1 00:00:09,800 --> 00:00:13,160 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:13,240 --> 00:00:17,079 Speaker 1: James Kirby. Welcome aboard everybody. I've had some signals, you 3 00:00:17,120 --> 00:00:20,880 Speaker 1: know that the property prices across the market are turning 4 00:00:20,920 --> 00:00:24,040 Speaker 1: the corner. And we had a soft start to the 5 00:00:24,120 --> 00:00:26,400 Speaker 1: year and of course we didn't get that rate cut 6 00:00:26,480 --> 00:00:30,200 Speaker 1: that all the economists thought we would. But at the 7 00:00:30,240 --> 00:00:33,680 Speaker 1: same time I noticed that some bank economists and I 8 00:00:33,680 --> 00:00:37,839 Speaker 1: always listened to bank economists over everyone else actually, and 9 00:00:37,880 --> 00:00:41,480 Speaker 1: they are becoming more confident that the property market will 10 00:00:42,200 --> 00:00:47,080 Speaker 1: rebound is rebounding. Peter Moncton is the chief economist at 11 00:00:47,080 --> 00:00:51,280 Speaker 1: the Bank of Queensland and he has actually upgraded his 12 00:00:51,479 --> 00:00:55,920 Speaker 1: property forecasts for the bank. Very interesting. I want to 13 00:00:55,960 --> 00:00:58,040 Speaker 1: talk to him about that today. Hi, Peter, how are you? 14 00:00:58,920 --> 00:01:01,160 Speaker 2: But thanks James, Thanks very much for having me on. 15 00:01:02,040 --> 00:01:04,200 Speaker 1: Oh nice to have you on. It's something that we've 16 00:01:04,240 --> 00:01:09,240 Speaker 1: been looking at on the show that there's this sense 17 00:01:09,600 --> 00:01:13,640 Speaker 1: that things are improving. There is improvement. I mean when 18 00:01:13,640 --> 00:01:16,200 Speaker 1: I say improving, what I mean is that the national 19 00:01:16,240 --> 00:01:19,200 Speaker 1: market has been mixed, but the big two market Sydney 20 00:01:19,280 --> 00:01:22,400 Speaker 1: and particularly in Melbourne have been very soft. Melbourne in 21 00:01:22,480 --> 00:01:26,640 Speaker 1: particular and we see clearance rates suddenly suddenly coming up 22 00:01:26,640 --> 00:01:29,199 Speaker 1: to normal or better than normal, even though we didn't 23 00:01:29,280 --> 00:01:32,520 Speaker 1: have a rate cut that we were expecting. Justin could 24 00:01:32,560 --> 00:01:37,120 Speaker 1: you tell the listeners you upgraded your forecast? Why could 25 00:01:37,160 --> 00:01:40,000 Speaker 1: you explain in themen's terms? Why? 26 00:01:40,160 --> 00:01:44,200 Speaker 2: Yeah, thanks chevs. First for was what are the forecasts. 27 00:01:44,240 --> 00:01:46,840 Speaker 2: The forecasts are for the capital cities, stand alone house 28 00:01:46,880 --> 00:01:49,480 Speaker 2: in the Capital cities. So that's what my forecasts are 29 00:01:49,680 --> 00:01:51,960 Speaker 2: in the forecast, what the house, what the stay alone 30 00:01:52,000 --> 00:01:55,640 Speaker 2: house process will increase in twenty twenty five and twenty 31 00:01:55,640 --> 00:01:59,440 Speaker 2: twenty six, and my upgrades. To be honest, it's more 32 00:01:59,480 --> 00:02:00,960 Speaker 2: in the nudge had a degree that I sort of 33 00:02:01,040 --> 00:02:04,160 Speaker 2: a rapid change. Was it to do with indust rates? 34 00:02:04,520 --> 00:02:07,240 Speaker 2: The answer is not really. So when I go through 35 00:02:07,240 --> 00:02:09,960 Speaker 2: and do my forecast, I focus on the monthly data. 36 00:02:10,320 --> 00:02:11,600 Speaker 2: You know, obviously these things that have happened in the 37 00:02:11,600 --> 00:02:13,760 Speaker 2: week's week, But I tend to focus on the monthly 38 00:02:13,800 --> 00:02:16,760 Speaker 2: sort of figures, and so therefore it wasn't so much 39 00:02:16,760 --> 00:02:19,760 Speaker 2: interest rates, because as you noted, it really was this 40 00:02:19,840 --> 00:02:22,760 Speaker 2: month when there was a surprise about the RBA not 41 00:02:22,880 --> 00:02:25,760 Speaker 2: moving the first half of the year. Interest rates broadly 42 00:02:25,800 --> 00:02:28,240 Speaker 2: when alive with what everyone thought to be a ray 43 00:02:28,280 --> 00:02:31,480 Speaker 2: cut in February and a ray cut in May. So 44 00:02:32,040 --> 00:02:35,160 Speaker 2: that didn't have the influence on my forecast. What was 45 00:02:35,200 --> 00:02:39,320 Speaker 2: the cause of my change, and its actually was how 46 00:02:39,360 --> 00:02:41,720 Speaker 2: the market's performing. And it wasn't so much a top 47 00:02:41,800 --> 00:02:44,400 Speaker 2: line how was Australia white house class is going. It 48 00:02:44,480 --> 00:02:46,200 Speaker 2: was a bit more of a bottom up thing actually 49 00:02:46,440 --> 00:02:48,800 Speaker 2: that when I looked at how individual cities are going. 50 00:02:49,480 --> 00:02:52,240 Speaker 2: While there were one or two that may not have 51 00:02:52,240 --> 00:02:54,840 Speaker 2: been performing quite as strongly as I thought, Adelaide and 52 00:02:54,919 --> 00:02:57,680 Speaker 2: Perth probably stood out in that regard, but a number 53 00:02:57,680 --> 00:02:59,960 Speaker 2: of the other cities, and you mentioned Melbourne that was 54 00:03:00,120 --> 00:03:04,560 Speaker 2: one homemark, Canberra, Darwin were others that were doing actually 55 00:03:04,560 --> 00:03:06,480 Speaker 2: better than what I thought the first half the year. 56 00:03:06,520 --> 00:03:10,040 Speaker 2: So there's more a bottom up who's doing well as 57 00:03:10,040 --> 00:03:12,080 Speaker 2: opposed to a top down. It just writes sort of 58 00:03:12,080 --> 00:03:14,120 Speaker 2: reason about what changed my forecast. 59 00:03:13,840 --> 00:03:17,519 Speaker 1: It I'd always be more convinced and comfortable with bottom 60 00:03:17,600 --> 00:03:19,480 Speaker 1: up forecasts anyway. You have to see in any field 61 00:03:19,480 --> 00:03:23,280 Speaker 1: of activity, including property. So tell me what were they then? 62 00:03:23,320 --> 00:03:25,880 Speaker 1: What were those signals that when you talk about bottom 63 00:03:25,960 --> 00:03:27,200 Speaker 1: up signals, what were. 64 00:03:27,040 --> 00:03:31,680 Speaker 2: There of Pretty simple, actually, James, no sort of magic 65 00:03:32,040 --> 00:03:35,160 Speaker 2: about this is just look at what has the momentum 66 00:03:35,520 --> 00:03:37,600 Speaker 2: of house price has been the first half the year. 67 00:03:37,760 --> 00:03:40,720 Speaker 2: And I suppose my thinking going to this year, as 68 00:03:40,760 --> 00:03:44,000 Speaker 2: we know, affordability was an issue afforded the space, afordability 69 00:03:44,000 --> 00:03:46,400 Speaker 2: still is an issue. And I thought that for the 70 00:03:46,440 --> 00:03:49,560 Speaker 2: places where we've seen very strong house price growth in 71 00:03:49,600 --> 00:03:53,320 Speaker 2: recent years, Adelaide, Birth Brisbane really stout out, affordability would 72 00:03:53,320 --> 00:03:55,880 Speaker 2: be a drive concern issue, which I think is play out. 73 00:03:56,320 --> 00:03:59,280 Speaker 2: Then I thought that the places which hasn't experienced very 74 00:03:59,320 --> 00:04:02,200 Speaker 2: strong house broken Melbourne is very much front of mine 75 00:04:02,240 --> 00:04:05,120 Speaker 2: here would start to pick up. But after a number 76 00:04:05,120 --> 00:04:08,760 Speaker 2: of years, as you pointed out where house prices had movement, 77 00:04:09,280 --> 00:04:11,640 Speaker 2: I thought that process would take a bit longer. That 78 00:04:11,640 --> 00:04:14,360 Speaker 2: do doubt that looks like it is. So there was 79 00:04:14,440 --> 00:04:16,480 Speaker 2: more that I looked at the house price changes have 80 00:04:16,520 --> 00:04:20,080 Speaker 2: actually happened. That momentum in some of the cities has 81 00:04:20,080 --> 00:04:22,080 Speaker 2: been stronger than what I thought, which is the reason 82 00:04:22,120 --> 00:04:23,599 Speaker 2: why I sort of nudge my forecast sile. 83 00:04:24,400 --> 00:04:26,800 Speaker 1: Before we go any further, I should just ask what 84 00:04:26,839 --> 00:04:29,200 Speaker 1: they are exactly, What is your forecast for the standardone 85 00:04:29,240 --> 00:04:32,680 Speaker 1: house places in twenty twenty five nationwide and next year 86 00:04:32,720 --> 00:04:33,799 Speaker 1: if you have that to hand. 87 00:04:34,920 --> 00:04:38,840 Speaker 2: Yep, So my numbers starting off was sort of you know, 88 00:04:38,880 --> 00:04:40,320 Speaker 2: I thought it'd be sort of a five and six 89 00:04:40,360 --> 00:04:43,119 Speaker 2: percent nationwide stand alone, how house price to the Capital 90 00:04:43,200 --> 00:04:46,800 Speaker 2: cities year, six percent next and really I've just sort 91 00:04:46,800 --> 00:04:48,880 Speaker 2: of nudged this year up to just be a percent 92 00:04:48,960 --> 00:04:51,520 Speaker 2: or so high. You know, I'd actually done some work 93 00:04:51,720 --> 00:04:54,320 Speaker 2: a few months ago would sort of show that in 94 00:04:54,360 --> 00:04:58,320 Speaker 2: the two years after you get interest rate cutting cycles 95 00:04:58,680 --> 00:05:01,920 Speaker 2: house prices then you go up ten to fifteen toer that. Right, 96 00:05:02,120 --> 00:05:03,600 Speaker 2: There's been the odd time there it's been a lot 97 00:05:03,640 --> 00:05:07,559 Speaker 2: stronger than that, but usually those times are when house 98 00:05:07,600 --> 00:05:11,640 Speaker 2: prices are pretty affordable, and it's hard to make that argument. 99 00:05:11,720 --> 00:05:14,000 Speaker 2: There's been a couple of times when the numbers have 100 00:05:14,040 --> 00:05:16,520 Speaker 2: been a lot lower than that, but invariably they've been 101 00:05:16,560 --> 00:05:18,479 Speaker 2: a time and the jobs market has been pretty weak, 102 00:05:18,560 --> 00:05:20,479 Speaker 2: unemployed rate, you know, a lot higher than where it 103 00:05:20,480 --> 00:05:22,560 Speaker 2: is today. So right now you've got a pretty good 104 00:05:22,560 --> 00:05:25,919 Speaker 2: god jobs market, you've got people clearly wanting homes, but 105 00:05:25,960 --> 00:05:28,719 Speaker 2: you've got an affordability issue. So ten to fifteen percent 106 00:05:28,760 --> 00:05:31,400 Speaker 2: is might sort of feel about where house prices will 107 00:05:31,400 --> 00:05:33,080 Speaker 2: go over the next couple of years, and it's sort 108 00:05:33,080 --> 00:05:35,280 Speaker 2: of a six to six sort of way. We'll get there, 109 00:05:35,360 --> 00:05:36,240 Speaker 2: is Baldcraft. 110 00:05:36,680 --> 00:05:39,920 Speaker 1: So six percent this year, and what was twenty twenty six? 111 00:05:41,400 --> 00:05:43,640 Speaker 2: Yeah, six percent twenty five or six percent twenty six. 112 00:05:43,520 --> 00:05:46,520 Speaker 1: Okay, So looking at very simple six percent a year, okay, 113 00:05:46,560 --> 00:05:49,480 Speaker 1: And how does that look on a long time average, Peter. 114 00:05:50,200 --> 00:05:53,520 Speaker 2: Look not too far away. Actually, So if you look 115 00:05:53,560 --> 00:05:57,680 Speaker 2: at what over the last twenty plus years, what households 116 00:05:57,680 --> 00:06:00,679 Speaker 2: supposed income growth is, it's been around about in the fives, 117 00:06:01,560 --> 00:06:04,520 Speaker 2: and house prices have gone up a little bit higher 118 00:06:04,520 --> 00:06:06,200 Speaker 2: than that. So about five and a half percent is, 119 00:06:06,520 --> 00:06:09,040 Speaker 2: if I remember, right, is where house Bob supposed income 120 00:06:09,080 --> 00:06:11,360 Speaker 2: grows grown and house prices have grown up a little 121 00:06:11,360 --> 00:06:13,320 Speaker 2: bit higher than that. And that's been one of the 122 00:06:13,400 --> 00:06:17,440 Speaker 2: reasons why the affordabilities issue. House prices have grown persistently 123 00:06:17,480 --> 00:06:20,360 Speaker 2: stronger than income growth, which is why I a bit 124 00:06:20,360 --> 00:06:22,839 Speaker 2: of a problem. But yeah, from somewhere between you at 125 00:06:22,880 --> 00:06:25,520 Speaker 2: six percent is not far away from what the sort 126 00:06:25,520 --> 00:06:27,280 Speaker 2: of longer term average. 127 00:06:26,920 --> 00:06:29,360 Speaker 1: Is, right. And when you mentioned that the rates didn't 128 00:06:29,800 --> 00:06:33,159 Speaker 1: what the particular decisions of the RBA were month to 129 00:06:33,240 --> 00:06:36,039 Speaker 1: month weren't crucial to what you're doing. There which is 130 00:06:36,080 --> 00:06:42,440 Speaker 1: really interesting. However, that particular rate call, it was unusual, 131 00:06:42,520 --> 00:06:46,159 Speaker 1: of course, because we've never seen how before how the 132 00:06:46,279 --> 00:06:48,559 Speaker 1: RBA voters, and this was the first time we actually 133 00:06:48,600 --> 00:06:51,240 Speaker 1: got to see how their voters and it was six 134 00:06:51,320 --> 00:06:54,800 Speaker 1: to three, that is, six of them said let's not 135 00:06:54,920 --> 00:06:57,200 Speaker 1: cut and three of them said let's cut. And a 136 00:06:57,200 --> 00:06:58,800 Speaker 1: lot of us met of that at the time that 137 00:06:58,880 --> 00:07:02,039 Speaker 1: they were going their separate wheeze. But we never saw 138 00:07:02,080 --> 00:07:05,360 Speaker 1: these numbers before. So what I'm asking you is whether 139 00:07:05,480 --> 00:07:08,599 Speaker 1: you think there is any question over the trajectory of 140 00:07:08,640 --> 00:07:10,960 Speaker 1: reds that they are going to go lower in the 141 00:07:11,000 --> 00:07:11,880 Speaker 1: rest of the year. 142 00:07:12,480 --> 00:07:14,680 Speaker 2: Yeah. So just to be clear, James, on the terms 143 00:07:14,720 --> 00:07:17,840 Speaker 2: of the interest rates, the fact we're in a lower 144 00:07:17,880 --> 00:07:21,120 Speaker 2: interest rate cycle is one of the reasons why I've 145 00:07:21,120 --> 00:07:23,840 Speaker 2: got my house price walkhast where they are. How if 146 00:07:24,000 --> 00:07:25,760 Speaker 2: we had this rate change from the start of the 147 00:07:25,800 --> 00:07:27,640 Speaker 2: year and say that was the sort of my view 148 00:07:27,640 --> 00:07:30,280 Speaker 2: all throughout the year, then I well strongly suspect that 149 00:07:30,320 --> 00:07:32,320 Speaker 2: house price growth this year and next would be a 150 00:07:32,320 --> 00:07:35,120 Speaker 2: lot lower. So the first vid is interest rate down 151 00:07:36,040 --> 00:07:37,760 Speaker 2: is part of the reasons about why I've got the 152 00:07:37,840 --> 00:07:40,280 Speaker 2: six and six. What didn't change my view is the 153 00:07:40,320 --> 00:07:42,480 Speaker 2: fact that they didn't go in July, So that has 154 00:07:42,600 --> 00:07:44,360 Speaker 2: changed my view because it was the momentum of the 155 00:07:44,400 --> 00:07:46,000 Speaker 2: first half of the year that would have changed things. 156 00:07:46,200 --> 00:07:48,520 Speaker 2: So then it comes to your question James about you know, 157 00:07:48,800 --> 00:07:50,600 Speaker 2: the six to three outlook and war was a better 158 00:07:50,760 --> 00:07:54,200 Speaker 2: There's two things about the July RBA decision that's without 159 00:07:54,600 --> 00:07:57,520 Speaker 2: One was decision not to go. It was very unusual, 160 00:07:57,560 --> 00:07:59,840 Speaker 2: given that there was a very strong chance of financial 161 00:08:00,040 --> 00:08:02,920 Speaker 2: markets and amongst the world of economists, as you pointed 162 00:08:02,960 --> 00:08:06,200 Speaker 2: our board to go, it's very unusual the RBA did 163 00:08:06,320 --> 00:08:09,200 Speaker 2: something so strongly against consensus, So that was all unusual. 164 00:08:09,640 --> 00:08:11,320 Speaker 2: And as you touched on, the second thing that was 165 00:08:11,400 --> 00:08:15,520 Speaker 2: unusual was actually the first time attributed what the voting was, 166 00:08:15,800 --> 00:08:18,080 Speaker 2: and as just mentioned, it was six to hold rates 167 00:08:18,160 --> 00:08:19,880 Speaker 2: unchanged and through for them to go. 168 00:08:20,120 --> 00:08:23,280 Speaker 1: Yeah, we don't normally. This was the first time under 169 00:08:23,280 --> 00:08:25,880 Speaker 1: the new RBA sort of regime that they revealed this 170 00:08:26,000 --> 00:08:26,480 Speaker 1: how they're. 171 00:08:26,360 --> 00:08:30,720 Speaker 2: Volted exactly right. But you know, I strongly suspect it's 172 00:08:30,760 --> 00:08:32,080 Speaker 2: not the first time there's been a bit of a 173 00:08:32,080 --> 00:08:40,040 Speaker 2: disagreement that's been publicly disclosed about what it actually means. 174 00:08:40,520 --> 00:08:42,840 Speaker 2: What are the practical implications from that. So from an 175 00:08:42,880 --> 00:08:46,280 Speaker 2: economist standpoint, the implication is you've now got nine people 176 00:08:46,840 --> 00:08:50,440 Speaker 2: who will we make the decision? Whereas before you sort 177 00:08:50,440 --> 00:08:52,080 Speaker 2: of got to you was really it was the Reserve 178 00:08:52,160 --> 00:08:54,480 Speaker 2: Bank bringing a decision to the board and the board 179 00:08:54,480 --> 00:08:56,199 Speaker 2: deciding about whether that was the right or wrong thing. 180 00:08:56,480 --> 00:08:58,760 Speaker 2: Whereas now it's nine people coming up of a decision. 181 00:08:59,000 --> 00:09:00,840 Speaker 2: And what that might mean is that from a meeting 182 00:09:00,920 --> 00:09:04,400 Speaker 2: to meeting standpoint, it might get a little bit more 183 00:09:04,480 --> 00:09:07,280 Speaker 2: uncertain about what the RBA is up to compared to 184 00:09:07,400 --> 00:09:10,720 Speaker 2: perhaps the past. So that's probably my job a little 185 00:09:10,720 --> 00:09:14,160 Speaker 2: bit harder. But what does it actually mean for your listeners? 186 00:09:15,120 --> 00:09:17,680 Speaker 2: And I think in a big picture practically not a lot. 187 00:09:17,760 --> 00:09:20,160 Speaker 2: I think that the big picture is interest rates will 188 00:09:20,160 --> 00:09:23,160 Speaker 2: be set on where inflation's going, what the unappointment rate is, 189 00:09:23,760 --> 00:09:25,760 Speaker 2: how is the global economy going? What does that mean 190 00:09:25,800 --> 00:09:26,319 Speaker 2: to be interest right? 191 00:09:26,400 --> 00:09:29,839 Speaker 1: And can we as listeners, as investors' listeners, can we 192 00:09:29,920 --> 00:09:33,400 Speaker 1: take it? We can we remain comfortable with the central 193 00:09:33,520 --> 00:09:36,400 Speaker 1: narrative that Australian roads have lowered a girl? 194 00:09:38,200 --> 00:09:40,839 Speaker 2: Yes, And again for the reasons I was touching on, 195 00:09:40,920 --> 00:09:44,760 Speaker 2: if you look through those issues, where's inflation going? What's 196 00:09:44,760 --> 00:09:47,280 Speaker 2: happening with the global economy, how's the domestic economy going, 197 00:09:47,280 --> 00:09:49,720 Speaker 2: all that sort of stuff. When you add up that, 198 00:09:49,960 --> 00:09:52,400 Speaker 2: it does say interest rates you'd be coming down. Financial 199 00:09:52,440 --> 00:09:56,320 Speaker 2: markets have got about another three quarter percentage point of 200 00:09:56,440 --> 00:09:59,760 Speaker 2: great cuts chart priced in as of the July and 201 00:09:59,760 --> 00:10:02,600 Speaker 2: I think that looks not unreasonable. So I think all 202 00:10:02,640 --> 00:10:05,480 Speaker 2: the arguments are that we still have lar regius rights. 203 00:10:05,600 --> 00:10:07,959 Speaker 1: Okay, very good. Now, what we're going to do, folks, 204 00:10:08,080 --> 00:10:10,840 Speaker 1: because I know what everyone's interested in is well, what 205 00:10:10,960 --> 00:10:14,760 Speaker 1: does this mean for prices? What does it mean for 206 00:10:14,880 --> 00:10:17,960 Speaker 1: prices in particular places, particularly in the largest city Sydney, 207 00:10:17,960 --> 00:10:21,760 Speaker 1: in Melbourne, and maybe also a look at the nature 208 00:10:21,760 --> 00:10:26,360 Speaker 1: of property that might if everything is dwellings are expected 209 00:10:26,400 --> 00:10:28,120 Speaker 1: to live by six percent a year, which is a 210 00:10:28,240 --> 00:10:30,920 Speaker 1: pretty good scenario for a property investor. What we want 211 00:10:30,960 --> 00:10:42,600 Speaker 1: to know is which ones we'll be back in a moment. Hello, 212 00:10:42,679 --> 00:10:45,560 Speaker 1: Welcome back to the Australians Money Puzzled podcast. I'm James 213 00:10:45,640 --> 00:10:48,280 Speaker 1: Kirby and I'm talking to Peter Monkton, chief economists at 214 00:10:48,320 --> 00:10:51,480 Speaker 1: the Bank of Queensland. We're talking property prices and where 215 00:10:51,520 --> 00:10:55,720 Speaker 1: they're going, and it's pretty strong tailwind. I think we 216 00:10:55,760 --> 00:10:59,719 Speaker 1: can comfortably say with predictions that property prices across the 217 00:10:59,760 --> 00:11:02,200 Speaker 1: world would lift six percent and that's an average, remember 218 00:11:02,440 --> 00:11:04,240 Speaker 1: or a median, And on top of that you have 219 00:11:04,360 --> 00:11:07,000 Speaker 1: the tailwind of rates being cut. One of the things 220 00:11:07,000 --> 00:11:09,560 Speaker 1: we've discovered on the show recent times, Peter, was big 221 00:11:09,600 --> 00:11:13,320 Speaker 1: difference between standalone houses and everything else. And your forecast 222 00:11:13,360 --> 00:11:17,520 Speaker 1: is for standalone houses, right, and they where once they 223 00:11:17,520 --> 00:11:21,720 Speaker 1: were utterly representative of dwellings in Australia, they are now 224 00:11:21,760 --> 00:11:25,160 Speaker 1: simply one part of the market and there's apartments and units, 225 00:11:25,200 --> 00:11:28,040 Speaker 1: et cetera. And one thing we discovered was that standalone 226 00:11:28,080 --> 00:11:30,880 Speaker 1: houses are just sort of in a world of their own. 227 00:11:31,240 --> 00:11:35,760 Speaker 1: They do very well. The gap between apartments and standardone houses, 228 00:11:35,800 --> 00:11:38,920 Speaker 1: which people thought might improve this with this uptick, hasn't 229 00:11:38,920 --> 00:11:41,320 Speaker 1: improved at all. In fact, it's worsened and a lot 230 00:11:41,360 --> 00:11:44,000 Speaker 1: of people have been losing money on apartments. One in 231 00:11:44,080 --> 00:11:48,160 Speaker 1: five apartments in Melbourne being sold in the last quarter 232 00:11:48,400 --> 00:11:50,559 Speaker 1: was sold at a loss. That was a number from 233 00:11:50,600 --> 00:11:54,640 Speaker 1: the Cautality Group formerly core Logic, and ninety percent of 234 00:11:54,640 --> 00:11:57,160 Speaker 1: the apartments that sold in Sydney were ninety percent of 235 00:11:57,160 --> 00:11:59,559 Speaker 1: the dwellings that sold in Sydney at a loss were apartments. 236 00:12:00,080 --> 00:12:02,880 Speaker 1: Apartments we're often seen as an entry level way into 237 00:12:02,960 --> 00:12:06,080 Speaker 1: the market for people. Were you aware of any of this, Peter, 238 00:12:06,200 --> 00:12:07,079 Speaker 1: have you any views on it? 239 00:12:09,360 --> 00:12:12,280 Speaker 2: No, Ja, the first time I've heard those statistics, and 240 00:12:12,480 --> 00:12:15,360 Speaker 2: they're very interesting. I would probably be of the school 241 00:12:15,920 --> 00:12:17,640 Speaker 2: along the lines that I would have thought that apartments 242 00:12:17,640 --> 00:12:20,480 Speaker 2: at some point times should do well versus standlone houses. 243 00:12:21,080 --> 00:12:24,960 Speaker 2: And the sense of the argument comes down to affordability. 244 00:12:25,800 --> 00:12:29,040 Speaker 2: As you mentioned, it's a great entry point, and I 245 00:12:29,080 --> 00:12:32,000 Speaker 2: would have thought that given where affordability is, more people 246 00:12:32,080 --> 00:12:35,199 Speaker 2: would be looking at apartments as sort of a possibility. 247 00:12:35,559 --> 00:12:38,160 Speaker 2: I suppose we raise the question about why hasn't that 248 00:12:38,200 --> 00:12:42,200 Speaker 2: been made case in places like Sydney in Melbourne, that 249 00:12:42,200 --> 00:12:45,600 Speaker 2: there's been a reasonable supply of apartments coming on. I 250 00:12:45,640 --> 00:12:47,880 Speaker 2: think another one is that we've obviously had very strong 251 00:12:47,920 --> 00:12:50,840 Speaker 2: population growth over the last couple of years now, and 252 00:12:50,880 --> 00:12:54,000 Speaker 2: that population growth has been heavily concentrated in the capital cities. 253 00:12:54,679 --> 00:12:58,160 Speaker 2: And of course there's no change in the supply of land, 254 00:12:58,559 --> 00:13:00,400 Speaker 2: and there's a big change in demand for land. What 255 00:13:00,440 --> 00:13:03,360 Speaker 2: more people is then demanded, supply means rice the land 256 00:13:03,360 --> 00:13:06,080 Speaker 2: goes up, which obviously the more important component of a 257 00:13:06,080 --> 00:13:08,920 Speaker 2: standalone house versus a unit. And probably the other thing 258 00:13:08,920 --> 00:13:11,120 Speaker 2: I've mentioned is that if you look at about how 259 00:13:11,160 --> 00:13:14,600 Speaker 2: capital cities performed versus regions, where regions have actually had 260 00:13:14,600 --> 00:13:17,560 Speaker 2: a better run in recent times, and if you look 261 00:13:17,600 --> 00:13:20,200 Speaker 2: at the housing stock, so the rolling stock in regions, 262 00:13:20,600 --> 00:13:23,439 Speaker 2: there's a bigger standlone house component versus capital city. 263 00:13:23,760 --> 00:13:26,160 Speaker 1: Oh yes, so yeah. 264 00:13:25,920 --> 00:13:28,080 Speaker 2: So I think just compositionally there is that. That's the 265 00:13:28,120 --> 00:13:30,560 Speaker 2: other reason about why I standlone houses have done well, 266 00:13:31,040 --> 00:13:33,559 Speaker 2: but bigger picture in terms of your question about houses 267 00:13:33,640 --> 00:13:37,240 Speaker 2: versus stanline houses versus units, et cetera. You know, essentially, 268 00:13:37,240 --> 00:13:39,200 Speaker 2: if you go back to the last thirty plus years, 269 00:13:39,400 --> 00:13:42,680 Speaker 2: there's been about three times when standlone houses their average 270 00:13:42,679 --> 00:13:46,000 Speaker 2: price increased a lot lessus the average unit price. And 271 00:13:46,040 --> 00:13:50,120 Speaker 2: then what we've got the previous two occasions. At some 272 00:13:50,280 --> 00:13:53,320 Speaker 2: point in time, I think affordability became an issue, and 273 00:13:53,360 --> 00:13:57,000 Speaker 2: then what we got slowly in the following years was 274 00:13:57,000 --> 00:13:59,480 Speaker 2: a period where units did at least as well as houses. 275 00:14:00,080 --> 00:14:03,800 Speaker 2: Standloned houses or maybe someone I'm outperformed, So that was 276 00:14:03,840 --> 00:14:07,360 Speaker 2: sort of we've seen in the in the in history. 277 00:14:07,960 --> 00:14:10,280 Speaker 2: This is the third time we've had a standlone houses 278 00:14:10,559 --> 00:14:13,679 Speaker 2: you know, clearly outperforms standland units, and I suspect at 279 00:14:13,679 --> 00:14:16,600 Speaker 2: some point in time we might get the units outperforming 280 00:14:16,640 --> 00:14:18,840 Speaker 2: again just because of the affordability question. 281 00:14:19,840 --> 00:14:23,160 Speaker 1: When you say that, do you have any they haven't yet, right, 282 00:14:23,520 --> 00:14:25,920 Speaker 1: there is no evidence, There is no evidence, and it's 283 00:14:25,920 --> 00:14:27,960 Speaker 1: been quite a while. Would you be concerned that it's 284 00:14:27,960 --> 00:14:29,000 Speaker 1: not going to happen this time? 285 00:14:29,320 --> 00:14:33,160 Speaker 2: Possibly because you know, one reason might be that you know, 286 00:14:33,240 --> 00:14:36,760 Speaker 2: in Sydney, for example, the government is looking about increasing 287 00:14:37,000 --> 00:14:41,080 Speaker 2: housing density around in particular train stations, and that's not 288 00:14:41,120 --> 00:14:43,200 Speaker 2: going to be by stand their own houses. It's more 289 00:14:43,280 --> 00:14:46,680 Speaker 2: likely by units. And as you correctly pointed out, particularly 290 00:14:46,680 --> 00:14:49,080 Speaker 2: in the capital cities, more and more of the dwelling 291 00:14:49,080 --> 00:14:51,080 Speaker 2: stock is becoming units just because of the lack of 292 00:14:51,160 --> 00:14:55,080 Speaker 2: land and the expensiveness of the land and very strong 293 00:14:55,160 --> 00:14:57,440 Speaker 2: outperformance of the regions versus cities for a long period 294 00:14:57,480 --> 00:15:00,520 Speaker 2: of time. Maybe that sort of outperformance went keep on having. 295 00:15:00,600 --> 00:15:02,200 Speaker 2: So you're one hundred percent right. The fact that it's 296 00:15:02,200 --> 00:15:04,560 Speaker 2: happened two times in the past doesn't mean it's got 297 00:15:04,560 --> 00:15:06,800 Speaker 2: to happen the third time. That's absolutely true. So it 298 00:15:06,800 --> 00:15:09,520 Speaker 2: will clearly depend upon what the supply of units, et 299 00:15:09,520 --> 00:15:12,320 Speaker 2: cetera will be going forward, But I do suspect that, 300 00:15:12,400 --> 00:15:16,640 Speaker 2: you know, the affordability question will weigh on HOURSS. Six percentage, 301 00:15:16,640 --> 00:15:19,400 Speaker 2: you pointed out is sort of a reasonable number, but 302 00:15:19,640 --> 00:15:22,600 Speaker 2: historical standpoints have obviously had a lot stronger price increases 303 00:15:22,640 --> 00:15:24,920 Speaker 2: than that, and the big reason for that is affordability. 304 00:15:25,000 --> 00:15:27,440 Speaker 2: So you know, we'll see how we go, but you 305 00:15:27,480 --> 00:15:29,960 Speaker 2: know there are reasons to think would be. But you know, 306 00:15:30,200 --> 00:15:32,240 Speaker 2: one of the things with the housing market, I've found 307 00:15:32,280 --> 00:15:35,480 Speaker 2: a few times when my forecasts have eventually turned out 308 00:15:35,480 --> 00:15:37,000 Speaker 2: to be right, but they happened for a while. You know, 309 00:15:37,120 --> 00:15:39,640 Speaker 2: things can happen to develop over time and take long 310 00:15:39,680 --> 00:15:40,320 Speaker 2: as you think. 311 00:15:40,720 --> 00:15:43,160 Speaker 1: And inside your foecas only you know this. Obviously they 312 00:15:43,200 --> 00:15:46,280 Speaker 1: don't know to extend you've met this public. But if 313 00:15:46,320 --> 00:15:50,040 Speaker 1: you're expecting six percent across the board, there will be 314 00:15:50,160 --> 00:15:52,640 Speaker 1: deviation around that, and some will do better than six, 315 00:15:52,680 --> 00:15:55,240 Speaker 1: some will do worse than six. Have you any sense 316 00:15:55,280 --> 00:15:59,680 Speaker 1: of which are the patches or locations or even styles 317 00:15:59,840 --> 00:16:02,640 Speaker 1: of homes that will do better and worse. 318 00:16:04,080 --> 00:16:06,480 Speaker 2: Yes, So look, as I's said at the start that 319 00:16:06,640 --> 00:16:09,600 Speaker 2: my forecast of the stand alone houses, and as you said, 320 00:16:09,600 --> 00:16:12,040 Speaker 2: it's the average of those. So I haven't got any 321 00:16:12,080 --> 00:16:15,640 Speaker 2: particular view, even though I've just answered of question about 322 00:16:15,640 --> 00:16:18,480 Speaker 2: houses of US units, I haven't got a particular issue 323 00:16:18,640 --> 00:16:20,480 Speaker 2: view about what units will do over the next couple 324 00:16:20,520 --> 00:16:24,040 Speaker 2: of years. But on capital cities, as I might have 325 00:16:24,080 --> 00:16:27,400 Speaker 2: mentioned earlier on, my theme has been the places that 326 00:16:27,440 --> 00:16:30,160 Speaker 2: have done better over the last two or three years, Brisbane, 327 00:16:30,160 --> 00:16:34,160 Speaker 2: Adelaide and Perth they will start slowing versus everyone else 328 00:16:34,160 --> 00:16:37,360 Speaker 2: because they've done so well. Affordablle is becoming aish in 329 00:16:37,360 --> 00:16:40,000 Speaker 2: those places, and the places that haven't done work as 330 00:16:40,040 --> 00:16:42,440 Speaker 2: well last two or three years. Melbourne's a bit of 331 00:16:42,480 --> 00:16:45,320 Speaker 2: a standout, but also dah and Camera and Hobart they 332 00:16:45,360 --> 00:16:48,080 Speaker 2: will start to do better. So it's almost like a 333 00:16:48,200 --> 00:16:49,680 Speaker 2: you know, the better come back to the pack and 334 00:16:49,760 --> 00:16:51,440 Speaker 2: the laggers are start to pack up a bit to 335 00:16:51,480 --> 00:16:54,680 Speaker 2: pick back up. And so that's my suspicion about what 336 00:16:54,760 --> 00:16:57,040 Speaker 2: will be happening, and that's what my forecasts have been. 337 00:16:57,080 --> 00:17:00,240 Speaker 2: That essentially Melbourne, Adelaide and Hobart Camera of course up 338 00:17:00,240 --> 00:17:02,240 Speaker 2: to pick up, and that sort of keeps the average 339 00:17:02,240 --> 00:17:04,520 Speaker 2: around about stick for the other one. The other of 340 00:17:04,640 --> 00:17:06,680 Speaker 2: cities start the price break moderates. 341 00:17:06,880 --> 00:17:08,400 Speaker 1: It's like a reversion to the mean. 342 00:17:09,640 --> 00:17:11,880 Speaker 2: Exactly right. And look, if you look through the big 343 00:17:11,880 --> 00:17:15,840 Speaker 2: picture about why people, you know, why population growth for example, 344 00:17:15,840 --> 00:17:18,160 Speaker 2: between states, you know what does go up and down. 345 00:17:18,200 --> 00:17:20,280 Speaker 2: One of the factors is the state economy doing well. 346 00:17:20,440 --> 00:17:23,160 Speaker 2: A second one is the affordable housing there. And at 347 00:17:23,160 --> 00:17:26,480 Speaker 2: some point if the economy is doing okay and you've 348 00:17:26,480 --> 00:17:28,840 Speaker 2: got affordable housing there, then people sort of say, well, 349 00:17:28,840 --> 00:17:30,479 Speaker 2: maybe that's a place that I can go to and 350 00:17:30,760 --> 00:17:32,400 Speaker 2: have a good, good standard limit. 351 00:17:32,280 --> 00:17:36,440 Speaker 1: To some extent, the market does its works its best. 352 00:17:36,520 --> 00:17:40,280 Speaker 2: Yeah, and you know, as we were talking about earlier on, 353 00:17:40,320 --> 00:17:42,800 Speaker 2: that can take longer than you think, but eventually the 354 00:17:42,960 --> 00:17:45,880 Speaker 2: things you know, I think you know does come through. 355 00:17:46,160 --> 00:17:48,840 Speaker 1: Okay, very interesting, all right, we'll take a short break. 356 00:17:48,880 --> 00:17:51,359 Speaker 1: I have some very good questions that I want to 357 00:17:51,359 --> 00:17:54,199 Speaker 1: put to Peter. They are from you guys, of course, 358 00:17:54,440 --> 00:17:57,320 Speaker 1: and they're not all of our property. But we'll see 359 00:17:57,359 --> 00:17:59,680 Speaker 1: what he has to see and we will endeavor as 360 00:17:59,680 --> 00:18:01,960 Speaker 1: a dual to give you an answer back in a moment. 361 00:18:10,640 --> 00:18:13,600 Speaker 1: Hello and welcome back to the Australians Money Puzzle Podcast. 362 00:18:13,680 --> 00:18:17,159 Speaker 1: James Kirby with Peter Moncton, Chief Economist, Bank of Queensland 363 00:18:17,200 --> 00:18:20,919 Speaker 1: first time on the show. He has just upgraded or 364 00:18:21,119 --> 00:18:25,880 Speaker 1: nudged his property forecasts forward, which I thought was very 365 00:18:25,880 --> 00:18:28,920 Speaker 1: interesting because there was some a little bit of dampness 366 00:18:28,920 --> 00:18:31,400 Speaker 1: in the market after the interest rates were not cut, 367 00:18:31,440 --> 00:18:35,679 Speaker 1: of course by the RBA, after absolute total consensus that 368 00:18:35,720 --> 00:18:39,120 Speaker 1: they would cut them. But it's reassuring to hear that 369 00:18:39,320 --> 00:18:42,080 Speaker 1: Peter and others believe that there is plenty more to 370 00:18:42,119 --> 00:18:44,000 Speaker 1: come on the raid cuts. I think it was three 371 00:18:44,080 --> 00:18:47,359 Speaker 1: quarters of a percent you thought basically before they resettled, 372 00:18:47,400 --> 00:18:48,200 Speaker 1: Was that right, Peter. 373 00:18:49,720 --> 00:18:52,840 Speaker 2: Yeah, that's my forecast, that's our financial market thinking. So 374 00:18:52,880 --> 00:18:54,400 Speaker 2: we'll see what THEBI ends up doing. 375 00:18:54,480 --> 00:18:57,920 Speaker 1: Yes, yep. Okay. Now, first questions from Tina. I found 376 00:18:57,960 --> 00:19:02,240 Speaker 1: no Whittaker's comments regarding pre to invest in shares over 377 00:19:02,359 --> 00:19:05,480 Speaker 1: property and over negative gearing. I take it his clients 378 00:19:05,480 --> 00:19:09,440 Speaker 1: are all more affluent to have millions dollars lying around 379 00:19:09,480 --> 00:19:11,840 Speaker 1: to invest in shares compared with the average moment dad 380 00:19:11,880 --> 00:19:15,440 Speaker 1: property investor. He is forgetting you can buy your investment 381 00:19:15,480 --> 00:19:19,480 Speaker 1: property literally without any money of your own. Okay, thank you, Tina. 382 00:19:19,640 --> 00:19:24,400 Speaker 1: Here's the thing. Noel was very much, very much pro 383 00:19:24,440 --> 00:19:27,399 Speaker 1: shares and very skeptical yes, I know on property, but 384 00:19:27,440 --> 00:19:29,800 Speaker 1: that's just one view. And the other thing is Tina, 385 00:19:30,240 --> 00:19:32,880 Speaker 1: you say that you can buy a property with very 386 00:19:32,880 --> 00:19:35,199 Speaker 1: little money of your own, you can buy shares with 387 00:19:35,359 --> 00:19:37,720 Speaker 1: very little money of your own. You can negatively gear 388 00:19:37,800 --> 00:19:44,560 Speaker 1: shares just technically as easily as you can negatively gear property. However, 389 00:19:44,840 --> 00:19:49,360 Speaker 1: in our market, everyone is prepared to do that on 390 00:19:49,440 --> 00:19:53,359 Speaker 1: property and take damn big loans as investors, but they're 391 00:19:53,400 --> 00:19:56,200 Speaker 1: not prepared to do so on negative gearing for shares, 392 00:19:56,280 --> 00:19:59,639 Speaker 1: even though the numbers on shares have been better in 393 00:19:59,680 --> 00:20:03,159 Speaker 1: recent Certainly you're getting four and a half percent yield 394 00:20:03,280 --> 00:20:07,200 Speaker 1: basically against what two or three in the cities in property, 395 00:20:07,600 --> 00:20:11,199 Speaker 1: and from extra extremely strong returns. I won't accept to 396 00:20:11,240 --> 00:20:16,960 Speaker 1: say this is not advice information only, but Peter, I 397 00:20:16,960 --> 00:20:19,040 Speaker 1: think behind it all here is the question why do 398 00:20:19,119 --> 00:20:22,880 Speaker 1: we all? Why do you think the Australian every day 399 00:20:22,880 --> 00:20:25,560 Speaker 1: investor is prepared to take big loans on property and 400 00:20:25,640 --> 00:20:27,840 Speaker 1: not on shares when the same terms are available in 401 00:20:27,880 --> 00:20:28,639 Speaker 1: negative gearing. 402 00:20:29,280 --> 00:20:31,600 Speaker 2: As you say, James, you know I'm not providing any 403 00:20:31,640 --> 00:20:35,040 Speaker 2: sort of boss look on you. I'll probably say two things. 404 00:20:35,080 --> 00:20:40,240 Speaker 2: First of all, do people understand shares as well as 405 00:20:40,960 --> 00:20:44,239 Speaker 2: and the second is that you know, every day we 406 00:20:44,280 --> 00:20:46,640 Speaker 2: get to sort of see what the share pross changees 407 00:20:46,680 --> 00:20:49,520 Speaker 2: been these days. You know, obviously we get monthly sort 408 00:20:49,560 --> 00:20:52,520 Speaker 2: of discussions. We've just had one about what ass proces 409 00:20:52,520 --> 00:20:52,840 Speaker 2: are up to. 410 00:20:53,040 --> 00:20:55,160 Speaker 1: We know much more than we used to, yeah, much much, 411 00:20:55,240 --> 00:20:56,600 Speaker 1: much more up to date information. 412 00:20:57,040 --> 00:21:00,480 Speaker 2: I've even saying weekly indicators of house processes somebody. But 413 00:21:00,960 --> 00:21:03,919 Speaker 2: I suppose that the share market apparently just goes up 414 00:21:04,000 --> 00:21:06,840 Speaker 2: down more than the property market. Both. Maybe it's just 415 00:21:07,000 --> 00:21:11,320 Speaker 2: that influencing people and maybe knowledge, but I'm not you know, 416 00:21:11,359 --> 00:21:13,520 Speaker 2: I've got an expert about why people decided to choose 417 00:21:13,600 --> 00:21:14,720 Speaker 2: property a maches or whatever. 418 00:21:14,920 --> 00:21:18,360 Speaker 1: Okay, I think you're right. I think it's a comfort factor, Tina, because, 419 00:21:18,440 --> 00:21:21,520 Speaker 1: as I say, you can buy shares with very little money, 420 00:21:21,640 --> 00:21:24,280 Speaker 1: you can negatively gear them in the same fashion, and 421 00:21:24,359 --> 00:21:26,480 Speaker 1: there's a lot less trouble, to be honest, because well, 422 00:21:26,520 --> 00:21:28,919 Speaker 1: anything's less trouble than owning an investment of property. As 423 00:21:28,920 --> 00:21:31,879 Speaker 1: you probably know that his owning listed shares are. But 424 00:21:32,480 --> 00:21:34,760 Speaker 1: the comfort factor is big with bricks and mortar. Never 425 00:21:34,840 --> 00:21:37,879 Speaker 1: underestimate that, I think. Okay, thanks Tina, Paul. I was 426 00:21:37,920 --> 00:21:40,080 Speaker 1: listening to your podcast in buying units off the Plan. 427 00:21:40,800 --> 00:21:43,440 Speaker 1: I now know that I would be competing against foreign 428 00:21:43,560 --> 00:21:45,680 Speaker 1: investors if I were ever to buy off the Plan. 429 00:21:46,040 --> 00:21:48,639 Speaker 1: I also know that shunky developers can walk away and 430 00:21:48,760 --> 00:21:53,280 Speaker 1: hide in perpetuity, rendering it expensive to call any money 431 00:21:53,280 --> 00:21:57,000 Speaker 1: back if I hit a disaster. Couldn't developers change their 432 00:21:57,000 --> 00:21:59,760 Speaker 1: minds if prices had risen since the contract had been 433 00:21:59,800 --> 00:22:02,240 Speaker 1: so mind and return my deposits so they could sell 434 00:22:02,240 --> 00:22:05,680 Speaker 1: it themselves. Well, very broadly, Paul, the Off the Plan 435 00:22:05,760 --> 00:22:08,480 Speaker 1: show was very interesting. There was a lot of negatives 436 00:22:08,520 --> 00:22:11,320 Speaker 1: in that space about off the Plan. There was a 437 00:22:11,320 --> 00:22:14,320 Speaker 1: lot of risks I think that were unclear maybe initially 438 00:22:14,320 --> 00:22:18,080 Speaker 1: to listeners, and though they have their place, I think 439 00:22:18,720 --> 00:22:21,240 Speaker 1: that the end of the show, I thought it was 440 00:22:21,280 --> 00:22:24,040 Speaker 1: pretty obvious that that it's much riskier than you might 441 00:22:24,080 --> 00:22:27,080 Speaker 1: think to buy off the plan. That's part one. As 442 00:22:27,119 --> 00:22:29,520 Speaker 1: for what developers might do or change their minds, well, 443 00:22:29,560 --> 00:22:32,399 Speaker 1: developers completely control This is the issue. I suppose the 444 00:22:32,480 --> 00:22:36,000 Speaker 1: developer controls the whole thing, and often controls the development 445 00:22:36,040 --> 00:22:38,120 Speaker 1: in the years after you move in as well, which 446 00:22:38,160 --> 00:22:41,040 Speaker 1: causes all sorts of other problems. Peter, I won't again 447 00:22:41,040 --> 00:22:42,639 Speaker 1: because you're in the columnist ida was not fair to 448 00:22:42,640 --> 00:22:44,399 Speaker 1: put that one to you, But I might ask you 449 00:22:44,440 --> 00:22:47,520 Speaker 1: one thing if from an economic and demographic point of view, 450 00:22:47,720 --> 00:22:50,399 Speaker 1: we were talking about how houses run ahead of apartments 451 00:22:50,400 --> 00:22:52,840 Speaker 1: and have done so and are doing it again at 452 00:22:52,840 --> 00:22:56,560 Speaker 1: the moment, and how apartment prices were softer. Have you 453 00:22:56,600 --> 00:22:59,240 Speaker 1: ever looked at the demographics of apartment buyers. It used 454 00:22:59,240 --> 00:23:02,119 Speaker 1: to be all based if the younger people, but I 455 00:23:02,160 --> 00:23:06,159 Speaker 1: believe a substantiate portion now are older people downsizing with 456 00:23:06,320 --> 00:23:08,480 Speaker 1: just a change the market? I wonder, yeah, it. 457 00:23:08,400 --> 00:23:12,240 Speaker 2: Could do, James. You know, obviously if the sort of 458 00:23:12,240 --> 00:23:14,760 Speaker 2: apartments are sort of more high end the people downside, 459 00:23:14,800 --> 00:23:17,359 Speaker 2: and that sort of evolves. I think, you know, one 460 00:23:17,400 --> 00:23:19,000 Speaker 2: of the other points I'd make on this is that 461 00:23:19,160 --> 00:23:22,240 Speaker 2: you know, if you look at cities, the land is 462 00:23:22,280 --> 00:23:25,119 Speaker 2: not getting more land. There's a lot more people. So, 463 00:23:25,600 --> 00:23:27,399 Speaker 2: as you pointed out earlier on the stock of a 464 00:23:27,480 --> 00:23:31,199 Speaker 2: part the overle locker dwellings is increasing. And what that 465 00:23:31,240 --> 00:23:34,680 Speaker 2: will just mean is that over time the composition of 466 00:23:34,720 --> 00:23:38,280 Speaker 2: who's the unit will volt just because of the proportional 467 00:23:38,840 --> 00:23:42,200 Speaker 2: oble golling stock is increasing. So I think that well, 468 00:23:42,480 --> 00:23:44,520 Speaker 2: that would be basically if you look at the big 469 00:23:44,560 --> 00:23:48,200 Speaker 2: cities overseas, you know, didn't you're over five million people. 470 00:23:48,600 --> 00:23:51,640 Speaker 2: If you look at big cities Europe like that, then 471 00:23:51,840 --> 00:23:54,159 Speaker 2: you know you do see more units in the in 472 00:23:54,520 --> 00:23:56,879 Speaker 2: the over going stock, So you know, I think that'll 473 00:23:56,920 --> 00:23:59,800 Speaker 2: be the other big thing that that issue about units 474 00:23:59,760 --> 00:24:01,919 Speaker 2: became having a bigger proportion of the dwelling stock that 475 00:24:02,000 --> 00:24:03,439 Speaker 2: will have impotations. 476 00:24:04,680 --> 00:24:10,760 Speaker 1: Finally, Andrew a question on property inside Super. With superbounces growing, 477 00:24:10,840 --> 00:24:13,000 Speaker 1: I can see that many people close to retirement would 478 00:24:13,000 --> 00:24:14,399 Speaker 1: be in a position where they would be able to 479 00:24:14,440 --> 00:24:18,359 Speaker 1: purchase a residential or commercial property without the need for 480 00:24:18,400 --> 00:24:23,360 Speaker 1: a complicated SMSF loan with all its restrictions. Hypothetically, if 481 00:24:23,359 --> 00:24:25,520 Speaker 1: someone had a million dollars in Super at sixty, would 482 00:24:25,560 --> 00:24:29,120 Speaker 1: it be a strategy to move it into an SMSF 483 00:24:29,160 --> 00:24:33,439 Speaker 1: and purchase a half a million property. It seems like 484 00:24:33,520 --> 00:24:36,240 Speaker 1: that would reduce heavy exposure to the market. Yes, it 485 00:24:36,320 --> 00:24:40,840 Speaker 1: would reduce But Andrew never advice. Hypothetically, if to all 486 00:24:40,840 --> 00:24:43,720 Speaker 1: the Andrews in the world, if you had it doesn't 487 00:24:43,720 --> 00:24:47,600 Speaker 1: matter what the figure is. If you had X in 488 00:24:47,640 --> 00:24:51,240 Speaker 1: your Super at sixty and you just decided to put 489 00:24:51,280 --> 00:24:55,600 Speaker 1: half X into one single acid and that one single acid, 490 00:24:55,640 --> 00:24:59,359 Speaker 1: whether it's property or anything is that would be very 491 00:24:59,400 --> 00:25:05,040 Speaker 1: poor in relation to diversification, and diversification is terribly important 492 00:25:05,880 --> 00:25:09,520 Speaker 1: in super so I think you would find the vast 493 00:25:09,600 --> 00:25:14,360 Speaker 1: majority of advisors, regulators, analysts, and perhaps even chief economists 494 00:25:14,359 --> 00:25:17,320 Speaker 1: at banks would be skeptical about such a move. 495 00:25:18,920 --> 00:25:23,520 Speaker 2: What do you think, Peter, Well, probably anything outside James. 496 00:25:23,600 --> 00:25:26,240 Speaker 2: He said, whever you make investments, it should be do 497 00:25:26,359 --> 00:25:29,240 Speaker 2: your research to understand about what the risks are and 498 00:25:29,320 --> 00:25:31,760 Speaker 2: what the returns are are. And you know, I think 499 00:25:31,760 --> 00:25:34,240 Speaker 2: if you do that, then you know, I think you'd 500 00:25:34,280 --> 00:25:36,040 Speaker 2: be more informal when you make your investment decisions. But 501 00:25:36,000 --> 00:25:38,399 Speaker 2: I have a very particular you about that. 502 00:25:38,560 --> 00:25:41,080 Speaker 1: Very good, and I just would add Andrew that diversification 503 00:25:41,240 --> 00:25:43,840 Speaker 1: is terribly important and you don't have to be a 504 00:25:43,920 --> 00:25:46,680 Speaker 1: math professor to know if fifty percent of your portfolio 505 00:25:46,720 --> 00:25:50,440 Speaker 1: is in one thing, then it's not diversified by any 506 00:25:50,840 --> 00:25:54,000 Speaker 1: I think, by any measure. All Right, very good, Very interesting, 507 00:25:54,040 --> 00:25:56,080 Speaker 1: Thank you Peter for coming on the show. Very interesting 508 00:25:56,080 --> 00:25:57,720 Speaker 1: to hear what you have to say about our property 509 00:25:57,720 --> 00:25:59,919 Speaker 1: market getting better, which is good to hear. 510 00:26:00,960 --> 00:26:03,040 Speaker 2: Thanks very much chairs you having me on, lovely to 511 00:26:03,080 --> 00:26:03,399 Speaker 2: have you on. 512 00:26:03,440 --> 00:26:05,760 Speaker 1: We'll talk to you again. That was Peter Monkton, chief 513 00:26:05,760 --> 00:26:08,959 Speaker 1: eclumnist at the Bank of Queensland. Very good. Let's have 514 00:26:09,080 --> 00:26:12,520 Speaker 1: some questions. Keep that up, folks. That idea of putting 515 00:26:12,520 --> 00:26:14,320 Speaker 1: two or three questions in an email, why not? Are 516 00:26:14,359 --> 00:26:16,480 Speaker 1: you going to take the effort to send in a question? 517 00:26:16,640 --> 00:26:18,840 Speaker 1: Send in a couple. The money puzzle at the Australian 518 00:26:18,880 --> 00:26:22,080 Speaker 1: dot com dot au is the address. Talk to you soon.