1
00:00:10,880 --> 00:00:14,400
Speaker 1: Hello, Welcome to The Australian's Money Puzzle podcast. I'm James Kirby.

2
00:00:14,440 --> 00:00:18,040
Speaker 1: Welcome aboard everybody. If you're an active property investor, you'll

3
00:00:18,079 --> 00:00:20,240
Speaker 1: know the mood is changing in the markets quite quickly.

4
00:00:20,280 --> 00:00:23,800
Speaker 1: I think we're looking at higher intustrates, possibly three more

5
00:00:24,160 --> 00:00:27,000
Speaker 1: rises from here. We're looking at higher construction costs due

6
00:00:27,000 --> 00:00:30,600
Speaker 1: to supply issues relating to the Iran crisis not promising.

7
00:00:31,160 --> 00:00:33,760
Speaker 1: And also I want to look at wasting your time

8
00:00:33,920 --> 00:00:37,120
Speaker 1: on properties where there is under quoting going on. It's infuriating,

9
00:00:37,159 --> 00:00:39,159
Speaker 1: I'm sure for anyone who's ever got caught in that.

10
00:00:39,200 --> 00:00:40,440
Speaker 1: I want to look at that. I want to look

11
00:00:40,440 --> 00:00:43,320
Speaker 1: at a few other changes that are basically eroding standards

12
00:00:43,840 --> 00:00:47,040
Speaker 1: in the industry, which you may not be particularly keen

13
00:00:47,080 --> 00:00:50,120
Speaker 1: to see, and certainly if they affect you, you won't

14
00:00:50,159 --> 00:00:52,960
Speaker 1: be keen to see them. My guest is Veronica Morgan.

15
00:00:53,040 --> 00:00:56,040
Speaker 1: She is a property advisor and a voice in the

16
00:00:56,040 --> 00:00:58,520
Speaker 1: property market, a unique voice, I think, and she's been

17
00:00:58,560 --> 00:01:01,960
Speaker 1: on the show before. She's great to talk. How are you, Veronica, I'm.

18
00:01:01,800 --> 00:01:03,800
Speaker 2: Well, Thank you very much, James. Thanks for calling me

19
00:01:03,840 --> 00:01:05,160
Speaker 2: a unique voice. I appreciate that.

20
00:01:06,160 --> 00:01:08,520
Speaker 1: I mean this, tell me one of the first things

21
00:01:08,560 --> 00:01:10,240
Speaker 1: I wanted to put to you because the last time

22
00:01:10,280 --> 00:01:13,640
Speaker 1: we spoke was around the time the CGT and Property

23
00:01:13,680 --> 00:01:16,800
Speaker 1: Gearing Review was announced, and you were very uncomfortable with

24
00:01:16,840 --> 00:01:21,039
Speaker 1: some aspects that were going on, specifically people being herded

25
00:01:21,120 --> 00:01:24,959
Speaker 1: iView like in by buyers agents that are working on masks,

26
00:01:24,959 --> 00:01:27,720
Speaker 1: getting lots of people to buy in lots of regional towns,

27
00:01:27,760 --> 00:01:29,880
Speaker 1: and to some extent, there was also the flows in

28
00:01:29,920 --> 00:01:33,319
Speaker 1: it in both sort of almost cornering a market in

29
00:01:33,360 --> 00:01:36,000
Speaker 1: a country town then bringing a whole part of people

30
00:01:36,000 --> 00:01:38,800
Speaker 1: into it. That was bad enough, but you also were

31
00:01:39,680 --> 00:01:41,920
Speaker 1: we didn't have time to talk about it. But there

32
00:01:41,920 --> 00:01:44,560
Speaker 1: are changes going on, isn't there in terms of buyers

33
00:01:44,640 --> 00:01:47,520
Speaker 1: agents and their stature. If you like, tell me quickly

34
00:01:47,760 --> 00:01:51,880
Speaker 1: your problem with buyers agents. It used to be that

35
00:01:51,960 --> 00:01:54,360
Speaker 1: people only bought in their own neighborhoods. Now a lot

36
00:01:54,400 --> 00:01:57,400
Speaker 1: of people listening to this show are encouraged to buy

37
00:01:57,440 --> 00:02:00,640
Speaker 1: interstate and it's a damn good idea. As an investor interested,

38
00:02:00,800 --> 00:02:02,760
Speaker 1: but you see a flaw in what's going on, tell

39
00:02:02,840 --> 00:02:03,360
Speaker 1: us about it.

40
00:02:03,920 --> 00:02:07,400
Speaker 2: Yeah, Look, it is smart to build a diversified portfolio,

41
00:02:07,560 --> 00:02:09,040
Speaker 2: like you buy everything around the corner from you.

42
00:02:09,120 --> 00:02:10,960
Speaker 3: Then that market tanks, then you're in trouble.

43
00:02:11,360 --> 00:02:13,440
Speaker 2: There's also you want to spread out your land tax

44
00:02:13,600 --> 00:02:16,919
Speaker 2: obligations and various other good reasons. The problem is where

45
00:02:17,240 --> 00:02:20,760
Speaker 2: buyers or investors are going to get the advice and

46
00:02:20,800 --> 00:02:23,160
Speaker 2: who they're getting that advice from in terms of where

47
00:02:23,200 --> 00:02:26,280
Speaker 2: to buy and how to buy and what has been

48
00:02:26,320 --> 00:02:29,200
Speaker 2: happening because there's a very low barrier to entry for

49
00:02:29,320 --> 00:02:31,560
Speaker 2: buyers agents and that means that they just get a

50
00:02:31,560 --> 00:02:33,640
Speaker 2: real estate agent's license, which is the same as a

51
00:02:33,639 --> 00:02:36,040
Speaker 2: selling agent or a property manager. Has got nothing in

52
00:02:36,080 --> 00:02:40,080
Speaker 2: there about property advice, about asset selection, about data even

53
00:02:40,520 --> 00:02:42,520
Speaker 2: and there's a whole bunch of things that it just

54
00:02:42,639 --> 00:02:46,280
Speaker 2: does not cover that a buyers agent needs. But there's

55
00:02:46,320 --> 00:02:50,799
Speaker 2: this also a simplification of the process whereby an agent

56
00:02:50,840 --> 00:02:53,519
Speaker 2: can go and get their license in Queensland, which is

57
00:02:53,560 --> 00:02:56,280
Speaker 2: the easiest state to get it, and then by automatic

58
00:02:56,440 --> 00:02:58,880
Speaker 2: mutual recognition they can go and then just get a

59
00:02:58,880 --> 00:03:01,840
Speaker 2: license in another state. It's assuming they even bother to

60
00:03:01,840 --> 00:03:03,840
Speaker 2: get a license in another state in which they're buying,

61
00:03:03,880 --> 00:03:08,040
Speaker 2: but that every single state and territory is completely different legislation,

62
00:03:08,520 --> 00:03:13,799
Speaker 2: completely different mental disclosure, completely different risk profiles, and that's

63
00:03:13,840 --> 00:03:16,839
Speaker 2: not even getting into the local dynamics of understanding what's

64
00:03:16,840 --> 00:03:19,760
Speaker 2: a good asset in any particular local area. So this

65
00:03:19,840 --> 00:03:24,000
Speaker 2: is an absolute minefield and consumers are just completely unaware

66
00:03:24,160 --> 00:03:26,840
Speaker 2: of the risks that they are taking on when they

67
00:03:26,880 --> 00:03:29,000
Speaker 2: engage these of borderless buyers agents.

68
00:03:29,200 --> 00:03:32,000
Speaker 1: What's the specific risk to the investor of the borderless

69
00:03:32,000 --> 00:03:35,000
Speaker 1: buyers agents. So you sitting in Sydney and you want

70
00:03:35,000 --> 00:03:37,960
Speaker 1: to buy in Queensland, you have no experience there. You

71
00:03:38,040 --> 00:03:41,160
Speaker 1: go in with an agent who has just basically had

72
00:03:41,160 --> 00:03:43,400
Speaker 1: a robber stamped license off the back of their real

73
00:03:43,480 --> 00:03:44,840
Speaker 1: estate agent qualification.

74
00:03:45,160 --> 00:03:49,200
Speaker 2: What's the concern the concern So maybe not so much

75
00:03:49,240 --> 00:03:52,240
Speaker 2: buying in Queensland, but certainly buying in regional towns or

76
00:03:52,320 --> 00:03:54,960
Speaker 2: perhaps in another city, maybe in Perth for example, and

77
00:03:55,040 --> 00:03:56,920
Speaker 2: you're dealing with an agent who.

78
00:03:56,920 --> 00:04:01,440
Speaker 3: Isn't doesn't know the good areas or the good types

79
00:04:01,480 --> 00:04:02,200
Speaker 3: of properties.

80
00:04:02,400 --> 00:04:04,960
Speaker 2: They don't understand the legislative process, so therefore they don't

81
00:04:04,960 --> 00:04:07,720
Speaker 2: even understand what information is actually required to be given

82
00:04:07,720 --> 00:04:09,400
Speaker 2: to them by the agent and what else they need

83
00:04:09,440 --> 00:04:12,200
Speaker 2: to know in order to avoid their client buying a

84
00:04:12,240 --> 00:04:16,400
Speaker 2: liability that they're completely unaware of. They then go sale

85
00:04:16,440 --> 00:04:18,520
Speaker 2: from the sunset, and the client's the one stuck with

86
00:04:18,560 --> 00:04:21,839
Speaker 2: this property. But not only that, they're actually making markets

87
00:04:21,880 --> 00:04:25,600
Speaker 2: quite often, so they're pushing prices up in markets that

88
00:04:25,720 --> 00:04:29,919
Speaker 2: really are overinflated because of this external investor activity not

89
00:04:30,760 --> 00:04:34,080
Speaker 2: underpinned by local owner occupy or local investor activity.

90
00:04:34,440 --> 00:04:35,760
Speaker 3: So you've got all this stuff.

91
00:04:35,520 --> 00:04:38,560
Speaker 2: Happening that as the consumer who's engaged the buyers agent

92
00:04:38,640 --> 00:04:42,960
Speaker 2: is completely unaware of. I talk to sales agents across

93
00:04:43,000 --> 00:04:45,920
Speaker 2: the country often and I will ask them questions, particularly

94
00:04:45,960 --> 00:04:49,440
Speaker 2: in non city areas or original areas, how many buyers

95
00:04:49,440 --> 00:04:53,640
Speaker 2: agents they're dealing with. And this is becoming uniform because

96
00:04:53,680 --> 00:04:56,240
Speaker 2: there's large investment houses if you want to call in

97
00:04:56,320 --> 00:04:58,839
Speaker 2: that they've got to buy volume in order to continue

98
00:04:58,839 --> 00:05:02,280
Speaker 2: their profitability, right, So they're buying in these areas and

99
00:05:02,400 --> 00:05:04,480
Speaker 2: not even inspecting the properties. They're doing it on the

100
00:05:04,520 --> 00:05:07,159
Speaker 2: back of a what app video from the agent. The

101
00:05:07,240 --> 00:05:09,560
Speaker 2: agents are laughing about how easy it is to sell,

102
00:05:09,960 --> 00:05:12,200
Speaker 2: and easy is to sell crap properties that they'd struggle

103
00:05:12,279 --> 00:05:14,880
Speaker 2: to sell normally, and for more money as well.

104
00:05:15,040 --> 00:05:17,640
Speaker 1: Can you name some towns You don't after name people,

105
00:05:17,720 --> 00:05:19,440
Speaker 1: but can you name some towns where this is happening.

106
00:05:19,560 --> 00:05:20,640
Speaker 3: Oh absolutely, I can talk.

107
00:05:20,720 --> 00:05:25,760
Speaker 2: There's Ballarat, Bendigo, It's happened in Geelong. I have spoken

108
00:05:25,760 --> 00:05:28,400
Speaker 2: to agents in Townsville and Tumba in New South Wales.

109
00:05:28,400 --> 00:05:31,520
Speaker 2: I've spoken to agents in Tamworth. I've spoken to agents

110
00:05:31,560 --> 00:05:34,480
Speaker 2: in Wagger. I've spoken to agents in Aubrey. I've spoken

111
00:05:34,520 --> 00:05:37,560
Speaker 2: to agents in Dubbo. That's and I've spoken to agents

112
00:05:37,600 --> 00:05:39,920
Speaker 2: in Perth as well. I mean that's obviously Metro.

113
00:05:39,880 --> 00:05:41,960
Speaker 1: Is a property version of Pomp and Dump.

114
00:05:42,080 --> 00:05:45,719
Speaker 3: Really, yep, that's it. You said it exactly what it is.

115
00:05:45,680 --> 00:05:47,520
Speaker 1: And it doesn't seem to have been reported to any

116
00:05:47,520 --> 00:05:48,000
Speaker 1: great degree.

117
00:05:48,120 --> 00:05:50,400
Speaker 2: No, And I'm waiting for this to crash because this

118
00:05:50,520 --> 00:05:54,440
Speaker 2: is a wave. It's out there. There's been some random posts,

119
00:05:54,440 --> 00:05:57,200
Speaker 2: I've seen some newspaper articles on it, has a lot

120
00:05:57,200 --> 00:05:58,840
Speaker 2: of talk within the industry about it.

121
00:05:59,240 --> 00:06:03,400
Speaker 3: But yeah, I'm for this to actually suddenly. It's almost

122
00:06:03,400 --> 00:06:05,719
Speaker 3: like it's going to happen. It's having gradually and then

123
00:06:05,720 --> 00:06:07,000
Speaker 3: all of a sudden it's going to suddenly happen.

124
00:06:07,080 --> 00:06:09,120
Speaker 1: That's the way these things happen. They are really unfold

125
00:06:09,279 --> 00:06:11,760
Speaker 1: and it's specifically a risk for investors, and it's specifically

126
00:06:11,800 --> 00:06:14,720
Speaker 1: a risk for the investor who goes outside their home territory.

127
00:06:14,760 --> 00:06:18,960
Speaker 1: Is that fair to say? Okay, very interesting. It's certainly

128
00:06:19,000 --> 00:06:22,599
Speaker 1: something that the point you're making and the concerns you're

129
00:06:22,680 --> 00:06:25,480
Speaker 1: raising can only be amplified by the fact that interest

130
00:06:25,560 --> 00:06:29,719
Speaker 1: rates are rising and they are about to get squeezed

131
00:06:29,760 --> 00:06:32,080
Speaker 1: along with many others. Let's have a break. We'll be

132
00:06:32,080 --> 00:06:45,800
Speaker 1: back in one moment. Hello, Welcome back to The Australian's

133
00:06:45,839 --> 00:06:49,080
Speaker 1: Money Puzzle podcast. I'm talking to Veronica Morgan buyer's agent

134
00:06:49,120 --> 00:06:53,640
Speaker 1: reader estate agent and what will we say voice for

135
00:06:53,800 --> 00:06:58,400
Speaker 1: investors who may be in danger? I think in some

136
00:06:58,520 --> 00:07:00,799
Speaker 1: of the practices that are happening, I think she highlighted

137
00:07:00,800 --> 00:07:02,880
Speaker 1: them pretty clearly at the start of the show. I'm

138
00:07:02,920 --> 00:07:06,080
Speaker 1: amazed this hasn't come out more often, Veronica, what's going on?

139
00:07:06,200 --> 00:07:08,160
Speaker 1: And even on our own show we haven't covered it much,

140
00:07:08,240 --> 00:07:11,240
Speaker 1: but we're covering it today. That is the abuse basically

141
00:07:11,800 --> 00:07:14,640
Speaker 1: of a system which has evolved so quickly around US

142
00:07:14,720 --> 00:07:17,560
Speaker 1: buyers agents, which are at core a great idea and

143
00:07:17,600 --> 00:07:21,800
Speaker 1: I use them myself, but they can be of course abused.

144
00:07:21,800 --> 00:07:24,000
Speaker 1: The whole process can be abused, and to some extent

145
00:07:24,120 --> 00:07:27,360
Speaker 1: a machine is created which can capture a lot of

146
00:07:27,480 --> 00:07:30,840
Speaker 1: buyers who may be a bit innocent basically rolling into this.

147
00:07:31,160 --> 00:07:33,640
Speaker 1: I mentioned how rates are about to rise. On top

148
00:07:33,680 --> 00:07:36,400
Speaker 1: of this, Veronica, tell me just about your own sense

149
00:07:36,440 --> 00:07:39,240
Speaker 1: in the market of the pressures around rate rising. They

150
00:07:39,280 --> 00:07:41,640
Speaker 1: say that is the economists are saying three more rate

151
00:07:41,720 --> 00:07:43,720
Speaker 1: rises are bringing us up to it, but almost five

152
00:07:43,760 --> 00:07:45,640
Speaker 1: percent on the cash that would bring us up to

153
00:07:45,760 --> 00:07:50,360
Speaker 1: seven sevens and eights on mortgages. One particular cohort I'm

154
00:07:50,400 --> 00:07:53,120
Speaker 1: looking at very closely and always have is first home buyers,

155
00:07:53,440 --> 00:07:56,560
Speaker 1: particularly those who went into the government's scheme, the now

156
00:07:56,680 --> 00:07:58,960
Speaker 1: famous five percent depart of the scheme, which I like

157
00:07:59,000 --> 00:08:02,520
Speaker 1: to call the ninety five percent mortgage scheme. These people

158
00:08:02,520 --> 00:08:05,600
Speaker 1: are ninety five percent mortgages. What's going to happen to

159
00:08:05,600 --> 00:08:07,160
Speaker 1: them with it? If we have three rate rises.

160
00:08:07,840 --> 00:08:09,640
Speaker 3: This is something that's very close to my heart.

161
00:08:09,760 --> 00:08:11,440
Speaker 2: One of the other things that I do, I've co

162
00:08:11,520 --> 00:08:13,520
Speaker 2: founded at home Bio Academy, and we have a course

163
00:08:13,560 --> 00:08:15,120
Speaker 2: to teach first home buyers how to buy a.

164
00:08:15,080 --> 00:08:18,120
Speaker 3: Property, and it is absolutely alarming.

165
00:08:18,160 --> 00:08:20,080
Speaker 2: One of the things that we really try to encourage

166
00:08:20,120 --> 00:08:22,160
Speaker 2: first home buyers to think about is that your first

167
00:08:22,240 --> 00:08:24,280
Speaker 2: rung on the ladder needs to be very firm, otherwise

168
00:08:24,280 --> 00:08:26,200
Speaker 2: you're never going to reach the next rung or it's

169
00:08:26,200 --> 00:08:27,600
Speaker 2: going to collapse under you and you're going to be

170
00:08:27,600 --> 00:08:28,160
Speaker 2: stuck there.

171
00:08:28,600 --> 00:08:31,480
Speaker 3: So buying what's known.

172
00:08:31,400 --> 00:08:33,440
Speaker 2: As a quality asset if you like, or even with

173
00:08:33,480 --> 00:08:37,120
Speaker 2: an investor's mindset, is really important to make sure that

174
00:08:37,160 --> 00:08:39,640
Speaker 2: you're not just buying anything to get onto the ladder

175
00:08:39,679 --> 00:08:42,520
Speaker 2: and find yourself in a deficit from day one.

176
00:08:42,800 --> 00:08:45,000
Speaker 3: And yes, we're already.

177
00:08:44,679 --> 00:08:47,480
Speaker 2: Seeing, you know, it's certainly in Sydney and Melbourne, we're

178
00:08:47,480 --> 00:08:51,000
Speaker 2: already seeing immediate impact of rate rises because there are

179
00:08:51,040 --> 00:08:53,840
Speaker 2: the two softest markets really in the country, and so

180
00:08:54,120 --> 00:08:56,360
Speaker 2: you're going to see that first and obviously we'll roll out.

181
00:08:56,720 --> 00:08:59,360
Speaker 2: So we have seen this before where prices have really

182
00:08:59,400 --> 00:09:01,480
Speaker 2: gone backwards and through a period time. Look they'll go

183
00:09:01,600 --> 00:09:03,440
Speaker 2: up again at some point, but in that period of

184
00:09:03,440 --> 00:09:06,679
Speaker 2: time where they're going backwards and rates arising, that's very

185
00:09:06,720 --> 00:09:09,120
Speaker 2: difficult for at first home buy particularly if they are

186
00:09:09,120 --> 00:09:11,679
Speaker 2: in a situation where they're owing the bank more than the.

187
00:09:11,600 --> 00:09:12,520
Speaker 3: Property is worth.

188
00:09:12,600 --> 00:09:14,920
Speaker 2: If they would have to sell it, and even if

189
00:09:14,920 --> 00:09:17,480
Speaker 2: at five percent they then had to suddenly sell it,

190
00:09:17,480 --> 00:09:20,120
Speaker 2: the cost of selling would basically eat up whatever it

191
00:09:20,160 --> 00:09:22,480
Speaker 2: could either gotten that property anyway. And first time buyers

192
00:09:22,480 --> 00:09:23,800
Speaker 2: are very vulnerable in this time.

193
00:09:24,200 --> 00:09:26,000
Speaker 1: So those buyers who went in on the ninety five

194
00:09:26,000 --> 00:09:28,400
Speaker 1: percent mortgage scheme, it seems to me the stature that

195
00:09:28,520 --> 00:09:30,600
Speaker 1: they are stressed with the fact that their rates are

196
00:09:30,600 --> 00:09:32,760
Speaker 1: gone up, but they are stock. They can't move.

197
00:09:33,800 --> 00:09:36,640
Speaker 2: If they do move, if they sell, they're probably going

198
00:09:36,679 --> 00:09:39,599
Speaker 2: to lose their five percent. They may lose more than that.

199
00:09:40,160 --> 00:09:43,720
Speaker 2: And I'm hoping and we certainly encourage some money smarts

200
00:09:43,720 --> 00:09:46,640
Speaker 2: obviously with our first home by students, and it's very

201
00:09:46,640 --> 00:09:47,960
Speaker 2: important they go and get good advice.

202
00:09:48,040 --> 00:09:50,160
Speaker 3: But in making sure you start off with buffers in place,

203
00:09:50,200 --> 00:09:51,880
Speaker 3: for example, that's going to help you.

204
00:09:52,000 --> 00:09:53,439
Speaker 2: So if you know you bought a good as set

205
00:09:53,600 --> 00:09:55,800
Speaker 2: that even if it falls in value a little bit,

206
00:09:56,160 --> 00:09:58,760
Speaker 2: you're not going to plummet. You'll be amongst those with

207
00:09:58,840 --> 00:10:00,960
Speaker 2: the first to take off again when prices rise again.

208
00:10:01,040 --> 00:10:03,000
Speaker 2: Then that gives you a lot more comfort in your

209
00:10:03,040 --> 00:10:05,360
Speaker 2: secure position. If you brought a bad asset that the

210
00:10:05,400 --> 00:10:08,080
Speaker 2: bottom palls out of it and everyone's trying to sell,

211
00:10:08,280 --> 00:10:10,600
Speaker 2: you're in a real predicament. But if you haven't got

212
00:10:10,640 --> 00:10:12,760
Speaker 2: buffers in place, you can't even ride it out.

213
00:10:13,440 --> 00:10:15,880
Speaker 1: So the flaws, I imagine love that scheme was that

214
00:10:16,600 --> 00:10:18,240
Speaker 1: they put the money in front of everybody and ask

215
00:10:18,320 --> 00:10:21,120
Speaker 1: no questions. Really, it was there to be taken. It's universal.

216
00:10:21,160 --> 00:10:22,960
Speaker 1: We never had a scheme like that before. It had

217
00:10:23,040 --> 00:10:25,400
Speaker 1: no limits. Anyone who rocked up and said I'm buying

218
00:10:25,400 --> 00:10:27,679
Speaker 1: my first film could fail of it and take a

219
00:10:27,840 --> 00:10:30,240
Speaker 1: ninety five percent mortgage. But there was no guidance on

220
00:10:30,360 --> 00:10:31,760
Speaker 1: how to buy whatsoever.

221
00:10:32,040 --> 00:10:34,880
Speaker 2: There never is and that's really because our politicians don't understand,

222
00:10:35,120 --> 00:10:37,280
Speaker 2: and in fact, to that end, if you think about it,

223
00:10:37,440 --> 00:10:40,440
Speaker 2: so many of our first home buyer incentives are designed

224
00:10:40,480 --> 00:10:43,120
Speaker 2: to help get them into brand new properties, whether that

225
00:10:43,200 --> 00:10:44,680
Speaker 2: be a brand new house or apartment.

226
00:10:44,840 --> 00:10:47,600
Speaker 3: Right, well, we know there's loads.

227
00:10:47,280 --> 00:10:51,560
Speaker 2: Of evidence that says, particularly apartments, that brand new apartments

228
00:10:51,640 --> 00:10:54,520
Speaker 2: the first time resale is the number one loss making

229
00:10:54,600 --> 00:10:57,679
Speaker 2: asset when you're looking at property right probably closely followed

230
00:10:57,720 --> 00:10:58,640
Speaker 2: by the brand new houses.

231
00:10:58,720 --> 00:11:01,720
Speaker 3: So there's a b huge amount of evidence and.

232
00:11:01,840 --> 00:11:05,640
Speaker 2: Ongoing even in a boom, people are losing money on

233
00:11:05,800 --> 00:11:09,040
Speaker 2: apartments that they've bought right off the plan. So you've

234
00:11:09,080 --> 00:11:12,280
Speaker 2: got government schemes at state level, and they have been

235
00:11:12,320 --> 00:11:15,160
Speaker 2: at federal level as well encouraging people to go and

236
00:11:15,280 --> 00:11:17,280
Speaker 2: get that to be their first rung on the ladder.

237
00:11:17,600 --> 00:11:19,640
Speaker 2: So you start off with negative equity, you don't have

238
00:11:19,720 --> 00:11:21,920
Speaker 2: hard to go and so we've got a government that

239
00:11:22,000 --> 00:11:26,079
Speaker 2: doesn't Governments plural do not understand there's a difference between

240
00:11:26,120 --> 00:11:28,640
Speaker 2: getting on the market safely and getting into it with risk.

241
00:11:29,000 --> 00:11:31,360
Speaker 1: So what you're saying suggests that anyone who bought an

242
00:11:31,360 --> 00:11:34,120
Speaker 1: apartment in this first step ever with the ninety five

243
00:11:34,160 --> 00:11:36,480
Speaker 1: percent mortgage, they're really at the call face. There are

244
00:11:36,520 --> 00:11:39,520
Speaker 1: the most vulnerable cohort. Yes in the market.

245
00:11:39,920 --> 00:11:41,720
Speaker 3: Okay, if they bought a brand new apartment.

246
00:11:41,840 --> 00:11:44,000
Speaker 1: Yeah, all right, we'll take us for a breakfasing back

247
00:11:44,000 --> 00:11:55,160
Speaker 1: at the moment. Hello, welcome back to The Australian's Money Puzzle.

248
00:11:55,280 --> 00:11:57,800
Speaker 1: James Kirby here with Veronica Morgan. Great to have you

249
00:11:57,880 --> 00:12:01,160
Speaker 1: on the show again. Veronica, you are very clear thinking interviewee,

250
00:12:01,640 --> 00:12:03,600
Speaker 1: which is always a pleasure to a deal with. Tell

251
00:12:03,640 --> 00:12:06,120
Speaker 1: me about the budget and what's happening in terms of

252
00:12:06,160 --> 00:12:08,719
Speaker 1: the government going to change. They are certainly going to

253
00:12:08,800 --> 00:12:12,520
Speaker 1: change CGT, they are possibly going to look at negative

254
00:12:12,559 --> 00:12:14,760
Speaker 1: gearing cut into the chase. They're going to change the

255
00:12:14,840 --> 00:12:17,800
Speaker 1: discount that we're all used to getting fifty percent off

256
00:12:17,840 --> 00:12:21,000
Speaker 1: the CGT that we are due as investors are for

257
00:12:21,080 --> 00:12:24,080
Speaker 1: a year. What do you think is going to happen

258
00:12:24,120 --> 00:12:27,319
Speaker 1: and how are you preparing anyone in your area or

259
00:12:27,360 --> 00:12:30,079
Speaker 1: clients for this potential change.

260
00:12:31,000 --> 00:12:33,040
Speaker 3: Look, I don't know what's going to happen. Let's face it.

261
00:12:33,600 --> 00:12:35,240
Speaker 3: I'm not going to put my voice out there and

262
00:12:35,280 --> 00:12:36,480
Speaker 3: say I think they're going to do this all that.

263
00:12:37,040 --> 00:12:38,679
Speaker 2: I think it's right for change, you know, I was

264
00:12:38,800 --> 00:12:41,440
Speaker 2: actually surprised that it didn't come up in twenty nineteen,

265
00:12:41,600 --> 00:12:44,760
Speaker 2: the unlosable election was lost over the capital gains tax

266
00:12:45,000 --> 00:12:47,679
Speaker 2: really amongst other things, and that at that time I

267
00:12:47,720 --> 00:12:50,120
Speaker 2: thought it's interesting they're not touching CGT because I would

268
00:12:50,160 --> 00:12:51,440
Speaker 2: have thought that would be an easier thing.

269
00:12:51,440 --> 00:12:53,160
Speaker 1: I would have thought it was going to be easier too. Yeah,

270
00:12:53,200 --> 00:12:55,240
Speaker 1: But but this time, I know, would you take it

271
00:12:55,280 --> 00:12:56,800
Speaker 1: that there is a different mood this time, that the

272
00:12:56,880 --> 00:12:57,679
Speaker 1: reaction is different?

273
00:12:58,160 --> 00:13:01,199
Speaker 2: Is that much more point on CGT rather than negative gearing,

274
00:13:01,559 --> 00:13:03,959
Speaker 2: which I think is appropriate to be quite frank, the

275
00:13:04,440 --> 00:13:06,559
Speaker 2: tax reform is needed, so I think that they do

276
00:13:06,720 --> 00:13:08,280
Speaker 2: need to look at it. I think where we've got

277
00:13:08,360 --> 00:13:11,920
Speaker 2: a problem here is that it's been pitched as this

278
00:13:12,080 --> 00:13:15,439
Speaker 2: will solve the problem, this will solve the affordability crisis,

279
00:13:15,480 --> 00:13:17,480
Speaker 2: and I think that is just basically kicking the can

280
00:13:17,600 --> 00:13:20,520
Speaker 2: further down the road, another bit of investor bashing, and

281
00:13:20,679 --> 00:13:26,280
Speaker 2: it's not really addressing the myriad causes of housing affordability

282
00:13:26,280 --> 00:13:30,839
Speaker 2: in this country. Now. Investment activity absolutely has contributed to it.

283
00:13:31,040 --> 00:13:33,800
Speaker 2: Let's just not pull punches here. Let's be real, right,

284
00:13:34,520 --> 00:13:38,120
Speaker 2: we have to acknowledge that, but it's not the only contributor.

285
00:13:38,320 --> 00:13:40,600
Speaker 2: And I think that there needs to be a capital

286
00:13:40,640 --> 00:13:43,240
Speaker 2: gains tax discn If you remember what it was originally

287
00:13:43,280 --> 00:13:48,880
Speaker 2: brought in for, it's to simplify the whole calculation of exactly. Look,

288
00:13:49,200 --> 00:13:52,000
Speaker 2: I've often thought fifty percent was too generous quietly, just

289
00:13:52,080 --> 00:13:54,640
Speaker 2: quietly loudly, now I'm saying it out loud. I've often

290
00:13:54,640 --> 00:13:56,480
Speaker 2: thought it was too generous, and it was set in

291
00:13:56,559 --> 00:13:58,679
Speaker 2: a time when inflation is higher than it abnit is now,

292
00:13:59,240 --> 00:14:01,640
Speaker 2: And so there's an argument that can be put forward

293
00:14:01,679 --> 00:14:03,520
Speaker 2: to say that it's that. But I also think that

294
00:14:03,640 --> 00:14:06,360
Speaker 2: one year is too short. I think that they could

295
00:14:06,440 --> 00:14:09,839
Speaker 2: be clever in how they structure this to encourage longer.

296
00:14:09,640 --> 00:14:12,240
Speaker 1: Term try investing Okay. Yes, it's an interesting point. So

297
00:14:12,440 --> 00:14:15,200
Speaker 1: rather than getting your discount after a year, encourage people

298
00:14:15,200 --> 00:14:18,720
Speaker 1: to stay in the market and discourage property flippers. Yeap, Okay,

299
00:14:19,120 --> 00:14:21,480
Speaker 1: maybe they will do something like that. It's wide open.

300
00:14:21,560 --> 00:14:23,440
Speaker 1: No one is sure and the treasure has been very

301
00:14:23,480 --> 00:14:26,000
Speaker 1: coy as to what plans he has, but he clearly

302
00:14:26,080 --> 00:14:28,440
Speaker 1: has plants. That's the point I think to make. Okay.

303
00:14:28,440 --> 00:14:30,280
Speaker 1: I wanted to put a question to you, Kevin and

304
00:14:30,440 --> 00:14:32,240
Speaker 1: recent days which I thought would suit you. From Luke,

305
00:14:32,920 --> 00:14:35,120
Speaker 1: he said, here's something I haven't heard talked about in

306
00:14:35,200 --> 00:14:37,200
Speaker 1: the short time between now and the May budget. Do

307
00:14:37,280 --> 00:14:39,960
Speaker 1: you reckon there could be a bump in property prices

308
00:14:40,760 --> 00:14:43,600
Speaker 1: due to it being potentially the last chance to buy

309
00:14:43,640 --> 00:14:46,880
Speaker 1: an investment property that may be grandfathered into the old

310
00:14:47,080 --> 00:14:52,000
Speaker 1: and favorable fifty percent CGT discount. Really good question, Luke.

311
00:14:52,440 --> 00:14:56,960
Speaker 1: We often have a spike prior to tax changes. The

312
00:14:57,080 --> 00:14:59,480
Speaker 1: issue here is we don't know precisely what the tax

313
00:14:59,560 --> 00:15:01,200
Speaker 1: change is. Do you see anything?

314
00:15:01,280 --> 00:15:01,440
Speaker 2: Yeah?

315
00:15:01,560 --> 00:15:02,040
Speaker 1: Suggest that?

316
00:15:03,120 --> 00:15:06,600
Speaker 2: No, I think that'd be a fairly bullish person who

317
00:15:06,640 --> 00:15:08,360
Speaker 2: would take a punt on that and go on by

318
00:15:08,560 --> 00:15:11,160
Speaker 2: on the premise of that. So I would think that

319
00:15:11,320 --> 00:15:14,720
Speaker 2: the opposite might be more likely to occur, whereas people

320
00:15:14,800 --> 00:15:18,040
Speaker 2: might actually decide to sell now in advance to that,

321
00:15:18,240 --> 00:15:20,400
Speaker 2: so we're thinking maybe of selling the next couple of years.

322
00:15:20,440 --> 00:15:21,840
Speaker 2: They might say, you know what, I'm not going to

323
00:15:21,920 --> 00:15:24,960
Speaker 2: run the risk of it coming through being reduced and

324
00:15:25,080 --> 00:15:27,880
Speaker 2: not being grandfathered, and I have been caught out. So

325
00:15:28,200 --> 00:15:30,480
Speaker 2: I would think that's more likely to occur prior to

326
00:15:30,880 --> 00:15:32,480
Speaker 2: the budget rather than the other way around.

327
00:15:32,640 --> 00:15:35,280
Speaker 1: I think listeners in case you don't know this grand father,

328
00:15:35,280 --> 00:15:38,080
Speaker 1: and what it means is that they would bring in

329
00:15:38,160 --> 00:15:40,640
Speaker 1: the legislation, they would change the CGT, but it would

330
00:15:40,640 --> 00:15:43,640
Speaker 1: only change from the day of the budget, and anyone

331
00:15:43,640 --> 00:15:45,440
Speaker 1: who had bought a property prior to the day of

332
00:15:45,480 --> 00:15:48,400
Speaker 1: the budget, the CGT engines that were in place when

333
00:15:48,440 --> 00:15:51,840
Speaker 1: they bought their property would continue until that whole kind

334
00:15:51,840 --> 00:15:54,400
Speaker 1: of corehurt runs off. That's a typical way they do

335
00:15:54,520 --> 00:15:57,400
Speaker 1: things now. Is its standard almost But there's been really

336
00:15:57,480 --> 00:15:59,360
Speaker 1: the bit about whether if they do this, whether they

337
00:15:59,360 --> 00:16:02,840
Speaker 1: should ground for order it because if their grandfather is

338
00:16:03,000 --> 00:16:06,160
Speaker 1: a softer measure than it might have been. God feeling

339
00:16:06,760 --> 00:16:08,240
Speaker 1: from you, do you think their grandfather it?

340
00:16:08,280 --> 00:16:11,000
Speaker 2: If they do it, it depends if they need the

341
00:16:11,040 --> 00:16:13,440
Speaker 2: Greens votes to get it through because they are very

342
00:16:13,520 --> 00:16:15,360
Speaker 2: loud and proud about not grandfathering.

343
00:16:15,640 --> 00:16:18,200
Speaker 1: Yes, that's right. I got to say from my twop

344
00:16:18,240 --> 00:16:20,600
Speaker 1: and sports is that they would not bring in such

345
00:16:20,640 --> 00:16:22,840
Speaker 1: a thing and not grandfather I think it would be whype,

346
00:16:22,920 --> 00:16:26,200
Speaker 1: not outrageous. In the overall scheme of things, where investors

347
00:16:26,240 --> 00:16:28,200
Speaker 1: try to invest long term, they try to invest on

348
00:16:28,280 --> 00:16:31,360
Speaker 1: the basis of policies that shouldn't really shouldn't bounce around,

349
00:16:31,360 --> 00:16:34,080
Speaker 1: and if they did this, it would bounce it around. Okay, terrific,

350
00:16:34,240 --> 00:16:36,440
Speaker 1: Running out of time. Veronica, thank you very much for

351
00:16:36,480 --> 00:16:38,000
Speaker 1: coming on the show today. Great to talk to you

352
00:16:38,080 --> 00:16:39,520
Speaker 1: as always, absolute pleasure.

353
00:16:39,600 --> 00:16:40,200
Speaker 3: Thank you, James.

354
00:16:41,200 --> 00:16:44,320
Speaker 1: That was Veronica Morgan folks properly Advisor, real estate agent,

355
00:16:44,480 --> 00:16:48,680
Speaker 1: buyer's Advocate and also runs that buyer's Academy. Interesting operation.

356
00:16:48,880 --> 00:16:51,640
Speaker 1: Lovely to talk to her. Thanks for listening today, Keep

357
00:16:51,800 --> 00:16:55,240
Speaker 1: the emails rolling, Thank you very much. The Money Puzzle

358
00:16:55,320 --> 00:16:58,720
Speaker 1: at the Australian dot com dot Au. Today's show was

359
00:16:58,800 --> 00:17:04,480
Speaker 1: produced by Tiffany Dimak. Talk You Soon, se

360
00:17:08,040 --> 00:17:08,520
Speaker 2: Sermon