Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
Speaker 1: James Kirkby, the Wealth editor at The Australia and welcome
Speaker 1: aboard everybody. If you're a property investor, you're probably watching
Speaker 1: some key numbers this week out of the budget and
Speaker 1: it's promised to drop in inflation. If inflation drops, rates
Speaker 1: should drop. If the government puts you know, a cumulative
Speaker 1: creoh party billion into a housing market in a spectrum
Speaker 1: of support initiatives, mostly mostly at the lower income side
Speaker 1: of the market, does that free up middle income side
Speaker 1: of the market, Does it create some space? Does it
Speaker 1: does it loosen the vacancy rate? Really really interesting and
Speaker 1: that's going to be reveal I sed post in the
Speaker 1: days ahead. But we do have a budget special remember
Speaker 1: on Thursday, coming up on sixteenth with Will Hamilton. But
Speaker 1: inside property folks, I think the biggest question of all
Speaker 1: is that is this market, this post COVID property investment
Speaker 1: market that we're in, are we going to see a
Speaker 1: reversion to the natural order of things? You know, we'll
Speaker 1: standalone houses for instance, lose the sort of extreme premium
Speaker 1: they have over units and other key issues of the
Speaker 1: day for property investors who could answer these questions. Tim
Speaker 1: Lawles Doyen of the Property Market. Doyen of the Property Market,
Speaker 1: head of research Core Logic. How are you, Tim, I'm
Speaker 1: really well, James. Thanks for the invitation to join you today. Man,
Speaker 1: you're welcome. The doyen is female. The Doyen is male.
Speaker 1: I just remembered, hence the correction there. Now. We've had
Speaker 1: a Actually we've spoken recent times, didn't we when we
Speaker 1: did a piece as well, and I thought it was
Speaker 1: really really interesting about changing shape of the market. But
Speaker 1: we're why we're on budget week. Where are you coming
Speaker 1: from in terms? Are you of the opinion that rates
Speaker 1: will and if you are, when might that happen?
Speaker 2: Well, rates will obviously drop at some stage. I think
Speaker 2: the timing is what's highly uncertain. I'm in the view
Speaker 2: that in the camp that we probably won't see interest
Speaker 2: rates coming down until sometime next year. It's looking like
Speaker 2: clearly the Treasurer is trying to bring down inflation in
Speaker 2: the budget, at least based on the leaks that are
Speaker 2: coming through, mechanically offering up some intentives or rebates and
Speaker 2: so forth, which is going to be good news for
Speaker 2: households absolutely, but arguably that potentially does free up households
Speaker 2: to spend a little bit more, which arguably could put
Speaker 2: some renewed upwards pressure on consumption. It's time will tell,
Speaker 2: and I think anybody is going to be jumping at
Speaker 2: a chance to see any sort of easy and cost
Speaker 2: of living pressure, that's for sure.
Speaker 1: Yes, yeah, well, well it's very much. It's a deliver government,
Speaker 1: it's a third budget. It's going to be very supportive
Speaker 1: from a social perspective. With us, we know that that's
Speaker 1: where most of the money is going. It's going into education,
Speaker 1: is going into workers in various areas, it's going into
Speaker 1: cost of living support and housing. Housing is a really
Speaker 1: interesting one. So when we were talking recently, you told
Speaker 1: me an amazing stat and it really to me. It
Speaker 1: really reflected what has happened in recent years. So we
Speaker 1: had this extraordinary COVID period and everyone rushed for space,
Speaker 1: understandably because we were all trapped inside our houses, and
Speaker 1: at the time, I suppose it was very real to
Speaker 1: us that we might be trapped there for a long time,
Speaker 1: or trapped there again in the future for some other pandemic,
Speaker 1: for some other reason. And so the premium that people
Speaker 1: put on standalone homes just went through the roof compared
Speaker 1: to traditionally. Could you explain to people what's happened, first
Speaker 1: of all.
Speaker 2: Yeah, absolutely, it's a fascinating paradigm here. Where As you say, James,
Speaker 2: we've seen this real preference shift towards space. It seemed
Speaker 2: to be lasting a lot longer than the pandemic itself.
Speaker 2: Interesting enough, we did see an update from the Reserve
Speaker 2: Bank on the average household size, which is a key
Speaker 2: part of this this trend, and we haven't really seen
Speaker 2: too much of a reversal in that earlier trend where
Speaker 2: the average household size dropped from around two point six
Speaker 2: around two point five people per household, and a real
Speaker 2: reflection of this amplification of housing demand we saw through
Speaker 2: the pandemic, even at the time when international borders were closed.
Speaker 2: But part and parcel with that was also the fact
Speaker 2: that people were looking for more space. There was this
Speaker 2: almost a shunning of medium to high density styles of housing.
Speaker 2: As people worked remotely, they wanted more living space, they
Speaker 2: wanted somewhere to work from home, they wanted not to
Speaker 2: have to share amenity like elevators and stairwells and so forth.
Speaker 2: But we're not really seeing too much evidence of that
Speaker 2: changing up into recently. So what that meant, of course
Speaker 2: was house values as opposed to unit values just rocketed higher.
Speaker 2: In fact, if you look at the longer term trend
Speaker 2: from the onset of the pandemic through to the most
Speaker 2: recent end of month end of April of this year,
Speaker 2: we've seen house values across our capital cities have risen
Speaker 2: by about thirty seven percent, pretty significant amounts. Unit values
Speaker 2: are up by about a third of that amount, up
Speaker 2: by thirteen percent.
Speaker 1: Yeah, yeah, right, they really really trailed behind her stand alone.
Speaker 2: It's a phenomenal trend. That trend, though, was really narrowed
Speaker 2: partly because house values did show a larger correction through
Speaker 2: the early phase of the rate hiking cycle following that
Speaker 2: surge of growth, but also more recently we've started to
Speaker 2: see unit values rising at a more similar pace to
Speaker 2: house values even some cities. Sydney is a good example,
Speaker 2: so as Brisbane, heart adelatter all showing unit value is
Speaker 2: rising a little bit more rapidly than have values now and.
Speaker 1: Of course the gap is closing a little bit closing.
Speaker 1: It's still you know, it don't seem to be particularly
Speaker 1: convinced that it's it's never going to go back, right,
Speaker 1: It's not going to go back to pre pandemic. It
Speaker 1: would have to go and the units would have to
Speaker 1: go crazy. Houses would have to do nothing for They've
Speaker 1: got to go back to where it was. Yeah, I'm exaggerating.
Speaker 2: Think about I'll use the market like Sydney, which you know,
Speaker 2: we know is a really good example because it's already
Speaker 2: quite a mature density market. The gap between house and
Speaker 2: unit medium values in Sydney at the moment is about
Speaker 2: sixty eight percent. The height of the pandemic, it was
Speaker 2: about sixty nine percent. So Sydney hasn't really narrowed all
Speaker 2: that much since those pandemic highs pre pandemic like coming
Speaker 2: into market of twenty twenty, the gap was only about
Speaker 2: thirty percent, right, So yeah, I agree we won't see
Speaker 2: that gap completely narrowing back to where it was in much.
Speaker 2: But I think the fact that affordability is so challenging
Speaker 2: at the moment, and we've got such a ty rental
Speaker 2: market a lot of first home buyers coming in because
Speaker 2: they don't want to be renters anymore, I think the
Speaker 2: logical alternative is looking towards the unit sector, where price
Speaker 2: points are a lot lower and a lot more achievable.
Speaker 1: Okay, so if you were an economist with the view
Speaker 1: of the reversion to the mean, you'd say, listen units
Speaker 1: from here on in the windows behind them, that they
Speaker 1: may actually dollar for dollar little better than single story,
Speaker 1: single standard on Holmes.
Speaker 2: Yeah, I would say that, at least over the short
Speaker 2: to medium term. I think there is this other argument
Speaker 2: over the long term, the scarcity value of land, which
Speaker 2: is generally what drives house prices higher compared to units.
Speaker 2: It's still a thing, right, I think that's probably going
Speaker 2: to keep house values with ascending a premium. There's also
Speaker 2: the other factor, which is we haven't really seen much
Speaker 2: of a supply response at all in the medium to
Speaker 2: high density sector. Houses at least had the benefit of
Speaker 2: home builder and there's been a supply response there, though
Speaker 2: it's fair to say there's still a lot of hurdles
Speaker 2: to getting that supply into the marketplace. We haven't seen
Speaker 2: at the meetium. The high density sector and through developers
Speaker 2: getting MEETI into high density styles of housing stock into
Speaker 2: the marketplace has a lot higher barriers because getting a
Speaker 2: multi store unit into the marketplace is very expensive at
Speaker 2: a time where construction costs are high and labor is
Speaker 2: in scarce supply.
Speaker 1: Yes, I see when you say units temp you mean apartments.
Speaker 1: Do you also mean like units as we know them,
Speaker 1: little garden units? And do you mean townhouses too? Is
Speaker 1: it everything except the standardone home in the traditional sense?
Speaker 2: Yeah, thanks for clarifying, James. It is a bit of
Speaker 2: a catch all phrase units. You're right, it does include
Speaker 2: everything from say, town homes through the high rise. I
Speaker 2: think there's a pretty good argument that what a lot
Speaker 2: of developers or the industry would describe is the missing middle,
Speaker 2: which is your more sort of lowd and median density
Speaker 2: styles of multi unit dwellings. Townhouses would be the best example,
Speaker 2: are probably going to be in high demand. Again, there's
Speaker 2: a real supply shortage, and it's kind of like the
Speaker 2: next best option. If you can't afford a house, then
Speaker 2: you're probably looking towards a townhouse or a terrorist or
Speaker 2: a villa.
Speaker 1: Okay, that's really interesting, So folks, I meanst the head
Speaker 1: of research at core Logic, and you know, basically he's
Speaker 1: saying the dollar for dollar that the units, the immediate
Speaker 1: outlook could go better. PERSCUAMTERI would be like than standalone
Speaker 1: homes because the standalone homes just basically went out. The
Speaker 1: increase that they had not just in COVID but in
Speaker 1: the immediate post COVID year was so extraordinary. Okay, very
Speaker 1: very interesting. I want to come back and we're going
Speaker 1: to take short break and I want to ask you
Speaker 1: in terms of this post COVID market team, I want
Speaker 1: to talk to you about the order of the property
Speaker 1: markets in Australia. We used to a very simple ladder.
Speaker 1: Sydney was at the top, Melbourne was second, and I
Speaker 1: sort of descended down. Hobart was at the bottom. That's
Speaker 1: all changed. We'll be back in the moment. Hello, Welcome
Speaker 1: back to The Australian's Money Puzzled podcast. I'm James Kirkby,
Speaker 1: the was editor at The Australian, and I'm hoping to
Speaker 1: Tim Lowless, head of research at Core Logic and Man
Speaker 1: you will see regularly quoted on all things property and
Speaker 1: property investment around Australia. So Tim, once upon a time,
Speaker 1: that's that was it for me. I mean I had
Speaker 1: a very simple view which was established over the years,
Speaker 1: that Sydney was the leading market, It set the trends,
Speaker 1: it was the most expensive market and then it cascaded
Speaker 1: down from there. You had Melbourne next, then you had Brisbane,
Speaker 1: then you had Perth Adelaide, and Hobart was at the end.
Speaker 1: I sued to have a joke that at the Hobart
Speaker 1: prices when they when they moved up, that was it.
Speaker 1: That was the that was the last link in the chain.
Speaker 1: As it was over. Basically, you know that everything it
Speaker 1: happened very slowly. Sydney always started any movements upwards and
Speaker 1: Hobart ended it. That all kind of went out the
Speaker 1: window in the Corvid period and there was an extraordinary
Speaker 1: time where for instance, hall Bark was more expensive than
Speaker 1: Partha Adelaide. What's the situation now, Yeah, there is this
Speaker 1: natural order I suppose in the housing market, and it
Speaker 1: does tend to change over time or evolve and then revert.
Speaker 1: So at the moment we still have Sydney like heads
Speaker 1: and shoulders, the most expensive market based on median values.
Speaker 1: And you've got a median house value in Sydney it's
Speaker 1: about one point four million dollars at the end of April.
Speaker 2: And then you've got Camera. You know, a lot of
Speaker 2: a lot of space between Sydney and Camebra. Camera's got
Speaker 2: a median house value about nine hundred and seventy two
Speaker 2: thousand dollars and then Melbourne at nine hundred and forty
Speaker 2: one thousand. But there is a little bit of a
Speaker 2: changing of the guards happening here. I don't think Sydney
Speaker 2: at any risk of being overtaken for its median value
Speaker 2: at the moment, but it does look like, you know,
Speaker 2: Brisbane will troublately overtake Melbourne. For example, there's not much
Speaker 2: difference there nine hundred and twenty thousand in Brisbane as
Speaker 2: an in nine hundred and forty thousand Melbourne. Melbourn's a
Speaker 2: flat market. Brisbane seeing housing values rising at nearly two
Speaker 2: percent month on months, So on those sort of trends,
Speaker 2: it won't take long before Brisbane overtakes Melbourne, which will
Speaker 2: be a little bit different.
Speaker 1: That's interesting. You could have Cambra and Brisbane more expensive
Speaker 1: than Melbourne even though it's the second biggest city. Yeah.
Speaker 2: Yeah, there's not much difference between Perth and in Melbourne either.
Speaker 2: Okay when you look at percentage difference, and with Perth
Speaker 2: housing values rising at about two percent month on month
Speaker 2: at the moment and even accelerating into the quarter and
Speaker 2: again Melbourne flat. You know, arguably, if we see these
Speaker 2: trends continue over the next six months, then Perth's going
Speaker 2: to be pretty close to Melbourne's value as well. A
Speaker 2: bit of a changing of the hierarchy here. Yeah, you
Speaker 2: go back to go back to two thousand and six
Speaker 2: and for a little while their Perth was even more
Speaker 2: expensive than Sydney during the mining boom. That didn't last
Speaker 2: very We went through all over after that as.
Speaker 1: Well, right, right, So actually there is perhaps a natural order,
Speaker 1: but the natural order bounces around considerably depending on obviously
Speaker 1: well Perath will right up and down with the commodities market,
Speaker 1: I suppose to an extent.
Speaker 2: Yeah, I mean the mining, the mining commodity cycle, or
Speaker 2: more with an infrastructure cycle of the company's resources prices
Speaker 2: was the real driver of Perth. But now what's really
Speaker 2: driving the Perth market is a very healthy rate of affordability,
Speaker 2: at least in relativity to the Sydney and Melbourne, really
Speaker 2: strong rate of interstate migration and overseas migration and inherent
Speaker 2: lack of supply, and a very strong economy of course
Speaker 2: as well. It's got one of the strongest jobs growth
Speaker 2: figures and one of the lowest rates of unemployment. The
Speaker 2: resources sector is very strong, but a lot of big
Speaker 2: infrastructure projects for transport underway as well. So yeah, it's
Speaker 2: looking very different to the mining boom in Perth. And
Speaker 2: despite such strong growth, it's still fairly affordable.
Speaker 1: It's still affordable and on the other end of the scale,
Speaker 1: as I understand, Hobart has started to drop back through
Speaker 1: the wrongs on the ladder because a lot of people
Speaker 1: perhaps rush there during COVID. It would have been such
Speaker 1: a lovely place to be if you could were looky
Speaker 1: enough to be there when everybody is lockdown. But I
Speaker 1: think it's has it dropped a few tiers.
Speaker 2: It had its absolutely even before COVID, Hobart was a
Speaker 2: very strong market. Look at the longer term growth rates,
Speaker 2: I say, with the five or ten year period, Hobart
Speaker 2: really stands out as such a strong market. But now
Speaker 2: its median house value is the second lelf of any
Speaker 2: capital city, now above Darwin and just below Perth. We're
Speaker 2: still seeing Hobart housing values down about eleven percent from
Speaker 2: their record highs So eleven and a half percent from
Speaker 2: the record high is back in twenty twenty two. So yeah,
Speaker 2: it's a clear example of a market that was very strong,
Speaker 2: but it doesn't have the same demographic tail when most
Speaker 2: other markets, and that affordability you mentioned is really been
Speaker 2: quite a barrier to attracting more people into that market.
Speaker 1: It's interesting, isn't it really is, Especially if you are
Speaker 1: an investor and you are prepared to invest interstate you can,
Speaker 1: you can. You can get it very right or very wrong.
Speaker 1: If you'd gone into Perth two years ago and then
Speaker 1: people had been saying for years, of course the Perth
Speaker 1: will come up, but it didn't until very recently and
Speaker 1: now it's really starting the steam. But if you had
Speaker 1: gone into hope Art, you'd have actually been at the
Speaker 1: peak looks like, and you'd be losing money if you
Speaker 1: were selling. Interesting. Interesting, fascinating to talk to you, Tim,
Speaker 1: and you have that helicopter view of the market, really
Speaker 1: really interesting. I have curated some questions just for you, Tim,
Speaker 1: so I think we'll take a break and we'll try
Speaker 1: to get through all those questions in the moment. Hello,
Speaker 1: Welcome back to the Money Puzzle podcast. James Kirkby talking
Speaker 1: to Tim Lowless. Tim. I've also the questions here and
Speaker 1: hopefully you can help me with some some you will
Speaker 1: not be able to help me with because they are
Speaker 1: really comments and complaints as much as questions. So I
Speaker 1: will to start with read orion i d He says,
Speaker 1: thanks for your response on my question on land banking,
Speaker 1: but I think your simple answer seemed a little dismissive.
Speaker 1: I expect more from a journalist who usually sounds pretty
Speaker 1: skeptical of the more self promoting claims of your guests.
Speaker 1: Cank you read, Yeah, sorry, in no way did I
Speaker 1: mean to be dismissive on your on your question about
Speaker 1: land banking that time. I hope if you're a regular
Speaker 1: listener to the show, I've been quite earnestly interested in
Speaker 1: the broader area of housing provision across, not just from
Speaker 1: an investment point of view. But apologies there, okay, Zoe says,
Speaker 1: Now this is really interesting. Everyone's been knocking the first
Speaker 1: home super scheme on the show. We've had lots of
Speaker 1: correspondence saying it's extremely difficult to deal with, it's too much,
Speaker 1: it's more trouble than it's worth. Zoe says, I've been
Speaker 1: listening to your podcast for the last twelve months as
Speaker 1: I saved four and have now purchased my first home.
Speaker 1: As someone starting out in the market. It's great to
Speaker 1: learn from the experience of those who's been in it
Speaker 1: for longer. However, it troubles me the way the first
Speaker 1: Home super Saver scheme is depicted as rating your super
Speaker 1: I've heard that phrase on your show and disappointed to
Speaker 1: hear it again recently. The first Home super scheme is
Speaker 1: the only way I could save towards my deposit when
Speaker 1: I was renting, and I think it's one of the
Speaker 1: best policies out there to help first home buyers, even
Speaker 1: if it is complicated. And then Zoe puts points three things.
Speaker 1: She says, I found it really useful for three reasons.
Speaker 1: One I couldn't touch my house deposit, which is very
Speaker 1: of course it would be the case if you buy
Speaker 1: in any event, but fair enough. Two it lowered my
Speaker 1: taxable income. Three it's keeping my deposit savings in my
Speaker 1: super increased the compounding interest on my super big because
Speaker 1: I had a larger amount invested. I hope these arguments
Speaker 1: incur is to rethink the FHSS. Well what about that?
Speaker 1: Here we are with a point where the whole argument
Speaker 1: about superfer housing is so hot, and we have this
Speaker 1: curious scheme where you allowed to use your super contributions.
Speaker 1: So thank you very much for that. So it's not
Speaker 1: it's not a view of herd many times, but it
Speaker 1: was very perspectively put tim on the housing for super
Speaker 1: You know that the opposition is really building on this,
Speaker 1: and they're now saying, certainly Andrew Bank is saying, and
Speaker 1: you send a committee that not if they get in,
Speaker 1: not only would they allow you use your Superfer housing,
Speaker 1: but they would allow you to use your entire Superfer
Speaker 1: housing with basically with no limits. You could just whatever
Speaker 1: you soup, you could take it out, put it in
Speaker 1: buy a house. I'm not going to ask you whether
Speaker 1: you think that's good or bad. I'm going to ask
Speaker 1: you what would be its impact do you think on
Speaker 1: house our housing market?
Speaker 2: Yeah, I mean to reminds you, but I think broadly
Speaker 2: clearly you're this is a demand side opportunity or stimulus
Speaker 2: to the market. It generally would tend to provide better
Speaker 2: access to housing, would increase demands. Logically, when you have
Speaker 2: higher demand against this ongoing backdrop a very low supply,
Speaker 2: it probably would push prices higher, arguably, But if you
Speaker 2: look at some of the other research around the Productivity
Speaker 2: Commission's a good example, retirement wealth is very much underpinned
Speaker 2: by home ownership, so getting to the market earlier and
Speaker 2: using your super funds logically it was probably a good
Speaker 2: way to build wealth and set yourself up for retirement
Speaker 2: much better. So I think there's a bit of pro
Speaker 2: and con here, but it would be interesting to see
Speaker 2: how it pans out.
Speaker 1: Yeah, yeah, I look, I have I think i'd said
Speaker 1: this on the shore recently, if I haven't dometic here now.
Speaker 1: I did always think super should solve it super and
Speaker 1: housing should solve housing, and in principle that all what's
Speaker 1: up fairly well. The thing is that in reality, the
Speaker 1: tax system is totally utterly biased towards the homeowner, and
Speaker 1: access to the pension is biased towards the homeowner, and
Speaker 1: the capital gains taxes biased towards the homeowner, and if
Speaker 1: you're not a homeowner, you don't get all those tax
Speaker 1: breaks that the entire system is constructed around. So I'm
Speaker 1: afraid that, in some way, reluctantly, I think that that
Speaker 1: super can be used for housing, and I can see
Speaker 1: why people would want to do it. And not only that,
Speaker 1: but I could see how it could work out for
Speaker 1: people because having a little bit of super and no
Speaker 1: home is a much worse position than owning your own
Speaker 1: home in reality, in the way the tax system works.
Speaker 1: They're just putting that out there, Okay and Neil. In
Speaker 1: reforming negative gearing, one of the options discussed is to
Speaker 1: limit it to one property. This approach lacks equity, as
Speaker 1: someone with two five hundred thousand properties would get far
Speaker 1: fewer reductions than someone with one one million property. Has
Speaker 1: the idea of a total cap being considered instead, Thank
Speaker 1: you and nil. Actually, well, we have no idea whether
Speaker 1: they're going to go near negative gearing in the budget.
Speaker 1: I'm speaking to you on budget morning. We go in
Speaker 1: at half past one for six merry hours. We were
Speaker 1: locked up together and looking at the budget. There's always
Speaker 1: rumors that they might go near capital against tax, might
Speaker 1: go near negative gearing. I think specifically, perhaps a more
Speaker 1: immediate concern might be they could close down the ability
Speaker 1: of super fans to borrow for property because they could
Speaker 1: be backed up in that. There has been previous inquiries
Speaker 1: which says that should happen, including David Murray's inquiry Once
Speaker 1: upon a Time, which was commissioned by the Coalition. So
Speaker 1: I think that's actually a risk as we go in
Speaker 1: there to date. I'll just finished with the final question
Speaker 1: of Andrew, which will trigger thoughts from both of us,
Speaker 1: Tim and who ask what do you want to see
Speaker 1: in the May budget which would strike the right balance
Speaker 1: of rugality and effectiveness. Thank you Andrew, big question. I
Speaker 1: think we know a lot about what we're going to
Speaker 1: see the nature of what we're going to see in
Speaker 1: the budget. So for someone like Tim, I would think
Speaker 1: policy wise, he's really looking at whether inflation will be
Speaker 1: stoked and whether rates will move up and down. On
Speaker 1: the other issues, tam on the big ticket issues like housing,
Speaker 1: and it's humulative three years I said, thirty billion going
Speaker 1: into housing, nine billion a loan to single item in
Speaker 1: this budget. Aren't social housing? How would it affect the
Speaker 1: market broadly for investors? It won't have an instant effect,
Speaker 1: that's for sure, because even with more funding, which I
Speaker 1: think is very welcome. By the way, social and community
Speaker 1: housing is pretty desperate for more funding and we clearly
Speaker 1: need it, but it's a pretty slow burn. We know
Speaker 1: there's a lot of hurdles to getting more supply into
Speaker 1: the marketplace, but longer term, absolutely this is going to
Speaker 1: fund more housing for people who need it and can't
Speaker 1: afford it. And we know the government has really removed
Speaker 1: itself from owning public housing, and the way they're offsetting
Speaker 1: that is through funding more social and community housing of course,
Speaker 1: So I think that's that's certainly key.
Speaker 2: I wouldn't be surprised if we see some other announcement
Speaker 2: or maybe further incentives from build to rent styles of
Speaker 2: institutional ownership to get more rental supply into the market.
Speaker 2: And of course the transport infrastructure side of things is
Speaker 2: also very important for housing as well, and no doubt
Speaker 2: there is a lot more being funded for a key
Speaker 2: transport infrastructure.
Speaker 1: We often get questions about build to rent to which
Speaker 1: I have to answer in veribly each time, is that sorry,
Speaker 1: it's not accessible to the to the to the everyday
Speaker 1: investor just yet it's very much institutional. Have you looked
Speaker 1: at that area in terms of what's been going on
Speaker 1: and what might happen in the future.
Speaker 2: Yeah, absolutely, it's it's very topical, and I think it's
Speaker 2: fair to say, even though there's a lot of hype
Speaker 2: around build to rent and a lot of interest, we
Speaker 2: aren't seeing a lot of activity or a lot of actually,
Speaker 2: you know, feat on the ground as such just yet.
Speaker 2: There are some good examples in Melbourne, but the few
Speaker 2: and far between. Nationally, I think we're still seeing institutional
Speaker 2: investment quite cautious in this space, given the very low
Speaker 2: yield environment across Australian housing, and probably also some challenges
Speaker 2: around just financing these styles of developments as well amid
Speaker 2: a high interest rate environment.
Speaker 1: So the big super funds they said, yeah, yeah, housing,
Speaker 1: it doesn't match our investment profund the yields out there,
Speaker 1: we don't get the chrends that we're looking for. So
Speaker 1: what are two million in Australians wrong to invest in
Speaker 1: property or are they comming in a different doorway?
Speaker 2: Yeah, it's very different. Taxation policies look to be I
Speaker 2: suppose improving in the sense of lower withholding taxes, better
Speaker 2: depreciation benefits for institutional investors. But you're right, I think,
Speaker 2: just a point, putting my finger in the air, around
Speaker 2: eighty five to ninety percent of all rental housing in
Speaker 2: the countries owned by private sector investors, and of course
Speaker 2: taxation policy being capital concessions and negative gearing are a
Speaker 2: pretty big part of that.
Speaker 1: Yes, So that explains perhaps to a substantial degree, the
Speaker 1: enthusiasm of the investors, ay, individual investors, and that's been
Speaker 1: sort of baked in for so long people as people
Speaker 1: work it into their figures and they don't expect it
Speaker 1: to change. Well, we'll see if it changes there anything
Speaker 1: changes around it later this afternoon. Okay, well, thank you
Speaker 1: very much, Tim, great to talk to you. Very interesting
Speaker 1: to look at that market. I must say I am
Speaker 1: dumbfounded to hear that Sydney, Canberra and Brisbane are already
Speaker 1: dearer than Melbourne and Earth could be soon. Sitting as
Speaker 1: I am in the middle of the city of five million,
Speaker 1: I do wonder what on earth, what on Earth is happening?
Speaker 1: But as you say, it changes all the time. There
Speaker 1: is a natural order. But the pillars move all the time,
Speaker 1: and you see hope at thinking at the moment and
Speaker 1: Brisbane and ascending. So very interesting for the investor, especially
Speaker 1: the investor who's open to moving cities with their money. Okay,
Speaker 1: thank you very much, Tim, Lola's had the research at
Speaker 1: core Logic.
Speaker 2: Many thanks, James.
Speaker 1: Lovely to have you on the show. And folks, let's
Speaker 1: have some questions. The email is the money puzzle at
Speaker 1: the Australian dot Com dot Au talk to you soon.