed through the balance that they had and that with nothing all in this, you know, mistaken or misguided quest to own property. So it's an interesting, yeah, it's very multilayered.

Chris: Yeah. The super and property discussion in our, fortunately it's probably going to end pretty soon. So many banks lending on it anymore, are they? Yeah, there's pretty much all the banks have kind of pulled out of it and you know, the ones that we're doing it, um, if you had an existing super low and then the interest have gone up much more than kind of normal residential rates that kind of really trying to get out of it and they, you know, might not be long before we see some legislation that completely band's borrowing within superannuation. So it's kind of been commoditized. Super. I think the competitiveness of the fees that's kind of, um, kind of happening now because, you know, the big retail funds, everyone's switching on after the Royal Commission and saying, say I probably should look at my super statement. I probably shouldn't be at AMP or MLC or you know, be higher cost funds. I can go to an industry fund and you know, halve my fees. So, and I think switch. So slowly but surely, I think Australians are kind of switching onto taking responsibility on their superannuation. Um, as an economist, um, you know, the every day kind of probably means something different to you, but what are the days where you get kind of excited when a piece a data's going to come out and you're like, refresh, refresh, refresh.

Eliza: Yeah. Um, well yesterday there was building activity data. One of the questions that I was concerned with, with the downturn of the property markets in Sydney and Melbourne was how necessary, um, house price growth was to economic growth and jobs growth. Yep. So I sort of closely monitor building activity, which we saw up to the march quarter yesterday. The biggest drop in apartment commencements, um, in 35 years occurred and on that year, on year basis, um, however that drop has occurred off of, um, uh, sort of peak in building. And so it's still sitting, you know, above a kind of long run average. So there's building activity data, um, jobs, data. Um, a very important one for property analysts is catalog number 5601 on the ABS, um, which looks at the amount of finance that's going to households to buyproperty. Um, so I believe the, um, May data comes out today at 11:30.

Eliza: Um, and that is something that is, it's a leading indicator in that if we understand how much, um, people have to pay for housing, whether the level of finance is going up or down, it can be a leading indicator of about three to six months on property prices. But the problem is the data comes out at a two month lag interest. So that's where we start to say, okay, at Domain, where can we find more high frequency data releases. So we have, um, Domain Loan Finder, we have a joint venture with Lendy. So these sort of online, um, loan finder solutions where we can actually again aggregate the data and get an understanding of what's happening in mortgage rates. Um, and we want to get a view of, of what's happening in, in sort of volumes as well. Um, so I was refreshing that the other day and we can see that the average mortgage rate among owner occupiers has come down and he's sitting at about 3.6% for July.

Speaker 4: That's principle and interest terms. In the investor space. It's looking at about 3.9% at the moment. Um, so that's, yeah, again, like a really cool piece of data that we have.

New Speaker: So to say that, those they're falling. Yes, yes. Yeah. So, so against what benchmark?

Veronica: Like that was the interest rates.

Eliza: Oh yeah, sorry, the mortgage rates,

Chris: You were thinking growth. Yeah, yeah, yeah. Right, right. Um, we're looking at average mortgage rates.

Veronica: Oh, Gotcha. Sorry.

Eliza: Yes, the lending data that comes out from the ABS has generally shown a that finance is still falling. So it'll be interesting to see what the next few months and releases will show us because that will be election month. And then post election month.

Chris: You might be across as AFG is a big mortgage aggregator and they're one of the biggest, and I have some pretty cool reports around lending. So I know that, um, you know, when you're looking at how lending activities going, it's good to have a big broad spectrum of brokers because you've got some brokers that will be growing their loan book just because they're in a growth phase and then you've got, and so AFG do provide some really interesting data around what's actually happening with their brokers and they've got thousands of brokers. So it's a really good kind of litmus test of what's happening. Um, I think, you know, a lot of people would lend in with property, they say, oh, lending's going down. And so for slow growth, but you're right, there's such a low lag and you've got to kind of break it up between owner occupiers and investors because they're both completely different stories, right? Yes. Do you have any kind of know about what's kind of the data behind what's been happening with the investors versus anarchy?

Eliza: Well, I followed the data very closely when I started studying the housing market, particularly as someone, you know, I'm probably one of the few Australian property analysts who doesn't actually own property. So I started,

Veronica: Sorry, I shouldn't laugh. You said because I mean you are you GenY or millennial. Yeah. You're a Millennial? and you are GenY aren't you, I am the granny in here. I'm a Gen X. I'm not a grandmother by the way

Eliza: and there's an element of it being that I'm young, but there was an element of it that when I started monitoring the housing market. 2013, 2014 Sydney started increasing by double digit. Yes. Um, you know, grow per annum then.

Veronica: Well, actually in the areas in which, you know, I was operating, we were looking at 20 to 24% per annum growth for a couple of years. It was just nuts!

Eliza: which doesn't really give you the motivation to say, it gives you the motivation to kind of throw up your hands and say, I'm gonna Travel. Yeah. Um, so, and you know, there's a lot in behavioral economics about that as well. And how in, how motivation is tied to, you know, the size of the goal that you're looking at. Yeah. Um, so in terms of what was happening in the lending space, that was, um, one of the first times in New South Wales that we actually saw, um, money being lent to investors was exceeding the money being leant to owner occupiers, which is quite a bizarre landscape because when you think of a property, you think of people buying somewhere to live In 2014, the investor lending eclipsed owner occupier lending, uh, across New South Wales, and it's adjusted that more people were getting money to buy an investment than they were something to live in. Yeah. Then, um, I think being concerned with rising levels of household debt and, um, potentially risky lending.

Eliza: Yep. Then the statutory authority APRA, the Australian Prudential Regulation Authority stepped in, toward the end of 2014 and limited growth in investment lending to, um, banks, uh, by, 10% each year. So there was a 10% cap on the growth that they could have an investment lending. Very quickly the banks complied and their investment lending is currently sitting around a 2% growth, even though that has since been repealed, like, it got repealed in 2018. The big one was, I think it's March, 2017 they announced that by September that year there would be a 30% cap on the portion of lending that could be on interest only terms. Yeah. at the time a majority of investors were seeking loans on interest only terms. And so again, the policy really did target the investor segment of the market and when APRA kind of really put pressure and reduce the investment lending, that's when we started to see a rise in the portion of first home buyers participating in the market also where we saw, you know, 15% decline in house prices.

Chris: Yep.

Eliza: So what I think is so interesting is that we, we refer to the housing market as if it operates in this kind of free market or this fundamental supply and demand. And to an extent, there are those fundamentals at play, but the amount of influence that institutional intervention has had, particularly in those high investment markets like Sydney and Melbourne, is just incredible to have observed. And it's a lifelong lesson, I think, to take that the housing market doesn't operate in a vacuum. Institutions are reactionary and if they see debt getting too high or if they see prices getting too high or if they see prices getting too low, there are things that they can do. And there are things that they have done. The 10% growth cap got repealed in late 2018 the 30% cap on interest only lending was repealed in January, 2019. Institutions aren't just sitting there watching it happen. They really

Veronica: Playing with the leavers.

Eliza: Yeah, they are. They're trying to guide things but to the extent to which they can control prices. You know, I don't, I don't think they can control everything, but they certainly did catalyze, the, the downswing in the cycle. Um, so,

Chris: Well they haven't had a huge impact on, uh, how much people can borrow and who they're going to lend money to and who they're not going to lend money to. And at what percentages and what areas. And you know, technically, you know, credit if you can't borrow in an area or you're not. And people in that area haven't got the income and things like that, then you know, they can control process to a certain extent, you know, and you know, they can basically, you know, a lot of banks will blacklist post codes because they'll say, well that's too risky for us. So they're actually affecting prices in that postcode.

Eliza: Well I, I guess that is the bank being informed by their prudential, um, duties where they're saying, okay, well, you know, is there too much risk in these areas? And that does come back to fundamentals of supply and demand. Right. But, but for sure that the institution guides a lot of, you know, even this morning I think there was a announcement that NAB, ANZ & Westpac have had to have their capital requirements increased. Um, so that might inform some of their lending policy later this year as well.

Veronica: So back to why you haven't bought?

Eliza: sorry, we went off on a tangent.

Veronica: This is really interesting because you've got all this stuff going on and you as an economist could observe that from an academic or an informed position to say, well this is not, um, something I necessarily want to invest in because I can see that it's being controlled by you know, forces that are greater than we all assuming. Maybe. Um, yeah. But at the same time, it was some crazy stuff happening. Certainly when you, when you first started researching it and, and I agree, the market obviously overshot the mark and you know, you can see it's corrected and et Cetera, et cetera. But is that something that you personally look at now and think, oh, I don't want to play in this, or is it, do you think now that, well, I don't know.

Eliza: Yeah, so. On the, on the country, I, I sort of look at all this and I think, well, is housing too big to fail?

Veronica: MMM. Um, eh. Yeah. Cause it is our biggest single investment class in this country.

Eliza: Yeah. Trillions of dollars several times the size of Australian GDP. Um, so I, I'm actually quite and people who know me would know I'm not exactly like a Liberal voter, but I'm actually quite inspired by the, um, plans for the greater Sydney commissions re CBD city. I think that's a really interesting vision. Um, if you look at areas that have city deals where the federal, the State and the Local Governments are working together to create growth and prosperity for regions. So you've got cities like Launceston, um, which I think makes sense as an area of spillover from Hobart, even though geographically it's not next to Hobart or anything, but it's the next biggest city. Um, you've got the property council lobbying for a city deal in I think Woolongong. Um, and you've got a city deal on Western Sydney. So I think that's basically the government saying we're going to do what we can to ensure that there's infrastructure, there's jobs growth, and there's new property development in these areas. Whether they can pull it off, and how long will it take ?

Eliza: And in my lifetime I had a really interesting anecdote about the Aerotropolis and you know, Badgerys Creek airport. Um, and how, you know, they want to kind of build out this industrial area by the airport. But, um, a concern is what I think it's called bat and bird strike. So they have to be conscious of vegetation around the airport. So what are you going to have a big industrial area in Western Sydney with no trees or you know, so all these complexities, I know it's still fascinating. Yeah.

Veronica: You don't want birds flying into airplane engines.

Eliza: Apparently it costs airlines hundreds of thousands of dollars a year in the replacement of engines. Not to mention, it's just phenomenal isn't it? Yeah. Not to mention of danger, environmental danger, environmental damage, the threat to biodiversity. So I, while I think, um, government visions for cities are very important. Um, and I think a lot of people do speculate on them. Yes. Um, there are risks to how they can be implemented, how long it takes.

Veronica: And Badgerys Creek is also a really good example because I can tell you that long before I bought my first property and that is now, well over 20 years ago, um, Badgerys Creek was on the radar as an airport site. Yeah. And people were buying houses out there cheaper because they knew it was going to be under a flight path. Um, then they started complaining that they were going to cop all the noise. I'm going to hang on a minute. You got to discount when you bought out there. Um, and then it was off the table and it was back on and off and on, you know, and, and here we are at, we're probably being, I don't know the exact amount when it first was tabled, but we, you know, talking about greenfield sites, that thing has been sort of on the books maybe for 30 years now.

Eliza: Absolutely.

Veronica: You know, and so people, like you say, people speculate on these promises of infrastructure and then, and then what is the impact because yes, what is going to be developed around it? Is that really going to be a boom for prices or you know, create jobs and wealth and all that sort of Palava or not, you know, and it's just all speculation.

Eliza: Well, I, I think, yes, yes and no. I think that there are areas you can identify that have, um, you know, priority precincts that are kind of prime for development that all show also show a level of promise and are affordable. So I think the last time I saw you both, I, I talked about my bullishness around, um, the kind of Bankstown area as like an extension of the Inner West, um, kind of, you know, separated out by train lines in the Cooks River and train lines and things like that, which has held them back, but, um, sort of an interesting area. Um, but ultimately I think, you know, Sydney as, as a city, I'm quite confident in, um, stability in, in housing. I don't think we're going to be seeing the kind of double digit growth that we did in between 2013 and 2017 but I do think as, an asset to have, for my retirement or you know to pass onto another generation. Uh, I th I still think it presents a good opportunity.

Chris: And I think the, um, you said you're not too big to fail and you know, there's a lot of people, you know, especially it was all over the news, right i,n the bust I guess the prices we're going to keep following, we're going to say 40% drops. You know, a lot of dooms dayers out there in the market. Even the big economists out there, you know, say Shane Oliver Thought 25%. So it was a lot of kind of hype around big downward prices. But the reality is that it is too big to fail, right? It easy. Our biggest asset class, it is every most Australians biggest asset. And it's most of, you know, the State Governments with the stamp duty you know, taxes on land release, you know, commercial developments, employment. Um, the reality is these things that are happening now, all the things to stabilize a market, were always going to happen. Is your belief that, you know, the Government's always going to keep on trying to pump process because it just so invested in that?

Veronica: You're such a conspiracy theorist!

Eliza: I mean, I, they probably will try to create long term, um, steady growth whether they can, I, I, I don't know anything could happen. And there are risks of economic shock as well. Something that has aided the Australian economy even in the housing downturn is this kind of shift to infrastructure and commercial development. Um, but even with the commercial development, a lot of that is based off of people looking for asset investment. People are looking for growth. So there's an element of speculation in that as well I think. But, um, yeah, I think they will do what they can because the way we are set up at the moment, housing is such an integral part of retirement. If nothing else, for me personally, I would like the, the feeling of owner occupation, the security that comes with that. And, the ability to kind of put down roots, in my city where I've grown up. Um, and you know, as we were saying earlier, maybe it won't be the city where you grow up or, but clearly it's something that a lot of people still want.

Chris: Yeah. It's funny because as prices go up, the, you know, affordability becomes a problem, right? And that's the challenge. You push prices up, then it marginalizes first time buyers, they get upset, then they crate a big voice that affects the government it might move, might lose your reelection and things like that. And so that's what Gladys came in and we've got to fix housing affordability. Well, she didn't really do much. Um, she just waited for prices to correct with, you know, the cycle. Uh, and she said, oh, we'll just do congestion busting. We'll just spend money on infrastructure.

Eliza: Which, which doesn't make sense either because I don't think I've ever seen a new train station go in and property prices go down. That's kind of a counterintuitive. Um, it's funny that that decentralization and infrastructure is going to bring prices down when, well if that's the case, why do investors speculate in the land around it or, um, I think that's a very important myth.

Veronica: Well maybe it evens it out a little bit perhaps. You know, so if you've got it all concentrated in one area, it's just going to make one area completely unaffordable. You know, I don't know. I mean I'm not one for going outside the 10km radius.

Eliza: so there actually could be something in that. I think the more stock you develop the more you know, people just choose to live somewhere else and you're creating more supply, which could put downward pressure. But if anything, I think the most effective policies that we've seen have come from taking that over investment and that over speculation out of the market.

Chris: Yes,100%

Veronica: Now I'm wondering what sort of the data that you see, you know, paints pictures around that because one of the things I've found really hard is it like with the apartment data for instance, and this is a classic, you've got all those apartment buildings that had been built for investor stock full of investor stock, right?

Veronica: As opposed to investor grade or as opposed to being built for an are occupiers. And then you've got established existing apartment buildings in established suburbs where there's not a lot of land releases and yet all that data is lumped in together. Do you have insights or access to be able to pull that apart and really see the difference in how it all behaves?

Eliza: Okay. It's such a good question. And unfortunately we, uh, our market price analysis is based on sales data. The sales data doesn't really give us an indication of the quality of the property. It doesn't give us an indication as to whether the property is new or established. So it is very hard for us at the moment to separate out and do that kind of analysis. It would be very interesting to see what I would say is that, um, there aren't really suburbs and I might go out on a limb and say that there isn't really stock that escaped the dramatic cyclical movements that we saw in Sydney and Melbourne. So by the time we got to, um, you know, the market trough sort of around March, 80% of Sydney suburbs had experienced either no growth or a decline in the typical purchase price. And, um, the other portion of suburbs that had seen growth had either fallen earlier or they yet to, you know, experienced the decline. So I don't think, um, there are areas that escape the cycle, but, but certainly they would be stock that is more impacted like the, and, and it does speak a lot to that investor grade kind of apartment development. Um, it speaks to perhaps, new development areas. You know, you look, we've seen a lot of fluctuation around Box Hill where it's not really been fully established yet. It's very far from the CBD. And that is where your inner ring suburbs, your nice established properties, um, can be viewed as a good long term investment. Yeah. But I think because of that they became swept up in the investment boom as well.

Veronica: Yeah. I look, I agree with you. I think there was an overenthusiasm um, yeah, towards the end of the, um, the boom for sure. I actually did some analysis on 50 properties that I'd found that I'd sold in the 18 months leading up to the end of the boom or the peak of the boom and then had on, sold in the two years after that. And because my initial hypothesis was like not everything loses money, loses value in a market downturn. And, I know that to be true except that how do you prove it, you know, and at what proportion? So I, I looked into these properties thinking and that was my hypothesis. I wanted to just show that there are certain examples and I figured you could pull it apart and explain why. But then what I really realized in looking at that data was that the timing, because real estate is a long term play and it really just reinforced that, that if you bought at the wrong time, it doesn't matter how good the asset was and then you had to sell within a short period of time and it happened to be after the boom had ended, then you pretty much were going to lose money regardless because of all the combination of all those things you're selling too quickly, you've bought at the wrong time. It doesn't sort of matter what you paid in a way because obviously if you overpaid you, your losses is going to be magnified. But um, that that's not the issue and the quality of the property wasn't necessarily the issue either as the fact that you bought at precisely the wrong time and without thinking you might need to on sell. But having said that, I could see very clearly in this, and I'll put the link in the show notes very clearly, and in that it was that the boom had ended, I'm sorry, the market in Sydney and are talking inner ydney here, the market in inner Sydney had definitely bottomed out earlier than March this year because the sales, the on sales in 2019 there was 33% that had actually sold for more than the purchase price, whereas last year in the entire year, only 14% had sold it at either the purchase price or more than the purchase price. So that was clear that, um, and so that's, and that's not time in the market persay, because if the market's still falling, those figures are not gonna increase are they? That's just showing that they actually, the market had turned and that was before the election really, because all of those sales were for this year. So, um, but anyway, so yeah, diving into that, it's really interesting that showed me something that I hadn't expected to learn from it.

Eliza: And, and I think it's important to note as well. Um, there are states and territories where they didn't have the same investment boom. So they don't get the same bust. Yes. Hobart prices, which are actually still going up. Um, you've got South Australia, which is a very owner occupier kind of market. It stayed very like slow and steady. Um, what you want isn't it really?

Veronica: You are, you want slow and steady, you know, well maybe not slow, but you want steady.

Eliza: I think there's, you know, a lot of debate to be had about whether housing should be as financial ISED as it is or, but the case with Adelaide, particularly the house segment is that it's just majority people live in the property that they buy and you don't get the same kind of fluctuations, speculation.

Chris: and there's always a continuing kind of growing kind of demand there that's slow. You know, your kids turn 18, there's three kids and they go out and they meet someone and you know, they have a family and et cetera. And then there are another buyer pool and et cetera. So, you know, it's like, you know, there's not this kind of mass migration.

Eliza: They have very steady population.

Chris: Yeah. And it's just, but it's not like, you know, 100,000 moving there this year for a mining project and then they're out again, like maybe in Perth. Um, I think you've made a really interesting point, um, around the boom and the bust, how you said that 80% of the suburbs dropped, et cetera. And some hadn't. That's the reality. He, even if you know, the boom has ended, it's only ended in some pockets and it's only ended in some types of assets. Um, you know, because even in those suburbs I say, I reckon apartments probably still haven't got that same drive because a lot of the people who buy on the apartment side say investors aren't really back in the market in full swing. And a lot of first time buyers that were thinking apartments and now thinking houses because they can get a house. And so, you know, even this is coming out of these kinds of downturn. We may see that in kind of the inner premium suburbs for houses, but we might not see it in the middle ring. I don't think we'll see it in the outer ring. I don't think we'll see it in our supply investor markets. You know, I think there's going to be a bigger lag and maybe potentially still quite big falls to come.

Eliza: Well we've done a lot of work on the dynamics of housing markets cycles in inner cities. And what we typically find is that Sydney and Melbourne have the high end of, so the higher price points lead the market in terms of um, that those upswings and downswings. Uh, and then we find that the lower price segments tend to follow. So I think the problem is when you look at a snapshot of data and you're like, oh, Mosman prices are going back up. And, um, that means that Mosman is a blue chip suburb that will always go up. No, actually our analysis has showed that the high end of the market is more volatile. Yeah. Higher highs and lower lows. You need to look at the data in a kind of fluid time series way. And most men might be up at that point because it was down, you know, 20% that's not an actual it's hypothetical so sorry people in Mosman.

Eliza: Um, so you know, it's, it's, it's, it's things like that where I think at some point over the past five years, suburbs would have experienced, uh, you know, their upswing and downswing. It doesn't all happen at once. What we do with our, um, what we call our stratified median series is we stratify the cities into value groups and we get a sense of how each group is performing and we take an average of, of the growth rates and try and apply that to one price. So when we refer to that series, we're trying to capture, you know, broadly movements in the whole market. Yep. But it will be different depending on when you're looking at your snapshot of data.

Veronica: It's really interesting. We interviewed Frank Gelber back in episode 37 so he's a, he describes himself as a forecast, a property forecaser with a long memory cause he's been doing it for 30 odd years and he talked about the high end of the market, you know, in long term actually outperforms everything else, uh, percentage wise but also that they can triple and then they can halve, so yes, that volatility yeah. Is um, and so yes, when you've got a suburb like Mosman and we've got a fair amount of margin, homogenous stock as well in many regards, you have lots of big family homes on large blocks of land, et Cetera, et cetera. So yes, of course that's in relation to the rest of Sydney. That's very much high end as well. So you've got that, all those things.

Eliza: Um, very good point. And uh, so my colleague Trent Wiltshire, he actually did an analysis on volatility in the different price segments across a city he found in Sydney and Melbourne, the high end of the market is more volatile. But then in areas like Perth and Adelaide, where again, you have that uniformity of stock generally, um, the price segments have a similar kind of level of volatility.

Chris: So it makes sense. So you know, like especially, you know, if you're going to take out huge mortgages or you're going to put a lot into an asset, um, playing the cycle is going to be a lot more important to you, right? Because you're talking big numbers and business confidence comes in a lot to it. You know, if you're thinking about big price falls in Sydney you're not going to go out and confidently go buy something at $5 million if you know they're potentially, you could pick it up next year for $4.5 or you know, economic cycles play into that market a lot more with, because now you've got a bigger proportion in business owners, in other investments, you know, if other investments are doing well, et Cetera, they take more risk. So it makes sense.

Veronica: It does. But on the, on the high side of that, it's all the buyer behavior. It's all, you know, it's back to the elephant. It's like they all feel over confident and then there's splashing out the big bucks, you know, so then triple in prices. It's like, well the same brain is not actually engaged when we're making all those decisions.

Chris: Yeah, exactly. Yeah, exactly. It's counterintuitive cause you should be, you know, going against the market and should create, you know counteract the volatility. Um, yeah, I mean you, you mentioned around, uh, construction and how it's coming off from a very high, you know, completion and application and approval, you know, and the, and construction has multiple different levels to it, right? There's approvals, there's getting built, there's completed. Um, how do you think that's kinda going to play out over the next few years? And can you explain how there's a different elements to construction as well? It's not just always apartments. There's, you know, joint dwellings and new dwellings, et cetera.

Eliza: Yep. So, um, when we look at the commencement data, for example, that's talking about, so the building activity data set has commencement and completion data. Um, and what we saw was at the apartment level, there was this peak of, um, you know, about 29,000 commencements of new units across Australia. So that's not taking into account demolition, which we might factor in it about a 10 to 20% rate, right. Because you're taking away stock to deliver new stock. Um, now that, uh, came down to March at about, um, to about 17,000 commencements I think it was over the quarter, but the long run average is 12,000. Well, so it's still very high levels of construction going on in the house segment. We didn't see the same, um, kind of ramp up of construction. So housing, um, house commencements have stayed fairly steady over time. They have come down a little about 9%, um, year on year. Um, so yeah, there's different sort of, um, dynamics I guess, depending on the kind of stock it is.

Chris: Yeah. I think cause it's really interesting for people to kind of, they think that the construction booms over and things like that. Well, no, there's actually still quite a lot of cranes out there. There's still a lot of people still having to build these apartments and you know, and there's still, you know, we've got the highest crane count going around, so there's still all these apartments to come. But you know, I don't think people realize that, you know, there's so much still in the pipeline that's still getting built, that's still being approved. That still, yeah,

Veronica: I think there's a bit of a crisis maybe looming here because there's a confidence crisis now that we've had, you know, Opal Towers and then Mascot Towers and now you've got this other building that was in the Herald, this, you know, this week, as I said, um, these episodes as you all know, if you've been listening, we record them and then we may not release them immediately. So it is in July. Uh, I think, what date is it today, 10th of July, there was a, the Sydney Morning Herald released an article about a property, a building in Zetland that had been evacuated late last year and kept quiet. So, you know, I think we're just scratching the tip of the iceberg, am I mixing my metaphors and how is that going to feed into, into consumer confidence in buying new stock is what is what I'm alluding to here.

Eliza: Yeah. I think that will definitely feed into confidence. There was a great editiorial that was someone writing my advice about buying new apartments don't.

Veronica: yes, it's pretty much what we've been saying for a long time.

Eliza: And it's a frightening prospect that the mortgage could outlive the structural integrity of the building.

Veronica: So, and not only that, the value that you might've paid too much. So even before that happened that you may not have actually recovered what you paid for it and then you got the mortgage and then the building starts falling apart

Eliza: Again, I think there is a bit of a black box around it. We know that there are some really good developers. We know there is some not so good developers. It would be great to, um, and I know there are some organizations out there that collect data on the materials used in buildings and development projects and things like that. Um, so I think it would be just good to have a view of it because at the moment we really don't understand the extent of the problem. Yeah. Um, but I think, I think it would feed into, um, confidence around buying new developments. Um, and again, the developers will be reactionary going out of their way to kind of prove the integrity of these buildings and, you know, showcasing the processes that they're putting in place to make sure that their buildings are safe and stable.

Eliza: Probably a good thing really, because no one has seen how things are build. No one's actually seeing the fabric of it and, and yeah, so you know, I think fundamentally moving forward, this is, I'm glad this has come to a head, it's just a real shame as a lot of people that have been going to be devastated financially, you know, because even the people that have already been displaced.

Veronica: Like, you know, where are they living, how are they paying their mortgage and yeah,

Chris: it's terrible. And it's not just, I mean, we are obviously very anti new on this podcast just generally. And we do prefer kind of more established kind of older properties that you're getting your money in land and many other reasons, which I'm sure our listeners know, but we actually started, you know, in older buildings, they're not without their problems. And you still need to be extremely careful when you're buying older buildings because, you know, there are rusts, there are concrete cancer, there are windows, there are, you know, substance, you know, there is so many problems with older buildings and I'm sure Veronica has got lots of horror stories over the years from where she's gone and looked at a beautiful apartment in Potts Point and, you know, looked at it and actually, you know, there's some few things wrong here.

Veronica: Yeah. I think transparency is going to help everybody in both sides. So, you know, we've done, uh, we interviewed, uh, Amanda Farmer and, uh, a while back in the 30s, I think, and Reena van Aalst, who's the strata manager. And we talked about, and even Michael Ferrier from Eyeon, and we talked about what goes into a strata report. Um, and really the lack of consistency, the lack of, um, of, uh, what's the word? There's this, there's no real, um, criteria, you know, in terms of, um, what they have to adhere to and the lack of basic record keeping skills. In many cases with strata managers. So therefore you've got often people buying strata properties completely in the dark and they think that they've done the right thing in terms of their due diligence, but they don't know what the holes are in that report. So then when you're buying established, obviously there's risks there, there's risk buying, any property, right? So all that risk minimization. And so that's so transparency in the strata report side of things and having a situation where you can't allow, um, owners, corporations to decide to put a mute on things that are wrong with the building because I don't want to impact on the values. And that's a deliberate decision that is made at times. Um, that is going to help that side of things. And on the flip side, then you've got new and transparency in terms of what goes into that building being made and the certification processes and all that sort of stuff. That's gotta help confidence as well. And I think that, let's, let's get out there and champion this anyway we've taken this podcast in a different direction.

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

Eliza: Oh, well actually speaking of I guess getting strata reports and, and history on the buildings. Um, I had an acquaintance who, you know, first home buyer actually employing the rentvestor strategy. Who bought an apartment and couldn't find anyone to rent it for about three months. So couldn't get that income to help pay off the mortgage. Um, whole bunch of bad luck sort of, um, occurred where they were made redundant and um, and the, the building needed an upgrade of the lift, which came to about $24,000. So that person really got into a lot of trouble. And I hesitate to call them a Dumbo because I think there's a level of miseducation and perhaps lack of transparency, transparency, um, and you know, the kind of more fragile state of the economy. So, um, they, they just had a lot of really bad luck I think. And it does speak to the necessity of, you know, really trying to do the research on the property if you can.

Veronica: It's knowing what to look for though, isn't it? That's the problem. It's like you think, I said that's the problem with these Strada reports is that people think they've done it.

Eliza: Yes.

Chris: So the property dumbo thing can sometimes be a bit misunderstood that we're trying to kind of take, you know, make fun of people that have made mistakes.

Eliza: Well, all the warp, warp sound effects.

Chris: Exactly. And the reality is, is that know Aussie BBQ, right? You know, people don't go there and you know, they'll talk about their good decisions. They'll talk about how much money they're making in property, but someone's not going to go, hey mate, I just lost $150k on a property you know, the bad stories just don't get spoken about because they're not nice to hear about it. That person doesn't really want to think about that. They're stressed about it. They've gone through so much pain. And there's all these people that with property that have lost that, you know, that that's not in the magazine. You know, you don't see the person who, you know, the person, it's like, you know, 7:30 or ABC have called me and you know, and you and say give me a case study that you know has been done by off the plan and people don't want to talk about it.

Chris: Right? And so what we're trying to do with the segment and this podcast is just kind of get these conversations out because there are people like that that, you know, went in blind, might've been society pressures, colleagues, family, and just gone and though I'm not successful if I don't own a property, I can't buy a home because it's too expensive. Or there's this cool investment strategy called rentvesting that's all over everywhere, which was, um, I'll go and buy something. It can't be that hard. And they've gone and just done it and they've tried to do something for their financial future, and they've just made a huge mistake. And that's a very common thing that we try to talk about on here because, you know, they'd probably would have been things that that person could have done to protect, you know, maybe bought a better asset, may be, you know, a different type of asset in a different location. You know, maybe you've done more due diligence.

Eliza: Well, I think something that is so interesting about the nature of the investment boom is when you have so many investors, it's like, do you have that? Well, but also do you have that many tenants that are out there? And we've actually observed the rental vacancy rate has gone up considerably in Sydney and Melbourne. And you know, and people as a tenant, I can tell you that people aren't necessarily taking up new properties to minimize their housing costs. They might be getting more people into a share house, you know, you might consolidation of tenants and how that affects vacancy as well. Yeah.

Veronica: And that's a very interesting point that yeah, you keep building more investment stock investor stock and it's like, where are the tenants going to come from? And, and there's been some impact and interesting, look, we've got to wrap this up in a minute, but, but, um, I imagine that you've had, do you see a bit of migrator re data around Sydney for instance because of the eastern suburbs property managers had been saying to me, look, you know, Zetland and Mascot and all of that sort of stuff. We never really thought that, you know, atenant from Bondai for argument sake might go on rent there except that when they're offered something brand new and it's really cheap rent and they will go there for a little while until the building gets a bit shabby and then they'll, they'll probably head back to where they wanted to live in the first place. So it's not actually the boundaries in terms of uh, how aware it's impacting seem to be extending. So what are you seeing in the data on that?

Eliza: Well, I've mapped out kind of typical days on market for rental properties across Sydney. Um, I did actually see, um, non renting areas being the most effected by the increase in a stock. So nontraditional areas basically being the, the northwest, um, which is sort of more owner occupied, a young family, um, suburbia. Yeah. Um, so whereas areas like, um, the northern beaches, the Eastern suburbs, they've, um, even the, inner west and Balmain peninsula, that sort of area, um, it's maintained a pretty tight, uh, level of days on market on average over the last year. I'm looking at about 20, 22 days and under.

New Speaker: Interesting stat to look at actually, isn't it? Because you know, you can look at, you know, yeah. A lot of people will go, I'm thinking about buying an investment and then they'll say, what can I rent it for? And I will look on, they'll look at all, there's three examples of properties that are renting for $700. I'll get $700 a week.

Speaker 3: Well, I don't even think they do that. What they do, they go and look at the property, the agent says, you'll get $700 a week for this. And they go, okay. And I work out their yield on that. Very rarely do they get online and have a look. I can guarantee that.

New Speaker: But if they do get online, you know, just because it's advertised as $700 a week rent, there might be seven. It doesn't mean it actually rented for that either. And you know, naturally when you're already thinking about buying something, you look for the good stories. You don't look, but the worst case. Um, and if you do kind of look online and you see actually that one's actually pretty much the same as mine and it's for $650 and it's still for rent and they haven't rented it and it's been on the market for 14 days, 48 days. You can start to kind of dig deeper because you've got, when you buy any investment, you know, getting a tenant and getting a stable rental, you know, fast home is one of the biggest risks that you need to make sure you manage. And I don't think a lot of investors rarely do enough due diligence around that, that just like, oh, it'll be right mate there's always people out there. But unfortunately supply doesn't work like that. So, yeah.

Veronica: Especially when you, like you said, the northwest of Sydney, there's so many people say, oh, you got to rent, you got to buy an investment at there because there's a train line now. It's like, and then all these apartments, there's like, well people out there aren't used to living in apartments they are actually used to living houses and, and they don't suddenly decide to, you know, move into a apartment next to the train station. It's, it doesn't work that way. The speculation around those stations, I think those apartments are priced similarly to what you'd get for an apartment in, towards the city or a house. It's quite, you know, it's quite bizarre. Um, and maybe it's something that will take off apartments in Castle Hill. I grew up in Castle Hill, so I never thought I'd say that, but, um, so there you go, yeah.

Chris: It's a really interesting point actually, because, you know, I know we've got to wrap it up here, but our client's trying to buy at the moment and um, you know, come to me and, uh, you know, from Sutherland shire and got a house down there, you know, he's grown up there, you know, he's lived there his whole life. He's got a house, he's happy and got very low debt. Um, loves it. Right but, you know, he's thinking about getting an investment property and um, they know they're not going to, shouldn't buy new, so they've gone, we don't want to go into too much debt. We want to buy an apartment and we'll buy an old apartment we're buying near a train station somewhere down there. Um, and the reality is, is that, you know, it's just not going to get you the returns because, you know, I, you know, people renting there because they are renting out of affordability.

Speaker 1: There's so many more apartments going to get built between the Sutherland Shire and the City where the jobs are in reality is people or the demographic to, to buy an apartment down there. It's not until all the houses really become unaffordable that you would then aspirational high income families who would want to live in an apartment. So, you know, you've just got to be extremely careful when you're investing in your partments, in the outer rings because of the rental problems, because of growth, etc. Like that. So I love that little point. So thank you so much for coming in today. It's loved it.

Speaker 3: Yeah, likewise. Like, I mean, I just think of a whole bunch of other topics I want to interview you on. We'll have to get you back.

Eliza: So much fun. I'd love to come back. Thank you.

Speaker 1: We want to make you a better at elephant rider and this week's elephant rider training is,

Speaker 3: Let's talk a bit about the importance of owner occupier appeal when you're looking at buying a property. Um, but also then the flip side of this, and we did touch on this and this conversation with Eliza, on a few points. So first of all, if you're looking at sustainable ongoing capital growth, you need to look at a property that has owner occupier appeal and ideally from more than one type of owner occupier. So that's really important because owner occupiers tend to push up prices. And also as we discussed here, they provide the foundations of a market. So the sustainability of a market comes down to really how many owner occupiers want to live there. But there's a, there's a little kicker in this because as Elizea also mentioned, um, like with rentals for instance, there are areas, there are areas that have got too many owner occupiers. And if you're going to look at buying there as an investor, you would be doing yourself out of probably some growth because you look at Adelaide, she said slow and steady for instance. Um, or you'd be doing yourself at a, some rental income as she was talking about northwest of Sydney, where it's highly owner occupier, uh, demographic there. So this is important because when you're choosing a location to invest in, you need to make sure that predominantly there are owner occupies there. And I would say 70% this is real really. So 30% investors, 70% owner occupies is the ideal, right? You need to have enough investors there or renters probably want it back a bit. You need to have enough people want to rent there to warrant a having 30% of housing stock go to investors. But then in order to actually buy a property that is going to continue to go up in value at a good rate, you want to make sure that it appeals to owner occupiers. But it is really important in terms of choosing an asset to always have in mind that owner occupiers need to want to live in this house, need to want to buy this house or apartment. Um, in order for you to be able to be confident that you've got a good asset that will go up in value over time.



Veronica Morgan