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Speaker 1: Tim Lawless, Mate, what a time crazy.

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Speaker 2: I think things are moving very quickly and a lot

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Speaker 2: of water under the bridge since we spoke a month

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Speaker 2: or or two ago.

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Speaker 1: Well do we speak after the budget before the budget?

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Speaker 2: I think time is moving so quick, ma, I think

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Speaker 2: it's before the budget. For me, I think I think

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Speaker 2: it's just before the budget, before the budget.

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Speaker 1: And so obviously lots happened to the budget. But we

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Speaker 1: had another you know, three months of higher interest rates

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Speaker 1: since san or a couple months of higher interest rates

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Speaker 1: since sand looking at about another one perhaps in August.

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Speaker 1: But let me just go back to let's talk about

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Speaker 1: the budget. You know, we've had a lot of interesting

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Speaker 1: discussions of various people about the budget in terms of

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Speaker 1: data as head of research at Totality formerly known as

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Speaker 1: core Logic, one of Australias like you know, leading analytical

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Speaker 1: organizations when it comes to the property market and other things.

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Speaker 1: But let's just talk about the proborty market. Say, what

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Speaker 1: is the data telling you about the state of the market.

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Speaker 1: Let's say right now post budget? Yeah, so post budget

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Speaker 1: the market's clearly weakened. It was weakening pre budget, I

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Speaker 1: think is important for the context.

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Speaker 3: Yeah, as you.

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Speaker 2: Say, higher rates, affordability, serviceability challenges are really low levels

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Speaker 2: of consumer confidence, and then the budget. So I think

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Speaker 2: the budget really did to amplify the downturn. We're already

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Speaker 2: in the fact that the market was already slowing, but

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Speaker 2: since we've seen the budget handed down, there's a lot

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Speaker 2: of anecdotes. There's very little hard evidence of say, investors

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Speaker 2: pulling back and first home buyers on the sidelines, but

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Speaker 2: you can speak to anybody in the market and they're

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Speaker 2: seeing it. So I think, well, since since the budget

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Speaker 2: we've seen housing values the downturn nationally has gathered some momentum.

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Speaker 2: We've seen Sydney and Melbourne already moving backwards and values

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Speaker 2: Adelaides now falling over a rolling four weekly basis. Brisbane's

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Speaker 2: absolutely flat, Perth is seeing about half a percent growth

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Speaker 2: month on month. Go back a couple of months ago,

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Speaker 2: Perth was rising in value by nearly two percent month

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Speaker 2: on months, So everywhere is either slowing down sharply or

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Speaker 2: now going backwards in value.

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Speaker 1: That's maybe we could unpack it a little bit more

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Speaker 1: to teim if you don't mind them. So the point

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Speaker 1: you made was an interesting one, a good one that

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Speaker 1: pre the budget we'd had three rate rises, but you know,

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Speaker 1: we've got interest rates up quite high, relatively speaking, put

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Speaker 1: us up to where we were before the rate reductions,

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Speaker 1: which was at that point considered to be restrictive interest

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Speaker 1: rate environment. You mentioned that we were already starting to

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Speaker 1: see a little bit of an effect from those three

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Speaker 1: rate rise increases, and I think that's when you and

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Speaker 1: I last spoke and you were sort of predicting house

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Speaker 1: price changes. In other words, it's always difficult to talk

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Speaker 1: about Australia because it covers a lot of territory, but

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Speaker 1: you were sort of predicting pretty much a lightning and

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Speaker 1: we were saying that then. But what is it that

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Speaker 1: the budget This is only hypothetical at this stage, but

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Speaker 1: you probably don't have data to back it up. But

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Speaker 1: what do you think it is that the budget did

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Speaker 1: to make it go faster or have a great effect?

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Speaker 3: What is it?

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Speaker 2: Yeah, I think that's probably two really important outcomes from

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Speaker 2: the budget. The first wine is very direct towards investment.

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Speaker 2: Of course, so if you're an investor in Australian housing markets,

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Speaker 2: you've generally been attracted to the opportunities for capital gain.

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Speaker 2: So that was already because the tax on capital game.

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Speaker 3: No, No, just just.

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Speaker 1: You were going to make it gain on the body.

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Speaker 2: So the point I'm trying to make is yield didn't

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Speaker 2: really factor into your decision as an investor.

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Speaker 1: Was the rents?

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Speaker 2: Yeah, your the balance between your rental payments and or

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Speaker 2: your rental income, and you're holding costs getting mortgage, your payments,

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Speaker 2: maintenance whatever, strata, insurance, etc. All that sort of stuff.

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Speaker 2: So yield was always well for most investors aside thought

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Speaker 2: or a secondary or tertiary part of the decision making,

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Speaker 2: most investors will be buy for a couple gain. But

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Speaker 2: now that we've seen the negative gearing component being removed

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Speaker 2: for established homes in the budget, even though it's not

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Speaker 2: legislated yet, I think it's virtually the same as I

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Speaker 2: think most people accept this is going to get through Parliament,

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Speaker 2: it'll be the new rules. Even if it doesn't, it's

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Speaker 2: already disrupted confidence. So I think for most investors now,

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Speaker 2: if you can't negaly gear an established home, the math

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Speaker 2: just doesn't stack up. The holding costs become prohibitive, and

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Speaker 2: your serviceability assessments become very hard if you can't include

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Speaker 2: a negative gearing rebate. The second part of the budget.

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Speaker 2: I think that's been really impactful simply on sentiment on confidence.

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Speaker 2: Confidence was already low due to higher inflation due to

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Speaker 2: what's happening ran and then the budget was handed down,

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Speaker 2: and now there's just increased, almost palpable levels of uncertainty,

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Speaker 2: especially with all the backpedaling and the carve outs we're

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Speaker 2: starting to see in the federal budget as well. And

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Speaker 2: we know that confidence, for how is critical. When confidence

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Speaker 2: is low, you generally see less housing turnover. When confidence

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Speaker 2: is high, you have a much more, much better ability

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Speaker 2: to make high commitment financial decisions. So we're not seeing

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Speaker 2: that at the moment.

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Speaker 1: So if the budget and the capital gains tax changes

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Speaker 1: are geared towards investors in terms of both negative gearing,

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Speaker 1: the ability to do negative gearing, and or the attractive

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Speaker 1: tax rates you pay on again, the marketplace is assuming

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Speaker 1: that there's going to be gained. There's an assumption built

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Speaker 1: into buying property buy investors that they'll make a capital gain,

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Speaker 1: and that is based on the fact that we don't

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Speaker 1: have enough supply relative to the demand, which will actually

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Speaker 1: therefore by definition, push prices up. And if those two

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Speaker 1: things are directed at investors, what did it in terms

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Speaker 1: of impact. What would you normally see in the data

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Speaker 1: as maybe contribution in turnover by investors at any at

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Speaker 1: any one particular time. So if the market's one hundred,

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Speaker 1: is there forty investors for every sixty home unoccupied?

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Speaker 3: Is that it works?

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Speaker 2: Yeah, so it's pretty much leading into the budget. That's

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Speaker 2: exactly the number. It was about forty one percent of

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Speaker 2: demand was being driven by investment, which was elevated. Long term,

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Speaker 2: you'd expect investors to be about a third of demand,

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Speaker 2: about thirty three percent.

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Speaker 1: That's the normal long term run rate of investors buying

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Speaker 1: property at auctions and private treaty and whatever it is

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Speaker 1: cross the market. Yeah, across Australia, Yeah, exactly. Is a

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Speaker 1: bigger or bigger or smaller in other state states where

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Speaker 1: they were all pretty much the same.

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Speaker 2: I know, there's definitely some variability. So national, at least

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Speaker 2: the March quarter, that's the most recent numbers, forty one

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Speaker 2: percent of demand's coming from investment. If you've got somewhere

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Speaker 2: like Victoria that had one of the lowest profiles for investors,

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Speaker 2: but it was still thirty seven percent. That's still quite

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Speaker 2: but nowhere near as high as New South Wales, which

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Speaker 2: was about forty four percent of demand being driven by investment.

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Speaker 2: So if you go back to periods where investors have

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Speaker 2: pulled back sharply in the market, and the most recent

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Speaker 2: evidence of that, the most recent example would be back

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Speaker 2: in twenty eighteen twenty nineteen, when we had the Royal

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Speaker 2: Commission and APRA had put in a couple of macrovidential

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Speaker 2: policies that really restricted investment lending. We saw investors pull

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Speaker 2: back to about twenty four percent of demand.

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Speaker 1: My guess, APRA being the regulator, told the banks, we

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Speaker 1: don't want to lend as much money to investors. Yeah.

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Speaker 2: Well, they had firm limits on interest on any lending yep.

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Speaker 2: And they had firm limits on investment credit growth ten

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Speaker 2: percent and a thirty percent limit on interest on you.

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Speaker 1: So the regulator was turning the banks, we don't want

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Speaker 1: you to grow your percentage of borrowers who are investors.

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Speaker 1: We don't want you to grow above ten percent pronum.

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Speaker 2: That's right, right, Yeah, So we saw investors drop back

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Speaker 2: to about from about forty six center demand, So that

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Speaker 2: was a record high, back to our twenty four percent.

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Speaker 2: My guess is post budget, we're going to be seeing

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Speaker 2: something similar, maybe even more dramatic. I just think for

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Speaker 2: investors investing in Australian real estate, yields are very low.

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Speaker 2: So if you're an investor, unless you have a really

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Speaker 2: large deposit, chances are you're going to be negatively geared.

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Speaker 2: You're going to you're going to be seeing a negative

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Speaker 2: cash flow in your property. That's going to make holding

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Speaker 2: that that property harder. Without negative gearing.

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Speaker 1: Which they used to mind because they could get they

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Speaker 1: would get some money back.

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Speaker 2: That's right exactly, So that crutch, if you will, is

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Speaker 2: no longer going to be available for established homes, and

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Speaker 2: you know about eighty percent of investors are buying established homes.

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Speaker 2: I don't think there's going to be a huge diversion

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Speaker 2: of investment appetite to buy new simply because new housing

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Speaker 2: has a price premium, so it's more expensive. The resale

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Speaker 2: market could be quite risky because you're going to be

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Speaker 2: selling that investment property to another investor that doesn't get

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Speaker 2: the same tax treatment as you did buying the new home.

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Speaker 2: Plus there's also just probably some risk around supply. New

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Speaker 2: house areas like inner city apartments and out of greenfield

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Speaker 2: detached housing doesn't have the same scarcity of supply that

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Speaker 2: investors tend to love. Really, yeah, there's more of it. Yeah,

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Speaker 2: I mean it could be quite bulky levels of supply,

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Speaker 2: especially inner city apartments that you know, one new development

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Speaker 2: could add another three hundred apartments, yeah, quite quickly. So

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Speaker 2: most investors tend to target the established market, which I

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Speaker 2: think is now going to be prohibitively costly and difficult

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Speaker 2: to hold because of the non benefit from negative gearing.

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Speaker 1: So you know, you guys examine data within an inch

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Speaker 1: of its life. Maybe I asked, could Tim Lawless for

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Speaker 1: us get inside the head of a residential property investor

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Speaker 1: from moment?

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Speaker 3: Sure?

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Speaker 1: So, And these are the people who are dropping off

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Speaker 1: thow flies at the moment. Data indicates, you know, from

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Speaker 1: forty one percent, don't we don't have another a new

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Speaker 1: number doing it well?

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Speaker 3: August fourteenth market calendar.

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Speaker 2: That's why we actually the Dune quarter lending indicators that

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Speaker 2: I can be the best.

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Speaker 1: Okay, So I was forty one percent, and I can

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Speaker 1: tell you as a lender, we were around that those numbers.

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Speaker 1: Forty percent. Around forty percent of our lending was to

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Speaker 1: investors and the balances to unoccupiers. I can tell you

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Speaker 1: that number of investors has dropped off dramatically in terms

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Speaker 1: of applications. Obviously haven't said all yet, but just that apps.

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Speaker 1: But put just if I could get asked Tim Laws

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Speaker 1: just to put his self into the mind of an

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Speaker 1: investor for property, investor says, I would normally be able

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Speaker 1: to buy. I would normally go and buy a million

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Speaker 1: dollar apartment forg mistake it just pick an easy number.

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Speaker 1: I've got twenty percent deposit, I've got two inn a

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Speaker 1: grand sitting in the bank. Normally I would go out

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Speaker 1: and buy one of these properties. What is investor weighing

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Speaker 1: up now? What is he saying to himself or herself

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Speaker 1: about whether they should go to the property market or not.

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Speaker 1: What are the pros and cons?

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Speaker 2: Well, again, I think the first thing that's going to

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Speaker 2: be they're going to be thinking about is what's the

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Speaker 2: opportunity for capital gain on this million dollar apartment or

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Speaker 2: two million dollars apartment, which I think is going to.

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Speaker 3: Be uncertain right.

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Speaker 1: I think we have uncertainty.

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Speaker 2: I think we have uncertainty around the trajectory of capital gains,

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Speaker 2: especially in the apartment sector, where you know, there's a

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Speaker 2: lot of focus on getting more supply into that sector

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Speaker 2: of the market. As hard as it is and as

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Speaker 2: difficult it is to get a feasibility to stack up,

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Speaker 2: eventually there will be a supply response, probably quite focused

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Speaker 2: on density to some extent, just on that.

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Speaker 1: Prior to maybe the capital gains tax, there was more certainty.

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Speaker 1: Are you saying that? Are they less certain today than

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Speaker 1: they were before the couple of gains tax in the

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Speaker 1: budget be announced? Yeah?

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Speaker 2: I think I think there's there's definitely a greater degree

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Speaker 2: of uncertainty in where capple gains are going to be

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Speaker 2: going forward, partly because of the uncertainty around what level

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Speaker 2: of aggregate demand are investors going to be adding. You know,

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Speaker 2: if we're going from forty percent of demand down to

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Speaker 2: say twenty percent or less, that's a big drop. That's

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Speaker 2: a big drop of aggregate demand.

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Speaker 1: There's a twenty percent drop in the title D demand

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Speaker 1: and fIF percent drop in the invested demand. Yeah.

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Speaker 2: Absolutely, And then there's uncertainty around what the overall supply

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Speaker 2: outcomes are going to be over the medium to long term.

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Speaker 2: I think short term absolutely, supply is going to remain

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Speaker 2: very tight. But ultimately Australia will see a supply response, yeah,

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Speaker 2: probably later rather than sooner, I would say the second

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Speaker 2: thing is going to be what's a yield on a

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Speaker 2: two million dollar apartment. It's probably going to be something

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Speaker 2: like percent, yeah, maybe three if you're likely three and

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Speaker 2: a half percent gross.

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Speaker 1: In other words, the beginning like maybe twelve hundred bucks

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Speaker 1: a week.

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Speaker 3: Yeah yeah.

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Speaker 2: So add to that, you've got your your mortgage or

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Speaker 2: payments probably around the mid sixes from mortgage rates. You've

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Speaker 2: got strata fees, you've got insurance costs, all of those

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Speaker 2: are going up quite swiftly. You've got tendancy reform, which

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Speaker 2: means if you're looking for a tenant, you've got to

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Speaker 2: probably ensure there's minimum standards, which can be expensive. And

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Speaker 2: you've got higher maintenance costs as well, because construction costs

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Speaker 2: have gone up, which implies it's costly or to maintained

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Speaker 2: strata strata fees. No, this is actually wear and tear.

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Speaker 2: If you've got to fix the plumbing, fix the sink, whatever,

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Speaker 2: it's a lot more expensive to do that now than

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Speaker 2: it was five years ago, simply because the cost of

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Speaker 2: trades and materials have gone up so substantially. So if

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Speaker 2: you compare that to what might be compared to say,

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Speaker 2: a much lower maintenance style of investment like buying into

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Speaker 2: a shareport for you or an ETF no maintenance costs,

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Speaker 2: no holding costs really whatsoever, apart from if you're leveraged,

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Speaker 2: very low transactional fees generally fairly similar long term capital

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Speaker 2: gain outcomes.

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Speaker 1: Yeah, they have been. I've seen the sharp ratio has

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Speaker 1: done for these things, and there's not much difference. The

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Speaker 1: sharp ratio is pretty equal relative to the risk.

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Speaker 2: That's right for an asset that gives you a fairly

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Speaker 2: similar outcome but much lower holding costs, much more liquid,

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Speaker 2: so you can buy it and out with very low

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Speaker 2: transactional costs as well. So I think a lot of

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Speaker 2: investors will.

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Speaker 3: Be doing that. Maths.

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Speaker 2: Is property going to give me enough return for the

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Speaker 2: risk I'm taking.

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Speaker 1: In that asset, especially during the period before I sell it,

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Speaker 1: because during that period, I am paying all this costs,

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Speaker 1: I am paying the interest, I am not getting much

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Speaker 1: return in terms of my rents, So I'm actually losing money.

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Speaker 1: Like while I'm holding this asset, I'm losing but this

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Speaker 1: is one of those few assets when I lose I'm

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Speaker 1: not allowed to actually claim a tax production notwithstanding I'm

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Speaker 1: losing money. You can, by the way, what most people

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Speaker 1: forgotten is you can accumulate that loss so that when

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Speaker 1: you do eventually sell it, if you make it be profit,

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Speaker 1: you can offset that loss. Then that's down the track.

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Speaker 1: So this is going through the mind of a residential

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Speaker 1: investment property buyer. I don't know if you have any

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Speaker 1: data on this, but is he or she thinking, Yeah,

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Speaker 1: for the time being, i might just put the money

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Speaker 1: in the bank, or maybe I'll buy some CBA shares

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Speaker 1: and I'll get this return on it. It's pretty simple.

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Speaker 1: I don't have to do anything, and I'll get again

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Speaker 1: on the CBA shares potentially whoever, whichever bank, and I'll

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Speaker 1: get a dividend and they're paying pretty good Frank dividends

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Speaker 1: at the moment.

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Speaker 3: Yeah.

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Speaker 2: So there isn't any data on this that I'm aware

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Speaker 2: of yet, Mark, So watch this space, though. I think

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Speaker 2: once we start to see more of the lending indicators

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Speaker 2: flowing through, Unfortunately, these data sets are pretty lagged, so

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Speaker 2: you're seeing it on your own books. I'm hearing other

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Speaker 2: banks talking about twenty twenty five percent drop in investment

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Speaker 2: inquiries as well, so I think it's already happening. And

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Speaker 2: once we start to see the data points that'll be

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Speaker 2: well down the track and the trend will have gathered momentum.

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Speaker 1: Do you think that people are as sophisticated in that

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Speaker 1: process as you've just gone through or is it more

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Speaker 1: Are they more just listening to people like you talk

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Speaker 1: and just saying, you know, like this is all a

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Speaker 1: bit high at the moment, just going to take a

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Speaker 1: step back and watch what happens.

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Speaker 2: Yeah, I think I'll give them them credit where it's due.

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Speaker 2: I mean, if you're spending one hundreds of thousand dollars,

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Speaker 2: if not millions of dollars to buy an asset being property,

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Speaker 2: I think you would be doing your due diligence. Property

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Speaker 2: is not a sophisticated investment. I would say, it's not

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Speaker 2: like buying into a commercial asset or an industrial asset,

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Speaker 2: where you have much more complex least terms and so forth,

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Speaker 2: and make goods property is. I don't think you need

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Speaker 2: to be a rocket scientist investor to be investing in property,

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Speaker 2: But if you are looking to invest in property, there

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Speaker 2: are a lot of safeguards around that. And I think

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Speaker 2: even if you weren't a sophisticated investor, he didn't go

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Speaker 2: through the mathematics. The bank's going to be doing that

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Speaker 2: for you.

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Speaker 3: When you go to.

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Speaker 1: Apply for a loan, they'll tell you what you can

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Speaker 1: afford in your can'ty exactly yes. So what seems to

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Speaker 1: be not being discussed is around the couple of gains

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Speaker 1: potential of buying into a problem into the problem market.

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Speaker 1: Is the problems existed here in austraighta for a long

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Speaker 1: long time. I can definitely get at least twenty years

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Speaker 1: to twenty five years to the two thousand and one

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Speaker 1: election of John Howard when he talked about affordability when

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Speaker 1: he launched his election campaign, it was affordability was a

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Speaker 1: problem then, as a problem now, and it's never been solved.

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Speaker 1: In fact, it's been exacerbated over the last few years.

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Speaker 1: The supply demand issue, I don't mean investor demand. I'm

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Speaker 1: talking about just population growth. The number of properties are

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Speaker 1: available for people to live in relative to the number

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Speaker 1: of properties that are available that are demanded to.

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Speaker 3: Be lived in.

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Speaker 1: That generally speaking, there's a mismatch. In other words, we

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Speaker 1: have a supply demand problem. People still got to live somewhere.

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Speaker 1: It doesn't matter if I buy propertly as an investor,

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Speaker 1: I rendered to you because you've got to live somewhere

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Speaker 1: you're either going to buy or rent it. That hasn't

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Speaker 1: been solved. So what is the prognosis from someone like

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Speaker 1: totality for the future, because surely house prices must dwelling

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Speaker 1: price must still go up because the demand by population

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Speaker 1: growth is still there.

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Speaker 2: Yeah, absolutely, this helps to keep a floor under housing prices.

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Speaker 2: If we didn't have that disconnect between supply and demand,

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Speaker 2: supply being overwhelmed by demand, we probably would have a

355
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Speaker 2: much worse case scenario when it comes to the housing

356
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Speaker 2: correction that we're starting to move through now. So I

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Speaker 2: think most most economists thing will probably see a downturn

358
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Speaker 2: at least a macro level around five to ten percent

359
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Speaker 2: across Australian housing house prices.

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Speaker 3: Yeah, exactly. If we didn't have.

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Speaker 2: An undersupply of homes in Australia almost guarantee they would

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Speaker 2: be a much larger number. So I think that that

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Speaker 2: under supply absolutely helps to keep a floor under housing

364
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Speaker 2: prices to some extent. But the demand side fundamentals really

365
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Speaker 2: need to be considered here. Absolutely, we have very low

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Speaker 2: levels of supply when you look at immediate supply, so

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Speaker 2: how many homes actually being advertised or listed for sale

368
00:18:38,600 --> 00:18:41,040
Speaker 2: that's now getting to above average levels. So for people

369
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Speaker 2: looking to buy a home at the moment, not buy

370
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Speaker 2: a new home, but buy an established home in a marketplace,

371
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Speaker 2: there's more listings than what we've seen over the past

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Speaker 2: five years on average, in Sydney, in Melbourne, now in Brisbane,

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Speaker 2: which is quite different for that market. Perth used to

374
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Speaker 2: have listing numbers about fifty percent below average. Now it's

375
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Speaker 2: about fifteen percent below average and rising quickly. So there's

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Speaker 2: more stock to choose.

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Speaker 1: From, so white people selling though. That's interesting because most

378
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Speaker 1: of these would be grandfathered under the couple of gas tax.

379
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Speaker 3: Is that right? Absolutely?

380
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Speaker 2: This isn't about investors dumping stock on the market or

381
00:19:13,560 --> 00:19:17,399
Speaker 2: homeowners suddenly becoming vendors. In fact, new listings coming to

382
00:19:17,480 --> 00:19:20,840
Speaker 2: the market are actually quite low, they're below outage. What

383
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Speaker 2: I'm talking about here is your total stock levels, not

384
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Speaker 2: the flow of new listings coming to market. And because

385
00:19:26,000 --> 00:19:28,919
Speaker 2: homes are taking longer to sell, the things that haven't sold, exactly,

386
00:19:28,960 --> 00:19:32,440
Speaker 2: there's an accumulation of stock in the market that's building.

387
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Speaker 1: Up over the last not desperate by sellers, but just

388
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Speaker 1: wanted to sell for some reason.

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Speaker 3: That's exactly right.

390
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Speaker 1: So it's accumulating.

391
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Speaker 2: Auction clearance rates are sort of in the low forty

392
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Speaker 2: percent range now, time to sell is rising, Discounting rates are,

393
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Speaker 2: negotiation levels arising as well. It's now a buyer's market

394
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Speaker 2: in quite a few markets now. So definitely we're seeing

395
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Speaker 2: supply from an immediate perspective is now becoming higher demand

396
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Speaker 2: when you think about people's actually ability to buy so

397
00:20:00,880 --> 00:20:04,800
Speaker 2: demonstrated demand. We're now seeing transactional activities a home sales,

398
00:20:04,800 --> 00:20:08,120
Speaker 2: which I think is demonstrated demand. Well, it's how many

399
00:20:08,160 --> 00:20:11,040
Speaker 2: people actually, it's turnover, it's how many people are how

400
00:20:11,080 --> 00:20:13,879
Speaker 2: many people are buying a home. So the number of

401
00:20:13,920 --> 00:20:16,680
Speaker 2: home sales month to month, that's tracking about ten percent

402
00:20:16,760 --> 00:20:19,760
Speaker 2: lower than a year ago now. So we've gone out

403
00:20:19,800 --> 00:20:24,120
Speaker 2: of a market where demand was consistently rising to about

404
00:20:24,160 --> 00:20:27,400
Speaker 2: October November last year, it peaked and it started to fall.

405
00:20:27,920 --> 00:20:31,080
Speaker 2: And again that probably comes down to affordability, inflation rising,

406
00:20:31,200 --> 00:20:33,040
Speaker 2: the RBA becoming a bit more hawkish at the end

407
00:20:33,040 --> 00:20:36,879
Speaker 2: of last year, and then more significantly breaks rising and

408
00:20:36,960 --> 00:20:41,280
Speaker 2: confidence falling. So we do have clear evidence that demand

409
00:20:41,600 --> 00:20:45,639
Speaker 2: is reducing demonstrated demand and supply is rising in terms

410
00:20:45,680 --> 00:20:49,320
Speaker 2: of immediate supply that that whole conversation around we're not

411
00:20:49,440 --> 00:20:51,920
Speaker 2: building enough homes is still really important, but that has

412
00:20:52,000 --> 00:20:55,480
Speaker 2: much more of a medium to long term influence on

413
00:20:55,600 --> 00:20:59,359
Speaker 2: the market rather than the immediacy of demonstrated demand and

414
00:20:59,480 --> 00:20:59,879
Speaker 2: listing them.

415
00:21:00,320 --> 00:21:04,800
Speaker 1: So would you say, then, irrespective what's happening in late today,

416
00:21:05,840 --> 00:21:09,320
Speaker 1: that the property market residential property market is still a

417
00:21:09,400 --> 00:21:13,720
Speaker 1: good investment, then, I mean, put negative gearing aside. But

418
00:21:13,840 --> 00:21:16,520
Speaker 1: it's you know, like it, Let's assume you only borrow

419
00:21:16,600 --> 00:21:18,680
Speaker 1: forty percent fray. We say, well, whatever, you can pretty

420
00:21:18,760 --> 00:21:21,800
Speaker 1: much break even on it on what your cost of

421
00:21:21,840 --> 00:21:25,000
Speaker 1: holding is relative to the rents. Do you think it's

422
00:21:25,000 --> 00:21:26,760
Speaker 1: a good capital gain asset class?

423
00:21:27,840 --> 00:21:31,360
Speaker 2: Personally, I think there's probably better opportunities for capital gain

424
00:21:31,680 --> 00:21:35,600
Speaker 2: outside of property once we start to see yields rising

425
00:21:35,800 --> 00:21:39,879
Speaker 2: and getting to a level like rents rising well, rents rising,

426
00:21:40,040 --> 00:21:43,159
Speaker 2: and of course values are coming down, which means yields

427
00:21:43,200 --> 00:21:46,800
Speaker 2: will will improve. Once that yield dynamic improves enough that

428
00:21:47,200 --> 00:21:51,080
Speaker 2: opportunities for cash flow become more common, at least with

429
00:21:51,160 --> 00:21:54,000
Speaker 2: a with say a twenty percent deposit, I think that's

430
00:21:54,040 --> 00:21:57,320
Speaker 2: where we'll start to see the investment fundamentals starting to

431
00:21:57,359 --> 00:21:59,879
Speaker 2: stack up in property but at the moment, if you

432
00:22:00,200 --> 00:22:02,320
Speaker 2: if you can't, if you can't buy to the housing

433
00:22:02,400 --> 00:22:07,080
Speaker 2: market and offset that cash flow loss through a negative

434
00:22:07,080 --> 00:22:12,080
Speaker 2: gearing strategy, it doesn't make as much sense anymore, especially

435
00:22:12,320 --> 00:22:14,320
Speaker 2: if over the medium term we're not going to be

436
00:22:14,400 --> 00:22:16,560
Speaker 2: seeing capital gains in the marketplace.

437
00:22:16,960 --> 00:22:19,080
Speaker 1: So in other words, I might put it into numbers

438
00:22:19,440 --> 00:22:21,560
Speaker 1: if I could buy a property in six months ago

439
00:22:21,640 --> 00:22:23,919
Speaker 1: from million bucks, and let's say the rent was one

440
00:22:23,920 --> 00:22:29,280
Speaker 1: thousand bucks a week, five percent return, but today, because

441
00:22:29,359 --> 00:22:31,560
Speaker 1: of the there's so much for me to choose from,

442
00:22:31,560 --> 00:22:33,359
Speaker 1: I can go and buy that same property as something

443
00:22:33,440 --> 00:22:36,800
Speaker 1: similar for nine hundred thousand dollars for Reagan mistake, But

444
00:22:37,119 --> 00:22:39,119
Speaker 1: your assumption is that the rent will still be a

445
00:22:39,160 --> 00:22:39,720
Speaker 1: thousand bucks.

446
00:22:40,600 --> 00:22:42,760
Speaker 2: I think rent will rise. I mean, vacancy rates are

447
00:22:42,760 --> 00:22:46,600
Speaker 2: still extraordinarily tied, so rentals be either what it was

448
00:22:46,680 --> 00:22:49,200
Speaker 2: six months ago or higher or higher. So my therefore

449
00:22:49,240 --> 00:22:51,840
Speaker 2: why yield is better absolutely yeah, yeah, which gets me

450
00:22:52,040 --> 00:22:55,120
Speaker 2: closer to breaking even. Yeah, but there's still a huge

451
00:22:55,200 --> 00:22:58,920
Speaker 2: gap between finding a positive cash flow property and where

452
00:22:58,960 --> 00:23:01,720
Speaker 2: yields are at the moment now with interest rates around

453
00:23:01,720 --> 00:23:03,879
Speaker 2: the mid sixes, for an investor, you'd probably need to

454
00:23:03,920 --> 00:23:06,399
Speaker 2: see a gross yield up around seven or eight percent.

455
00:23:07,080 --> 00:23:08,919
Speaker 2: That have to be positive cash flow when you account

456
00:23:08,960 --> 00:23:11,800
Speaker 2: for your mortgagor payments and all your other holding costs.

457
00:23:12,280 --> 00:23:14,240
Speaker 2: The other areas that offer that sort of return in

458
00:23:14,320 --> 00:23:18,360
Speaker 2: Australia tend to be extraordinarily higher risk mining towns for example,

459
00:23:19,320 --> 00:23:22,040
Speaker 2: or some of the inner city apartment markets around Melbourne.

460
00:23:22,280 --> 00:23:25,359
Speaker 2: Carlton is a good example of a very high yielding market,

461
00:23:25,520 --> 00:23:29,280
Speaker 2: mostly because unit values and that area are still lower

462
00:23:29,320 --> 00:23:30,320
Speaker 2: than they were ten years ago.

463
00:23:31,040 --> 00:23:35,760
Speaker 1: Eventually, though, if this continues on, the yields will increase

464
00:23:36,000 --> 00:23:40,639
Speaker 1: as prices reduce, but the rent stay high and or

465
00:23:41,000 --> 00:23:45,359
Speaker 1: go higher. Eventually, this will become quite an attractive asset

466
00:23:45,400 --> 00:23:49,120
Speaker 1: class because invest are going to say, well, I buy

467
00:23:49,680 --> 00:23:53,960
Speaker 1: you a dwelling in wherever, and my yield might be

468
00:23:54,320 --> 00:23:57,200
Speaker 1: six or seven percent. That's right, So which means the

469
00:23:57,280 --> 00:23:59,879
Speaker 1: investors will come back to the market you would expect.

470
00:24:00,080 --> 00:24:04,119
Speaker 2: Yeah, I think that's that's sound logic. The question is

471
00:24:04,160 --> 00:24:04,600
Speaker 2: how long is that?

472
00:24:04,800 --> 00:24:06,360
Speaker 1: I was going to say, I think that's a really

473
00:24:06,440 --> 00:24:08,520
Speaker 1: gradual phenomenon and it's going to take some time. And

474
00:24:08,640 --> 00:24:13,440
Speaker 1: then also equally, the assumption there is that I'm working

475
00:24:13,520 --> 00:24:16,480
Speaker 1: off for a zero increy, so of course of holding

476
00:24:16,560 --> 00:24:18,080
Speaker 1: so but if the interest rates go up, therefore you

477
00:24:18,240 --> 00:24:19,960
Speaker 1: speak you years ago, you've got to go be more

478
00:24:20,720 --> 00:24:23,920
Speaker 1: because I've never got to get a higher rent to

479
00:24:24,040 --> 00:24:26,760
Speaker 1: cover a higher cost, and we might be looking at

480
00:24:26,800 --> 00:24:29,320
Speaker 1: another interest rate rise coming up. Do you think the

481
00:24:29,440 --> 00:24:31,440
Speaker 1: government got it wrong? I mean in terms of timing

482
00:24:31,480 --> 00:24:33,639
Speaker 1: for example. I don't want to talk about policy so

483
00:24:33,720 --> 00:24:35,840
Speaker 1: much with you, but like, do you think the timing

484
00:24:35,880 --> 00:24:39,960
Speaker 1: of the introduction's policy was wrong relative to the property market,

485
00:24:40,040 --> 00:24:42,760
Speaker 1: not relative to the government a relative to the property market.

486
00:24:42,840 --> 00:24:45,280
Speaker 2: Yeah, absolutely, And I mean if you look at something

487
00:24:45,359 --> 00:24:49,280
Speaker 2: really basic, like the government incentivized first home buyers to

488
00:24:49,320 --> 00:24:51,400
Speaker 2: come to the market in October.

489
00:24:51,080 --> 00:24:53,879
Speaker 1: With the five percent double center posit car and terrible

490
00:24:53,920 --> 00:24:54,640
Speaker 1: to it's just so bad.

491
00:24:54,760 --> 00:24:56,480
Speaker 2: Brought a lot of first home buyers in with a

492
00:24:56,640 --> 00:25:02,080
Speaker 2: very small buffer, and then they smashed the market through

493
00:25:02,240 --> 00:25:05,680
Speaker 2: the budget and are almost orchestrating prices to come down

494
00:25:05,760 --> 00:25:08,200
Speaker 2: more so than they would have otherwise. So for a

495
00:25:08,240 --> 00:25:11,440
Speaker 2: lot of those fresh home buyers that came in, absolutely,

496
00:25:11,520 --> 00:25:13,480
Speaker 2: I think a lot of them will be in either

497
00:25:14,240 --> 00:25:17,800
Speaker 2: neutral equity, if not negative equity right now, yeah, right now,

498
00:25:17,920 --> 00:25:20,800
Speaker 2: which to be honest, I don't think that's that big

499
00:25:20,880 --> 00:25:23,240
Speaker 2: a deal unless we had a blowout in labor markets

500
00:25:23,359 --> 00:25:24,280
Speaker 2: or interest rates went up.

501
00:25:24,840 --> 00:25:26,760
Speaker 1: What do you mean by that is if people started

502
00:25:26,800 --> 00:25:27,840
Speaker 1: losing their job, that's right.

503
00:25:28,080 --> 00:25:31,000
Speaker 2: So I think for most of it that's predicted there. Well, yeah,

504
00:25:31,160 --> 00:25:34,120
Speaker 2: I think leader markets are loosening. But if we saw

505
00:25:34,200 --> 00:25:36,760
Speaker 2: unemployment getting up above five percent, I think everybody would

506
00:25:36,760 --> 00:25:37,479
Speaker 2: be quite surprised.

507
00:25:37,520 --> 00:25:43,600
Speaker 1: But I saw the deloitit access is. Recent predictions for

508
00:25:43,760 --> 00:25:47,920
Speaker 1: the labor market is that unemployment could go above five percent.

509
00:25:47,960 --> 00:25:50,080
Speaker 1: I think it's five point one percent, which means if

510
00:25:50,080 --> 00:25:53,240
Speaker 1: any of those people between four point five and five percent,

511
00:25:53,320 --> 00:25:55,119
Speaker 1: which is four point six whatever it is at the

512
00:25:55,160 --> 00:25:58,000
Speaker 1: moment where I think it's four point six. If you

513
00:25:58,119 --> 00:25:59,800
Speaker 1: fit in that category where you're one of the people

514
00:26:00,119 --> 00:26:02,160
Speaker 1: your job and you've got that government guarantee for five

515
00:26:02,160 --> 00:26:05,359
Speaker 1: percent to purchase your property, you only put five percent in,

516
00:26:05,800 --> 00:26:08,600
Speaker 1: and if the property goes down by ten percent and

517
00:26:08,760 --> 00:26:11,000
Speaker 1: you lose your job, you'll give me one of the

518
00:26:11,040 --> 00:26:15,560
Speaker 1: ones who's gonna lose completely lose your five percent deposit

519
00:26:15,720 --> 00:26:17,600
Speaker 1: and guess what the government has to stump up to

520
00:26:17,680 --> 00:26:21,360
Speaker 1: the bank and he lost. Because the government's basically guaranteeing

521
00:26:21,400 --> 00:26:24,760
Speaker 1: the banks that if Tim sells his property and he

522
00:26:24,840 --> 00:26:27,080
Speaker 1: sells a for lesson he bought it for, well lesson,

523
00:26:27,600 --> 00:26:33,240
Speaker 1: you lent him for nine We the government, US taxpayers

524
00:26:33,600 --> 00:26:34,440
Speaker 1: will pay that bill.

525
00:26:35,119 --> 00:26:36,840
Speaker 3: Is that right? Well, that's right.

526
00:26:37,200 --> 00:26:41,240
Speaker 2: A five point one percent unemployment rate is still relatively low. Yeah,

527
00:26:41,400 --> 00:26:43,680
Speaker 2: well in a historical sense, yeah, I think that's the

528
00:26:43,760 --> 00:26:45,920
Speaker 2: ten year average for unemployments about five and a half percent.

529
00:26:46,000 --> 00:26:48,200
Speaker 1: But in their statistical sense, you're right. But if you're

530
00:26:48,200 --> 00:26:50,040
Speaker 1: one of the people who are in that five percent,

531
00:26:50,119 --> 00:26:52,600
Speaker 1: that doesn't make matter to you. You just think, Wow,

532
00:26:53,000 --> 00:26:53,880
Speaker 1: I've lost some money.

533
00:26:54,440 --> 00:26:56,159
Speaker 3: Absolutely, I mean that's where the risk is.

534
00:26:56,520 --> 00:26:59,120
Speaker 2: And this is something that the IBA is highlighted repeatedly,

535
00:26:59,720 --> 00:27:02,480
Speaker 2: is that if you're on a high VR loan, you're

536
00:27:02,640 --> 00:27:07,359
Speaker 2: much more vulnerable to changes in your circumstances or changes

537
00:27:07,400 --> 00:27:10,480
Speaker 2: in the economic environment. And absolutely, for a first home

538
00:27:10,560 --> 00:27:13,879
Speaker 2: buyer with a small deposit, they're in that category. So

539
00:27:14,160 --> 00:27:16,200
Speaker 2: fingers crossed they don't lose their jobs or there's no

540
00:27:16,440 --> 00:27:21,359
Speaker 2: material fallout in the economy. Negative equity only becomes a

541
00:27:21,400 --> 00:27:23,159
Speaker 2: problem if you need to sell the problem. I think

542
00:27:23,240 --> 00:27:25,880
Speaker 2: most first home buyers will navigate the storm and they'll

543
00:27:26,160 --> 00:27:29,320
Speaker 2: pull back hard on discretionary spending and the day with

544
00:27:29,359 --> 00:27:31,880
Speaker 2: their mortgage or payments. That's generally what happens unless there's

545
00:27:31,920 --> 00:27:32,680
Speaker 2: some sort of a shock.

546
00:27:33,359 --> 00:27:33,640
Speaker 3: I mean.

547
00:27:33,720 --> 00:27:36,919
Speaker 1: One of the things that we noticed at our business

548
00:27:37,040 --> 00:27:40,840
Speaker 1: is that for those borrowers who are taking advantage of

549
00:27:40,880 --> 00:27:44,399
Speaker 1: the governor's five percent the guarantee to the banks and

550
00:27:44,480 --> 00:27:46,320
Speaker 1: where you only had to put down five percent deposit,

551
00:27:46,720 --> 00:27:48,719
Speaker 1: which is a great thing if you if you've got

552
00:27:48,800 --> 00:27:51,520
Speaker 1: no capital and you know you can't you can't buy,

553
00:27:51,920 --> 00:27:53,520
Speaker 1: you'll excod for the market because you don't have the

554
00:27:53,560 --> 00:27:58,359
Speaker 1: capital to buy the deposit to buy. We notice that

555
00:27:59,080 --> 00:28:01,640
Speaker 1: that part of the market between seven fifty and one

556
00:28:01,680 --> 00:28:06,800
Speaker 1: point five people were paying overs. It actually made probably

557
00:28:06,840 --> 00:28:11,280
Speaker 1: prices in that category grow at a faster rate than

558
00:28:11,359 --> 00:28:13,359
Speaker 1: any other category in the marketplace.

559
00:28:13,760 --> 00:28:17,400
Speaker 2: Yeah, we've done the same research and since October first,

560
00:28:17,720 --> 00:28:20,080
Speaker 2: even the month prior to that, which I think highlights

561
00:28:20,119 --> 00:28:23,600
Speaker 2: some of the speculative activity, because the expansion was announced

562
00:28:23,720 --> 00:28:26,320
Speaker 2: at the end of August, and then we started to

563
00:28:26,359 --> 00:28:30,400
Speaker 2: see some speculative activity pre October first, and absolutely prices

564
00:28:30,440 --> 00:28:32,960
Speaker 2: in that category below the price caps have been increasing

565
00:28:33,000 --> 00:28:35,760
Speaker 2: a lot faster than prices above the price caps.

566
00:28:35,880 --> 00:28:42,920
Speaker 1: Yeah. In other words, the government's initiative, rightly or wrongly actually,

567
00:28:43,440 --> 00:28:46,560
Speaker 1: which is always a season, always happened. First home uners

568
00:28:46,880 --> 00:28:49,320
Speaker 1: grants did the same thing. I mean during the Howard

569
00:28:49,360 --> 00:28:52,200
Speaker 1: government he doubled the first time monogram back in two

570
00:28:52,200 --> 00:28:52,600
Speaker 1: thousand and one.

571
00:28:52,720 --> 00:28:53,160
Speaker 3: Hindred was.

572
00:28:54,720 --> 00:28:58,120
Speaker 1: All it did was restructure the price of the marketplace

573
00:28:58,240 --> 00:29:00,720
Speaker 1: for the first home owners. That's right, just went straight

574
00:29:00,720 --> 00:29:01,120
Speaker 1: to the price.

575
00:29:01,320 --> 00:29:04,280
Speaker 2: It pushes prices up, does nothing for affordability in the

576
00:29:04,320 --> 00:29:04,680
Speaker 2: long run.

577
00:29:04,960 --> 00:29:07,800
Speaker 1: I thought to myself the other day, let's put myself now,

578
00:29:08,120 --> 00:29:09,920
Speaker 1: put can I put you you in the mind of

579
00:29:10,000 --> 00:29:16,280
Speaker 1: a property owner investor owns a property as an investor,

580
00:29:16,280 --> 00:29:19,880
Speaker 1: in other words, rent it out. He or She's thinking

581
00:29:20,000 --> 00:29:23,880
Speaker 1: to himself herself, I've got a good property here, because

582
00:29:24,360 --> 00:29:27,560
Speaker 1: attached to it is not only a home, not only

583
00:29:27,640 --> 00:29:29,800
Speaker 1: a loan from the bank, which are hard to get

584
00:29:30,840 --> 00:29:34,080
Speaker 1: under the current assessment provisions. Because I, you know, I

585
00:29:34,240 --> 00:29:35,760
Speaker 1: might have I might be the investor I might have

586
00:29:35,760 --> 00:29:40,760
Speaker 1: got assessed three inches strate rises ago. I might not

587
00:29:40,840 --> 00:29:45,200
Speaker 1: get that amount of money today one two that property

588
00:29:45,240 --> 00:29:48,160
Speaker 1: because I've bought prior to the Caupal Gains tax announcement

589
00:29:48,720 --> 00:29:52,000
Speaker 1: that the capra gaan on that will only be taxed

590
00:29:52,000 --> 00:29:53,720
Speaker 1: if only fifty percent of that's going to be taxed.

591
00:29:55,200 --> 00:29:58,000
Speaker 1: Do you think in the minds of those investors that

592
00:29:58,120 --> 00:30:01,240
Speaker 1: they might be saying, well, why would ever sell? Because

593
00:30:01,320 --> 00:30:02,640
Speaker 1: if I sell them, I'm just going to replace with

594
00:30:02,720 --> 00:30:04,280
Speaker 1: some other asset. The new asset of buy is going

595
00:30:04,280 --> 00:30:06,160
Speaker 1: to be taxed at the new couple of games tax

596
00:30:06,200 --> 00:30:09,560
Speaker 1: and regime much higher. Do you think people are going

597
00:30:09,600 --> 00:30:10,360
Speaker 1: to say, I'm not going to sell.

598
00:30:10,440 --> 00:30:11,520
Speaker 3: Of course they will. Yeah.

599
00:30:11,920 --> 00:30:13,920
Speaker 2: I think you'll see a lot of existing investors pre

600
00:30:14,040 --> 00:30:15,960
Speaker 2: budget are going to hold onto their property.

601
00:30:15,720 --> 00:30:18,240
Speaker 1: Because it's valuable. It's much more valuable all of a sudden.

602
00:30:18,520 --> 00:30:19,360
Speaker 3: Yeah, is that right?

603
00:30:19,440 --> 00:30:20,800
Speaker 1: Omro just making this crap up?

604
00:30:20,880 --> 00:30:21,280
Speaker 3: They get no.

605
00:30:21,360 --> 00:30:22,960
Speaker 1: I know, well the mentality, but.

606
00:30:22,960 --> 00:30:25,000
Speaker 2: The couple of game side of things is really important, right, So,

607
00:30:25,160 --> 00:30:27,440
Speaker 2: especially for an investor's been in the market for a while,

608
00:30:27,880 --> 00:30:30,920
Speaker 2: obviously gets pro rated. So after July first, it goes

609
00:30:31,000 --> 00:30:35,320
Speaker 2: back to twenty twenty seven. Yeah, CPI indexation. But if

610
00:30:35,400 --> 00:30:38,280
Speaker 2: most of your capital gain happened prior to that, absolutely

611
00:30:38,440 --> 00:30:41,280
Speaker 2: you're definitely sitting in a very good position. And if

612
00:30:41,280 --> 00:30:43,840
Speaker 2: you're still negatively gearing a lot of investors that they

613
00:30:43,840 --> 00:30:45,920
Speaker 2: don't need a negative gear after probably five.

614
00:30:46,160 --> 00:30:47,880
Speaker 1: Yeah, that's right, that's a good point. By way, tim

615
00:30:48,560 --> 00:30:52,320
Speaker 1: most negatively geared properties start to positively gear after five years.

616
00:30:52,360 --> 00:30:56,640
Speaker 1: They're not these so called billionaires aren't getting needy gearing

617
00:30:56,720 --> 00:31:00,000
Speaker 1: for thirty forty years. It's for the first five year

618
00:31:00,080 --> 00:31:04,200
Speaker 1: years that the rents are not enough to cover the

619
00:31:04,280 --> 00:31:06,600
Speaker 1: interest rate, the interest payments and all the other costs.

620
00:31:06,640 --> 00:31:07,000
Speaker 3: That's right.

621
00:31:07,040 --> 00:31:08,720
Speaker 2: They might have prayed down some of their principle by then.

622
00:31:08,920 --> 00:31:11,680
Speaker 1: Well they're generally speaking, you have because principal amortizers probably

623
00:31:11,680 --> 00:31:14,600
Speaker 1: after about year three or four star sermitized after which

624
00:31:14,640 --> 00:31:17,080
Speaker 1: means you interest being charged on the principle is lower.

625
00:31:17,320 --> 00:31:21,160
Speaker 1: Therefore you're you're not so negative as the year. But yeah,

626
00:31:21,320 --> 00:31:25,280
Speaker 1: so have we created a has the government created a

627
00:31:25,360 --> 00:31:29,920
Speaker 1: new asset class of property that's more valuable to some

628
00:31:30,080 --> 00:31:33,080
Speaker 1: investors than for them to sell that property, which which

629
00:31:33,120 --> 00:31:35,120
Speaker 1: is what the government's probably hoping they do. They're hoping

630
00:31:35,160 --> 00:31:37,960
Speaker 1: they put things on the market. Do you think we've

631
00:31:38,240 --> 00:31:42,000
Speaker 1: they've created this asset class ques special So it's.

632
00:31:41,880 --> 00:31:45,200
Speaker 2: Going to be very i think prolific and established. Entering

633
00:31:45,280 --> 00:31:47,280
Speaker 2: the middle ring suburbs right where there's been a lot

634
00:31:47,320 --> 00:31:49,240
Speaker 2: of investors. That's generally where they've got the best couple

635
00:31:49,240 --> 00:31:50,760
Speaker 2: of gains. That's where investor concentration.

636
00:31:50,880 --> 00:31:52,040
Speaker 1: What does it mean interering out?

637
00:31:52,720 --> 00:31:54,960
Speaker 2: Yeah, okay, so in most of the capital cities, you're

638
00:31:55,040 --> 00:31:57,200
Speaker 2: established markets where there's not a lot of land to

639
00:31:57,280 --> 00:31:59,880
Speaker 2: be built, for example, so they're real scarce supply levels.

640
00:32:00,120 --> 00:32:02,160
Speaker 2: That tends to be within ten kilometers of the CBD

641
00:32:02,600 --> 00:32:03,480
Speaker 2: with the major capitals.

642
00:32:04,480 --> 00:32:06,360
Speaker 1: And that's where are you saying, Tim, that's who in

643
00:32:07,680 --> 00:32:10,000
Speaker 1: more sophisticated, whether or just generally they tend to invest

644
00:32:10,000 --> 00:32:10,840
Speaker 1: in those areas.

645
00:32:10,840 --> 00:32:13,720
Speaker 2: Absolutely, because that's generally where capital gains have been the strongest.

646
00:32:14,560 --> 00:32:17,040
Speaker 2: So you'll find those investors going to be holding on

647
00:32:17,200 --> 00:32:21,040
Speaker 2: for longer, which in itself implies those inner city and

648
00:32:21,120 --> 00:32:23,920
Speaker 2: sort of middle ring property markets are probably going to

649
00:32:23,960 --> 00:32:25,560
Speaker 2: be the ones that suffer the most from a lack

650
00:32:25,600 --> 00:32:28,120
Speaker 2: of rental supply as well. If you don't see a

651
00:32:28,200 --> 00:32:31,720
Speaker 2: refreshment or an inflow of new investment or new rental

652
00:32:31,760 --> 00:32:36,040
Speaker 2: properties becoming available because you can't get the negative gearing benefits,

653
00:32:36,960 --> 00:32:38,960
Speaker 2: most investors who are going to be active in property

654
00:32:39,000 --> 00:32:42,320
Speaker 2: will probably be going out of fringe or inner city

655
00:32:42,400 --> 00:32:46,320
Speaker 2: where new housing supply gets those tax benefits. So we

656
00:32:46,480 --> 00:32:49,600
Speaker 2: might be creating a market here where rental markets remain

657
00:32:49,680 --> 00:32:54,640
Speaker 2: extremely tight. In those more desirable inner city and established suburbs,

658
00:32:55,280 --> 00:32:58,520
Speaker 2: whereas you're out of fringes, might have higher investor concentrations,

659
00:32:58,560 --> 00:33:02,360
Speaker 2: delivering more rental supply, but also competing with the markets

660
00:33:02,440 --> 00:33:05,920
Speaker 2: that the government's trying to insulate here first home buyers.

661
00:33:06,680 --> 00:33:09,680
Speaker 2: So if we see the more competitive friction between investors

662
00:33:09,720 --> 00:33:12,720
Speaker 2: and first home buyers in greenfield housing estates so new

663
00:33:13,280 --> 00:33:14,760
Speaker 2: where all the new houses are being built on the

664
00:33:14,800 --> 00:33:17,320
Speaker 2: outer fringes of Capital City or in the inner city

665
00:33:17,360 --> 00:33:20,040
Speaker 2: apartment markets, that kind of flies in the face of

666
00:33:20,480 --> 00:33:23,760
Speaker 2: giving first home buyers a leg up anyway, because you

667
00:33:23,840 --> 00:33:26,840
Speaker 2: might just be concentrating investor demands into those markets.

668
00:33:27,120 --> 00:33:32,560
Speaker 1: So recently I heard the Prime Minister in Parliament I

669
00:33:32,680 --> 00:33:35,080
Speaker 1: know it's not that many people listen to this boring stuff,

670
00:33:35,080 --> 00:33:38,960
Speaker 1: but I do, and saying that there's been an increase

671
00:33:40,000 --> 00:33:43,640
Speaker 1: in first time buyers as a result of the capital

672
00:33:43,760 --> 00:33:49,040
Speaker 1: gains tax proposed legislation. Is there data to support that

673
00:33:49,240 --> 00:33:51,720
Speaker 1: or is that a little bit cute in that there's

674
00:33:51,840 --> 00:33:55,280
Speaker 1: more as a percentage of the title, there's less investors.

675
00:33:55,280 --> 00:33:58,680
Speaker 1: Therefore there's more first time buyers or more unoccupied What

676
00:33:58,840 --> 00:34:01,959
Speaker 1: is the data showing? There isn't any data on this yet, right,

677
00:34:02,080 --> 00:34:04,520
Speaker 1: So where would you have got that of information.

678
00:34:04,800 --> 00:34:07,000
Speaker 3: You'll have to ask the Prime Minister Mark, he probably

679
00:34:07,000 --> 00:34:09,520
Speaker 3: won't talk to me. But anyway, Yeah, I'm hearing.

680
00:34:09,400 --> 00:34:12,520
Speaker 2: Exactly the opposite, that both investors and first home buyers

681
00:34:13,080 --> 00:34:15,840
Speaker 2: and subsequent buyers are holding back simply due to the

682
00:34:15,880 --> 00:34:16,400
Speaker 2: own first.

683
00:34:16,200 --> 00:34:19,719
Speaker 1: Time buyers too, absolutely, yeah, and unoccupies and occupied But

684
00:34:19,800 --> 00:34:23,359
Speaker 1: why why why? I understand the mind what you took

685
00:34:23,400 --> 00:34:25,279
Speaker 1: me into the mind of the investor. I understand that part.

686
00:34:25,880 --> 00:34:29,239
Speaker 1: What about first home buyers or unoccupies? What's going through

687
00:34:29,280 --> 00:34:29,600
Speaker 1: their head?

688
00:34:29,719 --> 00:34:33,920
Speaker 2: Well, I think partly it's uncertainty, lack of confidence. Nobody

689
00:34:33,920 --> 00:34:36,520
Speaker 2: wants to buy into a marketplace and spend your life

690
00:34:36,600 --> 00:34:38,920
Speaker 2: savings and suddenly find that assets worth less than what

691
00:34:39,000 --> 00:34:41,000
Speaker 2: it was a day ago.

692
00:34:41,160 --> 00:34:43,080
Speaker 1: So being clever, they're thinking, I might be able to

693
00:34:43,239 --> 00:34:45,520
Speaker 1: maybe the time in the market, I'm timing the market.

694
00:34:45,600 --> 00:34:48,120
Speaker 2: Yeah, I might be able to. It might get cheaper, yeah,

695
00:34:48,360 --> 00:34:50,120
Speaker 2: But I think, what's this space. I think once we

696
00:34:50,280 --> 00:34:53,560
Speaker 2: start to see some confidence coming back to the marketplace,

697
00:34:53,760 --> 00:34:57,200
Speaker 2: that inflation has maintained that interest rate cuts or imminent,

698
00:34:57,680 --> 00:35:00,440
Speaker 2: probably coming into next year sometime now. I think that's

699
00:35:00,440 --> 00:35:01,960
Speaker 2: when we'll start to see a lot more first home

700
00:35:02,040 --> 00:35:04,600
Speaker 2: buyers becoming active, taking advantage of the fact that prices

701
00:35:04,640 --> 00:35:08,040
Speaker 2: have dropped, the affordability is improved to some extent, there's

702
00:35:08,080 --> 00:35:11,520
Speaker 2: more stock to choose from. So yeah, absolutely, I think

703
00:35:11,520 --> 00:35:14,200
Speaker 2: there is a turning point here, and it probably comes

704
00:35:14,280 --> 00:35:16,760
Speaker 2: back to when we start to see more confidence returning

705
00:35:16,800 --> 00:35:18,960
Speaker 2: to the economy of the market. But there is a

706
00:35:19,000 --> 00:35:21,360
Speaker 2: silver lighting, I think, and that silver alighting is that

707
00:35:21,480 --> 00:35:24,120
Speaker 2: first home buyers probably will be in a much better

708
00:35:24,200 --> 00:35:26,840
Speaker 2: position to buy once the dust settles.

709
00:35:27,600 --> 00:35:31,359
Speaker 1: What happens if at the same time as these first

710
00:35:31,480 --> 00:35:35,080
Speaker 1: home owners and owner occupiers are starting to become more

711
00:35:35,160 --> 00:35:38,360
Speaker 1: confident that that now is a time to pounce, which states,

712
00:35:39,360 --> 00:35:42,520
Speaker 1: you know, mid next year for example, just by of example,

713
00:35:43,840 --> 00:35:46,080
Speaker 1: they and they now think that the interist rates are

714
00:35:46,120 --> 00:35:47,919
Speaker 1: pretty much leveled out, So that's one of the reasons

715
00:35:48,120 --> 00:35:50,960
Speaker 1: they're thinking it's time to get in. What happens if

716
00:35:51,000 --> 00:35:52,920
Speaker 1: around the same time, though, the investors start to think

717
00:35:52,960 --> 00:35:55,399
Speaker 1: to themselves, you know what, the yields are much better

718
00:35:56,200 --> 00:35:59,560
Speaker 1: because you know, the prices have come down, the rents

719
00:35:59,600 --> 00:36:02,520
Speaker 1: are still the same or probably gone up. My return

720
00:36:02,600 --> 00:36:04,200
Speaker 1: is now six and a half percent. Like we talked

721
00:36:04,200 --> 00:36:08,600
Speaker 1: about before, that hypothesis from before, the investors jump back

722
00:36:08,600 --> 00:36:11,160
Speaker 1: in the market and we start to get first home owners,

723
00:36:11,840 --> 00:36:15,320
Speaker 1: unoccupier's now competing with investors again. Do you think that

724
00:36:16,520 --> 00:36:19,919
Speaker 1: the house prices automatically go up because I've rarely seen

725
00:36:20,040 --> 00:36:24,280
Speaker 1: in Australia, and I've been through so many cycles, rarely

726
00:36:24,320 --> 00:36:28,040
Speaker 1: seeing Australia house prices stay low for very long. Yeah,

727
00:36:28,480 --> 00:36:30,400
Speaker 1: eighty months maybe max exactly.

728
00:36:30,640 --> 00:36:34,080
Speaker 2: Yeah, So whether or not it's the same. So typically

729
00:36:34,120 --> 00:36:36,040
Speaker 2: we see a pretty much a V shaped recovery in

730
00:36:36,080 --> 00:36:37,240
Speaker 2: Australian housing markets.

731
00:36:37,560 --> 00:36:39,520
Speaker 1: So it goes down yep, and then it goes up.

732
00:36:39,480 --> 00:36:40,919
Speaker 2: Goes up and about the same amount of time.

733
00:36:41,520 --> 00:36:41,680
Speaker 3: Right.

734
00:36:42,080 --> 00:36:43,480
Speaker 2: Sometimes it's a bit more of a use shape, but

735
00:36:43,520 --> 00:36:47,120
Speaker 2: typically it's fairly V shaped recovery. I'm not sure that'll

736
00:36:47,160 --> 00:36:51,239
Speaker 2: be the same trajectory this time around, because I don't

737
00:36:51,320 --> 00:36:54,720
Speaker 2: think we'll see a significant bounce back in investment demand

738
00:36:54,800 --> 00:36:58,360
Speaker 2: coming back into the Australian market unless here's another speculative

739
00:36:58,400 --> 00:37:00,440
Speaker 2: one mark if we see a change of them in

740
00:37:00,560 --> 00:37:02,520
Speaker 2: two years or twenty twenty eight.

741
00:37:02,840 --> 00:37:03,399
Speaker 1: Want to wait there.

742
00:37:04,160 --> 00:37:06,680
Speaker 2: Well, for the first half of twenty twenty eight, I

743
00:37:06,719 --> 00:37:08,719
Speaker 2: think is probably when we'll see another election, and what

744
00:37:08,840 --> 00:37:10,200
Speaker 2: if we see a change of government and some of

745
00:37:10,239 --> 00:37:13,840
Speaker 2: these rules get wound back. I mean, that's that's deeply speculative,

746
00:37:14,000 --> 00:37:15,719
Speaker 2: and maybe that's not even a good thing because it

747
00:37:15,800 --> 00:37:17,759
Speaker 2: just adds to the un I mean, you can't have

748
00:37:17,800 --> 00:37:20,080
Speaker 2: a playing field that's swapping and changing.

749
00:37:20,320 --> 00:37:22,640
Speaker 1: But they will, You're right to if Liberal and Nationals,

750
00:37:22,640 --> 00:37:25,359
Speaker 1: because they're already committed to that, they'll wind this stuff back.

751
00:37:25,920 --> 00:37:29,600
Speaker 1: That's not good either. No, it's too many variations, it's

752
00:37:29,880 --> 00:37:30,520
Speaker 1: too volatile.

753
00:37:30,800 --> 00:37:34,120
Speaker 2: Yeah, so absolutely, I do think when interest rates come down,

754
00:37:34,239 --> 00:37:37,120
Speaker 2: or maybe even when interest when inflation is tamed and

755
00:37:37,160 --> 00:37:39,480
Speaker 2: it's clear that interest rates are about to come down,

756
00:37:39,920 --> 00:37:41,400
Speaker 2: I think that's when we'll see the market at the

757
00:37:41,480 --> 00:37:43,560
Speaker 2: very least flattening out, if not moving back into some

758
00:37:43,760 --> 00:37:46,960
Speaker 2: level of growth. So that's probably coming into the second

759
00:37:47,000 --> 00:37:49,600
Speaker 2: half of twenty twenty seven, right, So that's when most

760
00:37:49,800 --> 00:37:52,719
Speaker 2: think we'll probably see interest rates starting to come down,

761
00:37:53,640 --> 00:37:56,160
Speaker 2: and that's when we'll probably see the housing markets stabilize,

762
00:37:56,400 --> 00:37:58,600
Speaker 2: probably move into some level of growth. But there's a

763
00:37:58,640 --> 00:38:00,560
Speaker 2: lot to think that level of growth there's going to

764
00:38:00,640 --> 00:38:03,520
Speaker 2: be a lot milder than what we've seen through previous

765
00:38:04,000 --> 00:38:05,320
Speaker 2: periods of recovery.

766
00:38:05,880 --> 00:38:08,239
Speaker 1: How much has the last five years been way out

767
00:38:08,239 --> 00:38:10,040
Speaker 1: of the box in terms of growth.

768
00:38:10,239 --> 00:38:14,319
Speaker 2: Yeah, substantially. It's not unprecedented, but it is quite extraordinary.

769
00:38:14,360 --> 00:38:17,680
Speaker 2: The last time we saw a five year growth rate

770
00:38:17,960 --> 00:38:20,240
Speaker 2: this strong, you'd go back to the early two thousands,

771
00:38:20,440 --> 00:38:22,200
Speaker 2: So the two thousand and one to two thousand and

772
00:38:22,320 --> 00:38:25,880
Speaker 2: four the market, yes, showing very similar conditions for similar

773
00:38:25,920 --> 00:38:29,120
Speaker 2: reasons as well. You know, rates were generally low, not

774
00:38:29,160 --> 00:38:30,600
Speaker 2: as low as what they were through the pandemic, but

775
00:38:30,640 --> 00:38:33,359
Speaker 2: there was very strong rates of population growth. As you mentioned,

776
00:38:33,400 --> 00:38:36,000
Speaker 2: the first home buyer grant had become available. It was

777
00:38:36,040 --> 00:38:38,440
Speaker 2: a lot of first home buyers active as well. But

778
00:38:38,600 --> 00:38:41,920
Speaker 2: some markets, I mean five years has been extreme in

779
00:38:41,960 --> 00:38:46,000
Speaker 2: its diversity as well. Melbourne in five years housing values

780
00:38:46,000 --> 00:38:48,160
Speaker 2: are up one percent percent.

781
00:38:49,320 --> 00:38:51,719
Speaker 1: Someone said that back to twenty fourteen levels or something.

782
00:38:52,239 --> 00:38:53,399
Speaker 3: It's not that something bad.

783
00:38:53,840 --> 00:38:56,600
Speaker 2: If we saw a ten percent drop in Melbourne housing

784
00:38:56,680 --> 00:38:59,839
Speaker 2: values now, they'd be back to about twenty nineteen levels.

785
00:39:00,160 --> 00:39:03,240
Speaker 2: Because vellies did rise pretty decently through twenty twenty before

786
00:39:04,200 --> 00:39:06,600
Speaker 2: there was so much disruption from Lockdown to Melbourne. But

787
00:39:06,680 --> 00:39:08,360
Speaker 2: then go to the other end of the book. Okay,

788
00:39:08,480 --> 00:39:11,120
Speaker 2: so the other book end is Perth. We're in five years,

789
00:39:11,160 --> 00:39:13,799
Speaker 2: the market's up about ninety percent. Well, so you've got

790
00:39:13,840 --> 00:39:17,839
Speaker 2: Melbourne at one ninety ninety five years. But remember prior

791
00:39:17,880 --> 00:39:20,959
Speaker 2: to that five year period, Perth was navigating the post

792
00:39:21,040 --> 00:39:23,880
Speaker 2: mining poom downturn. So it's off a very low base.

793
00:39:24,160 --> 00:39:27,160
Speaker 2: So there are some extremes that are influencing the numbers here. Nationally,

794
00:39:27,200 --> 00:39:29,720
Speaker 2: if you look at a really macro level of growth,

795
00:39:29,920 --> 00:39:32,120
Speaker 2: the market's up a bit over thirty percent in five years,

796
00:39:32,160 --> 00:39:33,800
Speaker 2: which still is a pretty strong outcome.

797
00:39:34,280 --> 00:39:38,080
Speaker 1: Do you think therefore has embedded into our investor brain

798
00:39:38,280 --> 00:39:42,640
Speaker 1: that this property increase, these types of increase have been

799
00:39:42,680 --> 00:39:46,160
Speaker 1: considered to be the norm and therefore, and whilst we're

800
00:39:47,239 --> 00:39:49,319
Speaker 1: not really in for a shock, we're what we're really

801
00:39:49,440 --> 00:39:51,319
Speaker 1: going to do is just see things to go back

802
00:39:51,400 --> 00:39:55,040
Speaker 1: to more normalize growth pattern relative to property as opposed

803
00:39:55,080 --> 00:39:58,040
Speaker 1: to this what we all thought might be normalized. This

804
00:39:58,480 --> 00:40:01,240
Speaker 1: ninety percent in Perth, but you know, thirty forty percent

805
00:40:01,320 --> 00:40:04,120
Speaker 1: in other places growth I mean, in other words, there

806
00:40:04,120 --> 00:40:08,239
Speaker 1: have been extraordinary periods for extraordinary reasons and that we

807
00:40:08,280 --> 00:40:10,800
Speaker 1: should not have expectations like that anymore.

808
00:40:11,120 --> 00:40:13,719
Speaker 2: Well, absolutely, I think investors need to be realistic. The

809
00:40:13,800 --> 00:40:17,680
Speaker 2: last five years has been extraordinary. You know, a typical

810
00:40:17,719 --> 00:40:19,759
Speaker 2: average rate of growth over a long period of time,

811
00:40:19,800 --> 00:40:22,160
Speaker 2: it's probably more like around five percent to seven percent

812
00:40:22,200 --> 00:40:25,120
Speaker 2: per annum, right, sustainable, a sustainable rate of growth, and

813
00:40:25,520 --> 00:40:29,360
Speaker 2: it's cyclical, So I mean everyone's already forgotten. Between the

814
00:40:29,400 --> 00:40:32,040
Speaker 2: middle of twenty twenty two and early twenty twenty three,

815
00:40:32,880 --> 00:40:35,280
Speaker 2: the housing market went through a really short and sharp correction.

816
00:40:35,480 --> 00:40:38,799
Speaker 2: Sydney home values fell about twelve percent, Melbourne was down

817
00:40:38,800 --> 00:40:40,840
Speaker 2: about nine percent, Briston was down about nine percent in

818
00:40:40,920 --> 00:40:43,279
Speaker 2: that really short space of time. So to think we

819
00:40:43,400 --> 00:40:45,480
Speaker 2: might be heading into let's say, a ten percent correction

820
00:40:46,000 --> 00:40:50,000
Speaker 2: against that context of extreme growth doesn't sound too extraordinary

821
00:40:50,040 --> 00:40:50,239
Speaker 2: to me.

822
00:40:50,520 --> 00:40:52,759
Speaker 1: I think you probably heard him, but Chris Joy, who

823
00:40:52,880 --> 00:40:55,600
Speaker 1: was on the podcast last week, said he thinks, and

824
00:40:55,880 --> 00:40:57,680
Speaker 1: you sort of touched on this yourself as well, that

825
00:40:57,800 --> 00:41:00,759
Speaker 1: this could be a different downturn to we've experienced in

826
00:41:00,760 --> 00:41:05,200
Speaker 1: the past. But he sees our current inflation, which is

827
00:41:05,440 --> 00:41:08,400
Speaker 1: he believes causes the downturn and property prices, but our

828
00:41:08,440 --> 00:41:11,799
Speaker 1: current inflation period and the taming of that inflation by

829
00:41:11,840 --> 00:41:17,000
Speaker 1: a reserve bank with higher interest rates. As currently, this

830
00:41:17,920 --> 00:41:21,320
Speaker 1: will be something that we've never seen before, unprecedented. In

831
00:41:21,400 --> 00:41:23,879
Speaker 1: other words, it will last a lot longer than we've

832
00:41:23,920 --> 00:41:25,879
Speaker 1: ever seen in the past. We talked about eighty months,

833
00:41:26,120 --> 00:41:27,560
Speaker 1: but this is going to last a lot longer, and

834
00:41:27,600 --> 00:41:31,719
Speaker 1: he talking about twenty eight and maybe even beyond. Does

835
00:41:33,160 --> 00:41:36,759
Speaker 1: fatality look at the future of interest rates and what

836
00:41:36,880 --> 00:41:38,560
Speaker 1: are you guys thinking about that? Yeah?

837
00:41:38,760 --> 00:41:42,040
Speaker 2: So, frankly, no, we don't. We're not macroeconomists. We don't

838
00:41:42,080 --> 00:41:45,480
Speaker 2: have a macroeconomic model that forecasts interest rates or inflation.

839
00:41:45,680 --> 00:41:48,360
Speaker 2: Will leave it up to the extraordinarily smart people like

840
00:41:48,400 --> 00:41:51,919
Speaker 2: Chris Joy. But I do tend to agree with Chris

841
00:41:52,120 --> 00:41:54,160
Speaker 2: that we probably are in a period that's going to

842
00:41:54,200 --> 00:41:57,480
Speaker 2: be quite different, not necessarily just because inflation might be

843
00:41:57,560 --> 00:41:59,760
Speaker 2: higher for longer, interest rates might be higher for longer.

844
00:42:00,280 --> 00:42:04,640
Speaker 2: This downturn is multifaceted. Normally, when the market moves through

845
00:42:04,640 --> 00:42:08,320
Speaker 2: a downturn, it's through a singularity like interest rates rising,

846
00:42:08,640 --> 00:42:12,160
Speaker 2: or a credit tightening period, or a shock like the GFC.

847
00:42:13,040 --> 00:42:18,040
Speaker 2: This period we're moving into now has record levels of unaffordability,

848
00:42:18,480 --> 00:42:22,760
Speaker 2: high interest rates, deeply pessimistic levels of confidence, which will

849
00:42:22,800 --> 00:42:25,120
Speaker 2: gradually change now that the strait of Horme moves is open,

850
00:42:25,160 --> 00:42:26,920
Speaker 2: but already seeing a little bit of a lifting confidence

851
00:42:26,920 --> 00:42:30,080
Speaker 2: but from very low levels, and a structural change in

852
00:42:30,160 --> 00:42:33,880
Speaker 2: taxation policy as well. All these things I think are

853
00:42:33,920 --> 00:42:37,880
Speaker 2: adding to the headwinds for housing markets that in many

854
00:42:37,920 --> 00:42:41,960
Speaker 2: ways are unprecedented that we'd have this array of this

855
00:42:42,200 --> 00:42:46,080
Speaker 2: diversity of negative factors influencing the market. But we still

856
00:42:46,160 --> 00:42:48,440
Speaker 2: have some positives in the sense that, as we say

857
00:42:48,680 --> 00:42:52,320
Speaker 2: talked about, supply levels are really low, demand from population

858
00:42:52,480 --> 00:42:56,040
Speaker 2: growth is still quite strong as well. These are the

859
00:42:56,080 --> 00:42:58,400
Speaker 2: factors I think that will probably stave off a more

860
00:42:58,480 --> 00:42:59,240
Speaker 2: material correction.

861
00:43:00,280 --> 00:43:09,240
Speaker 1: Does toutality currently take the view that there are places

862
00:43:09,320 --> 00:43:17,120
Speaker 1: in Australia regions or suburbs or cities that will outperform

863
00:43:17,840 --> 00:43:18,720
Speaker 1: the rest of the country.

864
00:43:19,280 --> 00:43:22,239
Speaker 2: Yeah, there's always going to be I think a fairly

865
00:43:22,400 --> 00:43:25,759
Speaker 2: diverse tapestry of outcomes. For example, I think if I

866
00:43:25,800 --> 00:43:28,800
Speaker 2: think around the capital cities, in my mind, Melbourne is

867
00:43:28,840 --> 00:43:32,160
Speaker 2: probably the best place market to outperform over the medium

868
00:43:32,200 --> 00:43:34,319
Speaker 2: to long term. And the reason I say that, even

869
00:43:34,320 --> 00:43:36,760
Speaker 2: though it's probably a little bit counterintuitive because that market's

870
00:43:36,760 --> 00:43:39,800
Speaker 2: been extraordinarily weak. That's part of the reason why it

871
00:43:39,960 --> 00:43:44,160
Speaker 2: is very affordable. You're took amount into the yields. No, no, well,

872
00:43:44,480 --> 00:43:46,960
Speaker 2: yields are higher in Melbourne, but they're they're not stand out.

873
00:43:46,960 --> 00:43:49,239
Speaker 2: The sort of still sub four percent grows at least

874
00:43:49,280 --> 00:43:52,799
Speaker 2: on average. I'm talking about opportunities for capital game, right,

875
00:43:52,960 --> 00:43:55,360
Speaker 2: So if you're buying into the Melbourne marketplace, you know,

876
00:43:55,440 --> 00:43:59,239
Speaker 2: we haven't seen Sydney Melbourne part and prices we talked

877
00:43:59,280 --> 00:44:01,799
Speaker 2: about last time it chatted since forever.

878
00:44:02,560 --> 00:44:04,360
Speaker 3: The gap is the widest we've seen because.

879
00:44:04,360 --> 00:44:05,880
Speaker 1: They are aways sort of pretty close. Weren't they in

880
00:44:06,000 --> 00:44:06,920
Speaker 1: terms of price.

881
00:44:06,640 --> 00:44:10,400
Speaker 2: Simply maybe a fifteen percent difference less than that now

882
00:44:11,000 --> 00:44:16,480
Speaker 2: now it's about fifty five no difference. Really Yeah, it's extraordinary.

883
00:44:16,520 --> 00:44:16,719
Speaker 3: Wow.

884
00:44:16,880 --> 00:44:20,440
Speaker 2: I think that affordability of advantage from Melbourne really stands

885
00:44:20,440 --> 00:44:22,759
Speaker 2: out for me. For Austory's second largest city, for an

886
00:44:22,800 --> 00:44:29,000
Speaker 2: economic you know, a diverse economics state with arguably strong

887
00:44:29,040 --> 00:44:32,359
Speaker 2: fundamentals over the meeting to long term, that market looks

888
00:44:32,560 --> 00:44:34,040
Speaker 2: quite affordable.

889
00:44:34,120 --> 00:44:36,080
Speaker 1: Can you get tenants down there? Can you get me?

890
00:44:37,160 --> 00:44:41,080
Speaker 1: Is a population sort of allow you to get tenants in?

891
00:44:41,920 --> 00:44:44,160
Speaker 2: Melbourne's got one of the fastest rates of population growth.

892
00:44:44,200 --> 00:44:47,239
Speaker 2: That's mostly driven by overseas migration, which tend to be

893
00:44:47,320 --> 00:44:51,400
Speaker 2: mostly short term visas, so it's students and absolutely that

894
00:44:51,480 --> 00:44:54,600
Speaker 2: the rental market's very strong. Vacancies are still sub two percent.

895
00:44:55,800 --> 00:44:58,239
Speaker 2: The capital gain story, though, has been very weak over

896
00:44:58,239 --> 00:44:59,960
Speaker 2: a long time. Let me talked about it for five

897
00:45:00,160 --> 00:45:02,279
Speaker 2: is one percent. So I think that's probably the civil

898
00:45:02,320 --> 00:45:06,040
Speaker 2: lining of Melbourn's underperformance is it's very cheap, It's probably

899
00:45:06,080 --> 00:45:08,160
Speaker 2: going to rise off a very low base, and there

900
00:45:08,200 --> 00:45:10,840
Speaker 2: needs to be some equilibrium between Sydney and Melbourne in

901
00:45:10,920 --> 00:45:12,960
Speaker 2: terms of their prices. So partly that's going to be

902
00:45:13,560 --> 00:45:18,080
Speaker 2: corrected by Sydney values moving through a downturn. Melbourne is

903
00:45:18,120 --> 00:45:22,200
Speaker 2: as well, but probably has stronger upside potential regional markets

904
00:45:22,320 --> 00:45:25,000
Speaker 2: as well. I still think some of the commutable regional

905
00:45:25,040 --> 00:45:29,279
Speaker 2: markets around the country are I wouldn't say undervalued, but

906
00:45:29,440 --> 00:45:30,759
Speaker 2: still relatively good value.

907
00:45:30,840 --> 00:45:32,040
Speaker 1: So what's that meaning commutable?

908
00:45:32,320 --> 00:45:32,640
Speaker 3: How far?

909
00:45:32,800 --> 00:45:35,560
Speaker 2: What are we talking about within two hours driving distance driving?

910
00:45:35,680 --> 00:45:39,000
Speaker 2: So Gosford, for example, in Sydney other central Coast and

911
00:45:39,040 --> 00:45:41,200
Speaker 2: Sydney is a great example of that, or even Newcastle

912
00:45:41,280 --> 00:45:45,440
Speaker 2: but further a bit further out for around Melbourne, it's

913
00:45:45,480 --> 00:45:48,800
Speaker 2: getting out to Geelong or Ballarat, those sort of markets.

914
00:45:48,880 --> 00:45:51,919
Speaker 2: In Queensland it's Toomba, the Gold Coast, the Sunshine Coast.

915
00:45:52,560 --> 00:45:53,880
Speaker 3: So those satellite.

916
00:45:53,480 --> 00:45:56,360
Speaker 2: Cities which are commutable, they've got a liveability advantage in

917
00:45:56,480 --> 00:45:56,960
Speaker 2: some ways.

918
00:45:57,400 --> 00:45:57,719
Speaker 3: I think.

919
00:45:58,040 --> 00:46:00,920
Speaker 2: Given I think we've seen the structural change in how

920
00:46:00,960 --> 00:46:04,600
Speaker 2: people work that we can see remote working going, you know,

921
00:46:04,840 --> 00:46:07,719
Speaker 2: it's probably something that's here to stay. Those markets are

922
00:46:07,719 --> 00:46:11,320
Speaker 2: suddenly a lot more popular with a broader base of demand.

923
00:46:11,600 --> 00:46:13,520
Speaker 1: What about Canberra and Darwin?

924
00:46:14,600 --> 00:46:15,120
Speaker 3: Good question.

925
00:46:16,000 --> 00:46:20,200
Speaker 2: Darwin is definitely very volatile, fickle market. It tends to

926
00:46:20,280 --> 00:46:24,520
Speaker 2: move on the back of big infrastructure projects and any

927
00:46:24,560 --> 00:46:27,520
Speaker 2: sort of capital investment that's going in. So yeah, at

928
00:46:27,560 --> 00:46:29,360
Speaker 2: the moment it's a market. It's very resilient. We're not

929
00:46:29,440 --> 00:46:32,160
Speaker 2: seeing the same sort of weakness in Darwin as we're

930
00:46:32,160 --> 00:46:34,960
Speaker 2: seeing in most other markets. But then again it's it's

931
00:46:35,000 --> 00:46:38,520
Speaker 2: extraordinarily affordable. It's got the highest yields. We talked about

932
00:46:38,520 --> 00:46:41,120
Speaker 2: opportunities for positive cash flow. Darwin's got a gross yield

933
00:46:41,200 --> 00:46:43,920
Speaker 2: that's up around six percent, well way higher than any

934
00:46:43,960 --> 00:46:44,799
Speaker 2: other capital city.

935
00:46:45,239 --> 00:46:47,600
Speaker 1: Is it because of supply problems or is it because

936
00:46:49,320 --> 00:46:52,400
Speaker 1: people just pay that because it's you know, it's Darwin.

937
00:46:52,760 --> 00:46:54,360
Speaker 2: I think it's mostly because it went through such a

938
00:46:54,400 --> 00:46:56,680
Speaker 2: long running downturn. The prices are very low.

939
00:46:56,680 --> 00:46:59,000
Speaker 1: So that's again that that's your thesis, like if the

940
00:46:59,080 --> 00:47:01,160
Speaker 1: price is low and stay the same, will go up

941
00:47:01,480 --> 00:47:01,960
Speaker 1: You're yielding.

942
00:47:02,040 --> 00:47:04,200
Speaker 2: Green is looking pretty good, but for a lot of

943
00:47:04,280 --> 00:47:08,239
Speaker 2: investors that's not attractive enough because they don't see the

944
00:47:08,640 --> 00:47:10,320
Speaker 2: I suppose the certainty of capital gain.

945
00:47:10,200 --> 00:47:10,680
Speaker 3: To the market.

946
00:47:10,760 --> 00:47:13,319
Speaker 2: Like Darwin, Camera is kind of similar in the sense

947
00:47:13,400 --> 00:47:17,360
Speaker 2: that that market has been a fairly consistent performer, but

948
00:47:17,440 --> 00:47:20,800
Speaker 2: there's a real difference between the apartment market and Camebra,

949
00:47:20,920 --> 00:47:26,040
Speaker 2: which is severely oversupplied versus houses, and houses have been

950
00:47:26,120 --> 00:47:29,160
Speaker 2: quite strong buying to the Camera. Unit market has been

951
00:47:29,200 --> 00:47:31,920
Speaker 2: a very poor investment. Generally, Uni values have been holding

952
00:47:31,960 --> 00:47:33,239
Speaker 2: flat to going backwards for.

953
00:47:33,280 --> 00:47:36,239
Speaker 1: Some time now, but it has very low vacancy rate.

954
00:47:36,280 --> 00:47:38,879
Speaker 2: Though Camera, well, the vacancy rate is still quite low,

955
00:47:39,000 --> 00:47:41,520
Speaker 2: but that doesn't seem to be supporting a strong rate

956
00:47:41,560 --> 00:47:43,799
Speaker 2: of capital growth, especially in the apartment sector where there's

957
00:47:43,800 --> 00:47:46,440
Speaker 2: still a lot of apartments being built as well. So

958
00:47:46,800 --> 00:47:50,040
Speaker 2: it's a great testament to build more supply and you'll

959
00:47:50,080 --> 00:47:52,960
Speaker 2: definitely keep a lid on housing prices and ensure some

960
00:47:53,080 --> 00:47:55,279
Speaker 2: level of affordability. And that's the other thing with Cambra.

961
00:47:55,280 --> 00:47:57,880
Speaker 2: It's a very affordable market given incomes tend to be

962
00:47:57,960 --> 00:47:58,719
Speaker 2: quite high as well.

963
00:47:58,880 --> 00:48:01,359
Speaker 1: Yeah they do, and there's lots of doubling comes down

964
00:48:01,400 --> 00:48:04,440
Speaker 1: there too, and they're got jobs which are usually not

965
00:48:04,560 --> 00:48:08,680
Speaker 1: at risk because they're usually government jobs. Basically most of

966
00:48:08,719 --> 00:48:12,040
Speaker 1: them are. Let's just look at a place like Sydney,

967
00:48:12,160 --> 00:48:15,399
Speaker 1: and I quite like what you said before. It would

968
00:48:15,440 --> 00:48:21,640
Speaker 1: seem to be those suburbs within Sydney that are within

969
00:48:21,760 --> 00:48:24,919
Speaker 1: the two rings of the CBD. I think you said

970
00:48:25,000 --> 00:48:26,640
Speaker 1: how many commuters ten combat.

971
00:48:26,440 --> 00:48:28,840
Speaker 2: About ten kilometers, But yeah, the rule of thumb is

972
00:48:29,560 --> 00:48:32,160
Speaker 2: is tanklomitters. Sydney being such a large metro, you can

973
00:48:32,200 --> 00:48:34,240
Speaker 2: probably go out a bit further than that to describe

974
00:48:34,280 --> 00:48:35,520
Speaker 2: that's sort of inter city boundary.

975
00:48:35,880 --> 00:48:39,959
Speaker 1: So that seems to have a prognosis wise, it seems

976
00:48:40,000 --> 00:48:42,600
Speaker 1: to have a good outlook for the future.

977
00:48:42,719 --> 00:48:43,320
Speaker 3: I would assume.

978
00:48:43,400 --> 00:48:46,600
Speaker 2: So don't get me wrong, it's it is chronically unaffordable.

979
00:48:47,120 --> 00:48:51,640
Speaker 2: So still it's still very very expensive markets. And these

980
00:48:51,680 --> 00:48:53,520
Speaker 2: are some of the weakest markets in Sydney as well.

981
00:48:53,600 --> 00:48:56,719
Speaker 2: These very expensive markets, but I think that's more cyclical

982
00:48:56,800 --> 00:48:57,719
Speaker 2: than the long term.

983
00:48:57,800 --> 00:48:59,879
Speaker 1: When you say weakest market, what do you mean, Well.

984
00:48:59,800 --> 00:49:02,640
Speaker 2: It's some of those markets that are quite affluent. Eastern

985
00:49:02,680 --> 00:49:05,200
Speaker 2: suburbs a great example, or the lower north Shore or

986
00:49:05,360 --> 00:49:08,920
Speaker 2: getting into the Northern Beaches. These are markets where values

987
00:49:08,960 --> 00:49:11,239
Speaker 2: are falling at the most rapid rate at the moment.

988
00:49:11,320 --> 00:49:14,160
Speaker 2: In Sydney, these are blue chip areas, but they do

989
00:49:14,320 --> 00:49:16,480
Speaker 2: tend to be a little bit more volatile. So I

990
00:49:16,600 --> 00:49:18,960
Speaker 2: think once we start to see the market turning around,

991
00:49:19,320 --> 00:49:21,960
Speaker 2: Truak or the eastern suburbs in Melbourne is another really

992
00:49:22,000 --> 00:49:24,080
Speaker 2: good example of quite weak markets at the moment.

993
00:49:25,280 --> 00:49:27,640
Speaker 1: Are you seeing significant price reductions there?

994
00:49:28,280 --> 00:49:31,359
Speaker 2: Some markets around those, these really high high end blue

995
00:49:31,440 --> 00:49:33,600
Speaker 2: chip markets are down more than ten percent already.

996
00:49:33,760 --> 00:49:39,120
Speaker 1: Absolutely Wow, what does coatalities? So sitting here today because

997
00:49:39,160 --> 00:49:42,279
Speaker 1: we know we sat here pre budget, but sitting here

998
00:49:42,280 --> 00:49:47,320
Speaker 1: today has totality change its future outlook for Australia. I

999
00:49:47,480 --> 00:49:50,320
Speaker 1: think you I think by a regulation you said something

1000
00:49:50,480 --> 00:49:54,120
Speaker 1: like overall you Sydney, Melbourne, you were looking at a

1001
00:49:54,200 --> 00:49:56,920
Speaker 1: ten percent downturn by the end of this col under year,

1002
00:49:57,560 --> 00:50:00,279
Speaker 1: and you were saying place like Brisbane. I think think

1003
00:50:00,640 --> 00:50:03,439
Speaker 1: my memory serves me correctly six percent of a few

1004
00:50:03,480 --> 00:50:05,960
Speaker 1: of the others were a little less, but the bigger

1005
00:50:06,040 --> 00:50:07,040
Speaker 1: markets were ten percent.

1006
00:50:07,360 --> 00:50:09,759
Speaker 2: Are you still seeing that? Yeah, I think they might

1007
00:50:09,800 --> 00:50:12,480
Speaker 2: have been piked a trough on those numbers, but yeah,

1008
00:50:12,480 --> 00:50:14,319
Speaker 2: it's probably worse than a little bit since work since

1009
00:50:14,320 --> 00:50:18,239
Speaker 2: we've spoken and the budget was handed down, so not significantly.

1010
00:50:18,520 --> 00:50:20,799
Speaker 2: I still think, you know, overall, you know a macro

1011
00:50:20,920 --> 00:50:23,080
Speaker 2: view of about a ten percent drop in housing prices,

1012
00:50:23,480 --> 00:50:26,160
Speaker 2: given the context of the strength of the upswing and

1013
00:50:26,239 --> 00:50:28,759
Speaker 2: how much equity people hold in their homes. If you've

1014
00:50:28,800 --> 00:50:31,520
Speaker 2: got a Brisbane and you see housing prices four by

1015
00:50:31,600 --> 00:50:34,279
Speaker 2: ten percent, you're getting back to levels we've last seen

1016
00:50:34,320 --> 00:50:39,040
Speaker 2: in September last year. It's not that that larger falls

1017
00:50:39,120 --> 00:50:40,879
Speaker 2: in the past of the upswing, But if you see

1018
00:50:40,880 --> 00:50:43,239
Speaker 2: a ten percent fall in Melbourne values from the current level,

1019
00:50:43,480 --> 00:50:46,920
Speaker 2: you're getting back to twenty nineteen. That's significant, which is significant.

1020
00:50:47,000 --> 00:50:48,840
Speaker 2: So yeah, I think, you know, if you put a

1021
00:50:48,960 --> 00:50:51,520
Speaker 2: lending lens on this, or a risk lens, there are

1022
00:50:51,560 --> 00:50:53,719
Speaker 2: definitely some markets that if they do go through a

1023
00:50:53,800 --> 00:50:56,480
Speaker 2: more meaningful correction, there is going to be much more

1024
00:50:56,480 --> 00:51:00,000
Speaker 2: widespread levels of negative equity. The RBA estimates negative equidy

1025
00:51:00,040 --> 00:51:03,680
Speaker 2: in Australia is less than one percent, but obviously it's

1026
00:51:03,719 --> 00:51:08,240
Speaker 2: prices fall. Clearly we will see more prevalent of negative

1027
00:51:08,239 --> 00:51:10,359
Speaker 2: equity and probably pick up in areas numbers as well.

1028
00:51:10,520 --> 00:51:13,719
Speaker 1: I know you don't do the macro economics in terms

1029
00:51:13,760 --> 00:51:15,560
Speaker 1: of you know, looking at geo political stuff and all

1030
00:51:15,600 --> 00:51:19,080
Speaker 1: those other things, but at totality. But have you guys

1031
00:51:19,160 --> 00:51:21,600
Speaker 1: got a view on what to expect in New Yorgu's

1032
00:51:21,640 --> 00:51:25,440
Speaker 1: meeting for the RBA. Yeah, mate, it's I mean, compares

1033
00:51:25,440 --> 00:51:26,839
Speaker 1: to why the numbers come out in the end of July.

1034
00:51:27,040 --> 00:51:30,560
Speaker 2: But yeah, everyone's watching inflation. Obviously we see another uptick

1035
00:51:30,600 --> 00:51:33,200
Speaker 2: in the core inflation numbers like we saw through the

1036
00:51:33,280 --> 00:51:35,480
Speaker 2: main numbers, then yeah, I think it's game one for

1037
00:51:35,520 --> 00:51:38,320
Speaker 2: another twenty five basis point hike. I'm definitely not in

1038
00:51:38,360 --> 00:51:41,000
Speaker 2: the camp of two more rate hikes. I think one

1039
00:51:41,120 --> 00:51:43,560
Speaker 2: more and we're done, hopefully. But that doesn't mean we're

1040
00:51:43,560 --> 00:51:44,680
Speaker 2: about to see rate cuts.

1041
00:51:45,440 --> 00:51:46,520
Speaker 3: I think. Yeah.

1042
00:51:46,560 --> 00:51:48,440
Speaker 2: I think the second half of next year is when

1043
00:51:48,480 --> 00:51:51,120
Speaker 2: we'll see finally core inflation getting back to where the

1044
00:51:51,239 --> 00:51:53,160
Speaker 2: RBA wants it to be, and that'll be the trigger

1045
00:51:53,200 --> 00:51:54,040
Speaker 2: for rates coming down.

1046
00:51:54,239 --> 00:51:56,279
Speaker 1: There's a lot of stuff being published. I mean you see,

1047
00:51:56,440 --> 00:51:59,920
Speaker 1: you would have seen the Deroit deloid accesses on economic Update.

1048
00:52:01,640 --> 00:52:05,320
Speaker 1: You look at you read all the commentaries, you produce

1049
00:52:05,360 --> 00:52:08,480
Speaker 1: your own commentaries, you produce your own data and analysis.

1050
00:52:09,360 --> 00:52:11,880
Speaker 1: Has it do at any stage the government ring you up?

1051
00:52:12,040 --> 00:52:14,360
Speaker 1: The federal government say Tim, could you come down to

1052
00:52:14,440 --> 00:52:16,320
Speaker 1: Canberra and we'd like to sit down with you and

1053
00:52:16,440 --> 00:52:18,600
Speaker 1: talk to you about what you guys are seeing.

1054
00:52:19,280 --> 00:52:21,200
Speaker 2: Yeah, I think to the credit the governments are very

1055
00:52:21,360 --> 00:52:25,480
Speaker 2: open to speaking with the private sector with the marketplace.

1056
00:52:25,719 --> 00:52:30,040
Speaker 2: So absolutely we do provide briefings to different departments within

1057
00:52:30,120 --> 00:52:30,560
Speaker 2: the government.

1058
00:52:30,760 --> 00:52:32,759
Speaker 1: What about the elected officials like.

1059
00:52:35,680 --> 00:52:39,200
Speaker 2: I won't go there delve into that, but yeah, I

1060
00:52:39,239 --> 00:52:44,200
Speaker 2: think with say Treasury, with IBA, with Human Services. I

1061
00:52:44,280 --> 00:52:46,120
Speaker 2: mean a lot of these government departments are also clients

1062
00:52:46,160 --> 00:52:48,480
Speaker 2: of toatality as well. And with any of our clients,

1063
00:52:48,520 --> 00:52:51,160
Speaker 2: absolutely we do try to make sure that they're informed

1064
00:52:51,280 --> 00:52:53,200
Speaker 2: in the market trends and the sort of insights that

1065
00:52:53,239 --> 00:52:56,040
Speaker 2: we're producing and how it influences their decision making.

1066
00:52:56,840 --> 00:52:59,560
Speaker 1: You must be sitting back thinking, well, we're in this

1067
00:52:59,640 --> 00:53:04,359
Speaker 1: massive to a directory about before Christmas last year, right

1068
00:53:04,440 --> 00:53:07,959
Speaker 1: up into February. House prices continue on in my case,

1069
00:53:08,400 --> 00:53:11,839
Speaker 1: loans loan levels being at record levels, lending being at

1070
00:53:11,840 --> 00:53:16,600
Speaker 1: record levels, house prices continuing on the lack of supply

1071
00:53:16,760 --> 00:53:21,560
Speaker 1: relatives to demand, population growth going crazy increasing. What do

1072
00:53:21,600 --> 00:53:26,360
Speaker 1: you think sitting here today, Given like it's only like

1073
00:53:26,520 --> 00:53:31,880
Speaker 1: six months, not even six months, the change has been dramatic, It's.

1074
00:53:31,719 --> 00:53:34,760
Speaker 2: Been fast, and I think the complexity in the market

1075
00:53:35,239 --> 00:53:37,920
Speaker 2: is very different to what we're used to seeing. Like

1076
00:53:38,000 --> 00:53:39,919
Speaker 2: I said that, there's a lot of headwinds at play

1077
00:53:40,040 --> 00:53:43,720
Speaker 2: at the moment, but yeah, things are changing very quickly.

1078
00:53:43,840 --> 00:53:46,960
Speaker 2: And I think the fact that there's been so much

1079
00:53:48,200 --> 00:53:51,239
Speaker 2: curiosity about the impact of the federal budget at a

1080
00:53:51,320 --> 00:53:54,960
Speaker 2: time when we're not really seeing firm evidence yet of

1081
00:53:55,360 --> 00:53:58,680
Speaker 2: how much investors are pulled back, it just highlights how

1082
00:53:58,800 --> 00:54:03,000
Speaker 2: uncertain people are about changes in policy and how it's

1083
00:54:03,040 --> 00:54:06,120
Speaker 2: influencing the housing sector. And the reason for that is

1084
00:54:06,600 --> 00:54:10,480
Speaker 2: we have the vast majority of households have their wealth

1085
00:54:10,520 --> 00:54:13,600
Speaker 2: in housing. Yeah, it's about fifty five percent of Australian

1086
00:54:13,680 --> 00:54:16,120
Speaker 2: wealth is in the housing asset class, and it's about

1087
00:54:16,160 --> 00:54:19,160
Speaker 2: seventy five percent of our household debt is in housing

1088
00:54:19,200 --> 00:54:22,280
Speaker 2: as well. So that's why we see so much fascination

1089
00:54:22,480 --> 00:54:23,480
Speaker 2: with housing trends.

1090
00:54:23,760 --> 00:54:26,680
Speaker 1: I don't even use the words kiddishness, you know, and

1091
00:54:27,320 --> 00:54:30,839
Speaker 1: you know like I see a bit of I see

1092
00:54:30,880 --> 00:54:35,760
Speaker 1: a bit of politically insensitivity to what is and actually

1093
00:54:36,000 --> 00:54:41,160
Speaker 1: what is actually an economic outcome as opposed to just

1094
00:54:41,200 --> 00:54:42,040
Speaker 1: a political outcome.

1095
00:54:42,440 --> 00:54:42,759
Speaker 3: I see.

1096
00:54:43,760 --> 00:54:47,279
Speaker 1: I don't think government's treasury. I'm mean the Treasurer, but

1097
00:54:47,360 --> 00:54:52,200
Speaker 1: treasury who advised the Treasurer as having made or pulled

1098
00:54:52,239 --> 00:54:55,480
Speaker 1: the right lever in terms of perhaps timing, I mean

1099
00:54:55,480 --> 00:54:57,960
Speaker 1: apart factor that my person view TV they should have

1100
00:54:57,960 --> 00:55:00,320
Speaker 1: gone to an election with it, But just take that

1101
00:55:00,440 --> 00:55:02,759
Speaker 1: out for a second. If they were going to introduce it,

1102
00:55:02,800 --> 00:55:04,720
Speaker 1: they should introduce it next to you, and everything settled

1103
00:55:04,719 --> 00:55:06,800
Speaker 1: down a little bit. I just think the timing of

1104
00:55:06,880 --> 00:55:10,200
Speaker 1: this whole program, probably also the way they announced it,

1105
00:55:10,480 --> 00:55:13,120
Speaker 1: because there's been so many changes to it. I can't

1106
00:55:13,200 --> 00:55:16,759
Speaker 1: keep up on't about you. I'm confused. What's example, what's

1107
00:55:16,760 --> 00:55:21,080
Speaker 1: not exempt? You know, commercial properties, exampt superinnovation funds have changed.

1108
00:55:21,640 --> 00:55:22,680
Speaker 1: It's a bit of a nightmare.

1109
00:55:23,280 --> 00:55:25,080
Speaker 2: Yeah, I think Sidley, the amount of carve outs in

1110
00:55:25,120 --> 00:55:27,719
Speaker 2: the backpedaling we've seen since the budget was handed down

1111
00:55:28,360 --> 00:55:32,720
Speaker 2: highlights this wasn't thought out well enough that the decision

1112
00:55:32,719 --> 00:55:35,719
Speaker 2: makers didn't go through all the scenarios to think, well,

1113
00:55:35,760 --> 00:55:38,920
Speaker 2: what are the unintended consequences here? Yeah, I think for

1114
00:55:39,600 --> 00:55:42,560
Speaker 2: your federal budget, we should have seen a lot more

1115
00:55:42,680 --> 00:55:44,279
Speaker 2: strategic forethought going into it.

1116
00:55:44,600 --> 00:55:47,800
Speaker 1: Yeah, it seems like it was politically time to do it,

1117
00:55:48,280 --> 00:55:54,560
Speaker 1: but maybe not economically sensitively, sensitively analyzed.

1118
00:55:54,800 --> 00:55:55,680
Speaker 3: Yeah, that's right enough.

1119
00:55:55,760 --> 00:55:58,680
Speaker 1: Well, Tim, things very much as usual, made for your

1120
00:55:58,719 --> 00:56:02,400
Speaker 1: great insights and the insights of cautality. Appreciate it. I

1121
00:56:02,480 --> 00:56:07,400
Speaker 1: think that you're the way you've unpicked the brain of

1122
00:56:07,480 --> 00:56:10,239
Speaker 1: an investor is really important for those people who are

1123
00:56:10,320 --> 00:56:12,759
Speaker 1: thinking about becoming investor or being an investor or are

1124
00:56:12,760 --> 00:56:17,040
Speaker 1: an investor. That's really important around the uncertainty, but also

1125
00:56:17,239 --> 00:56:20,200
Speaker 1: just around the changes and yield and the timing. I

1126
00:56:20,280 --> 00:56:23,920
Speaker 1: actually I've never really thought it through, but the increase

1127
00:56:23,960 --> 00:56:27,160
Speaker 1: in yield as a result of the rent staying the

1128
00:56:27,200 --> 00:56:30,839
Speaker 1: same or going up and the price going down could

1129
00:56:30,920 --> 00:56:34,800
Speaker 1: well be the catalyst to bring people back into the

1130
00:56:34,840 --> 00:56:37,960
Speaker 1: marketplace at some stage. But that's going to be but

1131
00:56:38,120 --> 00:56:41,600
Speaker 1: that relies on a reduction in price, and it's going

1132
00:56:41,640 --> 00:56:45,480
Speaker 1: to be a gradual phenomenon. It's something happens. Tim Lawyls,

1133
00:56:45,520 --> 00:56:46,879
Speaker 1: thanks for much any thanks Mat