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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

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Speaker 1: James Kirby, the welth editor at the Australian. Welcome aboard everybody.

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Speaker 1: Interesting week for property investors, home buyers too.

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Speaker 2: You might have seen the budget.

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Speaker 1: You say, well, I didn't say much in the budget

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Speaker 1: for home buyers and we will be talking about that

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Speaker 1: in a moment. You might have seen the budget reply

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Speaker 1: from Peter Dutton. Budget replies don't normally carry much news,

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Speaker 1: I find, but this year, of course, he's reiterated and

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Speaker 1: expanded to some extent on the Coalition's plan, which would

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Speaker 1: be to allow people to use their super du buy

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Speaker 1: their first home up to fifty thousand dollars. That is

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Speaker 1: a controversial policy. I wonder what you think of that.

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Speaker 1: I have to tell you that I think it would

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Speaker 1: be very successful for the simple reason that the tax

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Speaker 1: system is utterly loaded in favor of homeowners and I

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Speaker 1: think people if they don't know that, they will gradually

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Speaker 1: get to know that if they are potential home buyers.

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Speaker 1: Another theme which is really starting to get going this

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Speaker 1: year is that units and townhouses are looking better by

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Speaker 1: the day against standard on properties, and that is a

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Speaker 1: reversal of what we've seen for recent years. And I'm

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Speaker 1: going to talk about that with my guest, Terry, writer

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Speaker 1: of hot Spotting. He's been on before. How are you, Terry?

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Speaker 3: Very well, James, and like you're very interested in what's

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Speaker 3: in the budget and also what's not in the budget.

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Speaker 2: Is there something in the budget I failed to notice? Terry?

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Speaker 1: No.

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Speaker 3: I think I've been reading what you've been writing about, James,

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Speaker 3: and I think you've picked up on most of the

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Speaker 3: major issues that are included in the budget. From your perspective,

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Speaker 3: it's what's not there that's probably most significant, particularly dealing

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Speaker 3: with the rental shortage short term There.

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Speaker 2: Is there something?

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Speaker 1: Was there something outstanding you thought that they are in

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Speaker 1: a position to do that they didn't do well?

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Speaker 3: Yeah, I mean, the reality is that over ninety percent

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Speaker 3: of the homes that people rent in this country are

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Speaker 3: provided by private investors, often referred to as mom and

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Speaker 3: dad investors, not big corporations, not government, who have been

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Speaker 3: underfunding social housing for many years, and private investors have

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Speaker 3: been increasingly little by little dropping out of the market

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Speaker 3: in recent years. They're not present in the numbers that

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Speaker 3: we need to provide a balanced market. You know vacancies

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Speaker 3: around three percent, for example, and there are reasons for that.

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Speaker 3: They've been demonized, disincentivized little by little steadily over the

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Speaker 3: last five or six years, and that needs to be

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Speaker 3: reversed otherwise we're going to continue to have this slow

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Speaker 3: drift of people out of property investment, and that begs

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Speaker 3: the question.

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Speaker 2: Fair to them.

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Speaker 1: They did put in homoss money six billion and the

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Speaker 1: leastest cut into social housing, Does that in its way

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Speaker 1: reduce pressure on Beaconcy reads ultimately?

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Speaker 3: Well, my reading of it, and I think I was

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Speaker 3: reading what various people have analyzed in terms of what's

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Speaker 3: in the budges six billion dollars towards dealing with the

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Speaker 3: housing shortage, some of which going into social housing, some

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Speaker 3: of which is going into infrastructure, a lot of which

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Speaker 3: is going into a handout to people to subsidize their rents.

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Speaker 3: Big numbers nationally, but for the individual quite small. Will

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Speaker 3: make a small difference, but not a great difference. It

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Speaker 3: doesn't deal with the core resh. The coresh is really

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Speaker 3: the shortage of landlords in this country. That's what we

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Speaker 3: have a chronic undersupply of, and that's not addressed politicians

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Speaker 3: at certain politicians anyway, have been rather demonizing landlords and

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Speaker 3: private investors as the villains of the piece. They're actually

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Speaker 3: not the problem. They're the solution, and that's not addressed

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Speaker 3: in this base.

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Speaker 2: Ok.

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Speaker 1: I hear you, Luden here, tell me about you the

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Speaker 1: idea of people being allowed to use super for buying

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Speaker 1: their first film. Do you think it would work? If

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Speaker 1: it worked, what difference would it mean to the property market?

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Speaker 3: Look, I mean it will work to the extent that

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Speaker 3: will help people get into the market, you know, to

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Speaker 3: provide perhaps deposit that they're struggling as rental is paying

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Speaker 3: higher and higher rental in the current circumstances to accumulate

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Speaker 3: a sufficient deposit to get into the market. So in

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Speaker 3: the short term it can have a positive impact. I

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Speaker 3: don't agree with There's always a chorus of people who

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Speaker 3: spring up in the media when there's suggestion of giving

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Speaker 3: some help to first time buys, whether it's grants or

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Speaker 3: this measure allowing them to use this, But that will

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Speaker 3: just inflate prices. I don't think there's any evidence that

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Speaker 3: that's true, and I don't think that'll be the case.

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Speaker 3: It will give people a helping hand, get people the

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Speaker 3: assistance they need perhaps to get that deposit together and

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Speaker 3: get into the market.

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Speaker 1: I suppose economists would probably argue with you that they

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Speaker 1: do lift prices, that if you stimulate, if you give

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Speaker 1: in any way, if you give them an access even

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Speaker 1: to their super which is their own money. But even

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Speaker 1: so in doing so, they have more to bid, right,

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Speaker 1: they have more money when they stand at the auction

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Speaker 1: on a Saturday morning, So they can they push up prices.

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Speaker 3: But I don't think I think I think that factor

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Speaker 3: is overstated. I don't think, OK, people can just bid

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Speaker 3: up prices. I's often said that investors go to auction

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Speaker 3: and bid up prices. An actual fact, I think there's

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Speaker 3: a competition between an investor and a first home buyer,

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Speaker 3: and they have the same age, and they have the

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Speaker 3: same incomes. The first ome by actually has a considerable

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Speaker 3: advantage over the investor in terms of it's all about

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Speaker 3: borrowing capacity and just how much you can afford to pay.

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Speaker 3: You can't just keep bidding up prices. You're limited by

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Speaker 3: your borrowing capacity and how much you can afford to pay.

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Speaker 3: And because investors play higher interest rights, and because they

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Speaker 3: don't have government grass and they pay higher rates of

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Speaker 3: stamp duty, higher everything really, counsel rights, insurances a lot,

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Speaker 3: they are actually at a competitive disadvantage to first time

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Speaker 3: buyers if they are standing side by side at an option.

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Speaker 1: Yes, that's very interesting. I mean, yes, I see where

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Speaker 1: you're coming from. And if there are a self managed,

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Speaker 1: super funded investor, there are a significant disadvantage in terms

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Speaker 1: of their costs, not to mention the lending rates that

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Speaker 1: are forced upon them in the market.

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Speaker 2: Okay, that's a very interesting point.

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Speaker 1: I just want to move on to a larger notion,

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Speaker 1: which I know you've really been picking up of lace,

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Speaker 1: which is and you call it a new paradigm. So

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Speaker 1: I'd love you to explain to our audience who are

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Speaker 1: active investors what you're saying about the changing nature of

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Speaker 1: the post COVID market and in relation to units versus

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Speaker 1: houses or apartments versus houses.

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Speaker 3: Yeah. Well, for as long as I've been doing what

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Speaker 3: I'm doing, researching and writing about real estate over forty

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Speaker 3: years now, it's always been considered the rule of some

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Speaker 3: in real estate that houses on land provide better capital

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Speaker 3: growth and apartments. And if you look at the historical

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Speaker 3: data that's supported by the numbers, what we're saying is

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Speaker 3: that's starting to change, and in some locations, many locations

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Speaker 3: around straight has changed. So we're coming across more and

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Speaker 3: more instances now where we're looking at the numbers for

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Speaker 3: apartments and the numbers for houses in the same suburb

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Speaker 3: or the same town, and we're seeing that in the

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Speaker 3: past twelve months or the ten year growth averages, apartments

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Speaker 3: increasingly are actually outperforming. And we're really interested in this trend.

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Speaker 3: We've been charting it for the last say twelve months

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Speaker 3: or so. It became quite strongly evident in the second

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Speaker 3: half of twenty twenty three, and it's continued in the

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Speaker 3: twenty four increasingly. So it's not just about affordability, although

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Speaker 3: that's part of it, because obviously apartments in the same

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Speaker 3: suburb considerably cheaper than houses in most instances. It's also

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Speaker 3: about lifestyle. They're actually had quite a number of buying

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Speaker 3: cohorts that are increasingly opting for what you might call

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Speaker 3: attached dwellings versus detached dwellings. And so we've got people downsizing,

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Speaker 3: older people downsizing young people trying to get into the

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Speaker 3: market affordably. We've got buyers you just simply like that

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Speaker 3: low maintenance, lock up and leave lifestyle. We've got lots

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Speaker 3: of migrants coming from countries where attached dwellings are the norm.

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Speaker 3: They're comfortable with that style. And there's another fact that

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Speaker 3: I think it's increasingly evident, and we're hearing more and

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Speaker 3: more about this from developers of apartments, that is the

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Speaker 3: safety issue. Safety is becoming increasingly an issue, particularly for

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Speaker 3: older people. There's so much media about crime on the streets,

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Speaker 3: you know, knife attacks, all sorts of stories about violence,

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Speaker 3: and people are perhaps feeling increasingly not safe on the

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Speaker 3: ground floor, you know, in a suburban home. They feel

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Speaker 3: a lot safer on the tenth or fifteenth floor of

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Speaker 3: a secure, modern apartment building. And that's becoming a big

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Speaker 3: factor driving demand increasingly towards you.

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Speaker 1: Well, that's interesting. I wasn't aware of that. What I'm

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Speaker 1: hearing when you tell me about these suburbs where the

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Speaker 1: apartments are doing better in recent times per square meter,

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Speaker 1: I you like over the standard on Holmes. It's not

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Speaker 1: the majority of suburbs just yet, is it?

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Speaker 3: Is it just now? I couldn't say that's the majority

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Speaker 3: of something. What we would say is that increasingly we're

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Speaker 3: coming across instances where in various ways apartments are outperforming

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Speaker 3: in some cases on all the metrics. It might be

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Speaker 3: that in the past twelve months the meeting price for

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Speaker 3: apartments has grown more than for houses on the ten

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Speaker 3: year growth average, apartments are more obviously rental yields would

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Speaker 3: tend to be higher, although there are additional costs of

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Speaker 3: course with apartment owners. But also days on market are

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Speaker 3: very often considerably shorter. We're seeing examples of that popping up,

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Speaker 3: particularly in the more expensive market. So affordability is a

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Speaker 3: factor obviously, So we're seeing instances in Sydney, we're seeing

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Speaker 3: instances in Melbourne, a lot of suburb examples in Brisbane

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Speaker 3: and some of the more expensive and popular and large

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Speaker 3: regional cities, particularly the Gold Coast and the sun Huhine

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Speaker 3: Coast I mean, for example, and NUSA Heads. Apartments are

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Speaker 3: expensive there as well as houses. The ten year growth

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Speaker 3: average for houses is very good nine point five percent

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Speaker 3: per year according to the core Logic figures, but apartments

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Speaker 3: are close to fifteen percent per year.

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Speaker 2: Is that so?

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Speaker 1: Isn't it interesting now that the Tolistine Mey says, is

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Speaker 1: this like a reversion to the mean. Is this just

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Speaker 1: that the houses run too hot and the apartments are now.

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Speaker 3: It's more that there are more and more by cohorts

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Speaker 3: who are choosing apartments, and it's the weight of demand

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Speaker 3: from growing numbers of people opting for attached dwellings that

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Speaker 3: is causing price performance to improve. It has always been

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Speaker 3: felt that the land content is the big factor in

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Speaker 3: driving price growth. I've never been totally sure that that's true,

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Speaker 3: and increasingly we're seeing examples where that's been contradicted.

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Speaker 1: But that means if that means it's a hell of

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Speaker 1: a lot more than don to some sort of temporary

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Speaker 1: reversion to the mean, then isn't it. It's like a

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Speaker 1: structural change in the nature of the mind.

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Speaker 3: That's why we're calling it a paradigm ship because the

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Speaker 3: dominant paradigm has always been that houses have outperformed. But

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Speaker 3: we're seeing more of my instances where it is being contradicted,

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Speaker 3: and so we're saying a new paradigm is in play,

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Speaker 3: because it's not just the last twelve months we're seeing

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Speaker 3: superior performance in more and more suburays, but it's the

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Speaker 3: ten year growth averages. No surface paradise. The iconic Gold

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Speaker 3: Coast market, where meeting price for houses is close to

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Speaker 3: two million dollars, whereas the meetium price for apartments is

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Speaker 3: a take over six hundred thousand. The ten year growth

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Speaker 3: averages for both a good eight percent for houses but

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Speaker 3: ten point eight percent for apartments, and of course the

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Speaker 3: yields are infinitely better, only two point eight percent meetium

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Speaker 3: yield for houses and surface paradise but five point three

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Speaker 3: percent for apartments, and days on markets are much shorter

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Speaker 3: for apartments in that market now. Historically, surface paradise apartments

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Speaker 3: have been terrible performers up until say, three years ago.

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Speaker 2: I was beat me to it.

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Speaker 1: Yeah, yeah, you would because they can keep building them, right.

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Speaker 3: But that's one of the things that's changed. Many of

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Speaker 3: the big high rise apartment developments and Surface Paradise and

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Speaker 3: else on the Gold Coast that otherwise have been built

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Speaker 3: have not been built because they just don't stack up

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Speaker 3: financially with the cost structures as they now exist. And

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Speaker 3: I'm having conversations with major developers are saying things to

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Speaker 3: me like, look, because the cost of building these bills

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Speaker 3: have grown so much, and because we have shortages of trades,

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Speaker 3: people and materials, it's not feasible for us to build

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Speaker 3: a highest apartment unless we can sell all the apartments

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Speaker 3: for at least a million dollars. So if it's not

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Speaker 3: a market where we can sell apartments for one to

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Speaker 3: one point five million dollars, it's not viable to build it.

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Speaker 3: So a lot of the big high raise projects on

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Speaker 3: the Gold Coast have been deferred or scrapped. So we

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Speaker 3: have the opposite problem to that traditional boom bust thing

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Speaker 3: that we used to see on the Gold Coast because

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Speaker 3: they've built too much high rise. Now we've got a

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Speaker 3: shortage and it's not something that can be turned around quickly.

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Speaker 3: So we're starting to see rising demand for and improving

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Speaker 3: price performance for apartments. And one of the things, of course,

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Speaker 3: that apartments in these markets can offer that houses on

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Speaker 3: land generally can't not a waste, but as a rule

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Speaker 3: of thumb, apartments have view and that's a big factor

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Speaker 3: of perhaps in deriving demand and therefore capital.

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Speaker 1: That's really interesting. I mean, it's akaing like you're laying

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Speaker 1: out a scenario which is like a looming golden age

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Speaker 1: for the apartment's investor. Am I getting carried away there?

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Speaker 3: No? No, I think that's a fair assessment because you know,

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Speaker 3: it answers so many of the things that people looking

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Speaker 3: for it, answers, affordability, relative affordability, superior rental yields in

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Speaker 3: times of higher interest rates, and we're increasingly seeing really

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Speaker 3: good capital growth performance. So it's sort of ticking all

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Speaker 3: the boxes for more investors. And of course, low maintenance

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Speaker 3: provided provided that you bought in the building that has

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Speaker 3: a track record of low maintenance, because you know, one

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Speaker 3: of the issues with apartments, of course, is that so

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Speaker 3: many defects are coming to light. And it seems to

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Speaker 3: me that the ideal apartment investment is not a new one,

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Speaker 3: not an off the plan apartment purchase, but something that's

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Speaker 3: established in a good location, perhaps a little bit more boutique,

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Speaker 3: rather than a thirty or forty story high rise. That

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Speaker 3: kind of apartment, say an inner suburb of off the

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Speaker 3: inner west of Sydney or some of the inner suburbs

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Speaker 3: of Melbourne and also Brisbane could be the way to go.

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Speaker 2: See that's really interesting.

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Speaker 1: And as you see, the thing is that the factors

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Speaker 1: you outline behind this aren't going to change anytime soon.

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Speaker 1: They're quite they're quite they're quite established. Yeah, that's right.

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Speaker 3: Well, we've got this problem of shortage. The recent federal

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Speaker 3: budget has made some commitments and repeated Amelia published ones

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Speaker 3: to generate construction. They hope of a certain number of

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Speaker 3: dwellings over the next five years. But that's a longer

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Speaker 3: term solution and one which the building industry industry continually

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Speaker 3: argues they can't deliver on because of all the structural

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Speaker 3: problems within the dwelling construction industry at the moment, shortages

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Speaker 3: of everything, builders going broke. It seems like it's a

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Speaker 3: target that cannot realistically be achieved. So in the short

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Speaker 3: term we're going to continue to have shortages of dwellings generally,

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Speaker 3: but in particular shortages of dwellings for rental, and that's

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Speaker 3: the big problem.

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Speaker 1: See that's fascinating, So folks, I mean say that is

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Speaker 1: something that is really fresh piece of insights from Terry there.

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Speaker 1: We've always been that thing, you know that the apartment

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Speaker 1: market would take Docklands in Melbourne or South Bank in Melbourne.

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Speaker 1: I think of Alexandria area in Sydney, many other parts

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Speaker 1: of Sydney, along the River in Brisbane. Every time and

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Speaker 1: start to come right. The developers come in, they build

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Speaker 1: many more apartments. They are able to do that. But

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Speaker 1: as Terry's outlining economically that is not stacking up for

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Speaker 1: them now, and that means it's a different it's a

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Speaker 1: different investment climate and scenario for apartments. It's a very

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Speaker 1: interesting rationale for apartment investing that we haven't had for

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Speaker 1: quite some time, and I think this could really be

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Speaker 1: significant if you are an active investor. All Right, we

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Speaker 1: will leave it there for the moment with that very

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Speaker 1: interesting observation from Terry, but take a break and we

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Speaker 1: will be back with some very interesting property questions. Hello,

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Speaker 1: welcome back to The Australian's Money Puzzle podcast. James Kirby Well,

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Speaker 1: the editor at The Australian, talking to Terry Ryder of

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Speaker 1: hot Spotting. Hot Spotting, of course a very established organization

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Speaker 1: that Terry has been running for some years and he

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Speaker 1: is an expert on locales, if you like, across the

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Speaker 1: property market and what's happening in different spots, which is

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Speaker 1: exactly what we've been talking about. Okay, question from Stephen

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Speaker 1: in the existence of property restricted to older people, is

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Speaker 1: it time that we have a certain location or properties

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Speaker 1: that are restricted to those age twenty to thirty five. Instead,

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Speaker 1: the idea would be that subsidized living is provided for

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Speaker 1: younger folk, or they try to build up their own

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Speaker 1: deposits to purchase when they are thirty five plus. I

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Speaker 1: only smile, Stephen, because it's such a novel, radical idea.

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Speaker 1: Whatever the opposite of an old folks village would would

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Speaker 1: be a young folks village. I won't say it's utopian,

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Speaker 1: but it's ambitious.

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Speaker 2: What do you think, Terry?

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Speaker 3: Yeah, yeah, ambitious definitely. I mean, I mean there are

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Speaker 3: specific reasons why we have developments specifically for older people,

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Speaker 3: and those arguments don't necessarily apply to younger people. That

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Speaker 3: they can plump themselves anywhere that they like the lifestyle

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Speaker 3: or can afford the rent or the buying prices. I'm

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Speaker 3: not quite sure how that would work. As he's suggesting

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Speaker 3: that perhaps there's there's some kind of subsidy he.

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Speaker 1: Is, yes, indeed, yes, subsidized living is provided for the

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Speaker 1: younger folk. I I it's such a novel idea, Stephen,

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Speaker 1: that that well, well, we'll just leave it out there

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Speaker 1: for the for the listeners to ponder, and thank you

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Speaker 1: very much. I love these creative ideas that often come

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Speaker 1: through from the listeners. Okay, Russell, Russell, this is, by

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Speaker 1: the way, is slightly off Beam here but Russell wants

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Speaker 1: to make a point. The standard Australian passport, at three

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Speaker 1: hundred and forty six dollars, is one of the most

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Speaker 1: expensive in the world, the second most expensive in the world,

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Speaker 1: trailing only Stein. And he complains in various ways about that.

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Speaker 1: And here's an interesting thing in the budget last week.

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Speaker 1: Among the measure as many many measures, as I say,

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Speaker 1: there's always interesting things if you borrow through the budget,

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Speaker 1: they introduced a new facility for passports. Did not reduce

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Speaker 1: the passport price, I'm afraid, Russell, but they introduced don't

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Speaker 1: you know, an extra fee. You could pay an extra

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Speaker 1: hundred dollars and they'd give it to you faster. So

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Speaker 1: it's that old trick of raising your prices and then

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Speaker 1: saying and basically the service gets slower and not as impressive.

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Speaker 1: But what you do is you say, we can get

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Speaker 1: service back to where it was if you pay more.

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Speaker 1: And that's what the Australian Passport Office has just done

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Speaker 1: in the budget the other day.

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Speaker 2: So thanks for that observation, Russell.

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Speaker 1: Andrew, this is an interesting question, he says, this is

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Speaker 1: a very interesting question. Is there any other business in

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Speaker 1: Australia which has something comparable to lenders mortgage insurance. It's

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Speaker 1: easy to see this is nothing more than a cash

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Speaker 1: grab and a kickback, especially when the long default rate

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Speaker 1: is negible. Now, Andrew, you really are onto something there.

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Speaker 1: It's true. The default rates are absolutely microscopic, and so

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Speaker 1: lenders mortgage insurance, you would think, is a great game

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Speaker 1: for everybody involved. And you do wonder why it's so institutionalized.

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Speaker 1: What do you think, Terry like, I.

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Speaker 3: Think we could eliminate it and not much would change.

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Speaker 3: I think I agree with your question. Yeah, yeah, Look,

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Speaker 3: I think it's a rip off. I think it's unnecessary.

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Speaker 3: Look the hoops you have to jump through to get

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Speaker 3: a home loan or a loan to buy an investment

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Speaker 3: property in this country. I mean, I've just been through

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Speaker 3: the process again. I've got you great income, great track record,

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Speaker 3: great credit rating, et cetera, et cetera. Yet the process

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Speaker 3: to go through to satisfy the bank that you're an

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Speaker 3: acceptable risk to lend to. Yes, I don't think any

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Speaker 3: kind of insurance is necessary. I mean, I think the bank,

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Speaker 3: they're in the business of lending, there's an element of

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Speaker 3: risk for any lane that they put out there. But

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Speaker 3: to not only have this insurance policy system, but to

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Speaker 3: force the borrow to pay for it. It's just another

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Speaker 3: massive cost that is imposed on people who don't have

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Speaker 3: a twenty percent deposit. Now, for young people, it's increasingly

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Speaker 3: hard to get together a twenty percent deposit. You don't

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Speaker 3: need twenty percent to get a loan, but of course

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Speaker 3: if you have less than twenty percent, you've got to

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Speaker 3: pay this damn hideously expensive insurance policy which is often

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Speaker 3: capitalized into the loan, just adding to this length of

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Speaker 3: time they have to pay the damn thing off. I

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Speaker 3: just I'd like to see politics and step up and

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Speaker 3: say what is this for? It doesn't serve any purpose.

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Speaker 3: As Andrew points out, Morga's delinquency rates in Australia are

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Speaker 3: really small. They hover around one to one and a

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Speaker 3: half percent usually, and that's minor. There's not a great

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Speaker 3: deal of risk for the big lensers there. I think

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Speaker 3: they're having a lend of us no pun intended, and

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Speaker 3: they're making a lot of money by imposing this massive

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Speaker 3: extra cost on particularly young borrowers who just don't need

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Speaker 3: it and doesn't serve a purpose.

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Speaker 1: Get rid of it for something it's demonstrably low risk.

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Speaker 1: Okay from we know that from the figures. Hey, terrific.

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Speaker 1: Thank you very much for that, Andrew, And as always focused,

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Speaker 1: none of this is advice, it is simply information.

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Speaker 2: All Right, we'll take a.

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Speaker 1: Final break and we will be back with a question

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Speaker 1: from Angus about the Downsizer program, which is of course

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Speaker 1: so so popular. All right, back in the moment, Hello one,

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Speaker 1: Welcome back to the Australians Money Puzzle. James Kirkby with

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Speaker 1: Terry Ryder from hot Spotting. Well, we've had quite a

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Speaker 1: few questions regularly all the time on the Downsizer program.

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Speaker 2: I'm sure you're familiar with it, folks. If you're not.

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Speaker 1: Once you're over fifty five, you can ignore the Super

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Speaker 1: rules or Super caps and thresholds, et cetera. And if

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Speaker 1: you sell your family home as you've lived in for

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Speaker 1: ten years or more as your primary residence, you can

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Speaker 1: contribute to Super three hundred thousand per capita and you

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Speaker 1: can basically ignore the caps, which is very useful for

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Speaker 1: people who are on the older side for the simple

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Speaker 1: reason that you're If you're on the older I do

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Speaker 1: not allowed contribute to Super once you reach a certain age,

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Speaker 1: can't get that money in. Angus was asking basically, how

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Speaker 1: does it work and what is it? What are the

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Speaker 1: issues around it? I would just say to anyone interested

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Speaker 1: in the downside of the program that remarkably, one of

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Speaker 1: the things that's sort of unfinished about it is it

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Speaker 1: was all designed to get people out of those ambling around,

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Speaker 1: send the empty suburban houses into free uphousing stock. It

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Speaker 1: doesn't actually demand that you buy a smaller house. Bizarrely,

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Speaker 1: you can buy a bigger house if you wish. But

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Speaker 1: it's a way of getting the market freedom.

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Speaker 2: Terry.

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Speaker 1: I mean, one of the things I see here and

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Speaker 1: there is efforts you mentioned how the governments could do

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Speaker 1: a lot more. Some stack governments, some stick governments are

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Speaker 1: making an effort. You might say, the Victorian government are

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Speaker 1: doing the opposite and just keep coming up.

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Speaker 2: In new taxes.

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Speaker 1: West Australia has tried some interesting things. They literally rewarded

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Speaker 1: people who who turn their property from airbnb onto the

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Speaker 1: rental market and that sort of thing. Have you seen

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Speaker 1: anything that you think they could do more of in

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Speaker 1: the states.

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Speaker 3: Look, I think Western Australia currently is the model that

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Speaker 3: all states and territories should be followed out.

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Speaker 2: That's interesting, Okay, Yeah.

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Speaker 3: Look, basically governments particularly state governments, because a residential real

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Speaker 3: estate is pretty much their territory. They've got two ways

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Speaker 3: to try and engender the sort of behavior they want

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Speaker 3: to happen out there, particularly around supply. One is the

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Speaker 3: stick approach and one is the carrot approach. Victoria is

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Speaker 3: very much going with the stick approach. If you don't

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Speaker 3: do what we want, we're going to punish you with

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Speaker 3: new or high taxes. Yes, and it's quite brutal, and

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Speaker 3: the response of most people will be well, I'll just

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Speaker 3: stick up my rent to cover the extra costs, or

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Speaker 3: I'll sell up and get the hell out of Victoria.

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Speaker 3: I don't think it's really going to achieve the ends

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Speaker 3: they want. In Western Australia they have the character approach

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Speaker 3: and they've introduced a number of measures which are real

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Speaker 3: incentives for people who might have an Airbnb approach with

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Speaker 3: their property. They get a cash and center that they

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Speaker 3: put in the permanent rental market. There's measures to allow

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Speaker 3: people to build a granny flat at the back of

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Speaker 3: their property provide the property meet certain criteria without having

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Speaker 3: to get counsel approval that there are other measures that

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Speaker 3: introduced recently to encourage people to add to supply, particularly

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Speaker 3: in the rental market, and I think that's the intelligent approach,

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Speaker 3: that's the way to go, because people are more likely

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Speaker 3: to respond positively to an incentive than to a punishment.

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Speaker 3: Victoria's called some of their measures incentive, So not the punishments.

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Speaker 3: If you don't do what we want, even though what

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Speaker 3: you're doing is perfectly reasonable and legal, we will punish

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Speaker 3: you with punitive taxes. Not an incentive at all, But

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Speaker 3: what they're doing in Western Australia is and I think

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Speaker 3: other states should follow that measure. Of course, the advantage

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Speaker 3: they have over there if they have a strong budget

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Speaker 3: and Victoria has a very weak one but got a

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Speaker 3: real problem with their budget.

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Speaker 2: Really good point.

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Speaker 1: And for what it's worth, Folk, here today's Melbourne prices,

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Speaker 1: that is Victorian prices negative here today Perth.

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Speaker 2: Of eight percent.

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Speaker 1: Now there are other issues around that, but there you are.

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Speaker 2: There are the numbers just as we stand.

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Speaker 1: As Terry is saying, there was a disincentive basically baked

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Speaker 1: into Victoria and incentive is packed into Wa which has

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Speaker 1: probably accelerated existing trends from both those states. Very interesting, Terry,

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Speaker 1: thank you very much for being on the show.

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Speaker 2: Again.

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Speaker 1: Interesting, I think it's time to reassess the apartment market.

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Speaker 1: If there's one thing you picked up on the show

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Speaker 1: today on the arguments put forward and articulated very well

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Speaker 1: by Terry writer of hot Spotting.

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Speaker 3: Thanks Terry, You're welcome to James has greatly come on

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Speaker 3: and talk to you, particularly be at real estate, my

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Speaker 3: favorite subject, as often side of people. The hard part

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Speaker 3: is getting me to shut up.

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Speaker 2: Thank you very much.

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Speaker 1: Okay, folks, well we will all now wrap up and

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Speaker 1: remember keep those questions rolling. Great to see some questions

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Speaker 1: and all sorts of things.

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Speaker 2: Coming in this week.

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Speaker 1: Keep them coming. The money puzzle at the Australian dot

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Speaker 1: com don't hit you, Talk you soon,