Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
Speaker 1: James Kirby, the Wealth editor at The Australian, and welcome
Speaker 1: aboard everybody. Now you may have noticed that there is
Speaker 1: the beginning of a trend of a turn actually in
Speaker 1: the property market as we speak, and you'd already know.
Speaker 1: I'm sure the property prices are beginning to fall in
Speaker 1: both Sydney and Melbourne. Now those falls are small, but
Speaker 1: the point is they're falling right, they're going the wrong
Speaker 1: way and very roughly it looks at the current pace
Speaker 1: of something like one percent a month. The couple of
Speaker 1: issues major issues for anyone in property is how far
Speaker 1: will this go? And how wide will this go? Will
Speaker 1: it spread to the other cities that have been having
Speaker 1: such a good run in recent times, Perth and Brisbane
Speaker 1: in particular, and Adelaide too, So we want to have
Speaker 1: a look at that, and I want to take a
Speaker 1: quick look also at the long awaited, finally signed off
Speaker 1: shared equity scheme, where you or someone you know can
Speaker 1: now buy a home in conjunction if you like, in
Speaker 1: a joint venture with the government, so you and the
Speaker 1: government can share the ownership of a home they will
Speaker 1: put up up to forty percent of the price of
Speaker 1: it if it's a new house, thirty percent of it's
Speaker 1: an existing house. What's that like? Is it a good idea?
Speaker 1: Would it work for you? Would it work at all?
Speaker 1: My guest today is a regular on the show. It's
Speaker 1: Louis Christopher of SQM Research. How are you, Louie?
Speaker 2: Good Bye? They're giants. It has to be with you
Speaker 2: once again.
Speaker 1: Good to be with you. So just let's tell the
Speaker 1: listeners basically your call on where things are? First of all,
Speaker 1: is that about right? Price is following about one percent
Speaker 1: a month now.
Speaker 2: Or just on the one percent a mile for Sydney
Speaker 2: and Melbourne prizes on Alan numbers are also falling Canberra
Speaker 2: into a let's say, Steeds in Hobart, but they are
Speaker 2: still rising out a very strong click for Perth. Brisbane
Speaker 2: had laid when we believe that the Darwin market's actually
Speaker 2: sewn to pick up now. So but most of the
Speaker 2: falls we speak of that the people here about in
Speaker 2: the media are really Sydney and Goldblin stories.
Speaker 1: Here and the majority of housing sock is in Sydney
Speaker 1: and Melbourne. This did I think you said sixty percent
Speaker 1: or so.
Speaker 2: About sixty percent of the national spot.
Speaker 1: So there is I think it's Shane Oliver at AMP
Speaker 1: mentioning and a few others putting out the point they're
Speaker 1: pretty soon we're going to see a nationwide average fall
Speaker 1: in prices. Is that feasible or pushing it too much?
Speaker 2: Look, we have a different view. We think for twenty
Speaker 2: twenty five we're not going to see a broad based
Speaker 2: national cly. We still believe that the seeds are per
Speaker 2: and adelaide will we call rises our bed slower rises
Speaker 2: and what we're recorded in what has been recorded in
Speaker 2: twenty twenty four, and that the falls will be for
Speaker 2: just certain cities being Melbourne, Sydney, as Weuching before, Hobarts
Speaker 2: and canber So we don't think there's tend to be
Speaker 2: a broad based and actual decline, mainly because we're seeing
Speaker 2: certain state economies doing better than others and population into
Speaker 2: state population migration flows are stronger than certain states and others,
Speaker 2: meaning that underlying demand is stilling freezing at a fairly
Speaker 2: rapid rate of knots, for example in the state of
Speaker 2: Western Australia's state of Queensland, and that underlying demand for
Speaker 2: housing has not been met on the supply side. So
Speaker 2: these are one of the reasons why we're forecasting in
Speaker 2: more of a mixed house in market in twenty twenty five.
Speaker 1: Okay, And what's interesting here, obviously is you've put the
Speaker 1: end alongside Melbourne as a market that you expect to
Speaker 1: see a forward by the far end of twenty twenty five.
Speaker 1: Can you tell us a little bit more about what
Speaker 1: you're forecasting.
Speaker 2: Yeah, sure, So for Sydney and Melville we're forecasts and
Speaker 2: housing price declined to somewhere between minus one to minus
Speaker 2: five percent for the year. Now, what we believe will
Speaker 2: actually happen is that the bulk of the housing price
Speaker 2: falls will happen in the first half of the year.
Speaker 2: We believe at some point in time in mid year
Speaker 2: twenty twenty five, we're finally going to see the Reserve
Speaker 2: Bank of Australia cut each astraits and once they do,
Speaker 2: we do believe that at home by confidence, indeed vendor
Speaker 2: conferimence will start to prove in our two largest capital
Speaker 2: cities for the second half of twenty twenty five, but
Speaker 2: the net result will still be declines in housing prices
Speaker 2: recorded full of full year. So just think of an
Speaker 2: impartial V shaped recovery for our two largest capital cities
Speaker 2: where falls having the first half the year off set
Speaker 2: by some price increases for the second half of a year.
Speaker 1: You would know, of course, that most of the major
Speaker 1: bank economists have now pushed their forecast for a record
Speaker 1: out from February March right out to May June. The
Speaker 1: risk I imagine for you is that they would push
Speaker 1: them further out again. Is that a downside risk basically
Speaker 1: for your forecast?
Speaker 2: Well, you may recall and your audience may recall what
Speaker 2: we do when we release these forecasts each years. We
Speaker 2: put out various scenarios, and so our base pas scenario
Speaker 2: was that we would see our interest rate cut of
Speaker 2: betwey point two five percent two point five percent somewhere
Speaker 2: media twenty five. However, our second most likely scenario is
Speaker 2: one where the Reserve Bank WASTRA doesn't cut egestrates in
Speaker 2: twenty twenty five at all. And our that scenario we're
Speaker 2: a little bit more negative on the housing market book,
Speaker 2: particularly City and Melbourne. So on our modeling, the RBA
Speaker 2: does not cut rates in twenty twenty five, housing prices
Speaker 2: in City and Melbourne are likely to fall somewhere between
Speaker 2: seven to eight per seat for the full calendar year.
Speaker 1: Okay, and it has happened. I presume before that you
Speaker 1: had a year where the major cities were dropping and
Speaker 1: the other cities were rising. That's not unprecedented normally.
Speaker 2: The situation you do recall, are you one records over
Speaker 2: over a number of years now is a mixed housing
Speaker 2: market where some cities right, some cities fall. It's more
Speaker 2: the abnormality that you see every housing market across Australia
Speaker 2: in sec with housing price falls. Of course, there are
Speaker 2: periods where when the Reserve Bank Australias lifted interest rates
Speaker 2: and all the economy significantly slow that you see slowing
Speaker 2: housing markets across the capital cities, but England that case,
Speaker 2: it's not always a situation where housing fives falls literally
Speaker 2: happen everywhere, and I really do doubt we'll see that.
Speaker 2: I think in Australia next to you, I think you know.
Speaker 2: One of the cue missing ingredies behind big fools in
Speaker 2: housing prices nationwide is that we still have a shortage
Speaker 2: of real estate. It's not like a zo. The supply
Speaker 2: side on residial will stay in this country is boomy.
Speaker 2: It isn't everyone's aware. We've got a fundamental of shortage
Speaker 2: of real estate compared to the population growth rate, and
Speaker 2: that essentially puts a bit of our floor underneath the
Speaker 2: housing market to an extate.
Speaker 1: Okay, we'll be back in a moment. Hello, Welcome back
Speaker 1: to The Australian's Money Puzzle podcast. I'm James Kirby. I'm
Speaker 1: talking to Louis Christopher. Okay, Louis, this is what everyone
Speaker 1: wants to know. Where are the bargains in Melbourne's Sydney
Speaker 1: Because as our audience, they're investors, they're optimists, they're looking
Speaker 1: for value. So can we deal with them separately. Let's
Speaker 1: have a look at Melbourne. First of all, let's be.
Speaker 2: Well chah, well we can, but we're seeing some similar trends.
Speaker 2: Let me explain it. Okay. Firstly, firstly, for both seas,
Speaker 2: I wouldn't say that that the markets are undervaged at
Speaker 2: this point in time. So when we look at pricess
Speaker 2: to rens pricess of income, we're still recording other valuations
Speaker 2: in Melbourne and c but the market is colling off
Speaker 2: and we are seeing more distress listings activity, particularly in
Speaker 2: the state of Victoria. And then we went dig deeper
Speaker 2: into the stud of Victoria. The bulk of those distress
Speaker 2: listings are occurring any inner city areas of Melbourne. We
Speaker 2: are recording some distress listening to regional Victoria, but the
Speaker 2: bulk of the are in Melbourne and that they're they're
Speaker 2: involving apartments in the CBD.
Speaker 1: Okay, what's your definition of distress our?
Speaker 2: Distress listening is one where we're noticed frutile listing. It's
Speaker 2: been either advertised as lortgage in possession or season the
Speaker 2: ad bank for sale or deceased a state or all
Speaker 2: offers considered must sell. Now we think at about forty
Speaker 2: seven different keywords in terms of what we're regarded as
Speaker 2: of distress listing.
Speaker 1: What are you able to give us some sense of
Speaker 1: the proportion of property in Melbourne and Central that's distressed
Speaker 1: and what it might be normally.
Speaker 2: In the CVD. I think we're recording now about one
Speaker 2: hundred and ten properties. So in the post got A
Speaker 2: three thousand has about one hundred and ten properties selling
Speaker 2: under distress conditions.
Speaker 1: Okay, what would you expect normally?
Speaker 2: Well put it this way, James, it's a relatively new
Speaker 2: series that we've put out, so we've been running this
Speaker 2: distress listings index since weeky twenty and for most states
Speaker 2: that this number of distress listings are well down in
Speaker 2: those COVID times early COVID times, except for the state
Speaker 2: of Victoria. We've now recorded and new've hed for the
Speaker 2: chount of the stress listings in the state of Victoria,
Speaker 2: so that the numbers now are coming out to twelve
Speaker 2: hundred properties statewide which are selling under distress conditions as
Speaker 2: per our recordings, and that's higher than what we had
Speaker 2: during the COVID period. Now, there was this period between
Speaker 2: twenty twenty one and twenty twenty two Victoria and as
Speaker 2: it was a case of other states, where the stress
Speaker 2: listening activity essentially collapsed. And that was because during that time,
Speaker 2: you may recall, the banks had a lratorial on any
Speaker 2: borrowers who were facing financial hardship to the COVID. Hope.
Speaker 2: Those times have ended, of course, and the banks are
Speaker 2: now playing hardball.
Speaker 1: They were given a sort of lifeline at that time. Yeah, three,
Speaker 1: I see. And what about in your reporter just came
Speaker 1: out this morning, you say total listings. Now, this is nation,
Speaker 1: they presume, but presume it's it's underpin by Victoria. So
Speaker 1: total listings rules by seven point six percent, driven by
Speaker 1: sharp rises in old listings. I assume that is just
Speaker 1: the accumulation of stuff coming back on the market again
Speaker 1: and again. Is that what that means?
Speaker 2: Yeah, Bold listenings week class of by old listenings has
Speaker 2: been on the market for over six months, well one
Speaker 2: hundred and eighty days, and you would be surprised how
Speaker 2: me listening shout there and being on the market that role.
Speaker 2: We're counting nationwide there's about seventy four thousand listings that have
Speaker 2: been on the lark for greater than six months. But
Speaker 2: more interestingly, the properties that have been on the market
Speaker 2: between thirty days to ninety days rose significantly over the
Speaker 2: last thirty days. They're kind of went up by twenty
Speaker 2: two percent nationwide. And what that's telling us is that
Speaker 2: it's been a very disappointing spring selling seats in the
Speaker 2: cross country for many owners and agents alike, particularly once
Speaker 2: again in city of Melbourne, where we've recorded the biggest
Speaker 2: gains in that bracket of listings in terms of days
Speaker 2: of laughter.
Speaker 1: Right, so the weekness in Melbourne is inter city apartments clearly.
Speaker 1: Is that reflected in Sydney too.
Speaker 2: Yes, it is. We're also recording rise in the stress
Speaker 2: listing activity in the cvdal City. We're also being recording
Speaker 2: rises and distress selling activity in development areas in and
Speaker 2: around city. So for example, in Northwest City, particularly around
Speaker 2: the carling For and Epping area, we're recording of substantial
Speaker 2: rise and distress listing to activity, and that's been an
Speaker 2: area where there's been a lot of developments being added
Speaker 2: on to the market over the past three to five years.
Speaker 1: Okay, I want to ask you one point about that Sydney.
Speaker 1: The softness in the Sydney inner city apartment market. Is
Speaker 1: it also worse than the COVID period.
Speaker 2: Yes, it is. It's worse than a COVID period.
Speaker 1: Now, Okay, I see. So the explanation is not so
Speaker 1: much that it's so bad now, it's that there was
Speaker 1: this artificial cushion in the COVID period where the banks
Speaker 1: weren't allowed move.
Speaker 2: Basically, yes, that is true, and we need to okig
Speaker 2: in mind that you know, we'd go relatively young series
Speaker 2: out there. We're not only everyone else that does this series. Yeah,
Speaker 2: but you know, I really entire in this series will mature.
Speaker 2: So we've only got the data back to twenty twenty,
Speaker 2: so make of that what you will. But nevertheless, suddenly
Speaker 2: in the start of Victoria we're in now unchartered orders
Speaker 2: and we also now there's been separate reports of increased
Speaker 2: defaults and the rears in the start of victory as well.
Speaker 2: I think you know, being in Isaiah cang out with
Speaker 2: some surveys on that recently.
Speaker 1: Yes, and Fitch did also Louis on that side of things. Okay,
Speaker 1: very interesting. I just want to ask you whether you
Speaker 1: think investors would necessarily see in the city apartment markets
Speaker 1: as at what point would they see it as being
Speaker 1: in bargain territory because they are known to be among
Speaker 1: the weakest of property types because of basically because there's
Speaker 1: no land.
Speaker 2: Great very hard and at a personal level, it's not
Speaker 2: our location. I would personally investing myself because of the
Speaker 2: what I do regardless well, being will elevate the risks
Speaker 2: of boons and buss as opposed to more smooth our
Speaker 2: performance from an investment perspective. Yeah. Look, these areas, of
Speaker 2: course will be historically areas where you see more supply
Speaker 2: added into the marketplace. We are definitely notice more resales
Speaker 2: occurring below the initial purchase price, particularly in Melbourne. We
Speaker 2: ran one last week in our what we call our
Speaker 2: stress Property of the Week and our weekly ESQR newsletter.
Speaker 2: It was a property by recall where the initial purchase
Speaker 2: price was back in twenty fifteen at about eight hundred
Speaker 2: and fifty thousand dollars or three bid or in the unit,
Speaker 2: and then they are trying to pick it up. Well,
Speaker 2: they try to sell it somewhere in the six hundred
Speaker 2: thousand range of boy Cuble numbers, so it was a
Speaker 2: deep discount to the original purchase price. You could argue
Speaker 2: that the original purchase price, which I presumably was bought
Speaker 2: off the plane, was way above mark above laying. This
Speaker 2: is the issue I have ab off the plane valuations.
Speaker 2: It is very hard to tell what is speed market valuation,
Speaker 2: and there are greater risks for investors buying off the
Speaker 2: plane that they're paying arger the odds for the property concerned.
Speaker 1: Okay, very interesting. I'm sure the listeners will take all
Speaker 1: that on board. Very interesting. Okay, Now, just before we
Speaker 1: got questions, if I could just swing your attention in
Speaker 1: another direction entirely the Shared Home Equity Scheme, which is
Speaker 1: the Labor Government's signature or move to put something in
Speaker 1: for first home buyers got signed off in the last
Speaker 1: week of Parliament and it will now start and it
Speaker 1: would allow people to let the government basically to be
Speaker 1: the other partner in the purchase of a home first
Speaker 1: home forty percent. The government could have up to forty
Speaker 1: percent of a new property and thirty percent of an
Speaker 1: existing property. And there are salary caps on this. But
Speaker 1: it's very interesting. It's never been tried here, It's been
Speaker 1: tried in the UK. I've had to look at some
Speaker 1: of the I looked at that house, the Lord's report
Speaker 1: on the British one and the various observations they made,
Speaker 1: which the big takeaway was that it worked in the regions.
Speaker 1: It didn't work in the cities because the pass there's
Speaker 1: so much lower in the regions in the UK. But
Speaker 1: what do you think might happen here?
Speaker 2: Well, Damsby might not have been tried at the federal
Speaker 2: government level, but if ever been tried in Australia before
Speaker 2: by certain private organizations. You may recall some years back
Speaker 2: rizmarkat a ski and then I think there was another
Speaker 2: one called Grainwaite Capital and quite frankly, these steams in
Speaker 2: the past did not work. I predict that this one
Speaker 2: will not really work either, and it will not be
Speaker 2: the solution to a housing problems. But it look it
Speaker 2: may work for some first time buyers who just simply
Speaker 2: cannot get into the market at all. But I think
Speaker 2: for the bulk of would be buyers, the thought of
Speaker 2: the government having some ownership in your property, I think
Speaker 2: that's a bit of a turnoff for many people. It
Speaker 2: would be a turnoff for there. I wouldn't do it
Speaker 2: unless I absolutely hate to. And just remember that in
Speaker 2: all these things, when you have this shared equity, okay,
Speaker 2: as sooner or later you have to pay the pie.
Speaker 1: Is there some reason the government is a worse joint
Speaker 1: ventship partner than ris Mark or whoever it was in
Speaker 1: the past.
Speaker 2: They might not be, They might not be as worse Jones.
Speaker 2: And I think one thing that's improved over time is
Speaker 2: that it's more or less being settled how things such
Speaker 2: as repairs and maintenance need to be looked after. When
Speaker 2: these initialis first came into the market some fifteen to
Speaker 2: twenty years ago, no one ever really falls through the
Speaker 2: issues surrounding repairs and maintenance. So I think a number
Speaker 2: of those questions have been settled there after some experience.
Speaker 2: But even so, I just don't think you're going to
Speaker 2: say a lot of tie up in my year.
Speaker 1: Oh right, okay, I must say I think they'll be
Speaker 1: taken up. I reckon everything's spot will be taken up.
Speaker 1: I do. Whatever the issues are. I think there's limited numbers.
Speaker 2: I mean, let's say it's fully taken. Let's say you're right,
Speaker 2: and now it's just actually going to resolve a out
Speaker 2: housing issues.
Speaker 1: No, I don't think so. But I'm just thinking of
Speaker 1: it for the people who take it up that I
Speaker 1: suppose it's an option that wasn't there previously.
Speaker 2: I think that's a reasonable call. But I think in
Speaker 2: the lull and they're going to resent having gotten a
Speaker 2: nishick in their property.
Speaker 1: It sounds to me like you're alluding to some sort
Speaker 1: of Kafka esque bureaucratic nightmare that the young couple might
Speaker 1: find themselves.
Speaker 2: There is a libertarian part of me, and you know,
Speaker 2: I just I think there will be down a lot
Speaker 2: of people say no, thank you.
Speaker 1: Okay, And I think that point of view is worth canvassing.
Speaker 1: Folks are just having a look at I think one
Speaker 1: of the I think, well, the defense properties for instance.
Speaker 1: They are often seen as looking attractive, but you know
Speaker 1: when you do go into those they are very strict
Speaker 1: all their measures and regulations and maintenance demands. So they're
Speaker 1: all pre ordered and pre agreed, and you are just
Speaker 1: you know, you against the army or you against the
Speaker 1: Australian government. Is something to consider.
Speaker 2: They can their restrictions. And then I also bring to
Speaker 2: your teaching quite separately, just so the issues surrounding Indis
Speaker 2: properties of lake as well, which unfortunately you've had some
Speaker 2: and all of saying this is what happened with the
Speaker 2: shit equity back, we're saying situation where you've had some
Speaker 2: odd scrupulous operators enter into that spoutace for ABIs properties
Speaker 2: and a lot of innocently versus are being burnt. So
Speaker 2: it's really important all these things or these skins, that
Speaker 2: you look at the day job, whether you're a first
Speaker 2: time by very investing, you really consider the day job.
Speaker 1: That's important alls, and I think it's important to also
Speaker 1: say to the listeners that the ndis stuff. A lot
Speaker 1: of the developers after works for masquerading basic as the government,
Speaker 1: which they weren't. They were simply building buildings that were
Speaker 1: suitable for NDIS, but they weren't their government building the buildings,
Speaker 1: while here you are actually participating directly with the feathering government.
Speaker 1: This is on the home shared equity schemes. So all
Speaker 1: to be revealed in the fullness of time. Okay, with
Speaker 1: ex short break and we'll do some questions from listeners. Hello,
Speaker 1: welcome back to The Australian's Money Puzzle. James Kirby here
Speaker 1: with Louis Christopher of the s QM Research Group. That's
Speaker 1: a property research group that I'm sure you're familiar with,
Speaker 1: the Independent Property Research Group, who run a continuing sort
Speaker 1: of flow of reports on the market which we report
Speaker 1: on regularly in The Australian and elsewhere. Okay, Josh, Now
Speaker 1: Josh puts in brackets. He's from Brisbane and you'll figure
Speaker 1: out why in a second. When I read this question,
Speaker 1: love your show, but I can't have think that as
Speaker 1: you live in Melbourne, you can't see how bad the
Speaker 1: perception of investing in any form of property in Victoria is.
Speaker 1: All I see is an absolute basquet case of financially
Speaker 1: irresponsible city that has been run into the ground with
Speaker 1: mountains of debt. Yet not only do Victorians keep voting
Speaker 1: these people into power, these policymakers into power, but they
Speaker 1: build them statues. I find it mind boggling that any
Speaker 1: sane person would invest in such a market at present
Speaker 1: and can't help but think it has a long long
Speaker 1: that's three long stare folks wait to go to rectify itself. Okay, Josh,
Speaker 1: you know the rational part of me says, when someone
Speaker 1: starts talking about that, about a city that's going to
Speaker 1: be the biggest city in Australia, that has, whatever way
Speaker 1: you look at it, terrific fundamentals, I would start looking
Speaker 1: at it more as a long term opportunity. When the
Speaker 1: current regime in Victoria is sparking such comment, I'm not
Speaker 1: surprised that's sparking that kind of common but I wouldn't
Speaker 1: right off the city of Melbourne. It's a property investment possibility.
Speaker 1: And what about you, Louis.
Speaker 2: Now, I'm instantainly not over the long turn, Jones. Well,
Speaker 2: the governance come and go, as we all know. At
Speaker 2: this appointing time, I would have to say to State
Speaker 2: of Victoria, is not overly conduce you to property investment,
Speaker 2: because among other things you've got to investor laying tax.
Speaker 2: It's there in so callth it's going to introduce by Dounma.
Speaker 2: But let's remember a few things here. Firstly, the state
Speaker 2: of Victoria is still growing population wise. It's getting a
Speaker 2: very strong share of overseas migration. So no matter what,
Speaker 2: the state continues to grow with the population front, and
Speaker 2: that means a hunderlying demand for real estate con two
Speaker 2: years to increase. Let's also keep in mind that the
Speaker 2: stud of Victory it is a diversified economy. It's got
Speaker 2: a very large share of the financial services sector across Australia.
Speaker 2: It also has a very good manufacturing sector as well.
Speaker 2: It's what we call a very nicely diversified economy and
Speaker 2: will remain that way, which is good for the long term.
Speaker 2: Over the short term, look, yeah, there's been decisions made
Speaker 2: by the Gunment which you know I don't necessarily agree with,
Speaker 2: but like I said, over the long term, governments will
Speaker 2: come and go and there will be a time again
Speaker 2: when that the housing market will be running into positive territory.
Speaker 2: The declines that's been recorded have been modesty clients so
Speaker 2: far for this year, helping prove fundamental valuations. But as
Speaker 2: said on our numbers, we still think the northern housing
Speaker 2: market is somewhat over age, not as overvaid as where
Speaker 2: city stands, but nevertheless somewhat overvaid coveted to rents and incomes.
Speaker 2: But yeah, for a long time, a long term. If
Speaker 2: you take a long term view on investing, then the
Speaker 2: study of Victoria is definitely still worth a look.
Speaker 1: Okay, interesting, and in your predictions it participates in that
Speaker 1: v ship recovery media next.
Speaker 2: Year it does so housing price falls in the first
Speaker 2: half of the year, and then assuming we get that right,
Speaker 2: cup Medie, we should start to see a return of
Speaker 2: by competence in the second half of twenty twenty five.
Speaker 2: Across Melbourne. I think the inner city area is given
Speaker 2: how much stock we're saying there, I'm also sure whether
Speaker 2: that will enjoy so much of the V shaped recovery.
Speaker 2: But we're noticing more strengthently out of ring of Victoria,
Speaker 2: so less softness in North Melbourne in the Mornington Penicula
Speaker 2: area there we're still seeing plenty of bars there to
Speaker 2: an extent. The bulk of a softness in Melbourne is
Speaker 2: in the inner city areas.
Speaker 1: Right now, Okay, okay, interesting, all right, fine? Question from
Speaker 1: Lisa A. Lisa can I ask you and your guest.
Speaker 1: My son and his girlfriend are interested in buying a
Speaker 1: one bedroom apartment. I don't know what city this is.
Speaker 1: I know it is seen as a foot on the
Speaker 1: property ladder, but everything I have ever read suggests they
Speaker 1: in one bedroom apartments are relatively hopeless investments discuss.
Speaker 2: Okay, so they're solely a lot more risk buying an
Speaker 2: off the plan one bedroom apartment. But a few words
Speaker 2: of buy established one bedroom, a part of it that
Speaker 2: says reasonably modern, even an older style one, then a
Speaker 2: lot of the depreciation affected depreciations already heard on that property.
Speaker 2: So when you're buying a new property, it's not buying
Speaker 2: a new car. You're buying a cent off the showroom floor.
Speaker 2: You're paying a premium for its units. But there's a
Speaker 2: good reason why the ATO gives you a depreciation allowing
Speaker 2: some new properties, because they depreciate. All those pictures there,
Speaker 2: fittings depreciate. They will not look as good as they
Speaker 2: are now in ten years time. But once that's taking
Speaker 2: into account into the price, which happens when you buy
Speaker 2: an established property that's say, for example, five years or
Speaker 2: we're older, you will find such properties will perform at
Speaker 2: least in line with market. Now. Of course, you still
Speaker 2: need to do your research on, say, out the Palmer block,
Speaker 2: because what you don't want to see a major fold
Speaker 2: it's another part of block. Otherwise, even buying in existing
Speaker 2: property inside the faulty block, you're up for problems going forward.
Speaker 2: You've got to be careful that. And that's why I
Speaker 2: always say that people read the Strata minutes, get your
Speaker 2: hands on the committee minutes, to see what's been going
Speaker 2: on behind the scenes at a public block.
Speaker 1: And see what's what may be coming down the line.
Speaker 2: Absolutely, I might.
Speaker 1: Be waiting for you to buy your apartment to it.
Speaker 2: But d and all this what we've been finding of
Speaker 2: lead in more recent cycles is that units are being
Speaker 2: reasonably a good defensive playing market downturns. They up toform
Speaker 2: houses and market downturns, they turned up under perform houses
Speaker 2: and upturns.
Speaker 1: Okay, So which would imply that they will do better
Speaker 1: than the rest of the market in this immediate period
Speaker 1: of softness.
Speaker 2: Correct, Yeah, very.
Speaker 1: Interesting, Okay, terrific, Hey, terrific to get you Louis again,
Speaker 1: great to have you on the show. As usual, always
Speaker 1: very very good helicopter view of the market. Very practical
Speaker 1: one too. Thanks at Louis Christopher of Escue and Research,
Speaker 1: do send us some correspondence. Folks love to have some
Speaker 1: more questions or even observations like Joshua's quite distinct observation
Speaker 1: there on the Melbourne market from the distance of Brisbane.
Speaker 1: Whatever you like, love to hear from you the Money
Speaker 1: Puzzle at the Australian dot com dot Au. Today's show
Speaker 1: was produced by Leah Samuel Glue. Talk to you soon.