1 00:00:11,520 --> 00:00:14,800 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:14,920 --> 00:00:18,120 Speaker 1: James Kirkby. Welcome aboard everybody. Now you know that in 3 00:00:18,160 --> 00:00:22,360 Speaker 1: the property market this year has been one outstanding question. 4 00:00:24,280 --> 00:00:29,240 Speaker 1: Is Melbourne a bargain or is this a city which 5 00:00:29,280 --> 00:00:32,440 Speaker 1: is going to be stuck in the second division from 6 00:00:32,479 --> 00:00:35,479 Speaker 1: a property perspective from now on? And we touched on 7 00:00:35,560 --> 00:00:40,040 Speaker 1: this issue more than once in recent shows. And we 8 00:00:40,159 --> 00:00:43,080 Speaker 1: know also that property taxes hit Melbourne heard last year, 9 00:00:43,280 --> 00:00:45,800 Speaker 1: and the question is will we see nationwide property taxes 10 00:00:45,840 --> 00:00:48,159 Speaker 1: this year? We look at that as well. But first 11 00:00:48,600 --> 00:00:53,440 Speaker 1: we're going to investigate are the numbers telling us anything 12 00:00:53,560 --> 00:00:57,600 Speaker 1: now in mid twenty twenty five and has this station? 13 00:00:57,800 --> 00:01:01,280 Speaker 1: Has this city turned really interesting? My guest is Stuart 14 00:01:01,320 --> 00:01:04,080 Speaker 1: Whims of the pro Solution Group, something of an expert 15 00:01:04,120 --> 00:01:06,840 Speaker 1: on this veccin question. How are you, Stuart? 16 00:01:07,800 --> 00:01:09,880 Speaker 2: I'm really well, James. Thanks for having me back. 17 00:01:10,400 --> 00:01:11,840 Speaker 1: It's great to have you back. You know what I 18 00:01:11,840 --> 00:01:14,160 Speaker 1: want to I can't think if I think of anybody 19 00:01:14,160 --> 00:01:19,679 Speaker 1: who has sort of articulated how bad Melbourne prices have 20 00:01:19,800 --> 00:01:23,200 Speaker 1: been on every measure, it's been you. And so why 21 00:01:23,200 --> 00:01:27,560 Speaker 1: don't you tell us just in a snapshot from a 22 00:01:27,640 --> 00:01:30,880 Speaker 1: numbers perspective, how poor this city has been compared to 23 00:01:30,920 --> 00:01:33,240 Speaker 1: what it should be over said the last ten years. 24 00:01:33,280 --> 00:01:35,720 Speaker 1: And by the way, folks, the figures go back ten years. 25 00:01:35,720 --> 00:01:37,200 Speaker 1: This is not a one year thing. This is a 26 00:01:37,240 --> 00:01:37,920 Speaker 1: decade long. 27 00:01:39,080 --> 00:01:41,080 Speaker 2: And I think that's a good point to kick off 28 00:01:41,120 --> 00:01:44,720 Speaker 2: for James, because a lot of common tree is quite 29 00:01:44,760 --> 00:01:48,640 Speaker 2: short term, whereas when we look at ETFs and other investments, 30 00:01:48,960 --> 00:01:52,160 Speaker 2: quite often we're presented with, you know, what's happened over one, 31 00:01:52,320 --> 00:01:54,920 Speaker 2: five and ten years and allows us, you know, to 32 00:01:54,960 --> 00:01:57,160 Speaker 2: weigh up short, medium and long term returns. I think 33 00:01:57,160 --> 00:01:59,600 Speaker 2: we should be doing the same in the property market 34 00:01:59,640 --> 00:02:03,320 Speaker 2: as well. I mean, the numbers are pretty ordinary over 35 00:02:04,080 --> 00:02:06,400 Speaker 2: a ten year period, and this is just the median 36 00:02:06,800 --> 00:02:11,760 Speaker 2: house value so excluding apartments is about half a percent 37 00:02:11,800 --> 00:02:15,120 Speaker 2: per annum growth over the last ten years, or sorry, 38 00:02:15,120 --> 00:02:18,000 Speaker 2: three percent growth over the last ten years. But we 39 00:02:18,120 --> 00:02:21,480 Speaker 2: know that inflation's been about three percent as well, so 40 00:02:21,960 --> 00:02:26,160 Speaker 2: in real terms native inflation, no change over a teen 41 00:02:26,240 --> 00:02:27,240 Speaker 2: year period. 42 00:02:27,040 --> 00:02:32,160 Speaker 1: And the nwide median is about six percent right well 43 00:02:32,160 --> 00:02:32,560 Speaker 1: for ten. 44 00:02:32,520 --> 00:02:34,560 Speaker 2: Years, so three percent above inflation. 45 00:02:34,800 --> 00:02:38,040 Speaker 1: Yes, and that's on every measure. Then on the five 46 00:02:38,120 --> 00:02:41,200 Speaker 1: year measure, Melbourne's five year numbers are hopeless, so less 47 00:02:41,200 --> 00:02:45,519 Speaker 1: than one percent a year, and nationwide you know what 48 00:02:45,600 --> 00:02:50,400 Speaker 1: we're doing ten that's extraordinary. And even right up to 49 00:02:50,600 --> 00:02:54,080 Speaker 1: one year figures, the medium was east and Melbourne was 50 00:02:56,639 --> 00:02:58,639 Speaker 1: zero in front of it, zero points six to five, 51 00:02:58,720 --> 00:03:01,359 Speaker 1: so half percent, so it actually got it almost got worse, 52 00:03:01,639 --> 00:03:02,560 Speaker 1: did for a mint? 53 00:03:03,120 --> 00:03:07,799 Speaker 2: Yeah, over five years neative inflation, it's an approximate annualized 54 00:03:07,840 --> 00:03:11,000 Speaker 2: decline of about three percent per annum, which means in 55 00:03:11,120 --> 00:03:14,720 Speaker 2: real terms, house prices or median house price is fourteen 56 00:03:14,760 --> 00:03:19,360 Speaker 2: percent lower today than it was five years ago. So 57 00:03:19,720 --> 00:03:21,760 Speaker 2: in I mean, if you've been an investor in the market, 58 00:03:21,800 --> 00:03:24,680 Speaker 2: hopefully you outperform the median. But if you're an investor 59 00:03:24,800 --> 00:03:28,079 Speaker 2: in the Melbourne market, you know, like everything in a rising, 60 00:03:28,160 --> 00:03:31,440 Speaker 2: title ships rise and vice versa, really hard to buck 61 00:03:31,480 --> 00:03:34,880 Speaker 2: the trend. When the trend is you know, property prices 62 00:03:34,920 --> 00:03:37,640 Speaker 2: are ten to fifteen percent lower in real terms than 63 00:03:37,680 --> 00:03:38,920 Speaker 2: they were five years ago. 64 00:03:39,120 --> 00:03:41,520 Speaker 1: And they were just add folks, you know this is houses, right, 65 00:03:41,560 --> 00:03:44,960 Speaker 1: which is the best apartments one in five per selling 66 00:03:45,000 --> 00:03:47,440 Speaker 1: at a loss. Okay, so we'll just park that for 67 00:03:47,480 --> 00:03:49,760 Speaker 1: one mon We say, okay, well that's the recent history 68 00:03:49,800 --> 00:03:53,520 Speaker 1: of what our listeners want to know from every stat 69 00:03:53,680 --> 00:03:56,960 Speaker 1: including obviously in Victoria. But you know, it's interesting, Stuart. 70 00:03:57,000 --> 00:04:00,840 Speaker 1: I had lunch with a financial advisor in last week 71 00:04:00,960 --> 00:04:06,240 Speaker 1: and he said that all the action among these clients 72 00:04:06,960 --> 00:04:10,760 Speaker 1: was will you should you buy in Melbourne? And some 73 00:04:10,840 --> 00:04:13,920 Speaker 1: of them have been buying in Melbourne. Why wouldn't they 74 00:04:14,000 --> 00:04:17,839 Speaker 1: when you well, on a strict metric of just looking 75 00:04:17,880 --> 00:04:20,679 Speaker 1: at the numbers, if you're in Sydney and you've watched 76 00:04:21,040 --> 00:04:24,799 Speaker 1: your prices tick along so nicely, say over five years 77 00:04:25,120 --> 00:04:28,280 Speaker 1: at seven point six percent a year, which is pretty juicy, 78 00:04:28,720 --> 00:04:31,039 Speaker 1: and you look at the other city in Melbourne, which 79 00:04:31,080 --> 00:04:34,839 Speaker 1: is not that very different, and it's tracking at no percent. 80 00:04:34,960 --> 00:04:38,800 Speaker 1: Basically it's doing nothing. Then it would seem but it's 81 00:04:38,880 --> 00:04:42,160 Speaker 1: seemed for a long time to be a bargain. So 82 00:04:42,440 --> 00:04:44,960 Speaker 1: here's a million dollar question that everyone's been hanging on for. 83 00:04:45,640 --> 00:04:49,560 Speaker 1: Is there anything in the numbers now that suggests to 84 00:04:49,680 --> 00:04:53,120 Speaker 1: us that a turn I believe, I'm sure you believe 85 00:04:53,120 --> 00:04:55,320 Speaker 1: there will be a turn, But is there anything in 86 00:04:55,360 --> 00:04:58,880 Speaker 1: the numbers that suggests a turn could be occurring? 87 00:05:00,080 --> 00:05:02,360 Speaker 2: Yeah, it's certainly changed. At the beginning of this year, 88 00:05:02,480 --> 00:05:05,320 Speaker 2: James and I should say, and we'll be familiar with 89 00:05:05,360 --> 00:05:09,600 Speaker 2: this with all the discussion around Perth. Interstate investors are 90 00:05:09,600 --> 00:05:13,000 Speaker 2: the first ones to re enter the market. It's always 91 00:05:13,000 --> 00:05:16,200 Speaker 2: interstate investors, and we saw that in Perth. And if 92 00:05:16,200 --> 00:05:18,640 Speaker 2: you speak to any buyers agents in Melbourne, they'll tell 93 00:05:18,680 --> 00:05:23,480 Speaker 2: you that the majority of inquiry from investors are interstate investors. 94 00:05:24,000 --> 00:05:26,920 Speaker 2: And I guess you know, probably because we've been beaten 95 00:05:27,000 --> 00:05:30,039 Speaker 2: down in Melbourne in terms of how bad the government 96 00:05:30,120 --> 00:05:32,320 Speaker 2: is and the debt and all these sorts of things, 97 00:05:32,760 --> 00:05:35,919 Speaker 2: maybe we don't have that perspective that interstate investors do. 98 00:05:36,080 --> 00:05:41,039 Speaker 2: But cautality produce a daily price index, and I quite 99 00:05:41,200 --> 00:05:46,200 Speaker 2: like it relative to meeting house price movements because it 100 00:05:46,400 --> 00:05:50,320 Speaker 2: uses a hedonic methodology, which means it's trying to compare 101 00:05:50,360 --> 00:05:53,000 Speaker 2: apples with apples, so it's looking at land sized number 102 00:05:53,040 --> 00:05:56,320 Speaker 2: of bedrooms and so forth, where a Meetian house price 103 00:05:56,360 --> 00:06:00,120 Speaker 2: comparison really isn't a comparison of like with like. And 104 00:06:00,160 --> 00:06:02,000 Speaker 2: so if we have a look at how that's tracking, 105 00:06:02,040 --> 00:06:05,200 Speaker 2: it turned. In fact, all states started to turn positive 106 00:06:05,279 --> 00:06:08,599 Speaker 2: in terms of growth early February this year and we're 107 00:06:08,640 --> 00:06:12,520 Speaker 2: tracking about five point eight percent annualized growth in Melbourne 108 00:06:12,560 --> 00:06:15,320 Speaker 2: between February and today, it's the last six months. To 109 00:06:15,360 --> 00:06:18,480 Speaker 2: put that in context, Sydney's about six point one, Perth 110 00:06:18,520 --> 00:06:22,200 Speaker 2: about seven point one. Adelaide's slowing down. It's three point nine, 111 00:06:22,240 --> 00:06:25,080 Speaker 2: which is kind of interesting. Brisbane's the standout eight and 112 00:06:25,080 --> 00:06:28,080 Speaker 2: a half percent, so they're all sort of six to 113 00:06:28,360 --> 00:06:31,440 Speaker 2: eight percent really in that range. In Melbourne is in 114 00:06:31,480 --> 00:06:33,640 Speaker 2: that range, which is very rare. We haven't seen that 115 00:06:33,680 --> 00:06:37,839 Speaker 2: for five years, probably haven't really seen it for ten years. 116 00:06:38,240 --> 00:06:41,359 Speaker 2: But I think when markets change, you know, it's the 117 00:06:41,480 --> 00:06:44,320 Speaker 2: data lags a little bit, and so we'll see it 118 00:06:44,360 --> 00:06:46,960 Speaker 2: in the data probably towards the end of this year 119 00:06:47,360 --> 00:06:50,960 Speaker 2: in terms of compelling case. But the word is from 120 00:06:51,080 --> 00:06:55,760 Speaker 2: buyers agencies that certainly demand is increased, so there's greater 121 00:06:55,800 --> 00:07:00,800 Speaker 2: people going to open houses, inspections, more interest parties, more 122 00:07:00,800 --> 00:07:04,760 Speaker 2: bidders at auction and so forth. There isn't any major 123 00:07:04,880 --> 00:07:08,760 Speaker 2: price movements yet, but it's always that sort of activity 124 00:07:09,200 --> 00:07:11,040 Speaker 2: that precedes price movements. 125 00:07:11,240 --> 00:07:14,760 Speaker 1: So you're saying the Deadly index is now pretty good. 126 00:07:15,000 --> 00:07:21,160 Speaker 1: It's showing six percent YEP for it's showing six percent 127 00:07:21,160 --> 00:07:24,960 Speaker 1: annualized return over the last six months. So on that 128 00:07:25,000 --> 00:07:27,400 Speaker 1: basis if it did what it's been doing everyd for 129 00:07:27,440 --> 00:07:30,640 Speaker 1: the last six months. We're coming back, we're coming back 130 00:07:30,680 --> 00:07:34,640 Speaker 1: into investible territory from the numbers. And then you're also 131 00:07:34,720 --> 00:07:37,200 Speaker 1: saying that though this is harder to get data on 132 00:07:38,720 --> 00:07:44,920 Speaker 1: the signals bitter numbers, the very tempo of the market 133 00:07:45,400 --> 00:07:48,920 Speaker 1: is improving as well. Are you convinced by that those numbers. 134 00:07:49,400 --> 00:07:52,400 Speaker 2: Are totally convinced? And we've seen it on the seller 135 00:07:52,440 --> 00:07:55,960 Speaker 2: and buyer side, so James. So we've seen some clients 136 00:07:56,040 --> 00:08:01,560 Speaker 2: sell apartments or houses and for whatever reason, for different reasons, 137 00:08:01,600 --> 00:08:04,280 Speaker 2: and the results that have been able to achieve have 138 00:08:04,400 --> 00:08:08,920 Speaker 2: been exceeded expectations, whereas again that hasn't happened for the 139 00:08:08,920 --> 00:08:10,960 Speaker 2: really the last ten years, when we've had a client 140 00:08:11,000 --> 00:08:14,440 Speaker 2: sell of property, normally we've been a bit disappointed with 141 00:08:14,480 --> 00:08:21,000 Speaker 2: the results rather than pleasantly surprised. So definitely the market's changed. Definitely, 142 00:08:21,000 --> 00:08:25,000 Speaker 2: we're starting to see green shoots of growth and it 143 00:08:25,000 --> 00:08:27,800 Speaker 2: doesn't surprise me after ten years of no real growth. 144 00:08:27,920 --> 00:08:30,320 Speaker 2: You know, there's always that pent up demand and also 145 00:08:30,360 --> 00:08:33,480 Speaker 2: that when you look at relative performance, you know, Adelaide 146 00:08:33,480 --> 00:08:35,880 Speaker 2: looks like it's cooling off a little bit. It's had 147 00:08:35,920 --> 00:08:39,239 Speaker 2: a significant period of growth. You know, the best performing 148 00:08:39,880 --> 00:08:43,200 Speaker 2: market across the capital city through to March Brisbane, I 149 00:08:43,200 --> 00:08:45,520 Speaker 2: mean Brisbane. I think we will continue to kick along, 150 00:08:45,800 --> 00:08:50,479 Speaker 2: albeit maybe a slower growth than in the past. And Sydney's, 151 00:08:50,520 --> 00:08:53,760 Speaker 2: you know, from an affordability perspective, in terms of entry 152 00:08:53,840 --> 00:08:57,160 Speaker 2: level investment grade property really difficult for most people. 153 00:08:57,920 --> 00:09:00,319 Speaker 1: Oh well, that's a crucial point, isn't it. From the 154 00:09:00,360 --> 00:09:04,120 Speaker 1: interstate perspective, can you tell us a little bit more 155 00:09:04,120 --> 00:09:06,120 Speaker 1: about entry level differences? 156 00:09:06,920 --> 00:09:07,600 Speaker 2: Yeah, certainly. 157 00:09:07,720 --> 00:09:07,800 Speaker 1: So. 158 00:09:07,920 --> 00:09:10,040 Speaker 2: If you want a house in Sydney and you're not 159 00:09:10,200 --> 00:09:14,800 Speaker 2: prepared to make any compromise, any significant compromises, you're probably 160 00:09:14,840 --> 00:09:19,280 Speaker 2: going to buy a cottage somewhere between five to ten 161 00:09:19,360 --> 00:09:21,960 Speaker 2: kilometers from the city on one hundred and one hundred 162 00:09:22,000 --> 00:09:24,280 Speaker 2: and fifty square meters. You're going to probably have to 163 00:09:24,320 --> 00:09:27,440 Speaker 2: pay two to two and a half million for that property, 164 00:09:28,200 --> 00:09:32,920 Speaker 2: whereas in Melbourne you can get something that fits similar description, 165 00:09:33,040 --> 00:09:37,000 Speaker 2: maybe slightly larger land and your budget needs to be 166 00:09:37,040 --> 00:09:39,560 Speaker 2: sort of one point one to one point two and above, 167 00:09:40,080 --> 00:09:44,000 Speaker 2: say one one to one five for instance. So that's 168 00:09:44,040 --> 00:09:47,080 Speaker 2: more manageable for a lot more people than what Sydney is. 169 00:09:47,480 --> 00:09:50,040 Speaker 1: That gap is enormous. Can you recall when the gap 170 00:09:50,160 --> 00:09:51,160 Speaker 1: was ever so big? 171 00:09:52,120 --> 00:09:55,240 Speaker 2: No, I mean because Melbourne had a really strong run 172 00:09:55,360 --> 00:09:59,160 Speaker 2: up until the last decade. Melbourne actually had quite a 173 00:09:59,200 --> 00:10:02,800 Speaker 2: strong run in terms of property growth really between well 174 00:10:02,840 --> 00:10:07,080 Speaker 2: starting ninety eighty until twenty fifteen or circle that amount. 175 00:10:07,480 --> 00:10:10,240 Speaker 2: It was from memory about eight percent compounding or something, 176 00:10:10,280 --> 00:10:13,440 Speaker 2: so it's above average. So we had a really strong 177 00:10:13,480 --> 00:10:16,160 Speaker 2: market in Melbourne until that time. It's taken a breather, 178 00:10:16,400 --> 00:10:19,640 Speaker 2: not a surprise. We know markets move in cycles, flatt 179 00:10:19,679 --> 00:10:23,800 Speaker 2: and growth cycles, so no, but the gap is certainly significant. 180 00:10:24,160 --> 00:10:25,920 Speaker 2: And I guess when we look at the other major 181 00:10:25,960 --> 00:10:29,360 Speaker 2: capital city being Brisbane, people might be a bit reluctant to, 182 00:10:29,800 --> 00:10:32,559 Speaker 2: you know, invest in Brisbane. After it's done almost twelve 183 00:10:32,559 --> 00:10:36,280 Speaker 2: percent per annum after over five years, they might think, Okay, 184 00:10:36,280 --> 00:10:39,760 Speaker 2: you've got the Olympics. There's a lot of positive sentiment still, but. 185 00:10:40,160 --> 00:10:41,880 Speaker 1: Hard to keep that up with in a twelve percent 186 00:10:42,320 --> 00:10:43,600 Speaker 1: pe it's not. 187 00:10:43,520 --> 00:10:45,240 Speaker 2: Going to get that. That's definitely not going to keep up. 188 00:10:45,240 --> 00:10:47,560 Speaker 2: But I think it'll still be positive right through to 189 00:10:47,640 --> 00:10:51,400 Speaker 2: twenty thirty two, right through to the Olympics, because sentiment 190 00:10:51,559 --> 00:10:54,559 Speaker 2: in the short run drives markets. But I don't think 191 00:10:54,559 --> 00:10:58,920 Speaker 2: the Olympics fundamentally changes the market. So the fundamentals aren't changing, 192 00:10:58,960 --> 00:11:01,359 Speaker 2: but I think the positive sentiment will continue. 193 00:11:01,760 --> 00:11:03,760 Speaker 1: What we might do here, folks, and this is really good. 194 00:11:03,760 --> 00:11:05,280 Speaker 1: Of what I wanted to get Stuart to do was 195 00:11:05,320 --> 00:11:08,520 Speaker 1: to tell it to basically took us through strictly on 196 00:11:08,600 --> 00:11:12,439 Speaker 1: the numbers, whether Melbourne looked like it had turned and 197 00:11:12,960 --> 00:11:16,280 Speaker 1: the evidence, the hard evidence is actually that it is turning. 198 00:11:17,320 --> 00:11:19,880 Speaker 1: Now we only have six months and it's only houses. 199 00:11:20,920 --> 00:11:24,440 Speaker 1: But as as Stewart said, he's totally convinced that it 200 00:11:24,520 --> 00:11:26,920 Speaker 1: is turning. And I think just if you're a believer 201 00:11:27,000 --> 00:11:30,360 Speaker 1: in reversion to the mean, which I am, then you 202 00:11:30,480 --> 00:11:32,440 Speaker 1: have to think that this is the start of it. Now, 203 00:11:32,480 --> 00:11:33,840 Speaker 1: what do I do is just park it there for 204 00:11:33,880 --> 00:11:35,720 Speaker 1: one moment. What I'm going to do, by the way, 205 00:11:35,800 --> 00:11:39,880 Speaker 1: next next Tuesday, and this Cavallo is going to come 206 00:11:39,920 --> 00:11:41,720 Speaker 1: on the show and she's going to talk about Melbourne 207 00:11:41,760 --> 00:11:45,520 Speaker 1: deep dive right the actual city, the areas, the districts, 208 00:11:45,520 --> 00:11:47,600 Speaker 1: if you're interested, I'm sure you are, and how it's 209 00:11:47,640 --> 00:11:50,120 Speaker 1: going to how she thinks it's going to perform. But 210 00:11:50,160 --> 00:11:53,160 Speaker 1: there's one big question which Stuart again has been very 211 00:11:53,160 --> 00:11:56,520 Speaker 1: across and one of the perhaps one of the reasons 212 00:11:56,559 --> 00:12:01,600 Speaker 1: that Melbourne's trough extended at least a year further than 213 00:12:02,160 --> 00:12:05,760 Speaker 1: a reasonable person might expect, and it's got to do 214 00:12:05,880 --> 00:12:08,520 Speaker 1: with tax and I think we will pick that up 215 00:12:08,520 --> 00:12:10,640 Speaker 1: on the second part of the show because first of all, 216 00:12:10,760 --> 00:12:13,839 Speaker 1: it's a hot issue remains an issue in Victoria, a 217 00:12:13,920 --> 00:12:16,160 Speaker 1: cloud if you like, over a potential rebound there, but 218 00:12:16,200 --> 00:12:20,240 Speaker 1: also something of a cloud over the wider market because 219 00:12:20,240 --> 00:12:24,760 Speaker 1: it seems to me every second suggestion and submission going 220 00:12:24,760 --> 00:12:28,080 Speaker 1: into this tax summit later this month from the government 221 00:12:28,600 --> 00:12:45,800 Speaker 1: is going to hit property. We'll be back in a moment. Hello, 222 00:12:45,880 --> 00:12:48,920 Speaker 1: Welcome back to The Australian's Money Puzzle podcast. I'm James 223 00:12:48,960 --> 00:12:51,400 Speaker 1: Kirby and I'm talking to Stuart Weams of the pro 224 00:12:51,480 --> 00:12:54,720 Speaker 1: Solution Group. Stewart is, among other things, a regular contributor 225 00:12:54,760 --> 00:12:58,240 Speaker 1: of course to the Wealth vertical on The Australian, which 226 00:12:58,240 --> 00:13:00,839 Speaker 1: I hope you have had a look and checked out. 227 00:13:00,880 --> 00:13:04,200 Speaker 1: It was launched last week or into our second week. 228 00:13:04,200 --> 00:13:11,520 Speaker 1: You'll see a lot more stories, commentary videos on wealth 229 00:13:11,559 --> 00:13:14,840 Speaker 1: and of course the Money Postle is there and getting 230 00:13:14,920 --> 00:13:18,240 Speaker 1: some oxygen which is great and I think you'll find 231 00:13:18,360 --> 00:13:21,080 Speaker 1: that we've got a bigger team now on wealth and 232 00:13:21,120 --> 00:13:23,319 Speaker 1: it's really I think it's something that the paper has 233 00:13:23,360 --> 00:13:25,599 Speaker 1: really got behind, which is terrific and I'm delighted to 234 00:13:25,640 --> 00:13:29,200 Speaker 1: see it now. Folks. We talked about property, and we 235 00:13:29,240 --> 00:13:31,960 Speaker 1: talked about Victoria, and we talked briefly about tax and 236 00:13:31,960 --> 00:13:33,520 Speaker 1: I want to put a couple of things to Stuart. 237 00:13:34,040 --> 00:13:38,120 Speaker 1: The obvious question is whether Victoria itself, whether the tax 238 00:13:38,360 --> 00:13:45,720 Speaker 1: regime there halted or extended the trough and the poor prices. Now, 239 00:13:46,080 --> 00:13:47,800 Speaker 1: there's been a lot of noise around the tax in 240 00:13:47,840 --> 00:13:49,959 Speaker 1: Victori because there's a lot of taxes. There's ten taxes. 241 00:13:50,000 --> 00:13:54,520 Speaker 1: But actually you were saying on close inspection, hear this, folks, 242 00:13:54,760 --> 00:13:58,560 Speaker 1: on closed inspection, Victoria's taxes aren't that bad for most 243 00:13:58,600 --> 00:13:59,679 Speaker 1: people most of the time. 244 00:14:01,280 --> 00:14:03,360 Speaker 2: Yeah, So I had to look, James, what happened over 245 00:14:03,360 --> 00:14:06,600 Speaker 2: the last ten years in New South Wales, Victoria and 246 00:14:06,679 --> 00:14:10,679 Speaker 2: Queensland to give some context around this. And certainly all 247 00:14:10,720 --> 00:14:12,640 Speaker 2: the states are as bad as each other. I mean, 248 00:14:12,720 --> 00:14:15,079 Speaker 2: that's the answer, and that's really I mean, that's where 249 00:14:15,120 --> 00:14:16,719 Speaker 2: they get a lot of their tax revenue from that. 250 00:14:16,840 --> 00:14:19,760 Speaker 2: But a big one, yeah, land tax and stamp giddy 251 00:14:20,280 --> 00:14:21,680 Speaker 2: So if you look at the growth over the last 252 00:14:21,720 --> 00:14:25,359 Speaker 2: ten years, New South Wales has increased land tax revenue 253 00:14:25,840 --> 00:14:29,760 Speaker 2: by twelve point six percent compounding perannum over a teen 254 00:14:29,840 --> 00:14:33,680 Speaker 2: year period, Queensland a little bit more, thirteen percent, and 255 00:14:34,160 --> 00:14:38,000 Speaker 2: Victoria fifteen percent compounding each year on average over the 256 00:14:38,080 --> 00:14:41,360 Speaker 2: last ten years. So certainly Victoria is the worst there, 257 00:14:42,120 --> 00:14:44,160 Speaker 2: but not by a huge margin. Maybe not. I was 258 00:14:44,240 --> 00:14:45,160 Speaker 2: kind of surprised by this. 259 00:14:45,360 --> 00:14:50,240 Speaker 1: Yeah, So thirteen for Sydney and thirty in for Brisbane 260 00:14:50,320 --> 00:14:54,720 Speaker 1: obviously and fifteenth Forts. So they're all been they've all 261 00:14:54,760 --> 00:14:56,920 Speaker 1: been racking up the land taxas and of course they've 262 00:14:56,960 --> 00:14:59,520 Speaker 1: been a top of prices have been They've become the 263 00:14:59,600 --> 00:15:04,400 Speaker 1: key revenue your owner for governments. Okay, but picking up 264 00:15:04,440 --> 00:15:07,200 Speaker 1: on what happened to Victoria and whether their land tax 265 00:15:08,240 --> 00:15:10,520 Speaker 1: was much worse than other states didn't really martin it. 266 00:15:10,560 --> 00:15:13,320 Speaker 1: I think the issue was the impression the state gave 267 00:15:14,200 --> 00:15:19,160 Speaker 1: by introducing ten separate property taxes of perhaps seven of 268 00:15:19,160 --> 00:15:21,560 Speaker 1: them are quite arcade, then most people will never pay them. 269 00:15:21,800 --> 00:15:24,720 Speaker 1: But the impression they gave was that they were out 270 00:15:24,720 --> 00:15:28,320 Speaker 1: to tax property and the outcome was that investor stead away. 271 00:15:29,360 --> 00:15:30,360 Speaker 1: What do you think of that? Contention. 272 00:15:30,480 --> 00:15:34,320 Speaker 2: First of all, one hundred percent is said in the 273 00:15:34,360 --> 00:15:38,520 Speaker 2: short term sentiment rather than fundamental strives markets. And if 274 00:15:38,560 --> 00:15:41,760 Speaker 2: you already own property in Queensland or New South Wales, 275 00:15:41,800 --> 00:15:44,880 Speaker 2: you know, buying an additional investment property in that jurisdiction 276 00:15:45,280 --> 00:15:48,600 Speaker 2: might actually give rise to a lot more land tax 277 00:15:48,640 --> 00:15:52,360 Speaker 2: because it's a marginal rate system compared to say investing 278 00:15:52,400 --> 00:15:55,080 Speaker 2: in Melbourne. But a lot of people have been dissuaded 279 00:15:55,120 --> 00:15:58,800 Speaker 2: from investing in Melbourne because certainly the government has been 280 00:15:58,880 --> 00:16:02,960 Speaker 2: out to tax property investors, which is true across the board. 281 00:16:03,360 --> 00:16:06,800 Speaker 1: You by just experience the listeners the distinction you were 282 00:16:06,840 --> 00:16:09,120 Speaker 1: making between the two states and the tax I've what 283 00:16:09,160 --> 00:16:10,320 Speaker 1: the margin reate means. 284 00:16:11,040 --> 00:16:14,480 Speaker 2: So we did a analysis. I remember it's probably about 285 00:16:14,480 --> 00:16:17,280 Speaker 2: twelve months ago now for a client comparing you know, 286 00:16:17,400 --> 00:16:19,920 Speaker 2: do you buy another investment property in Queensland or do 287 00:16:20,000 --> 00:16:23,360 Speaker 2: you buy one in Melbourne? And the client already held 288 00:16:23,400 --> 00:16:26,920 Speaker 2: an investment property in Queensland. And because it's in a 289 00:16:26,960 --> 00:16:29,600 Speaker 2: marginal rate system, I think the first around six hundred 290 00:16:29,600 --> 00:16:32,640 Speaker 2: thousand is tax free in Queensland and then as you 291 00:16:32,840 --> 00:16:35,320 Speaker 2: climb in terms of land value, the higher the rate 292 00:16:35,360 --> 00:16:39,440 Speaker 2: of tax. Much like our individual income tax rate system, 293 00:16:40,080 --> 00:16:42,280 Speaker 2: and so we did the comparison just on a land 294 00:16:42,280 --> 00:16:44,760 Speaker 2: and land tax is only one of many considerations, but 295 00:16:44,800 --> 00:16:48,680 Speaker 2: we did the comparison. Although Victoria had introduced higher rates 296 00:16:48,680 --> 00:16:52,080 Speaker 2: of land tax in a dollar value perspective, for this client, 297 00:16:52,120 --> 00:16:54,760 Speaker 2: it was going to be cheaper to invest in Victoria 298 00:16:54,920 --> 00:16:57,720 Speaker 2: compared to adding a second investment property in Queensland. 299 00:16:57,800 --> 00:16:58,520 Speaker 1: Isn't that interesting? 300 00:16:59,760 --> 00:17:02,600 Speaker 2: Yeah, So we've got to be conscious of these things, 301 00:17:02,640 --> 00:17:05,280 Speaker 2: and we're not going to structure something purely around land tax. 302 00:17:05,680 --> 00:17:07,840 Speaker 2: But I think looking at these numbers puts it all 303 00:17:07,880 --> 00:17:10,520 Speaker 2: in context. And actually, James, they give us a four 304 00:17:10,600 --> 00:17:12,840 Speaker 2: year projection of what they think is going to happen 305 00:17:12,920 --> 00:17:16,320 Speaker 2: to land tax. So in New South Wales they're predicting 306 00:17:16,359 --> 00:17:19,399 Speaker 2: a six percent increase per annum over the next four years, 307 00:17:20,040 --> 00:17:22,479 Speaker 2: Victoria seven point eight so are just below eight percent, 308 00:17:23,240 --> 00:17:27,600 Speaker 2: Queensland thirteen point one percent. So in four years time, 309 00:17:27,640 --> 00:17:30,880 Speaker 2: if their projections are correct, Queensland will be the highest 310 00:17:31,080 --> 00:17:34,320 Speaker 2: taxing state from a land tax perspective. So again, I 311 00:17:34,359 --> 00:17:36,040 Speaker 2: guess it puts all in context, doesn't it. 312 00:17:36,400 --> 00:17:39,960 Speaker 1: Whose projections are there? Again, Well, they're treasury, the state 313 00:17:40,040 --> 00:17:44,120 Speaker 1: treasure or you're rocking budget yeah, you're rocky off the forward estimates. Yeah, 314 00:17:44,440 --> 00:17:47,320 Speaker 1: well I certainly believe them, right. 315 00:17:47,200 --> 00:17:49,160 Speaker 2: Yeah, Well they're not going to underplay it, are they. 316 00:17:49,440 --> 00:17:52,000 Speaker 1: Yeah, no, they're not. Okay, now you heard it hear 317 00:17:52,080 --> 00:17:55,119 Speaker 1: first folks. All right, So that's very interesting what we 318 00:17:55,160 --> 00:17:57,320 Speaker 1: have we have been not the impression. Certainly the Queenslander 319 00:17:57,320 --> 00:17:59,320 Speaker 1: is the little taxing steed and Victoria's a high one 320 00:17:59,400 --> 00:18:02,280 Speaker 1: close and space suggests it's a closer run thing, and 321 00:18:02,359 --> 00:18:06,440 Speaker 1: I think listeners would be worth knowing. Stuart's exercise looking 322 00:18:06,480 --> 00:18:09,760 Speaker 1: at state budgets et cetera suggests that actually Queensland's going 323 00:18:09,800 --> 00:18:13,720 Speaker 1: to race up and wanted champion here. Okay on tax Now, 324 00:18:13,800 --> 00:18:17,480 Speaker 1: on the broader issue of nationwide tax the tax sum 325 00:18:17,480 --> 00:18:20,919 Speaker 1: are coming up. Everyone's got two per spies about what 326 00:18:20,960 --> 00:18:23,040 Speaker 1: they might do to property. It does seem property as 327 00:18:23,080 --> 00:18:28,600 Speaker 1: are setting duck here, particularly homes, particularly negative gearing CGT. 328 00:18:28,720 --> 00:18:32,560 Speaker 1: Every submission that I see suggests zoning, you know, zoning 329 00:18:32,600 --> 00:18:35,160 Speaker 1: in basically wealth taxes, but wealth tax become de facto 330 00:18:35,160 --> 00:18:37,760 Speaker 1: of property taxes many times. What do you think is 331 00:18:37,960 --> 00:18:39,359 Speaker 1: coming down the line. 332 00:18:40,800 --> 00:18:42,480 Speaker 2: Well, I mean there's been a lot of talk about 333 00:18:42,520 --> 00:18:47,520 Speaker 2: capping negative gearing rather than abolishing it completely. And you know, 334 00:18:47,560 --> 00:18:51,560 Speaker 2: of the times, James, I've seen some investors gear very 335 00:18:51,600 --> 00:18:54,359 Speaker 2: heavily to the extent where which is kind of stupid, 336 00:18:54,440 --> 00:18:57,560 Speaker 2: to the extent where they're taxable incoming zero and they're 337 00:18:57,600 --> 00:19:02,040 Speaker 2: not paying any income tax whatsoever to me, So at 338 00:19:02,040 --> 00:19:03,879 Speaker 2: the fringes, that doesn't make a lot of sense to me. 339 00:19:04,080 --> 00:19:07,240 Speaker 2: I think a cap probably makes sense, and that cap 340 00:19:07,359 --> 00:19:10,600 Speaker 2: probably should be a dollar cap. So maybe you can 341 00:19:10,600 --> 00:19:13,639 Speaker 2: claim up to fifty thousand dollars per individual or something. 342 00:19:13,920 --> 00:19:16,120 Speaker 2: Who knows what that number looks like. But I think 343 00:19:16,160 --> 00:19:19,240 Speaker 2: having open ended to the extent where you could have 344 00:19:19,280 --> 00:19:23,359 Speaker 2: a very high income earner aggressively gear to the extent 345 00:19:23,440 --> 00:19:26,240 Speaker 2: that they pay no tax doesn't probably make a lot 346 00:19:26,280 --> 00:19:26,960 Speaker 2: of sense. 347 00:19:27,280 --> 00:19:29,760 Speaker 1: Right, So it's one of those extreme it's extreme with 348 00:19:29,840 --> 00:19:33,360 Speaker 1: someone having you know, twenty million in a SMSF. It's 349 00:19:33,359 --> 00:19:38,399 Speaker 1: an extreme yep, yeah, yeah, optimization for one of a 350 00:19:38,400 --> 00:19:40,680 Speaker 1: better word of the rules. Yeah. 351 00:19:40,720 --> 00:19:42,639 Speaker 2: And the federal government, I mean, they wouldn't like the 352 00:19:42,680 --> 00:19:44,879 Speaker 2: increase in land tax either, by the way, because you 353 00:19:44,920 --> 00:19:47,720 Speaker 2: can claim a tax doduction for it. So really the 354 00:19:47,760 --> 00:19:50,640 Speaker 2: federal government is picking up what thirty or between thirty 355 00:19:50,640 --> 00:19:53,520 Speaker 2: and fifty percent of the bill in terms of in 356 00:19:53,640 --> 00:19:57,240 Speaker 2: terms of state land tax, So that's sort of problematic 357 00:19:57,280 --> 00:19:59,520 Speaker 2: as well. You know, I think that it'd be great 358 00:19:59,760 --> 00:20:03,880 Speaker 2: for the government to do something around affordable housing, more 359 00:20:03,920 --> 00:20:07,080 Speaker 2: affordable housing, I should say, not affordable housing in the 360 00:20:07,119 --> 00:20:08,520 Speaker 2: way we normally refer to it. 361 00:20:08,600 --> 00:20:11,040 Speaker 1: So is there any market initiative they can take to 362 00:20:11,080 --> 00:20:13,040 Speaker 1: do that. There's a very good question actually coming up 363 00:20:13,040 --> 00:20:15,080 Speaker 1: in a moment to round this. We'll get to it 364 00:20:15,119 --> 00:20:17,680 Speaker 1: in a second. But do you see anything they can 365 00:20:17,720 --> 00:20:18,359 Speaker 1: do well. 366 00:20:18,200 --> 00:20:20,920 Speaker 2: They had a few years ago, they had the National 367 00:20:20,960 --> 00:20:25,680 Speaker 2: Rent Affordability Scheme NAZRA, where they gave some tax benefits 368 00:20:25,760 --> 00:20:29,800 Speaker 2: if you rented a property twenty percent blow market value. Yes, yes, Well, 369 00:20:29,800 --> 00:20:32,640 Speaker 2: maybe if they play around with negative gearing capital or something, 370 00:20:32,680 --> 00:20:36,520 Speaker 2: maybe there's an additional incentive that they can give to investors, 371 00:20:36,520 --> 00:20:40,960 Speaker 2: particularly investors that are renting out established property rather than building. You, 372 00:20:41,600 --> 00:20:45,040 Speaker 2: because we're talking about we want to spread the extra 373 00:20:45,080 --> 00:20:49,080 Speaker 2: supplier geographically, maybe they could do something like that, have 374 00:20:49,119 --> 00:20:51,760 Speaker 2: a tax incentive if you decide to rent your property 375 00:20:51,760 --> 00:20:55,840 Speaker 2: twenty percent below blow market and maybe even offer longer 376 00:20:56,320 --> 00:21:01,560 Speaker 2: rent tendancy agreements to provide security for pans that might 377 00:21:01,600 --> 00:21:02,879 Speaker 2: be a smart initiative. 378 00:21:03,359 --> 00:21:06,080 Speaker 1: Yes, I certainly think they could explore, as you say, 379 00:21:06,640 --> 00:21:10,879 Speaker 1: initiatives and investor incentives, and we just hope it doesn't 380 00:21:10,880 --> 00:21:15,520 Speaker 1: become a sumbat about slashing investor incentives, because if you 381 00:21:15,520 --> 00:21:17,520 Speaker 1: get the investor incentives right, you can really make a 382 00:21:17,560 --> 00:21:19,399 Speaker 1: difference in a positive way. Think of the downside of 383 00:21:19,400 --> 00:21:21,720 Speaker 1: the program for instance, which has been you know, has 384 00:21:21,920 --> 00:21:24,919 Speaker 1: made a difference and it's an investment incentive. We'll come 385 00:21:24,960 --> 00:21:26,679 Speaker 1: back to that in a moment, because we've got some 386 00:21:26,720 --> 00:21:40,919 Speaker 1: great questions. All right, back in a moment. Hello, Welcome 387 00:21:40,960 --> 00:21:43,880 Speaker 1: back to The Australian's Money Puzzle podcast. James Kirkby talking 388 00:21:43,880 --> 00:21:49,000 Speaker 1: to Stuart Weems. Okay, Carl says, this is a really 389 00:21:49,040 --> 00:21:52,520 Speaker 1: good question. I don't understand why governments are not doing 390 00:21:52,560 --> 00:21:55,680 Speaker 1: more to enable people in inner city suburbs to build 391 00:21:55,720 --> 00:22:00,520 Speaker 1: townhouses or other forms of medium density housing. It seems 392 00:22:00,560 --> 00:22:03,560 Speaker 1: like we're missing that middle, the gap between high rise 393 00:22:03,560 --> 00:22:06,520 Speaker 1: apartments and detached homs. And I know this one off 394 00:22:06,560 --> 00:22:08,800 Speaker 1: all of the housing issues, but it's a big part 395 00:22:08,840 --> 00:22:11,960 Speaker 1: of the solution. I completely agree with you, Karl. So 396 00:22:12,200 --> 00:22:15,280 Speaker 1: you know, we think about certainly Melbourne and Sydney the 397 00:22:15,280 --> 00:22:18,200 Speaker 1: fabric of the cities. We are starting to have apartment 398 00:22:18,320 --> 00:22:24,879 Speaker 1: towers and houses very little in between, townhouses, great investments, 399 00:22:25,760 --> 00:22:30,760 Speaker 1: law maintenance classified with houses I think really ultimately rather 400 00:22:30,800 --> 00:22:33,639 Speaker 1: than apartments in the volosophy of things. Would you agree 401 00:22:33,680 --> 00:22:34,800 Speaker 1: with that, Stuart. 402 00:22:35,760 --> 00:22:38,680 Speaker 2: Yeah, And we're having this discussion. It's having this discussion 403 00:22:38,760 --> 00:22:41,879 Speaker 2: yesterday with some people from the property industry talking about 404 00:22:42,520 --> 00:22:46,600 Speaker 2: unwillingness of older people to downsize their homes just because 405 00:22:46,640 --> 00:22:48,840 Speaker 2: they can't find something that they want to live in 406 00:22:48,840 --> 00:22:51,600 Speaker 2: the location that they're in. So they don't necessarily want 407 00:22:51,640 --> 00:22:53,800 Speaker 2: to go to a retirement village, of course, but you know, 408 00:22:54,160 --> 00:22:57,720 Speaker 2: a large apartment complex doesn't necessarily suit them. They would 409 00:22:57,800 --> 00:23:01,800 Speaker 2: like to downsize to something, you know, that's relatively attractive, 410 00:23:01,840 --> 00:23:04,639 Speaker 2: but maybe a townhouse or something like that, or a 411 00:23:04,720 --> 00:23:07,960 Speaker 2: villa unit style accommodation. But there really just aren't that 412 00:23:08,040 --> 00:23:11,760 Speaker 2: many being built. The Gratton Institute did some work on 413 00:23:11,800 --> 00:23:15,679 Speaker 2: this James earlier this year about the density of Australian's 414 00:23:15,760 --> 00:23:19,400 Speaker 2: capital cities and tagged you know, Melbourne is probably one 415 00:23:19,440 --> 00:23:22,920 Speaker 2: of the least dense cities of its size compared to 416 00:23:23,080 --> 00:23:27,240 Speaker 2: cities around the world, and you know, Melbourne can spread out. 417 00:23:27,440 --> 00:23:27,600 Speaker 1: You know. 418 00:23:27,720 --> 00:23:29,800 Speaker 2: Of course where Sydney's got the challenge, they're going to 419 00:23:29,840 --> 00:23:33,040 Speaker 2: have to face it either way because of course geographically 420 00:23:33,080 --> 00:23:35,960 Speaker 2: they're yeah, they're hemmed in, so they've got to got 421 00:23:36,000 --> 00:23:38,760 Speaker 2: to find a solution. It's interesting to say that both 422 00:23:38,760 --> 00:23:41,480 Speaker 2: state governments Victoria and New South Wales have come up 423 00:23:41,640 --> 00:23:44,880 Speaker 2: with some planning around this in terms of to try 424 00:23:44,880 --> 00:23:49,840 Speaker 2: and streamline at townhouse and low rise construction. It only 425 00:23:49,840 --> 00:23:53,320 Speaker 2: happened in March in Victoria and February in New South Wales, 426 00:23:53,400 --> 00:23:56,359 Speaker 2: so it's early days to see whether that's going to happen. 427 00:23:56,480 --> 00:23:59,679 Speaker 2: But one hundred percent there's got to be more density 428 00:24:00,080 --> 00:24:03,480 Speaker 2: and that's good for existing investments to change because it 429 00:24:03,640 --> 00:24:08,000 Speaker 2: increases the productive value of land. So anyone that's invested 430 00:24:08,040 --> 00:24:11,120 Speaker 2: in those investment grade locations, Whilst we might think more 431 00:24:11,160 --> 00:24:14,920 Speaker 2: density is bad news, it's actually good news. And because 432 00:24:14,920 --> 00:24:16,720 Speaker 2: it does increase that underlying land. 433 00:24:16,600 --> 00:24:18,800 Speaker 1: Value it yes, of course it does, yeah, which is 434 00:24:18,840 --> 00:24:21,560 Speaker 1: what it's all about. Yeah, that's very interesting observation, and 435 00:24:21,640 --> 00:24:25,440 Speaker 1: I would back it. One other thing, Carl. We're saying 436 00:24:25,480 --> 00:24:27,600 Speaker 1: just about not that much in between. It's interesting. I 437 00:24:27,600 --> 00:24:31,359 Speaker 1: saw Murvac an executive meet the point that forty percent 438 00:24:31,440 --> 00:24:37,040 Speaker 1: of their apartment, says are to downsizers now, so they're 439 00:24:37,040 --> 00:24:39,639 Speaker 1: obviously zoning in there are the sort of middle to 440 00:24:39,720 --> 00:24:45,920 Speaker 1: upper end and creating property that those sort of people want, 441 00:24:45,960 --> 00:24:48,400 Speaker 1: and as Carl is pointing out, it's not there. Really 442 00:24:48,400 --> 00:24:51,680 Speaker 1: good question and thanks for picking it up, Stuart. Okay, 443 00:24:51,720 --> 00:24:55,000 Speaker 1: there's a question from Steve and Dylan. They're on the 444 00:24:55,040 --> 00:24:58,200 Speaker 1: same issue. If you'd like to read those questions. 445 00:24:58,480 --> 00:25:01,080 Speaker 2: Yeah, okay. So Steve says, I'm an engineer who has 446 00:25:01,440 --> 00:25:06,520 Speaker 2: experienced a highly unorthodoxed wealth management journey due to intergenerational 447 00:25:06,560 --> 00:25:10,679 Speaker 2: wealth transfer, and it's attracted me to the financial advisory sector. 448 00:25:11,160 --> 00:25:15,040 Speaker 2: I'm currently studying the graduate diploma of Financial planning. Can 449 00:25:15,119 --> 00:25:19,200 Speaker 2: you offer some advice for a mid career professional transitioning 450 00:25:19,240 --> 00:25:22,439 Speaker 2: into financial services? Noting that one of the breadcrumbs that 451 00:25:22,520 --> 00:25:25,199 Speaker 2: led me down to this path was how frequently you 452 00:25:25,359 --> 00:25:29,000 Speaker 2: state that financial advisors will be in short supply. Any 453 00:25:29,040 --> 00:25:32,399 Speaker 2: advice would be greatly appreciated, and then Dylan goes on 454 00:25:32,480 --> 00:25:35,000 Speaker 2: to ask, you know, what is the outlook for financial 455 00:25:35,000 --> 00:25:39,320 Speaker 2: advisors and the financial advice industry and how may AI 456 00:25:39,680 --> 00:25:40,679 Speaker 2: impact its future? 457 00:25:41,080 --> 00:25:44,560 Speaker 1: Okay, terrific. We might put the AAI one's probably hard 458 00:25:44,600 --> 00:25:47,520 Speaker 1: to tackle in the context of this show, in that 459 00:25:47,600 --> 00:25:50,560 Speaker 1: we'll find ourselves drifting all over the place to every 460 00:25:50,600 --> 00:25:53,600 Speaker 1: other conceivable practice of AI. I saw this morning a 461 00:25:54,080 --> 00:25:58,080 Speaker 1: rating or bit writing some funeral FLMs using AI to 462 00:25:58,080 --> 00:26:01,960 Speaker 1: write a bitcheries and it backfired badly. Okay, now you're 463 00:26:01,960 --> 00:26:04,120 Speaker 1: in a great position to answer this, and we're flattered 464 00:26:04,160 --> 00:26:06,000 Speaker 1: by the way on the show that we have people 465 00:26:06,000 --> 00:26:08,680 Speaker 1: who are thinking about becoming financial advisors listening to the show, 466 00:26:08,960 --> 00:26:11,959 Speaker 1: people who are training as financial advisors, which tells us 467 00:26:11,960 --> 00:26:15,679 Speaker 1: that we're taking seriously, which is good. So Okay, I 468 00:26:15,720 --> 00:26:18,480 Speaker 1: always say I am saying it's something I'm saying. The 469 00:26:18,560 --> 00:26:22,400 Speaker 1: numbers are there. The financial advisory sector is shrinking, it's 470 00:26:22,440 --> 00:26:25,600 Speaker 1: still shrinking. It went it actually got smaller this year. 471 00:26:27,000 --> 00:26:29,360 Speaker 1: The number of whether the Australians have doubled, the number 472 00:26:29,400 --> 00:26:31,680 Speaker 1: of financial advisors will be cut in half. You would 473 00:26:31,680 --> 00:26:34,439 Speaker 1: think it's an opportunity for Steven dinnan. What do you 474 00:26:34,520 --> 00:26:36,680 Speaker 1: have to tell them, Stuart. 475 00:26:37,119 --> 00:26:38,840 Speaker 2: I think it's a great opportunity. I mean, you look 476 00:26:38,880 --> 00:26:42,960 Speaker 2: at the projections around just superannuation industry. It's about over 477 00:26:43,160 --> 00:26:46,440 Speaker 2: just a little over four trillion today by twenty thirty 478 00:26:46,440 --> 00:26:50,480 Speaker 2: five ten years time, it's eight trillion, is the RBA projections. 479 00:26:51,040 --> 00:26:54,720 Speaker 2: And then you have intergenerational wealth transfers, so baby boomers 480 00:26:54,760 --> 00:26:59,040 Speaker 2: passing moneys on. I guess the three million dollar super 481 00:26:59,119 --> 00:27:03,440 Speaker 2: tax will probably exacerbate that or bring it forward. So 482 00:27:03,480 --> 00:27:06,200 Speaker 2: there's a lot of positive you know, sort of tail 483 00:27:06,280 --> 00:27:10,320 Speaker 2: winds for the industry. And you know, the banning of commissions, 484 00:27:10,320 --> 00:27:13,400 Speaker 2: which I think was back in twenty thirteen. James might 485 00:27:13,720 --> 00:27:14,840 Speaker 2: you might know it better than me. 486 00:27:15,400 --> 00:27:20,320 Speaker 1: It was pretty hein which was two sixteen. Yes, absolutely, yeah. 487 00:27:19,400 --> 00:27:21,439 Speaker 2: It was the best thing that I think the country 488 00:27:21,480 --> 00:27:25,440 Speaker 2: did for financial advice because before that we had commission 489 00:27:25,520 --> 00:27:29,800 Speaker 2: based people and their core competency was really salesmanship. Today 490 00:27:30,359 --> 00:27:34,000 Speaker 2: an advisor's core competency has to be advice. And the 491 00:27:34,160 --> 00:27:37,640 Speaker 2: younger generation that's coming through, you know, in their thirties, 492 00:27:37,880 --> 00:27:41,080 Speaker 2: are really engaged with it. They want to learn more 493 00:27:41,119 --> 00:27:44,640 Speaker 2: about property. You know. Unfortunately, as Steve will find out, 494 00:27:45,000 --> 00:27:49,240 Speaker 2: that the formal education has nothing about property, which is 495 00:27:49,400 --> 00:27:51,480 Speaker 2: ridiculous given it's a major asset. 496 00:27:51,760 --> 00:27:54,920 Speaker 1: I mean, the advisor qualifications, it's a listed securities, it's 497 00:27:55,000 --> 00:27:55,520 Speaker 1: all that. 498 00:27:55,680 --> 00:27:58,919 Speaker 2: It's all listed securities, insurance, all that sort of stuff 499 00:27:59,000 --> 00:28:02,879 Speaker 2: nothing about property. So I think anyone getting into the industry, 500 00:28:03,040 --> 00:28:04,960 Speaker 2: you know, they want to probably get some good work 501 00:28:05,040 --> 00:28:08,720 Speaker 2: experience because that's really where you're going to learn the trade, 502 00:28:08,760 --> 00:28:12,160 Speaker 2: I guess, and learn more about property and how it intersects. 503 00:28:12,200 --> 00:28:14,600 Speaker 2: It's not all about property, but it's a missing part 504 00:28:14,640 --> 00:28:17,440 Speaker 2: of the piece. And what I hope for the industry 505 00:28:17,480 --> 00:28:22,760 Speaker 2: moving forward is that we have more asset class agnostic advisors, 506 00:28:22,800 --> 00:28:25,080 Speaker 2: so that you can go to someone and say what 507 00:28:25,240 --> 00:28:27,720 Speaker 2: combination of property and share should I have, and you're 508 00:28:27,720 --> 00:28:30,040 Speaker 2: going to get impartial advice on them. 509 00:28:30,080 --> 00:28:32,080 Speaker 1: Okay, I think that would be the best type of advisor. 510 00:28:32,200 --> 00:28:34,879 Speaker 1: Of course, it would be the advisor who's maltias to, 511 00:28:34,920 --> 00:28:37,600 Speaker 1: who has no biases, who doesn't say I really understand shares, 512 00:28:37,640 --> 00:28:39,920 Speaker 1: so you should buy shares, or doesn't say I really 513 00:28:40,000 --> 00:28:42,640 Speaker 1: understand property so you should buy property, which I'm sure 514 00:28:42,720 --> 00:28:43,920 Speaker 1: happens very good. 515 00:28:44,040 --> 00:28:44,400 Speaker 2: Okay. 516 00:28:44,800 --> 00:28:48,840 Speaker 1: Final questions are from Don, and Don has led outs 517 00:28:48,880 --> 00:28:54,080 Speaker 1: some pretty difficult questions on the new Supertax, but we'll 518 00:28:54,120 --> 00:28:57,520 Speaker 1: try and bounce to them at speed because they are 519 00:28:57,640 --> 00:29:02,080 Speaker 1: actually what most of them are, actually relatively easy to answer. Okay, 520 00:29:02,240 --> 00:29:04,680 Speaker 1: He's first question, if you are over seventy five. Is 521 00:29:04,680 --> 00:29:08,600 Speaker 1: it true that you can't use strategies such as recontribution etc. 522 00:29:09,200 --> 00:29:12,720 Speaker 1: In relation to managing your super and the super tax 523 00:29:13,440 --> 00:29:15,200 Speaker 1: I'll take that one on the answer on that one 524 00:29:15,480 --> 00:29:19,440 Speaker 1: is that once you're over seventy five, you are restricted 525 00:29:20,080 --> 00:29:24,960 Speaker 1: to a SGC super guarantee charge contributions and whatever is 526 00:29:25,000 --> 00:29:29,320 Speaker 1: allowed in the very relative restricted area of downsizing where 527 00:29:29,320 --> 00:29:31,040 Speaker 1: you'd have to sell the family home and you'd have 528 00:29:31,080 --> 00:29:33,440 Speaker 1: to prove that you did that to get those later 529 00:29:33,520 --> 00:29:37,160 Speaker 1: contributions into super, So that area is very limited to you, 530 00:29:37,280 --> 00:29:39,200 Speaker 1: I would think, Don, And none of this, by the way, 531 00:29:39,280 --> 00:29:42,880 Speaker 1: is advice. Is information only? Okay, Stuart? Are the rules 532 00:29:42,920 --> 00:29:46,880 Speaker 1: different if yourself a super fund is fully in pension mode? 533 00:29:47,160 --> 00:29:50,600 Speaker 1: Are the rules different? About? What the rules different? 534 00:29:51,960 --> 00:29:52,040 Speaker 2: On? 535 00:29:52,400 --> 00:29:53,520 Speaker 1: What does he mean there? I wonder? 536 00:29:54,880 --> 00:29:58,880 Speaker 2: I don't know, maybe if it relates to the recontribution strategy. 537 00:29:59,000 --> 00:30:01,760 Speaker 2: Maybe Don was asking whether you can still do the 538 00:30:01,840 --> 00:30:05,440 Speaker 2: recontribution strategy if your self managed super funds in pension phase, 539 00:30:05,880 --> 00:30:08,680 Speaker 2: and the answer is yes. A self managed super fund 540 00:30:08,720 --> 00:30:11,600 Speaker 2: can have multiple pension accounts or accumulation account that will 541 00:30:11,800 --> 00:30:15,000 Speaker 2: relate to one member, and it's very flexible in that regard. 542 00:30:15,320 --> 00:30:19,120 Speaker 1: Yeah, what I thought. So, okay, does the fifteen percent 543 00:30:19,400 --> 00:30:23,400 Speaker 1: extra tax on values over three million? Okay? What's talking 544 00:30:23,400 --> 00:30:26,120 Speaker 1: about here is the new supertax, which is fifteen percent 545 00:30:26,160 --> 00:30:30,920 Speaker 1: tax on earnings over on earnings on amounts above three million? 546 00:30:31,520 --> 00:30:37,720 Speaker 1: Will it apply? Will pension withdrawals during the year be 547 00:30:37,760 --> 00:30:39,760 Speaker 1: added to the year end value? In other words, he 548 00:30:39,800 --> 00:30:44,640 Speaker 1: wants to know, in terms of their calculation computation stacking 549 00:30:44,720 --> 00:30:48,280 Speaker 1: up to get to that three million figure, do pension 550 00:30:48,320 --> 00:30:53,600 Speaker 1: withdrawals during the year Are they included? The answer is yes, 551 00:30:55,120 --> 00:30:55,880 Speaker 1: of course there are. 552 00:30:56,480 --> 00:30:59,200 Speaker 2: Yeah, so you can't magically avoid the tax just by 553 00:30:59,240 --> 00:31:01,880 Speaker 2: withdrawing a little bit of money on the twenty ninth 554 00:31:01,920 --> 00:31:05,440 Speaker 2: of June. They'll add that back to levy the tax. 555 00:31:06,120 --> 00:31:08,160 Speaker 1: That's how the Frank dividend came in too, wasn't it 556 00:31:08,320 --> 00:31:11,480 Speaker 1: that the Frank evident were basically rolled in there? So 557 00:31:11,520 --> 00:31:13,320 Speaker 1: you've got to look very close. Yet, this is an 558 00:31:13,320 --> 00:31:15,920 Speaker 1: extraordinary tax. It's a completely new tax. The reason there 559 00:31:15,920 --> 00:31:18,000 Speaker 1: are so many questions is people have never been taxed 560 00:31:18,000 --> 00:31:23,160 Speaker 1: on unrealized games before, and it has all sorts of consequences. 561 00:31:23,280 --> 00:31:26,400 Speaker 1: Just like Darnas pointed out on for instances, your pension, 562 00:31:26,440 --> 00:31:29,440 Speaker 1: our pension withdrawals included, Yes, they're added back. Are Frank 563 00:31:29,520 --> 00:31:33,720 Speaker 1: dividend included, Yes, in a way they are. It takes 564 00:31:33,720 --> 00:31:36,280 Speaker 1: some explaining, but take it from me that that your 565 00:31:36,280 --> 00:31:39,120 Speaker 1: Frank dividend income is relevant to the computation of the 566 00:31:39,240 --> 00:31:42,360 Speaker 1: number and all sorts of things coming up. For instance, 567 00:31:42,360 --> 00:31:45,160 Speaker 1: another one the other day was about it works like 568 00:31:45,760 --> 00:31:48,120 Speaker 1: it works like CGT. So it's a personal tax. So 569 00:31:48,160 --> 00:31:50,120 Speaker 1: you get this bill and you can pay it yourself 570 00:31:50,240 --> 00:31:53,040 Speaker 1: or your super fund must pay it. If you've got profits, 571 00:31:53,040 --> 00:31:56,120 Speaker 1: they are tax If you've got losses, you don't get compensated. 572 00:31:56,120 --> 00:31:59,120 Speaker 1: You can only carry them forward, which is all fine, 573 00:31:59,160 --> 00:32:02,240 Speaker 1: But from Harrison's point of view, for instance, if you 574 00:32:02,320 --> 00:32:05,360 Speaker 1: were unfortunate enough that in the end you were talking 575 00:32:05,360 --> 00:32:07,760 Speaker 1: about in the state rather than your active super fund, 576 00:32:08,200 --> 00:32:11,720 Speaker 1: your inherent tours would not get that. They'd get taxed. 577 00:32:11,760 --> 00:32:16,760 Speaker 1: They'd get the tax buil for your profits, but your credits, 578 00:32:16,840 --> 00:32:18,719 Speaker 1: if you had losses, would just be chucked in the win. 579 00:32:18,800 --> 00:32:21,719 Speaker 1: They would have no value. So there's all. There are 580 00:32:21,840 --> 00:32:25,520 Speaker 1: twenty different sort of outcomes here, which oftens like us 581 00:32:25,560 --> 00:32:29,040 Speaker 1: find fascinating and most people and the more you dig 582 00:32:29,080 --> 00:32:31,640 Speaker 1: into it, the more you realize, Oh my, this is 583 00:32:31,680 --> 00:32:34,920 Speaker 1: one messy, sloppy tax that's just going to be a nightmare. 584 00:32:35,920 --> 00:32:38,600 Speaker 2: I think it's like inheritance tax, James, like in the UK, 585 00:32:38,720 --> 00:32:40,920 Speaker 2: no one actually pays it, Like no one's said the 586 00:32:41,040 --> 00:32:43,680 Speaker 2: government's not going to raise any revenue from these unrealized 587 00:32:43,720 --> 00:32:45,200 Speaker 2: gains tax because no one's going to pay it. 588 00:32:45,240 --> 00:32:47,400 Speaker 1: But what's the number? I don't want to go in this. 589 00:32:48,040 --> 00:32:49,920 Speaker 1: Oh yes it is, but I shouldn't guess on air. 590 00:32:50,320 --> 00:32:52,920 Speaker 1: So so they are not going to raise anything like 591 00:32:53,000 --> 00:32:55,760 Speaker 1: the amount they said they'd raise, Unlike the land tax 592 00:32:55,960 --> 00:32:59,960 Speaker 1: forward estimate Stewart that you can't take seriously. Don't take 593 00:33:00,080 --> 00:33:03,960 Speaker 1: the two nine six perceived income from the government seriously 594 00:33:04,040 --> 00:33:08,000 Speaker 1: because unlike land tax, you can avoid the division two 595 00:33:08,080 --> 00:33:11,720 Speaker 1: nine six terribly easy. You just simply ensure that you 596 00:33:11,760 --> 00:33:14,240 Speaker 1: never get three million, or you ensure that it's split, 597 00:33:14,480 --> 00:33:16,680 Speaker 1: or you ensure that it comes out before it hits 598 00:33:16,680 --> 00:33:18,600 Speaker 1: three There's so many things you could do, not to 599 00:33:18,720 --> 00:33:24,480 Speaker 1: mention valuations, which, gosh, guess what you can get a 600 00:33:24,560 --> 00:33:26,880 Speaker 1: variety of them, I depend I imagine and depending on 601 00:33:26,880 --> 00:33:30,440 Speaker 1: who you call, would that be? Is that an outrageous 602 00:33:30,440 --> 00:33:30,920 Speaker 1: thing to say? 603 00:33:31,840 --> 00:33:33,640 Speaker 2: No, it's not but there's got to go through an audit. 604 00:33:33,960 --> 00:33:36,640 Speaker 2: So it depends on how flexible you're order to read. 605 00:33:38,720 --> 00:33:40,720 Speaker 1: Yes, okay, it has to be, of course it does. 606 00:33:40,760 --> 00:33:43,760 Speaker 1: But there would be shall we say there there would 607 00:33:43,760 --> 00:33:50,160 Speaker 1: be variables around around unrealized valuations. Deffinitely, Yeah, for sure, 608 00:33:50,480 --> 00:33:52,800 Speaker 1: you thought so. Okay, maybe we'll leave it at that 609 00:33:52,880 --> 00:33:55,160 Speaker 1: for this week. Hey, Stuart, thank you very much for 610 00:33:55,160 --> 00:33:57,520 Speaker 1: coming on the show. Very interesting. My pleasure is always 611 00:33:57,760 --> 00:34:01,360 Speaker 1: I am just about convinced. Yes, I think that Melbourne 612 00:34:01,360 --> 00:34:03,440 Speaker 1: has turned and I don't see anything to stop that 613 00:34:03,560 --> 00:34:06,320 Speaker 1: turn extending. Now is if it can do it in 614 00:34:06,360 --> 00:34:07,800 Speaker 1: this if we can do it in the middle of 615 00:34:07,800 --> 00:34:11,279 Speaker 1: the winter season where the rates happened fallen yet to 616 00:34:11,320 --> 00:34:13,839 Speaker 1: anything like they're supposed to, you have to think that 617 00:34:13,960 --> 00:34:17,759 Speaker 1: the wind is behind those numbers. Okay, thanks Juart pro 618 00:34:17,840 --> 00:34:20,480 Speaker 1: Solutions coming on the show, and thank you folks for 619 00:34:20,560 --> 00:34:26,880 Speaker 1: everything in the way of correspondence. The email is the 620 00:34:26,920 --> 00:34:30,560 Speaker 1: money Puzzle at the Australian dot com dot au. We'll 621 00:34:30,600 --> 00:34:31,239 Speaker 1: hear from you soon.