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

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Speaker 1: James Kirby, the web editor at The Australian, and welcome

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Speaker 1: aboard everybody. I imagine that every now and again as

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Speaker 1: an investor, it makes a lot of sense for everybody

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Speaker 1: to stand back a little bit and jump above the

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Speaker 1: noise and take a look at some of the bigger

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Speaker 1: questions and the bigger issues that are emerging and shaping

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Speaker 1: the property market we're investing in. I have my guest today.

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Speaker 1: I was looking for someone that could give us a

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Speaker 1: helicopter view, if you like, of the property market. He's

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Speaker 1: been on before. He is the ideal person. He fits

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Speaker 1: the bill. It's Louis Christopher of SQM Research.

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Speaker 2: How are you, Louis, goody, Jane's nice to be with

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Speaker 2: you and your audience once more.

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Speaker 1: It's great to have you on board. Some of the

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Speaker 1: bigger themes I think through the mar market this year,

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Speaker 1: I want to just put on the table today because

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Speaker 1: we often talk about them and I want to actually

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Speaker 1: sort of put them in properly and do them properly today.

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Speaker 1: And one of the sort of running issues all year

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Speaker 1: is about whether this market that we all think we

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Speaker 1: know the Australian property market, whether it's really changing, and

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Speaker 1: whether the regional markets are to some extent sort of

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Speaker 1: breaking off and going their own way. There was always

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Speaker 1: a we thought it was a natural order of things

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Speaker 1: and property Sydney was the dearest, Melbourne was the second dearest,

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Speaker 1: then Brisbane, then pert and Adelaide naturally enough linked with

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Speaker 1: the size of those cities. That's not happening this year,

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Speaker 1: very different story. Melbourne is about fourth on the ladder,

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Speaker 1: Adelaide and part are very hot markets at the moment.

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Speaker 1: Do you think that the market is changing into regional

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Speaker 1: distinct regional markets.

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Speaker 2: I think for twenty twenty four we've seen nationally a

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Speaker 2: very mixed housing market. You're right to point out, and

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Speaker 2: Perth of being the outperformers. I would like to add

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Speaker 2: into that Brisbane as well. They are three cities which

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Speaker 2: on our numbers, and I'm aware of our peers as well,

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Speaker 2: are recording still strong capital growth. So, for instance, Perth

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Speaker 2: over the past twelve months we've got dwelling prices up

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Speaker 2: near twenty four percent, extraordinarily strong. I contrast that with

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Speaker 2: say Melbourne and at this point in time, over the

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Speaker 2: last thirty days, we're actually recording some falls and dwelling

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Speaker 2: prices in Melbourne and the twelve month change coming in

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Speaker 2: at just under five percent. So there is quite the

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Speaker 2: contrast across the capital cities.

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Speaker 1: Yeah, so you've got like Perth growing four times as

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Speaker 1: fast as Melbourne is a smaller city. And I know

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Speaker 1: there are always, to some extent regional variations, but I

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Speaker 1: wonder when you look at the market, are you detecting

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Speaker 1: something deeper. I mean, for instance, the Queensland market is

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Speaker 1: very strong for years in the year years now, it's

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Speaker 1: probably had, it's probably had certainly since COVID, particularly strong run,

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Speaker 1: and there is internal migration there and they are getting

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Speaker 1: very good numbers consistently across the state, not just Brisbone

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Speaker 1: but through particularly to southeast Queensland. And the Melbourne market

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Speaker 1: is soft and remains soft, and they are facing broadly

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Speaker 1: the same fundamentals. Do you think there's any sort of

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Speaker 1: disturbance to that natural order that I laid out at

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Speaker 1: the start, that Sydney's always the deuce, that Melbourne's always

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Speaker 1: the second eiest, et cetera.

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Speaker 2: Well, I think in terms of absolute dollars we still

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Speaker 2: had that Sydney is still the most expensive housing market.

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Speaker 2: So for example, for freestanding houses, we have a medium

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Speaker 2: price in Siting now running at about one point nine

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Speaker 2: million dollars. I compare that to say, Perth, which has

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Speaker 2: just crossed over a million dollars, which, of course for

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Speaker 2: local residents and Perth that will sound very expensive indeed,

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Speaker 2: but it's nearly half the price of city. So we

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Speaker 2: still have this contrast and he is still by far

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Speaker 2: the most expensive. But when we speak about performance, of

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Speaker 2: course we're looking at relative capital growth and certainly over

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Speaker 2: the past twelve months Perth has been the number one

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Speaker 2: out performer, followed by closely by Adelaide and then Brisbane

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Speaker 2: and then our two largest capital cities. Well, no, they've

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Speaker 2: not been performing well. Now getting to your question, well,

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Speaker 2: what's driving I think one of the key factors here

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Speaker 2: is net interstate migration. Okay, so Queensland and Western Australia

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Speaker 2: have been having in very recent times very positive net

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Speaker 2: interstate migration flows which have been coming from Victoria and

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Speaker 2: New South Wales. That's definitely one of the key factors.

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Speaker 2: People have been moving, I think in part for affordability,

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Speaker 2: in part for job opportunities as well into Queensland into

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Speaker 2: way to pick up those better paying jobs and to

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Speaker 2: get a better priced house.

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Speaker 1: Yes, right now, Traditionally people did move. There was always

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Speaker 1: patterns and there was always some you know, New South

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Speaker 1: Wales and Victoria particularly, people would move up to Queensland

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Speaker 1: to retire. But I noticed you said their job opportunities,

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Speaker 1: So is it a different sort of pattern there are

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Speaker 1: the different people moving.

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Speaker 2: I think there are different people moving. We unfortunately, when

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Speaker 2: it comes to the strict demographic data from the Australian

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Speaker 2: Bureau of Statistics, it's not entirely clear who are these

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Speaker 2: people that are moving, so we can only guess. But

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Speaker 2: I would agree with you based on what we can

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Speaker 2: see for purchases of dwellings that it's looking like they

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Speaker 2: are first home buyers. There is some property investment activity

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Speaker 2: there as well, but it's first home buyers, second home

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Speaker 2: buyers buying freestanding dwellings predominantly in these city isn't selling

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Speaker 2: up in Sydney and Melbourne?

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Speaker 1: Right? So they can buy a house, this is it.

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Speaker 1: They can buy a house outside the two metropolitan centers.

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Speaker 2: I think that's in large part what's been driving this.

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Speaker 1: So Louis it's interesting you say that because one of

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Speaker 1: the things I'm thinking about is there was a very

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Speaker 1: big structural shift in the market after COVID where we

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Speaker 1: realize people could work at home, and there is a

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Speaker 1: drift back to work, but it's never going to be

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Speaker 1: the same again. I think most people will agree with that.

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Speaker 1: The fact that you can work outside of Sydney and

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Speaker 1: Melbourne has changed everything, and there was this huge shift

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Speaker 1: to coastal regions, treat change regions, and some of that

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Speaker 1: was almost like panic if you like, in COVID. But

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Speaker 1: there's a deeper pattern now of people working for whoever

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Speaker 1: they like, wherever they like. So I'm just wondering whether

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Speaker 1: in your data that's coming through, has that settled or

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Speaker 1: is that process it happening.

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Speaker 2: I wonder, James, I think we're still seeing it. I

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Speaker 2: think there's actually been a recent shift back towards living

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Speaker 2: in regional Australia. I say that because we've been recording

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Speaker 2: falls and rental vacancy rates across regional Australia once again

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Speaker 2: in twenty twenty four. So by way of background, our

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Speaker 2: data strongly agrees with your point that in during the

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Speaker 2: lockdown period twenty twenty one twenty twenty two, rental vacancy

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Speaker 2: rates and regional Australia tightened dramatically. Then we noticed at

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Speaker 2: the end of twenty two and into twenty twenty three

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Speaker 2: they East rental vacancy rates rose and we started to

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Speaker 2: record a slide down in rents. But for this year

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Speaker 2: we're seeing the reverse yet again, where rental vacancy rates

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Speaker 2: have been tightening in regional Australia. Now, obviously we cannot

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Speaker 2: point to a lockdown that hasn't been happening. I found

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Speaker 2: the data quite surprising. My expectation while that rental vacancy

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Speaker 2: rates would continue to age in twenty four across regional

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Speaker 2: Australia as more and more people return back to the office,

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Speaker 2: but that's not the case, and I can only conclude

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Speaker 2: that there must be more negotiations going on between employer

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Speaker 2: employee to allow that employee to continue to work and

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Speaker 2: live remotely.

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Speaker 1: Yes, yes, because I imagine if people prove their case

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Speaker 1: and then they finally take the chip in by train

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Speaker 1: to the center of Melbourne or the center of Sydney,

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Speaker 1: and who knows their boss might have taken a trip

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Speaker 1: in on the train as well. The maybe they weren't

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Speaker 1: in there at all And they both meet in the

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Speaker 1: center of the city and the employee says, well, you

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Speaker 1: know what's wrong with my work? Is there any problem?

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Speaker 1: And the employer says no, I would just like to

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Speaker 1: have you in the office. It's not a very powerful point.

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Speaker 1: I don't think it's going to swing people. I'm just

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Speaker 1: thinking about on the that's the demand side. What about

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Speaker 1: the supply side, Louie, Is there nobody building out and

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Speaker 1: in Australia that those rental vacancy rates have tightened again.

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Speaker 2: That's the number one issue I think, James, is that

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Speaker 2: on the builder side of supply side, regional Australias regard

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Speaker 2: as high risk to build. And the issue is that,

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Speaker 2: as I'm sure you're well a where many builders and

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Speaker 2: developers require financing and pre sales before they can go

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Speaker 2: off and build. The issue is that the financial sector

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Speaker 2: or the banks have many black spots in regional Australia

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Speaker 2: where they regard the risk profile of these areas. It's

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Speaker 2: just too risky for their books. They will not leave.

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Speaker 1: I didn't know that, yeah.

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Speaker 2: And so that, combined with what has been a shortage

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Speaker 2: of builders, has been holding back many development companies from

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Speaker 2: building in Regional Australia. They just regard it as too

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Speaker 2: high risk. They cannot get the financing properly, they cannot

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Speaker 2: get the local labor into build and so yeah, it's

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Speaker 2: been a big problem on the supply side for Regional Australia.

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Speaker 1: And that risk that the banks determine about house building

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Speaker 1: outside the city center and which keeps the vacancy rates

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Speaker 1: tight in the regions. I just want to ask you

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Speaker 1: what's the risk. Is the risk in the building that

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Speaker 1: it's so difficult to build anyway it's harder to build

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Speaker 1: outside or are the deeper risks like that for instance?

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Speaker 1: Basically the economies of the regions are rarely as dynamic

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Speaker 1: as the big cities. Which is it.

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Speaker 2: I think it's a combination of factors, James. Historically we've

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Speaker 2: seen a lot of volatility in dwelling prices in many

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Speaker 2: regional townships. The volatility has just been huge. I'll never

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Speaker 2: forget what happened, for example, in Karatha in Western Australia,

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Speaker 2: where back in nineteen ninety three the median house prices

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Speaker 2: running two hundred thousand dollars, it ran up to over

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Speaker 2: a million dollars for a house in Karatha at the

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Speaker 2: pink of the mining boom, and then it came all

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Speaker 2: the way back in twenty fourteen, back to three hundred

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Speaker 2: thousand dollars.

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Speaker 1: Oh my, and someone somewhere paid a million bucks for

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Speaker 1: our house in Karta at that time.

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Speaker 2: And they got smashed. And the problem is that historical

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Speaker 2: data features in the in the bank's books. They see this,

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Speaker 2: they say, right, this is an area of very high volatility.

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Speaker 2: We could see a situation where our loan to value

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Speaker 2: ratios in this area really blow out if meetium dwelling

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Speaker 2: prices fall like that again. And so we're only willing

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Speaker 2: to provide very limited lending to this area or no

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Speaker 2: lending at all, and we'll just let another financier take

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Speaker 2: care of it.

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Speaker 1: It's interesting, isn't it. So there's this notion that you

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Speaker 1: can always sell in the city and the banks probably

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Speaker 1: have that ingrained. But interestingly, if you are an owner

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Speaker 1: in regional Australia, then you've got really good vacancy rates

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Speaker 1: from a property owner's point that is there are really

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Speaker 1: tight and remain tight. That's really interesting. That is a

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Speaker 1: big picture of developments that I hadn't quite been aware of.

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Speaker 2: Yeah, it's something I think we need to fundamentally resolve

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Speaker 2: because I think Australia's long term future does lie of

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Speaker 2: the regions. Of course, once upon a time we used

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Speaker 2: to look at the United States as a very successful

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Speaker 2: and very strong economy. Obviously it's had its weaknesses of late,

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Speaker 2: but one of the key drivers to its long term

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Speaker 2: success was the development of inland towns and cities, townships,

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Speaker 2: small townships turning into large cities. And I've got a

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Speaker 2: great belief that we need to see that here in Australia.

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Speaker 2: We cannot just simply rely on our coastal townships forever

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Speaker 2: when we have this mass, we have this massive land

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Speaker 2: mass in Australia and these regional townships where they are

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Speaker 2: local economies. Yes, they can be fickle, but there is

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Speaker 2: a there is an economy there, and one way or

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Speaker 2: the other they will grow. But we should be doing

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Speaker 2: every we can to. But still it take that.

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Speaker 1: Grousth Okay, it's probably a long time since we saw

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Speaker 1: consistent price growth and rental demand in regional centers like

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Speaker 1: consistent of which we've had for one reason or another

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Speaker 1: says for four years now basically, And as you say,

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Speaker 1: what's really interesting is anybody familiar with the market would

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Speaker 1: have said, Okay, with those vacancy rates in the regions,

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Speaker 1: you know, they've got to watch them fly up when

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Speaker 1: everything settles down post COVID, and as you say, that

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Speaker 1: hasn't happened, which is a very interesting point. Okay, we'll

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Speaker 1: take a short break. We'll be back in a moment. Hello,

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

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Speaker 1: James kirkby Well, the editor at The Australian, talking today

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Speaker 1: to Louis Christopher of SQM Research. Louis is one of

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Speaker 1: the leading interpreters and researchers on property in Australia. Widely quoted.

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Speaker 1: I'm sure you're familiar with him already. We know each

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Speaker 1: other for a long time. I've always talked to him

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Speaker 1: when I want to get a view, a studied view,

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Speaker 1: if you like, of the market based on data, which

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Speaker 1: is his own data that he works on in his

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Speaker 1: own group, SQM Research. Louis looking, we're coming towards the

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Speaker 1: end of twenty twenty four and certain things are certain

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Speaker 1: sort of fundamentals in the market remain sort of broadly

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Speaker 1: in place. We have rates that are perhaps higher than

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Speaker 1: we're used to in recent times, certainly the last decade,

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Speaker 1: we've got vacancy rates consistently low. And then there's some

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Speaker 1: interesting things happening in the market that every investor should know.

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Speaker 1: One of them, which is, if nothing else entertaining, is

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Speaker 1: that units and apartments are doing better than houses. Just now,

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Speaker 1: could you explain to people why that's happening and then

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Speaker 1: your view as to how long it could keep going?

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Speaker 2: Yes, James, I might talk about it in terms of

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Speaker 2: certain city and why this is happening is it's not

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Speaker 2: happening everywhere, but it has been happening in our two

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Speaker 2: largest capital cities in more recent times. Now, what we've

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Speaker 2: been finding and what I've concluded now is that during

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Speaker 2: softening markets in Australia, what we tend to see is

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Speaker 2: units outperforming houses. In a softening period. During a growth period,

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Speaker 2: we tend to see the opposite, free standing houses doing

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Speaker 2: better than units. And we've got to ask ourselves, well why,

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Speaker 2: I think in part units essentially offer a little bit

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Speaker 2: more of a defensive characteristic compared to houses. Houses. Now,

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Speaker 2: of course, when we think about our house has mentioned

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Speaker 2: the median free standing house price and cities running at

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Speaker 2: one point nine million dollars, that means not every investor

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Speaker 2: can afford to jump into our house in Sydney which

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Speaker 2: to make investment. It's very high on entry level, whereas

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Speaker 2: units are a far lower entry level. Also, over and

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Speaker 2: above that, I believe units have been offering more stable

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Speaker 2: income in terms of rents because they generally are target

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Speaker 2: the more affordable end of the tenancy market where there's

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Speaker 2: a lot more demand. This combined with the fact that

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Speaker 2: we've been underbuilding units for a long time now, as

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Speaker 2: we're well aware, we've got a significant shortage of residential

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Speaker 2: dwellings in this country. And by the fact that we've

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Speaker 2: been underbuilding homes, that means really we've been underbuilding units

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Speaker 2: because we build more units than freestanding houses nowadays, and

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Speaker 2: with that undersupply, I think that's meant that when we

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Speaker 2: see downturns, we no longer see units under performing or

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Speaker 2: falling further. Now a few caveats here, I wouldn't wish

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Speaker 2: to be buying in off the plan development at the

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Speaker 2: start of a downturn. I think you would see significant

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Speaker 2: underperformance in that scenario, and I generally stay well clear

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Speaker 2: of new dwellings on that front. So I think this

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Speaker 2: is one of the key reasons why we've been seeing

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Speaker 2: so Yes, our data shows during downturns, more recent downturns,

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Speaker 2: units have been performing better during upturns. Free standing house.

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Speaker 1: There's some contradiction. Maybe the unit prices are performing better right,

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Speaker 1: which you say compared to houses, which you say happens

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Speaker 1: in a softening period. But it's not softening or is

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Speaker 1: it softening just now? We had a good start of

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Speaker 1: the year, the first six months were strong. How would

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Speaker 1: you see it as a signal that the market's going

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Speaker 1: to get softer.

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Speaker 2: I believe the Sydney and Melbourne market, so that the

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Speaker 2: markets are now two largest capital cities are softening as

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Speaker 2: we speak. Okay, right, we're seeing it in weak option

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Speaker 2: clearance rates of singeing in Melbourne. We've been naturally seeing

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Speaker 2: it since about the month of Duke. We're seeing it

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Speaker 2: and falling asking prices so vendors in senior Melbourne have

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Speaker 2: become more negotiable. Now. I don't want to overtop this, James.

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Speaker 2: We're not saying any type of housing crash on anything

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Speaker 2: like that, and we wait have to very very unlikely

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Speaker 2: we'll get such a major downturn. But I think we

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Speaker 2: are falling and singing in Melbourne on an annualized rate

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Speaker 2: now running about four to five percent.

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Speaker 1: Right, So you see going into the twenty twenty five

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Speaker 1: Melbourne and Sydney you see them as soft.

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Speaker 2: I see them as soft now, James. But I think

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Speaker 2: there's a lot of water under the bridge still until

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Speaker 2: we get to twenty twenty five, and the year twenty

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Speaker 2: twenty five itself will be most interesting. One of the

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Speaker 2: big variables out there is what happens with interest rates.

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Speaker 1: Yes, yes, yeah.

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Speaker 2: So some months back I was talk of course of

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Speaker 2: I'm potentially an interest rate rise. That sort of changed

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Speaker 2: given the recent market volatility and the money markets are

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Speaker 2: looking increasingly like they're crossing in multiple interest rate cuts

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Speaker 2: in this country starting from towards the end of this year.

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Speaker 1: That will change things in the big way I expect. Yeah, okay,

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Speaker 1: well we'll put that. We'll put that on one.

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Speaker 2: Sorry.

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Speaker 1: From the something I want to catch something I wanted

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Speaker 1: to ask you, which I often ask guests who have

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Speaker 1: actually helicopter view and on the basis of what you've

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Speaker 1: been seeing, if Louis Christopher I said to you, I

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Speaker 1: have a million dollars to invest in residential property anywhere

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Speaker 1: in Australia, in any sort of property, what would you.

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Speaker 2: Where would you be pointing me, well, I'm a great

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Speaker 2: believer in diversification.

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Speaker 1: Are you going to tell me to split it up?

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Speaker 2: Bets? Yeah, very hard. It's split a million dollars for

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Speaker 2: example in Sydney where I live. Look, I'm also believe

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Speaker 2: that in in an area you know well and generally

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Speaker 2: be an investment in a NASA class you also know well.

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Speaker 2: So for me personally, I probably would use the money

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Speaker 2: to take out another property in city in Sydney.

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Speaker 1: Yes, but that is your personal because you know.

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Speaker 2: That's my personal point of view. Now, if I had

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Speaker 2: all my properties in Sydney already, then I would look

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Speaker 2: to invest in another city, and that another city probably

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Speaker 2: would be Brisbane.

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Speaker 1: Okay, So even though you know Melbourne is has been weaker.

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Speaker 2: I know Melbourn's been weaker, but that doesn't necessarily mean

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Speaker 2: one should disautomatically jump into that market. From a longer

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Speaker 2: term perspective, I'm interested in understanding the longer term economic

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Speaker 2: opportunities for a city in state, and I believe Queens

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Speaker 2: Aint's got the better economic opportunities over the next ten years.

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Speaker 1: Yeah, right, Okay, what makes you say that apart from

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Speaker 1: the Olympics. Sort of buzz the Olympics.

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Speaker 2: It's one definently in fact, the taxation regimes a little

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Speaker 2: bit better and Queens aren't compared to Victoria right now,

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Speaker 2: is not a fact that we've spoken earlier about the

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Speaker 2: state migration flows Now that's been a longer term trenders.

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Speaker 2: I'm sure you're well aware, but there's no evidence at

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Speaker 2: this point in time to suggest that's about to slow

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Speaker 2: in Queensland. If anything has been speeding up. I think

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Speaker 2: too that supply side of property has been changing in Queensland.

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Speaker 2: So once upon a time, for example, on the Gold Coast,

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Speaker 2: you would have a lot of builders and developers build

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Speaker 2: their high rise developments there on the coast on speculation. Okay,

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Speaker 2: Now I've been noticing in more recent cycles that developers

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Speaker 2: no longer do that they cannot build on speck anymore.

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Speaker 2: They need the pre sales and so the typical boom

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Speaker 2: bus crunch, which you know that the bus is generally

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Speaker 2: delivered by oversupplies, no longer apparent in southeast Queensland. And

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Speaker 2: I would also argue that's a case of cross Queens

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Speaker 2: and probably out of countries out of states as well.

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Speaker 2: But that combined with this long to increase an underlying

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Speaker 2: demand which I expect to continue on that with the

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Speaker 2: lower with a better taxation profile property investors, I believe

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Speaker 2: that makes Queensland are pretty solid case or investment. I

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Speaker 2: have a long time.

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Speaker 1: Okay, very interesting and very interesting and always great to

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Speaker 1: have a guest who will actually make a call, So

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Speaker 1: thank you for that. All right, we will be back

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Speaker 1: in a moment. Folks. Hello, welcome back to The Australian's

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Speaker 1: Money Positive podcast. I'm James Kirby with Louis Christopher and

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Speaker 1: we are talking big picture on property today, standing back

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Speaker 1: and looking at all the data that we know, what

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Speaker 1: are the big takeaways in the market And I think

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Speaker 1: in the first two segments of the show some really

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Speaker 1: interesting observations there about how the market has changed, how

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Speaker 1: ex Melbourne and Sydney for instance, those markets are stronger

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Speaker 1: and have deeper dynamics we perhaps were used to traditionally,

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Speaker 1: and the extended low vacancy rate sort of proves that.

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Speaker 1: I like Louis's observations on Queensland as a potential property performer.

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Speaker 1: All the talk of courses in the market is about Melbourne,

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Speaker 1: that Melbourne is at a discount basically, then it must

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Speaker 1: be a bargain. Who's to say that may not be

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Speaker 1: the case if you look at those internal migration figures,

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Speaker 1: if you look at the property disposition if you like,

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Speaker 1: of the regime in Queensland compared to Melbourne, and they

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Speaker 1: are certainly well to reverse that in the Victorian government

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Speaker 1: or the least property friendly state, that's for sure. These

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Speaker 1: things are very important for long term investors. Okay, Louis well,

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Speaker 1: a couple of other things I wanted to talk to

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Speaker 1: you about. They are different than the first parts of

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Speaker 1: the show, but interesting for all our listeners. First of all,

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Speaker 1: with one thing that home buyers are doing at the

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Speaker 1: moment our homeowners are doing at the moment in property

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Speaker 1: and some investors too, is they are finding it difficult

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Speaker 1: just to keep the show on the road because of inflation,

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Speaker 1: cost of living, everything else. Their expenses have probably gone

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Speaker 1: through the roof and they used to have some space

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Speaker 1: to pay their mortgage on an investment property or on

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Speaker 1: their home. So without making more money, how do you

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Speaker 1: get around that. There's one or two ways that people

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Speaker 1: have put forward on the show. Extend your mortgage let's

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Speaker 1: say you have a twenty five year mortgage extended for

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Speaker 1: thirty years, switch from the traditional principal and interest model

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Speaker 1: to just interest only. Are there any of those that

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Speaker 1: you find to be if you had to make that choice,

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Speaker 1: would you go near either of them? Oh?

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Speaker 2: Personally, Janes, I've always paid principle and interest. I've never

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Speaker 2: personally gone interest only on a strong beliebor in paying

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Speaker 2: dick down as quickly as I possibly can. Now, when

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Speaker 2: there's been times in my life where cash flow hasn't

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Speaker 2: been as strong, for lack of better words, then I've

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Speaker 2: reduced the principle combineded a on paying down, whether that's

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Speaker 2: by extending the more aage or just paying the minimum

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Speaker 2: monthly repayments. That's what I've done, And then when times

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Speaker 2: are being better cash flow wise, I've upped those payments.

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Speaker 1: Yes, I thought you might say that I wouldn't have

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Speaker 1: picked you as a speculator, that's for sure. All right now,

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Speaker 1: final question, And I have to preface this by saying

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Speaker 1: I've changed on this one in that I had always

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Speaker 1: been a believer that super is for super and the

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Speaker 1: home market home buyer market can sort out its own problems.

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Speaker 1: I have changed on this. I didn't want to. It's

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Speaker 1: almost against my core textbook approach, but I think there

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Speaker 1: is increasingly an argument to allow of people use their

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Speaker 1: SUPER to buy a home. Not because it's the best

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Speaker 1: idea in the world, but because, in pragmatic terms, the

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Speaker 1: entire sick tax system is loaded against the person who

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Speaker 1: doesn't own their home, loaded against them. And on that basis,

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00:26:07,600 --> 00:26:10,680
Speaker 1: and on that basis alone, I think if you are

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00:26:10,720 --> 00:26:14,040
Speaker 1: better off if you are close, if you are fifty

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00:26:14,080 --> 00:26:17,520
Speaker 1: grand away or one hundred grand away from getting that

439
00:26:17,640 --> 00:26:22,680
Speaker 1: house for all your life, against having some more and Super,

440
00:26:23,200 --> 00:26:25,280
Speaker 1: I think you would be better off getting that house.

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00:26:26,160 --> 00:26:30,400
Speaker 1: I'm just wondering, as someone who's spent decades in this market,

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00:26:30,920 --> 00:26:33,439
Speaker 1: always with some interesting ideas on the market, what do

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00:26:33,480 --> 00:26:39,600
Speaker 1: you think about using super to access home funds or

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00:26:39,640 --> 00:26:40,479
Speaker 1: property funds.

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00:26:40,600 --> 00:26:44,399
Speaker 2: I understand your perspective, James, and yeah, if I was

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00:26:44,400 --> 00:26:48,040
Speaker 2: fifty thousand dollars away personally from buying my first time,

447
00:26:48,600 --> 00:26:51,520
Speaker 2: I would be demanding to use my SUPER myself, right,

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00:26:52,000 --> 00:26:55,440
Speaker 2: So we're on the same page on that front. However,

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00:26:55,440 --> 00:26:58,840
Speaker 2: I'd like to point out a few things. Firstly, from

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00:26:58,920 --> 00:27:03,840
Speaker 2: an investment give I find faults with it Okay. Number one,

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00:27:04,600 --> 00:27:07,280
Speaker 2: you're not getting the negative gearing benefits if you buy

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00:27:07,320 --> 00:27:11,240
Speaker 2: a residential home in your super trust. Remember, you cannot

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00:27:11,240 --> 00:27:15,399
Speaker 2: negatively gear your super fund. Therefore, strictly based on the

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00:27:15,520 --> 00:27:19,639
Speaker 2: numbers a super fund and property, well, it's best for

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00:27:19,840 --> 00:27:22,520
Speaker 2: high yielding properties such as commercial property, if you want

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00:27:22,560 --> 00:27:27,840
Speaker 2: to go into property via super Number two, I have

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00:27:27,960 --> 00:27:34,000
Speaker 2: an issue with diversification. I've always looked at super as

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00:27:34,200 --> 00:27:38,200
Speaker 2: something where I can diversify my own risk profile. So

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00:27:39,000 --> 00:27:41,960
Speaker 2: as mentioned before our segment, I have a in my

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00:27:42,119 --> 00:27:45,760
Speaker 2: super account, a lot of equities. I hold property in

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00:27:45,760 --> 00:27:46,680
Speaker 2: my super account.

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00:27:46,680 --> 00:27:50,440
Speaker 1: Sorry, this is a this is an SMSF, is it, LOUI? Yeah,

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00:27:50,480 --> 00:27:53,320
Speaker 1: absolutely it is, and you don't have property in it.

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00:27:53,680 --> 00:27:56,639
Speaker 2: I don't have property in it. I have all Australian equities.

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00:27:56,960 --> 00:27:58,640
Speaker 1: Okay, right, okay, that's just me.

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00:27:59,000 --> 00:28:02,359
Speaker 2: And obviously that has its own risk profile. But I

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00:28:02,440 --> 00:28:06,040
Speaker 2: hold property personally under our name or under the family

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00:28:06,040 --> 00:28:09,679
Speaker 2: trust structure. Okay, but I do hold it against my

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00:28:09,840 --> 00:28:15,240
Speaker 2: name because I can then take advantage of negative geary.

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00:28:15,040 --> 00:28:18,160
Speaker 1: Benefits, right, yes, yeah, yeah as an investor though, Louis,

471
00:28:18,200 --> 00:28:19,440
Speaker 1: I'm talking about buying a home.

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00:28:20,640 --> 00:28:24,280
Speaker 2: Yeah, that's right. Now, from the perspective of the greater good,

473
00:28:24,359 --> 00:28:27,480
Speaker 2: what's good for the community. All right. I have another

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00:28:27,520 --> 00:28:33,520
Speaker 2: issue with it, and that is you, by by accessing superannuation,

475
00:28:34,400 --> 00:28:38,600
Speaker 2: you're fundamentally stimulating underlying demand. Okay. It's like if you

476
00:28:38,720 --> 00:28:43,360
Speaker 2: remember the first home Owners Grant scheme some years back. Okay,

477
00:28:43,720 --> 00:28:46,480
Speaker 2: the government brings in my first home Owners grand scheme

478
00:28:46,520 --> 00:28:49,560
Speaker 2: for first time buyers. Well, guess what happens. The benefits

479
00:28:49,560 --> 00:28:53,720
Speaker 2: of that scheme quickly dissipate because prices rise very quickly.

480
00:28:53,760 --> 00:28:57,200
Speaker 2: And I'm concerned that if everyone had access to the

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00:28:57,240 --> 00:28:59,560
Speaker 2: super the buyer home prices will go up very quickly.

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Speaker 1: Yes, okay, I hear you, Yes, I hear you, and

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00:29:02,520 --> 00:29:05,360
Speaker 1: I take that on board. It's an interesting issue. I

484
00:29:05,360 --> 00:29:08,120
Speaker 1: don't think it will go away. Always interesting to hear

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00:29:08,200 --> 00:29:10,440
Speaker 1: what guests have to say about it on the show,

486
00:29:10,800 --> 00:29:13,440
Speaker 1: and I'd like to actually hear more from our own

487
00:29:14,400 --> 00:29:16,520
Speaker 1: audience about what they have to say on the show.

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00:29:16,600 --> 00:29:19,680
Speaker 1: So let's have some correspondence on that, folks. I don't

489
00:29:19,680 --> 00:29:22,720
Speaker 1: think we've actually seen much on that. All right, terrific,

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00:29:23,040 --> 00:29:26,120
Speaker 1: Louis Christopher SQM Research. Thank you very much. Terrific to

491
00:29:26,200 --> 00:29:27,240
Speaker 1: have you on as always.

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00:29:28,160 --> 00:29:30,040
Speaker 2: Thank you James, it's been a good discussion.

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00:29:30,080 --> 00:29:33,080
Speaker 1: Thank you, Louis always good. That was Louis Christopher Will.

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00:29:33,120 --> 00:29:35,680
Speaker 1: We've talked to him before. We'll talk to him again,

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00:29:35,960 --> 00:29:38,479
Speaker 1: all right, and talk to you soon. Remember the email

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00:29:38,720 --> 00:30:00,400
Speaker 1: The money Puzzle at the Australian dot com dot au

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00:30:00,280 --> 00:30:00,600
Speaker 1: at