1 00:00:10,200 --> 00:00:13,320 Speaker 1: Hello and welcome to the Australians Money Puzzle Podcast. I'm 2 00:00:13,400 --> 00:00:17,600 Speaker 1: James Kirby. Welcome aboard everybody, Well, welcome aboard. Eliza Owen 3 00:00:17,840 --> 00:00:20,880 Speaker 1: my guest today, regular on this show. Delighted to have 4 00:00:21,160 --> 00:00:23,360 Speaker 1: Eliza come into the studio. How are you, Eliza? 5 00:00:24,239 --> 00:00:26,400 Speaker 2: Really good? It's great to be here. It's great to 6 00:00:26,440 --> 00:00:27,040 Speaker 2: see you in. 7 00:00:26,960 --> 00:00:29,160 Speaker 1: Person, isn't it. Yeah, well, I don't know if it's 8 00:00:29,160 --> 00:00:30,920 Speaker 1: great to see me in person, but it's nice to 9 00:00:31,000 --> 00:00:36,040 Speaker 1: do so. As you know, folks, Eliza's been on the 10 00:00:36,040 --> 00:00:40,240 Speaker 1: show regularly and we always have very interesting discussions about 11 00:00:40,240 --> 00:00:43,560 Speaker 1: properly because she's right across it working for the Toutality 12 00:00:43,600 --> 00:00:47,479 Speaker 1: Group formerly core Logic. Now what cut my eye was 13 00:00:47,640 --> 00:00:50,159 Speaker 1: She's done a deep dive and I've never seen this 14 00:00:50,240 --> 00:00:54,040 Speaker 1: done before on this What will we call it? Is 15 00:00:54,080 --> 00:00:57,440 Speaker 1: it a suburban myth? Maybe it is a suburban myth 16 00:00:57,520 --> 00:01:02,200 Speaker 1: on the back of your figures. That's how in private 17 00:01:02,240 --> 00:01:05,880 Speaker 1: school zones, public school zones, I'm sorry, posh school zones, 18 00:01:05,920 --> 00:01:08,640 Speaker 1: we can see do very well and that they are 19 00:01:08,680 --> 00:01:11,360 Speaker 1: a sort of secret, sort of gold mine of the 20 00:01:11,360 --> 00:01:14,520 Speaker 1: property sector. Everyone assumed that I reckon it was true once. 21 00:01:15,280 --> 00:01:16,480 Speaker 1: Is it still true? 22 00:01:17,080 --> 00:01:19,080 Speaker 2: This is a great question, and it's probably worth just 23 00:01:19,160 --> 00:01:21,360 Speaker 2: doing a little bit of background on where we were 24 00:01:21,360 --> 00:01:24,240 Speaker 2: coming at from with this research. The background was that 25 00:01:24,280 --> 00:01:27,440 Speaker 2: we developed this new tool where we could essentially create 26 00:01:27,480 --> 00:01:31,080 Speaker 2: custom boundaries, draw a circle on a map of the 27 00:01:31,120 --> 00:01:35,360 Speaker 2: property market, and analyze all the properties within that. So 28 00:01:35,400 --> 00:01:41,640 Speaker 2: we applied it to school zones where we identified top 29 00:01:41,680 --> 00:01:44,880 Speaker 2: performing public school zones so that we could answer this question, 30 00:01:45,880 --> 00:01:51,280 Speaker 2: is it worth paying premiums on houses in these top 31 00:01:51,320 --> 00:01:56,320 Speaker 2: performing public schools to save on private school fees and 32 00:01:56,360 --> 00:02:00,440 Speaker 2: the kind of cost benefit of that. So we found yes, 33 00:02:00,440 --> 00:02:04,760 Speaker 2: it probably is worthwhile in most markets to be paying 34 00:02:04,800 --> 00:02:08,280 Speaker 2: a premium anywhere between fifty thousand dollars all the way 35 00:02:08,360 --> 00:02:11,320 Speaker 2: up to one point two million dollars, which I'll come 36 00:02:11,360 --> 00:02:15,480 Speaker 2: back to in a second, but you'll be paying potentially 37 00:02:15,560 --> 00:02:18,440 Speaker 2: hundreds of thousands of dollars on school fees, and where 38 00:02:18,720 --> 00:02:22,160 Speaker 2: real mortgage payments go down over time, school fees tend 39 00:02:22,160 --> 00:02:24,160 Speaker 2: to go up and up and up. Plus you're getting 40 00:02:24,200 --> 00:02:25,920 Speaker 2: the benefit of a really solid education. 41 00:02:26,480 --> 00:02:29,480 Speaker 1: But so it sounds to me that if it's true 42 00:02:30,320 --> 00:02:35,359 Speaker 1: still that as a property investment, a property inside a 43 00:02:35,520 --> 00:02:42,360 Speaker 1: top school zone is a good asset it's true, but 44 00:02:42,480 --> 00:02:44,840 Speaker 1: it's a closer on thing that you had to actually 45 00:02:45,280 --> 00:02:47,080 Speaker 1: go deep in. You had to look at everything. You 46 00:02:47,120 --> 00:02:50,440 Speaker 1: had to subtract, as such the school fees that person 47 00:02:50,520 --> 00:02:52,480 Speaker 1: might be paying over a long period of time and 48 00:02:52,600 --> 00:02:55,120 Speaker 1: on balance, whereas once upon a time, I imagine it 49 00:02:55,160 --> 00:02:57,680 Speaker 1: was a knockout. Is the reason there's such a premium. 50 00:02:57,880 --> 00:02:59,560 Speaker 1: Do you think there was a period where these zones 51 00:02:59,600 --> 00:03:02,200 Speaker 1: really and that they've run so high now that there 52 00:03:02,240 --> 00:03:04,000 Speaker 1: isn't much left in it? Because it seems to me 53 00:03:04,040 --> 00:03:07,200 Speaker 1: that you found in Sydney and Melbourne school zones often 54 00:03:07,800 --> 00:03:11,680 Speaker 1: the capital growth was actually weaker than the rest of 55 00:03:11,720 --> 00:03:13,760 Speaker 1: the city. Explain what happened there? 56 00:03:13,840 --> 00:03:16,280 Speaker 2: So this was the big catch right. We could look 57 00:03:16,320 --> 00:03:19,320 Speaker 2: at the median house values in and outside of the catchments, 58 00:03:19,320 --> 00:03:21,200 Speaker 2: but we could also look at the capital growth trend 59 00:03:21,200 --> 00:03:23,400 Speaker 2: long term, and that turned out to be weaker. 60 00:03:23,840 --> 00:03:25,240 Speaker 1: When you say long term, how long is that? 61 00:03:25,440 --> 00:03:28,320 Speaker 2: So we looked at a fifteen year period and for 62 00:03:28,400 --> 00:03:31,960 Speaker 2: six of the nine areas that we analyzed, we found 63 00:03:32,200 --> 00:03:35,360 Speaker 2: that the fifteen year capital growth was lower than outside 64 00:03:35,360 --> 00:03:39,840 Speaker 2: the catchments. We don't really know why exactly, but we 65 00:03:39,960 --> 00:03:43,920 Speaker 2: think it could be linked to an affordability issue. These 66 00:03:44,040 --> 00:03:46,800 Speaker 2: areas inside catchments. Not all of them, by the way, 67 00:03:46,880 --> 00:03:49,480 Speaker 2: not all the areas we analyzed had a premium, but 68 00:03:49,600 --> 00:03:52,640 Speaker 2: most of them did, and we think that because they're 69 00:03:52,680 --> 00:03:55,840 Speaker 2: just inherently higher, it's harder for them to accrue more 70 00:03:55,920 --> 00:03:56,880 Speaker 2: value over time. 71 00:03:57,040 --> 00:03:59,880 Speaker 1: Yes, they've reached it, perhaps reached something of a ceiling. 72 00:04:00,280 --> 00:04:04,320 Speaker 1: So if you were to buy something in these school zones, 73 00:04:04,320 --> 00:04:08,160 Speaker 1: the first thing is they're much dearer than surrounding properties 74 00:04:08,600 --> 00:04:13,360 Speaker 1: for like for like. Secondly, the growth is weaker over 75 00:04:13,400 --> 00:04:17,520 Speaker 1: fifteen years than outside. So really it seems to me 76 00:04:17,680 --> 00:04:21,760 Speaker 1: you'd want to have kids in schools as an investor, 77 00:04:21,760 --> 00:04:24,200 Speaker 1: it mightn't really stack up absolutely. 78 00:04:24,520 --> 00:04:28,720 Speaker 2: It really comes down to your individual cost benefit analysis, 79 00:04:28,720 --> 00:04:32,840 Speaker 2: which is going to include your education goals. But another 80 00:04:32,920 --> 00:04:36,160 Speaker 2: catch that we found with this analysis is that if 81 00:04:36,160 --> 00:04:39,200 Speaker 2: we're looking at just public schools that are not selective, 82 00:04:39,560 --> 00:04:42,719 Speaker 2: then the schools we looked at Epping Boys, Cheltenham Girls 83 00:04:42,760 --> 00:04:46,600 Speaker 2: in Sydney, Princess Hill in Melbourne, for example, they rank 84 00:04:46,720 --> 00:04:50,080 Speaker 2: really well within public schools that are not selective, but 85 00:04:50,160 --> 00:04:54,440 Speaker 2: when you start doing the rankings by all schools, they 86 00:04:54,480 --> 00:04:58,000 Speaker 2: fall right down the list. So even if you pay 87 00:04:58,000 --> 00:05:00,760 Speaker 2: those premiums. You not necessarily going to be ranking in 88 00:05:00,800 --> 00:05:03,000 Speaker 2: the top ten or twenty when it comes to HSC 89 00:05:03,040 --> 00:05:06,120 Speaker 2: and VC results. That's something to keep in mind as well. 90 00:05:06,120 --> 00:05:10,080 Speaker 2: And it's kind of an unfortunate statement about the equality 91 00:05:10,080 --> 00:05:12,040 Speaker 2: of you know, education quality across the. 92 00:05:12,560 --> 00:05:15,000 Speaker 1: The schools that serves. They change. Yes, school that's a 93 00:05:15,040 --> 00:05:17,520 Speaker 1: great school is not necessarily a great school ten years later. 94 00:05:17,760 --> 00:05:19,880 Speaker 2: Well, one of the more positive stories we found was 95 00:05:19,920 --> 00:05:23,039 Speaker 2: Elizabeth Murdock, for example, which has actually been rising through 96 00:05:23,080 --> 00:05:26,800 Speaker 2: the rankings, so that had outperformed in terms of capital 97 00:05:26,839 --> 00:05:30,039 Speaker 2: growth and the premium wasn't even as high at about 98 00:05:30,040 --> 00:05:32,960 Speaker 2: fifty thousand dollars. So there were some good news stories 99 00:05:32,960 --> 00:05:36,799 Speaker 2: that emerged from it as well. But hopefully it's useful 100 00:05:36,839 --> 00:05:40,880 Speaker 2: for house hunters in that young family stage of life 101 00:05:41,080 --> 00:05:43,800 Speaker 2: to help them realize, you know, whether it's going to 102 00:05:43,839 --> 00:05:45,560 Speaker 2: be the best decision for them to buy in or 103 00:05:45,560 --> 00:05:46,520 Speaker 2: out of the catchments. 104 00:05:46,960 --> 00:05:49,200 Speaker 1: So it works well, it would seem to work well 105 00:05:49,240 --> 00:05:53,160 Speaker 1: for homeowners that are using the schools, and obviously the 106 00:05:53,160 --> 00:05:56,520 Speaker 1: more kids you haven't the school, the better. These exact true, 107 00:05:56,720 --> 00:05:59,440 Speaker 1: all fine, but from an investment point of view, then 108 00:05:59,560 --> 00:06:01,480 Speaker 1: what about years did you look at that at all 109 00:06:01,520 --> 00:06:04,240 Speaker 1: inside that ranger, I think we found out about renting 110 00:06:04,240 --> 00:06:04,840 Speaker 1: in that area. 111 00:06:05,080 --> 00:06:06,800 Speaker 2: Yeah, so we had a look at rent values over 112 00:06:06,839 --> 00:06:09,880 Speaker 2: time as well. Each of the areas, or most of 113 00:06:09,920 --> 00:06:12,400 Speaker 2: the areas that we analyzed, had a premium on rents, 114 00:06:12,480 --> 00:06:14,840 Speaker 2: and that premium on rents averaged about three and a 115 00:06:14,880 --> 00:06:18,240 Speaker 2: half thousand dollars a year. So again, if you're making 116 00:06:18,240 --> 00:06:21,480 Speaker 2: that cost benefited analysis when it comes to schooling, I'd 117 00:06:21,480 --> 00:06:25,160 Speaker 2: say it's still worthwhile renting within the catchments that we 118 00:06:25,200 --> 00:06:28,120 Speaker 2: looked at, because most private schools are going to be 119 00:06:28,200 --> 00:06:30,360 Speaker 2: starting at least three and a half grand a year. 120 00:06:31,080 --> 00:06:35,599 Speaker 2: So depending again on how you treat education, how you 121 00:06:35,720 --> 00:06:41,320 Speaker 2: value education, that could be worthwhile. One of the things 122 00:06:41,320 --> 00:06:43,560 Speaker 2: that's really worth noting about this analysis, and this is 123 00:06:43,560 --> 00:06:45,279 Speaker 2: where I come back to that one point two million 124 00:06:45,279 --> 00:06:48,040 Speaker 2: premium I talked about earlier. This was for a pocket 125 00:06:48,080 --> 00:06:52,039 Speaker 2: of Sydney's North Shore where you had a cluster of 126 00:06:52,680 --> 00:06:57,840 Speaker 2: Cholara High, Willoughby Girls and Linfield Learning Village, But all 127 00:06:57,920 --> 00:07:01,359 Speaker 2: the catchments also encompass a lot of the North Shore 128 00:07:01,400 --> 00:07:04,920 Speaker 2: train line. We weren't controlling for other factors here, so 129 00:07:05,120 --> 00:07:08,160 Speaker 2: that could be another reason there's a premium in that area. 130 00:07:08,240 --> 00:07:11,680 Speaker 1: Okay, Yes, of course, it's not just the school, Okay. 131 00:07:12,120 --> 00:07:15,400 Speaker 1: Was there any evidence that the volume of rental property 132 00:07:15,400 --> 00:07:18,680 Speaker 1: in the school catchment zones was higher than the zones 133 00:07:18,720 --> 00:07:19,680 Speaker 1: outside the schools. 134 00:07:20,480 --> 00:07:24,440 Speaker 2: We didn't look at the volume, but we did look 135 00:07:24,560 --> 00:07:29,040 Speaker 2: at trends like time on market, selling times, whole periods. 136 00:07:29,080 --> 00:07:34,200 Speaker 2: Conditions were generally tighter within the catchments. There's all sorts 137 00:07:34,400 --> 00:07:37,760 Speaker 2: of housing techniques that people have used to try and 138 00:07:37,840 --> 00:07:41,760 Speaker 2: get their kids into these catchments, into good schools. Unfortunately, 139 00:07:41,840 --> 00:07:43,480 Speaker 2: there's even been cases of fraud. 140 00:07:43,760 --> 00:07:46,640 Speaker 1: Of course, family address or whatever. 141 00:07:47,120 --> 00:07:50,280 Speaker 2: Which I think to me ultimately screams for the need 142 00:07:50,360 --> 00:07:53,720 Speaker 2: to kind of uplift the education standards in other areas 143 00:07:53,720 --> 00:07:56,360 Speaker 2: of the city so you don't get such housing pressure 144 00:07:56,400 --> 00:07:57,600 Speaker 2: in those catchments. 145 00:07:57,840 --> 00:08:01,280 Speaker 1: And there's also something of a jerry wondering that can 146 00:08:01,400 --> 00:08:04,720 Speaker 1: happen in the schools because they can change their zones, 147 00:08:04,720 --> 00:08:07,480 Speaker 1: can't they. It's their right to do whatever they like, 148 00:08:07,560 --> 00:08:10,200 Speaker 1: and if they want to snip out a neighborhood they can, 149 00:08:10,400 --> 00:08:12,320 Speaker 1: and you can't take them to corder or anything if 150 00:08:12,320 --> 00:08:14,360 Speaker 1: you bought a house in that district. Well. 151 00:08:14,360 --> 00:08:18,000 Speaker 2: I also thought it was interesting that Doncaster, which was 152 00:08:18,000 --> 00:08:21,560 Speaker 2: a really high performing school in the VCE. They established 153 00:08:21,600 --> 00:08:24,920 Speaker 2: a second campus so that they could expand their school 154 00:08:25,000 --> 00:08:29,000 Speaker 2: zones and that ended up creating an uplift in price 155 00:08:29,080 --> 00:08:32,360 Speaker 2: premiums in those some of those suburbs as well. So 156 00:08:32,679 --> 00:08:37,480 Speaker 2: it's fascinating the interlink between the two. Another really interesting 157 00:08:37,520 --> 00:08:40,040 Speaker 2: one was Cherrybrook Tech, which a lot of people talk 158 00:08:40,080 --> 00:08:43,520 Speaker 2: about in Sydney as one that increases house value. That 159 00:08:43,559 --> 00:08:45,600 Speaker 2: wasn't the case. We actually found that it sat about 160 00:08:45,640 --> 00:08:48,520 Speaker 2: one hundred and fifty thousand dollars under the medium of 161 00:08:48,600 --> 00:08:50,720 Speaker 2: surrounding houses. 162 00:08:50,440 --> 00:08:54,120 Speaker 1: Hy on a straight price straight price comparison. 163 00:08:54,200 --> 00:08:56,840 Speaker 2: Yeah, so again just coming back to the methodology part 164 00:08:56,880 --> 00:08:59,360 Speaker 2: of it was basically we looked at the school zone 165 00:08:59,559 --> 00:09:03,320 Speaker 2: as if was one housing market, and then we compared 166 00:09:03,360 --> 00:09:07,280 Speaker 2: it with houses in the same suburb that were outside 167 00:09:07,280 --> 00:09:08,920 Speaker 2: of the catchment. So we get a little bit of 168 00:09:08,960 --> 00:09:11,760 Speaker 2: a like for like. But the reality is outside the 169 00:09:11,800 --> 00:09:15,240 Speaker 2: Cherrybrook Tech catchment, you have new metro stations, you have 170 00:09:15,320 --> 00:09:19,080 Speaker 2: houses that are probably larger, including in dural which is 171 00:09:19,120 --> 00:09:22,040 Speaker 2: this kind of you know, you get more estate housing 172 00:09:22,120 --> 00:09:25,400 Speaker 2: outside the catchment there, so that probably drags up the 173 00:09:25,400 --> 00:09:27,520 Speaker 2: median as well. So there's a lot of things to 174 00:09:27,559 --> 00:09:29,720 Speaker 2: take into account when you're looking at some of these areas. 175 00:09:29,920 --> 00:09:33,080 Speaker 1: Gee's fascinating though, I mean, it really is, and I 176 00:09:33,080 --> 00:09:35,079 Speaker 1: can you know, I know that it's a big game 177 00:09:35,360 --> 00:09:38,040 Speaker 1: in both Melbourne and Sydney particularly, but in all cities 178 00:09:38,400 --> 00:09:42,400 Speaker 1: about the housing whether to make the effort to buy 179 00:09:42,400 --> 00:09:45,480 Speaker 1: inside the school zone. And it's interesting. I mean, tell 180 00:09:45,480 --> 00:09:47,920 Speaker 1: me if I'm wrong, but it would seem in conclusion 181 00:09:48,000 --> 00:09:50,560 Speaker 1: on your report, which is a terrific exercise that, as 182 00:09:50,600 --> 00:09:55,240 Speaker 1: I say, I've never seen done before that for homeowners 183 00:09:55,600 --> 00:09:58,760 Speaker 1: using the schools on balance over a long period of 184 00:09:58,800 --> 00:10:02,160 Speaker 1: time parannum, there is probably and that the clearity is 185 00:10:02,160 --> 00:10:08,320 Speaker 1: an advantage. But for investors, the capital prices are so high, 186 00:10:08,360 --> 00:10:12,079 Speaker 1: and they're higher right than the neighborhoods outside generally, so 187 00:10:12,720 --> 00:10:19,480 Speaker 1: so you're as an investment option, it's doesn't necessarily seem 188 00:10:19,520 --> 00:10:20,520 Speaker 1: to appear better. 189 00:10:20,960 --> 00:10:22,760 Speaker 2: No, I would say if you're looking at this from 190 00:10:22,760 --> 00:10:25,400 Speaker 2: an investment perspective, you might be better off looking at 191 00:10:25,440 --> 00:10:28,520 Speaker 2: other amenities, such as new infrastructure that's going in so 192 00:10:28,600 --> 00:10:32,560 Speaker 2: you can capture the value before it's established. We're actually 193 00:10:32,559 --> 00:10:34,959 Speaker 2: seeing a lot of that in Sydney with the establishment 194 00:10:35,000 --> 00:10:39,240 Speaker 2: of the Metro West and the metro airport lines. Some 195 00:10:39,360 --> 00:10:42,200 Speaker 2: of our fastest capital growth in the city across the 196 00:10:42,240 --> 00:10:47,320 Speaker 2: market is occurring in those areas where they're awaiting those 197 00:10:47,520 --> 00:10:50,920 Speaker 2: metro lines to be established. So maybe better off looking 198 00:10:50,960 --> 00:10:54,439 Speaker 2: at something like that than an established good school zone 199 00:10:54,600 --> 00:10:55,960 Speaker 2: from an investment perspective. 200 00:10:55,960 --> 00:10:59,079 Speaker 1: Interesting. Yeah, and Velbrunt Similarly the tunnel, which obviously is 201 00:10:59,080 --> 00:11:01,280 Speaker 1: going to go across to the West Sidney. Some of 202 00:11:01,280 --> 00:11:05,120 Speaker 1: those suburbs are quite are red hot actually already, and 203 00:11:05,120 --> 00:11:07,120 Speaker 1: I'm sure that's the factor that I haven't seen any 204 00:11:07,320 --> 00:11:10,000 Speaker 1: sort of deep research work like you've done here. Terrific. Okay, 205 00:11:10,000 --> 00:11:11,439 Speaker 1: we'll take short break. We'll be back in a moment. 206 00:11:11,520 --> 00:11:14,160 Speaker 1: We've got some very interesting issues you want to deal with, 207 00:11:14,280 --> 00:11:18,840 Speaker 1: including the nasty business of under quoting, which I'm afraid 208 00:11:19,000 --> 00:11:34,800 Speaker 1: is back with us. Hello, Welcome back to The Australian's 209 00:11:34,800 --> 00:11:38,280 Speaker 1: Money Puzzle podcast. James Kirby talking to regular guests Eliza 210 00:11:38,400 --> 00:11:42,160 Speaker 1: Owen of the Cautality property group, which you probably knew 211 00:11:42,200 --> 00:11:47,760 Speaker 1: as core logic now under quoting. I did something on this, 212 00:11:47,800 --> 00:11:49,320 Speaker 1: so we have it in the Wealth section of The 213 00:11:49,320 --> 00:11:52,760 Speaker 1: Australian this week, and it's worth I would say humbly 214 00:11:52,800 --> 00:11:55,000 Speaker 1: that it's worth looking at for the simple reason that 215 00:11:55,040 --> 00:11:57,120 Speaker 1: there does seem to be does seem to be an issue. 216 00:11:57,200 --> 00:12:00,400 Speaker 1: And one of the more interesting observations was by Anysa Cavello, 217 00:12:00,400 --> 00:12:02,200 Speaker 1: who will be on the show By the Way next week. 218 00:12:02,240 --> 00:12:05,880 Speaker 1: She's a property buyer's advocate based in Melbourne and she, 219 00:12:06,360 --> 00:12:08,640 Speaker 1: like everyone in the story, she said, yes, it's happening, 220 00:12:09,520 --> 00:12:12,480 Speaker 1: but in a sort of fiercely pragmatic passion. She also said, 221 00:12:13,120 --> 00:12:17,600 Speaker 1: it's proof that the market is rebounding. Underquoting. It seems 222 00:12:17,600 --> 00:12:21,319 Speaker 1: to be a real issue in a rising market, particularly 223 00:12:21,320 --> 00:12:23,600 Speaker 1: at the entry level. Entry lever seems to be the 224 00:12:23,640 --> 00:12:26,120 Speaker 1: part when everyone's got the toughest, doesn't it. Really. 225 00:12:27,240 --> 00:12:29,640 Speaker 2: I think it's really hard. As you say, at an 226 00:12:29,640 --> 00:12:32,400 Speaker 2: inflection point in the market when it's rising, kind of 227 00:12:32,400 --> 00:12:35,920 Speaker 2: compounds the issue because on top of potential underquoting, you've 228 00:12:35,960 --> 00:12:39,920 Speaker 2: got unintentional underquoting where the market is just moving faster 229 00:12:40,120 --> 00:12:43,160 Speaker 2: than where people think the market is. I know from 230 00:12:43,400 --> 00:12:47,040 Speaker 2: the first home buyer experience, it's just kind of a 231 00:12:47,080 --> 00:12:49,880 Speaker 2: part of the process and unfortunately a bit of a 232 00:12:49,960 --> 00:12:54,760 Speaker 2: humiliation when you understand that the listing price isn't representative 233 00:12:54,800 --> 00:12:57,600 Speaker 2: of what a property is necessarily going to go. 234 00:12:57,559 --> 00:13:00,040 Speaker 1: For isn't there laws against it? 235 00:13:00,280 --> 00:13:03,440 Speaker 2: Yeah, there definitely is, but I think that it can 236 00:13:03,480 --> 00:13:10,280 Speaker 2: be maybe difficult to bear out and potentially also a 237 00:13:10,400 --> 00:13:13,360 Speaker 2: lack of complaints, And this is something that I think 238 00:13:13,440 --> 00:13:14,120 Speaker 2: was in your eyes. 239 00:13:14,559 --> 00:13:17,360 Speaker 1: People don't complain because they just move on. They just 240 00:13:17,440 --> 00:13:18,959 Speaker 1: move on to share. Well, that's it, you know, we 241 00:13:19,679 --> 00:13:20,760 Speaker 1: go to the next auction next. 242 00:13:21,040 --> 00:13:23,360 Speaker 2: They accept it as a function of the market, which 243 00:13:23,400 --> 00:13:26,200 Speaker 2: is really weird because you don't see it in other transactions. 244 00:13:26,280 --> 00:13:29,480 Speaker 2: But I think fair trading so far this year in 245 00:13:29,520 --> 00:13:33,640 Speaker 2: New South Wales has received one hundred and twenty five 246 00:13:33,760 --> 00:13:37,120 Speaker 2: complaints about under quoting. In the year to date for 247 00:13:37,160 --> 00:13:40,600 Speaker 2: New South Wales there's been seventy four thousand sales. So 248 00:13:40,679 --> 00:13:42,320 Speaker 2: that gives you a sense in. 249 00:13:42,320 --> 00:13:45,360 Speaker 1: The ocean, you know, exactly so, but yeah, so it 250 00:13:45,760 --> 00:13:47,760 Speaker 1: probably not indicative of the issue. 251 00:13:47,840 --> 00:13:50,120 Speaker 2: Potentially not. And I guess that's the thing. If you 252 00:13:50,200 --> 00:13:55,000 Speaker 2: do think that an agent has misrepresented what the property 253 00:13:55,080 --> 00:13:57,480 Speaker 2: was going to go for, maybe it is worth looking 254 00:13:57,520 --> 00:14:00,000 Speaker 2: at fair trading and making a complaint. But I think 255 00:14:00,000 --> 00:14:03,080 Speaker 2: think it's also really worthwhile as a buyer to arm 256 00:14:03,120 --> 00:14:07,320 Speaker 2: yourself with comparable sales information, right, Yeah, yeah, or the 257 00:14:07,400 --> 00:14:09,880 Speaker 2: valuation that you can see on listings. Sometimes if it's 258 00:14:09,880 --> 00:14:12,480 Speaker 2: not suppressed, or even if you have apidata, you can 259 00:14:12,520 --> 00:14:13,719 Speaker 2: look it up there and just. 260 00:14:13,720 --> 00:14:15,800 Speaker 1: Use your common sense. I mean, if you're talking to 261 00:14:15,880 --> 00:14:18,640 Speaker 1: an agent and they're saying, okay, well, the range on 262 00:14:18,679 --> 00:14:21,000 Speaker 1: this is let's pick a number. Okay, the range on 263 00:14:21,040 --> 00:14:25,520 Speaker 1: this is eight fifty to nine hundred, and last weekend 264 00:14:25,680 --> 00:14:28,080 Speaker 1: you saw several similar properties that all went for over 265 00:14:28,120 --> 00:14:31,120 Speaker 1: a million, then that is not the price that's going 266 00:14:31,160 --> 00:14:33,280 Speaker 1: to go for whatever that agent is saying. And I 267 00:14:33,320 --> 00:14:36,640 Speaker 1: find if you quiz the agent, they'll say this is 268 00:14:36,760 --> 00:14:40,160 Speaker 1: the They're careful. They're all careful not to be seen 269 00:14:40,160 --> 00:14:42,240 Speaker 1: as overcoating. So what their defense would be is they 270 00:14:42,240 --> 00:14:45,280 Speaker 1: will say, this was the figure that we agreed in 271 00:14:45,320 --> 00:14:47,880 Speaker 1: the kitchen two months ago when I sat down with 272 00:14:47,920 --> 00:14:51,160 Speaker 1: these people for the first time, and they don't change it. 273 00:14:51,920 --> 00:14:55,240 Speaker 1: But I would like you to explain what is really 274 00:14:56,600 --> 00:14:59,280 Speaker 1: not the downside of all this. I mean, the obvious 275 00:14:59,280 --> 00:15:02,600 Speaker 1: downside is that people waste their time, and it's not 276 00:15:02,640 --> 00:15:04,280 Speaker 1: just wasting their time and people trying to buy a home, 277 00:15:04,320 --> 00:15:06,360 Speaker 1: you're trying to imagine living there. But I think the 278 00:15:06,360 --> 00:15:08,040 Speaker 1: worst part of it is that people are used as 279 00:15:08,040 --> 00:15:10,440 Speaker 1: cannon fodd are really at auctions, aren't they? So they 280 00:15:10,480 --> 00:15:13,360 Speaker 1: turn up all they've done all this work, as Louis 281 00:15:13,480 --> 00:15:16,280 Speaker 1: Christopher was saying in the story, they've done their pest 282 00:15:16,360 --> 00:15:20,560 Speaker 1: inspections and their size inspections, and they're sitting there like innocently, 283 00:15:20,920 --> 00:15:23,560 Speaker 1: and you know, the auction opens and they're gone. They're 284 00:15:23,600 --> 00:15:26,520 Speaker 1: knocked out in minutes. So that's the downside I think 285 00:15:27,360 --> 00:15:27,640 Speaker 1: of it. 286 00:15:27,880 --> 00:15:30,800 Speaker 2: I agree. I guess I've never really understood the upside. 287 00:15:30,840 --> 00:15:33,240 Speaker 2: To be honest, I would have thought it'd be more efficient. 288 00:15:33,480 --> 00:15:37,080 Speaker 1: There is no real lopside. It distorts the market. I mean, 289 00:15:37,160 --> 00:15:40,480 Speaker 1: someone wins this one. The seller wins, I suppose because 290 00:15:40,520 --> 00:15:43,840 Speaker 1: perhaps they had a perhaps they had a livelier auction 291 00:15:43,920 --> 00:15:45,840 Speaker 1: than they might have had. But that's about it. 292 00:15:45,880 --> 00:15:48,200 Speaker 2: Really. Yeah, perhaps you create more of a sense of 293 00:15:48,320 --> 00:15:51,840 Speaker 2: urgency for the buyers that are eligible to get the property. 294 00:15:52,040 --> 00:15:56,600 Speaker 2: But as you say, the downside is the financial, temporal 295 00:15:56,680 --> 00:16:00,160 Speaker 2: and emotional investment that people are making in the property journey. 296 00:16:00,360 --> 00:16:02,000 Speaker 2: And it is a bit of a rite of passage 297 00:16:02,040 --> 00:16:04,480 Speaker 2: when you're a first home buyer in Australia to set 298 00:16:04,560 --> 00:16:08,320 Speaker 2: to revise your expectations. We have a tool if you 299 00:16:08,360 --> 00:16:11,240 Speaker 2: google it, it's just mapping the market catality. You can 300 00:16:11,280 --> 00:16:15,440 Speaker 2: actually see median house and unit values by suburb. Even 301 00:16:15,640 --> 00:16:18,160 Speaker 2: going into that and saying, okay, what are the suburbs 302 00:16:18,160 --> 00:16:22,160 Speaker 2: that are ten twenty percent below my budget? That's probably 303 00:16:22,200 --> 00:16:24,520 Speaker 2: where I'm going to have a lot more control in 304 00:16:24,560 --> 00:16:27,040 Speaker 2: the buying process. 305 00:16:26,120 --> 00:16:29,120 Speaker 1: Allowing for the price ranged to be ten or twenty 306 00:16:29,120 --> 00:16:29,960 Speaker 1: percent under. 307 00:16:30,920 --> 00:16:33,880 Speaker 2: That's what I range speaking from a person. 308 00:16:34,760 --> 00:16:38,160 Speaker 1: Such a low and then you've got less likely to 309 00:16:38,200 --> 00:16:39,960 Speaker 1: be disappointed. Yeah, I think so. 310 00:16:40,320 --> 00:16:43,000 Speaker 2: But even as someone who'd been researching the property market 311 00:16:43,000 --> 00:16:45,000 Speaker 2: for years and years, I still had to go through 312 00:16:45,000 --> 00:16:46,160 Speaker 2: that same revision of. 313 00:16:46,080 --> 00:16:48,280 Speaker 1: My own and you know, you know more than most. 314 00:16:48,400 --> 00:16:51,400 Speaker 2: I went into some ouctions quite hopeful, but that arm 315 00:16:51,400 --> 00:16:56,240 Speaker 2: yourself with comparable sales that have happened recently take into account, 316 00:16:56,400 --> 00:16:58,640 Speaker 2: and hey, if you've got the money, why not get 317 00:16:58,680 --> 00:17:00,360 Speaker 2: some buyer representation as. 318 00:17:00,280 --> 00:17:03,440 Speaker 1: Well an advocate at the auction for you. Yes. Absolutely, 319 00:17:03,480 --> 00:17:04,960 Speaker 1: And look, the one thing that I think all the 320 00:17:05,040 --> 00:17:08,359 Speaker 1: listeners would know is that this used to be very hard. 321 00:17:08,800 --> 00:17:10,960 Speaker 1: To find out what the comparable sales were. You had 322 00:17:11,000 --> 00:17:13,239 Speaker 1: to go down to the titles office, and you can 323 00:17:13,280 --> 00:17:16,640 Speaker 1: do it in two seconds, souse, use those tools all right? 324 00:17:16,880 --> 00:17:18,280 Speaker 1: I think since I have you in the studio, I 325 00:17:18,280 --> 00:17:21,080 Speaker 1: wanted to ask you all a two other quick questions, just observations. Really, 326 00:17:21,720 --> 00:17:23,800 Speaker 1: we talked some time ago and we had a very 327 00:17:23,840 --> 00:17:26,600 Speaker 1: interesting discussion, and I did the story which was one 328 00:17:26,600 --> 00:17:28,720 Speaker 1: of the more interesting ones I thought in Property of 329 00:17:28,800 --> 00:17:31,679 Speaker 1: the Year so far from me, which was about the 330 00:17:31,720 --> 00:17:35,400 Speaker 1: apartment people losing money in apartments. One in five apartments 331 00:17:35,440 --> 00:17:38,040 Speaker 1: selling at a loss inside of Melbourne. Ninety percent of 332 00:17:38,080 --> 00:17:41,280 Speaker 1: loss making sales of dwellings in Sydney being apartments, a 333 00:17:41,400 --> 00:17:43,480 Speaker 1: real weakness in that market, and you mentioned and you 334 00:17:43,520 --> 00:17:47,399 Speaker 1: showed how it was weak for years now. I've just 335 00:17:47,480 --> 00:17:51,560 Speaker 1: discovered recently that you know, coming up to half of 336 00:17:51,600 --> 00:17:55,840 Speaker 1: all apartment buyers are downsizers, and downsizers invariably are selling 337 00:17:55,880 --> 00:17:59,359 Speaker 1: a home, so there they've got much more money than 338 00:17:59,560 --> 00:18:02,159 Speaker 1: the average apartment buyer. But I just wonder if that 339 00:18:02,280 --> 00:18:04,919 Speaker 1: cohort then is more exposed than we might have realized 340 00:18:04,960 --> 00:18:07,800 Speaker 1: to these weak apartment prices. If the people are that 341 00:18:08,400 --> 00:18:10,320 Speaker 1: core hord that are setting the family home and moving 342 00:18:10,359 --> 00:18:14,040 Speaker 1: into apartments, if apartment prices are so weak, are they exposed? 343 00:18:14,680 --> 00:18:18,160 Speaker 2: This is such a good question, because if you look 344 00:18:18,160 --> 00:18:22,040 Speaker 2: at the performance in houses and units over time, annualized 345 00:18:22,640 --> 00:18:25,919 Speaker 2: growth over the past decade has been about six percent 346 00:18:26,000 --> 00:18:28,360 Speaker 2: for houses compared to just three percent for you. 347 00:18:28,480 --> 00:18:30,920 Speaker 1: And it's mortari on it's six percent, isn't it exactly? 348 00:18:31,600 --> 00:18:36,040 Speaker 2: But I guess it's worth making the distinction between apartments 349 00:18:36,119 --> 00:18:39,280 Speaker 2: that are likely to sell for a loss versus apartments 350 00:18:39,320 --> 00:18:42,720 Speaker 2: that downsizes would be targeting. A lot of those loss 351 00:18:42,720 --> 00:18:45,240 Speaker 2: making sales we talk about are skewed by a very 352 00:18:45,280 --> 00:18:49,359 Speaker 2: specific kind of development that went up throughout the twenty 353 00:18:49,400 --> 00:18:52,360 Speaker 2: tens when investors were very active in the market, and 354 00:18:52,400 --> 00:18:55,520 Speaker 2: they were I would say somewhat investor gradestock a lot 355 00:18:55,600 --> 00:18:58,439 Speaker 2: of them, not necessarily the kinds of things that are 356 00:18:58,520 --> 00:19:02,600 Speaker 2: downsizer would be targeted. So there aren't markets where units 357 00:19:02,640 --> 00:19:07,680 Speaker 2: actually outperform houses where you'd have to imagine cashed up 358 00:19:07,720 --> 00:19:13,480 Speaker 2: downsizes might be interested in. Like Maruci in the Sunshine 359 00:19:13,520 --> 00:19:17,000 Speaker 2: Coast region, annualized growth for units is eight percent in 360 00:19:17,040 --> 00:19:19,399 Speaker 2: the past decade compared to seven percent for houses. 361 00:19:19,480 --> 00:19:21,320 Speaker 1: Is that right? So these are a tree change beauty 362 00:19:21,359 --> 00:19:24,600 Speaker 1: spots basically where retirees flocked too, So we can guess 363 00:19:24,640 --> 00:19:28,120 Speaker 1: the rest for sure. So we can guess the suburbs 364 00:19:28,119 --> 00:19:30,720 Speaker 1: around the country, won't them off. Yeah. 365 00:19:30,840 --> 00:19:33,840 Speaker 2: Yeah, So that's a really important distinction to make, is 366 00:19:33,880 --> 00:19:37,720 Speaker 2: that the apartment stock is shaped by demand, and if 367 00:19:37,760 --> 00:19:41,800 Speaker 2: demand is coming from cashed up boomers, then you're going 368 00:19:41,880 --> 00:19:44,800 Speaker 2: to get some really nice stock. And I actually think 369 00:19:44,800 --> 00:19:45,760 Speaker 2: that's really exciting. 370 00:19:45,840 --> 00:19:50,119 Speaker 1: They're not going to buy an anonymous apartment on the 371 00:19:50,160 --> 00:19:52,520 Speaker 1: twenty second floor of an anonymous tower in the middle 372 00:19:52,560 --> 00:19:55,080 Speaker 1: of the city, probably probably, And even if. 373 00:19:55,000 --> 00:19:57,399 Speaker 2: They do, even if they buy something that doesn't return 374 00:19:57,400 --> 00:19:59,800 Speaker 2: a lot of capital growth by the time you're downsizing. 375 00:20:00,280 --> 00:20:04,200 Speaker 2: Is high capital growth really one of your goals financially? 376 00:20:04,800 --> 00:20:06,479 Speaker 2: Maybe it is, But I think you've got to make 377 00:20:06,520 --> 00:20:09,600 Speaker 2: a compromise between what's a high growth asset and what's 378 00:20:09,600 --> 00:20:13,439 Speaker 2: a suitable home for you to live in. In most cases, 379 00:20:13,440 --> 00:20:15,080 Speaker 2: you're not going to make as much money off an 380 00:20:15,080 --> 00:20:18,160 Speaker 2: apartment as a house because house has the associated land, 381 00:20:18,560 --> 00:20:21,280 Speaker 2: which is where most of the value is coming from. 382 00:20:21,720 --> 00:20:23,960 Speaker 2: But if you're at a stage of life where a 383 00:20:24,040 --> 00:20:27,720 Speaker 2: house is just too difficult for you to maintain, then 384 00:20:27,760 --> 00:20:31,080 Speaker 2: you're risking some of the appreciation on the actual house itself, 385 00:20:31,160 --> 00:20:33,760 Speaker 2: you know. So there's a compromise that's got to be made, 386 00:20:33,840 --> 00:20:37,240 Speaker 2: and hopefully you can strike a good balance between a 387 00:20:37,400 --> 00:20:41,520 Speaker 2: sound investment and something that's also manageable and enjoyable for. 388 00:20:41,480 --> 00:20:43,240 Speaker 1: You to live. Okay, So as you say a good 389 00:20:43,240 --> 00:20:47,879 Speaker 1: point that it's not a strictly financial and economic move, 390 00:20:48,480 --> 00:20:50,960 Speaker 1: it's a lifestyle move, and then we have to sort 391 00:20:51,000 --> 00:20:53,680 Speaker 1: of apply a different criteria, okay. And just one of 392 00:20:53,720 --> 00:20:56,560 Speaker 1: the quick thing about property looking forward, a lot of 393 00:20:56,600 --> 00:21:02,560 Speaker 1: talk about tax now. Every single tax summit of that 394 00:21:02,680 --> 00:21:05,119 Speaker 1: nature when the government have them, they have them to 395 00:21:05,400 --> 00:21:08,520 Speaker 1: see if they can get some support for tax changes, 396 00:21:09,000 --> 00:21:11,480 Speaker 1: and it would seem the big items on the agenda 397 00:21:11,800 --> 00:21:15,440 Speaker 1: are capital gains tax reform, which would play straight into 398 00:21:15,480 --> 00:21:18,879 Speaker 1: property trading if you like, or property sales. Immediately, all 399 00:21:18,960 --> 00:21:21,840 Speaker 1: property sales would not be as lucrative because they're talking 400 00:21:21,880 --> 00:21:26,000 Speaker 1: about winding back capital gains tax benefits if you like. 401 00:21:26,440 --> 00:21:29,200 Speaker 1: Also some talking about access to the pension again that's 402 00:21:29,240 --> 00:21:32,719 Speaker 1: linked with the price of a family home. And then 403 00:21:32,760 --> 00:21:35,720 Speaker 1: we have the new supertax, which again will kick property 404 00:21:35,760 --> 00:21:38,560 Speaker 1: holders first, I think because they're the most illiquid and 405 00:21:38,600 --> 00:21:41,439 Speaker 1: that they're sitting ducks really in an unrealized gains tax. 406 00:21:42,440 --> 00:21:44,520 Speaker 1: It seems to me that there's a sense perhaps that 407 00:21:44,560 --> 00:21:46,600 Speaker 1: whatever way it moves, it's property that's going to get 408 00:21:46,640 --> 00:21:50,359 Speaker 1: it in the neck if there's tax changes, what do you. 409 00:21:50,359 --> 00:21:54,080 Speaker 2: Think, Yeah, I think it's a real possibility. And we've 410 00:21:54,600 --> 00:21:57,040 Speaker 2: you know, I've seen the pendulum kind of swing both 411 00:21:57,080 --> 00:21:59,720 Speaker 2: ways on housing affordability and what we need to do 412 00:21:59,760 --> 00:22:03,200 Speaker 2: to dress housing. Twenty twenty one, we had the inquiry 413 00:22:03,240 --> 00:22:07,080 Speaker 2: into housing affordability and supply was very supply focused. I 414 00:22:07,119 --> 00:22:10,200 Speaker 2: think now we've got the pendulum swinging more towards demand 415 00:22:10,280 --> 00:22:14,639 Speaker 2: for a few reasons in that there's more there's a 416 00:22:14,800 --> 00:22:18,639 Speaker 2: gradual decline in home ownership. There's a recognition even from 417 00:22:18,720 --> 00:22:21,280 Speaker 2: property owners who are trying to help their kids into 418 00:22:21,359 --> 00:22:25,359 Speaker 2: the housing market. They're recognizing how difficult it is, and 419 00:22:25,400 --> 00:22:28,000 Speaker 2: also supply constraints. There's only so much we can do 420 00:22:28,080 --> 00:22:31,400 Speaker 2: to affect supply when cyclically we've got a bunch of 421 00:22:31,720 --> 00:22:35,439 Speaker 2: dwellings stuck in the pipeline that continue to place this 422 00:22:35,520 --> 00:22:38,639 Speaker 2: strain on labor and material costs. So eventually you've got 423 00:22:38,680 --> 00:22:40,320 Speaker 2: to look at demand, and a lot of that demand 424 00:22:40,359 --> 00:22:43,439 Speaker 2: side comes from the tax space. So I think the 425 00:22:43,480 --> 00:22:46,240 Speaker 2: pendulum is swinging. I think we've moved a long way 426 00:22:46,280 --> 00:22:50,560 Speaker 2: from twenty nineteen, when capital gains negative gearing was smacked 427 00:22:50,560 --> 00:22:53,520 Speaker 2: down at the face it was untouchable. Yes, society is 428 00:22:53,600 --> 00:22:58,320 Speaker 2: reactive and we have to remember that property operates within 429 00:22:58,600 --> 00:23:02,480 Speaker 2: a reactive institution and it is subject to change, and 430 00:23:02,520 --> 00:23:03,480 Speaker 2: we don't rule it out. 431 00:23:03,680 --> 00:23:06,440 Speaker 1: Okay, very interesting. I expect you're I expect you're right. 432 00:23:06,880 --> 00:23:09,600 Speaker 1: It'll be really interesting to see which taxes do come through. 433 00:23:09,600 --> 00:23:11,240 Speaker 1: But it seemed to me that when you look at 434 00:23:11,240 --> 00:23:15,879 Speaker 1: all the suggestions and the submissions, the common denominators, invariably 435 00:23:16,480 --> 00:23:19,000 Speaker 1: property is right in the middle of that. Okay, we'll 436 00:23:19,040 --> 00:23:22,280 Speaker 1: be back with some questions, some of which are quite 437 00:23:22,359 --> 00:23:38,639 Speaker 1: properly focused in a moment. Hello, Welcome back to the 438 00:23:38,680 --> 00:23:43,240 Speaker 1: Australians Money Puzzle podcast. I'm James Kirby talking to Eliza 439 00:23:43,359 --> 00:23:46,600 Speaker 1: Owen of the Cautality Group Property Research House. I'm sure 440 00:23:46,640 --> 00:23:49,840 Speaker 1: you're familiar with it now. As a question from let's 441 00:23:49,880 --> 00:23:52,280 Speaker 1: post the first one from Bruce who says about that 442 00:23:52,400 --> 00:23:56,919 Speaker 1: discussion on capital gains tax discount, I accept that fifty 443 00:23:56,920 --> 00:24:00,000 Speaker 1: percent was introduced to these complexity, but surely with modern 444 00:24:00,040 --> 00:24:02,840 Speaker 1: computing power it would be relatively easy to adjust CGT 445 00:24:02,960 --> 00:24:06,879 Speaker 1: for inflation and to throw a cat amongst the pigeons. 446 00:24:07,000 --> 00:24:09,920 Speaker 1: Some may argue that other forms of income are not indexed, 447 00:24:10,000 --> 00:24:15,160 Speaker 1: so why should CGT get this break? Okay, great question, Bruce. 448 00:24:15,200 --> 00:24:20,119 Speaker 1: Two parts to it. One is that the original explanation, 449 00:24:20,359 --> 00:24:22,679 Speaker 1: the original I think it was John Howard and his 450 00:24:22,800 --> 00:24:26,639 Speaker 1: solution about inflation and indexing and everything else around CGT 451 00:24:26,920 --> 00:24:30,160 Speaker 1: was to introduce this discount, basically a permanent discount, which 452 00:24:30,160 --> 00:24:32,680 Speaker 1: meant if you held a property or any other asset 453 00:24:32,720 --> 00:24:35,440 Speaker 1: for more than a year and you sold it, there 454 00:24:35,600 --> 00:24:39,960 Speaker 1: was a fifty percent discount on the capital against tax, 455 00:24:40,000 --> 00:24:42,080 Speaker 1: which like if your salary owner works out at something 456 00:24:42,080 --> 00:24:44,359 Speaker 1: like your what your tax is on your salary now, 457 00:24:45,600 --> 00:24:49,280 Speaker 1: so it comes in maybe twenty twenty something percent. Now. 458 00:24:49,800 --> 00:24:52,920 Speaker 1: He then adds that the logic for it was indexing, 459 00:24:53,840 --> 00:24:56,239 Speaker 1: So why don't they just index it? Again? Well, I'm 460 00:24:56,280 --> 00:24:58,919 Speaker 1: which you, Bruce, why don't to index everything? But of 461 00:24:58,920 --> 00:25:01,840 Speaker 1: course they don't. They some things, they don't index other things, 462 00:25:01,880 --> 00:25:04,240 Speaker 1: and that is how they Actually that's a policy lever 463 00:25:04,920 --> 00:25:08,040 Speaker 1: and that's not going to change. So for instance, oh hey, 464 00:25:08,040 --> 00:25:10,560 Speaker 1: well the new supertax is and indexed, for instance, but 465 00:25:10,600 --> 00:25:13,199 Speaker 1: the pension's indexed twice a year, so you get all 466 00:25:13,200 --> 00:25:16,119 Speaker 1: those sort of variations. What do you think about his 467 00:25:16,280 --> 00:25:18,920 Speaker 1: basic contention that does not need to have the discount 468 00:25:18,920 --> 00:25:19,760 Speaker 1: at all. 469 00:25:19,960 --> 00:25:24,760 Speaker 2: I think indexation is a great idea, Yeah, for sure. 470 00:25:25,119 --> 00:25:25,680 Speaker 1: I think it was. 471 00:25:25,760 --> 00:25:28,440 Speaker 2: Lucy Ellis a few years ago made this really elegant 472 00:25:28,840 --> 00:25:32,000 Speaker 2: argument that you could discount capital gains by two and 473 00:25:32,040 --> 00:25:34,520 Speaker 2: a half percent a year the mid range of the 474 00:25:34,520 --> 00:25:36,040 Speaker 2: inflation target over the. 475 00:25:36,000 --> 00:25:37,560 Speaker 1: Long term, and you'll be doing the same thing from 476 00:25:37,560 --> 00:25:38,520 Speaker 1: a policy perspective. 477 00:25:38,680 --> 00:25:40,960 Speaker 2: Yeah, and that could be a really interesting way to 478 00:25:41,080 --> 00:25:45,479 Speaker 2: wind back what is largely considered an overly generous capital 479 00:25:45,480 --> 00:25:48,879 Speaker 2: gains discount on windfalls. I also think it could have 480 00:25:48,920 --> 00:25:52,080 Speaker 2: better housing outcomes, because if you look at periods of 481 00:25:52,119 --> 00:25:55,800 Speaker 2: windfall capital gain, we actually see a spike in short 482 00:25:55,920 --> 00:26:00,840 Speaker 2: term selling, which can be disruptive to renters because people 483 00:26:00,880 --> 00:26:02,960 Speaker 2: are bought in. They've made, you know, a few hundred 484 00:26:02,960 --> 00:26:09,080 Speaker 2: thousand dollars their property. Yeah, exactly one year before you 485 00:26:09,160 --> 00:26:12,400 Speaker 2: get a fifty percent discount on capital gains. Come on, man, 486 00:26:12,480 --> 00:26:15,399 Speaker 2: that doesn't seem fair to me. Have them hold the 487 00:26:15,440 --> 00:26:17,720 Speaker 2: property for longer, and you can incentivize that through a 488 00:26:17,760 --> 00:26:21,480 Speaker 2: gradual indexation of the of the capital gain. I'm not 489 00:26:21,480 --> 00:26:25,120 Speaker 2: sure about the computational capability required to adjust for inflation. 490 00:26:25,280 --> 00:26:28,480 Speaker 2: But I agree with the Bruce. I think you'd have 491 00:26:28,520 --> 00:26:30,480 Speaker 2: to imagine that the technology and the data we have 492 00:26:30,600 --> 00:26:32,159 Speaker 2: is a lot more sophisticated to do that. 493 00:26:32,280 --> 00:26:34,760 Speaker 1: Now, Absolutely you would. Yeah, I mean, the only thing 494 00:26:34,800 --> 00:26:37,000 Speaker 1: would be getting it past the people who had a 495 00:26:37,040 --> 00:26:40,520 Speaker 1: miserable rental yield and finally cuts some cafital gains and 496 00:26:40,520 --> 00:26:42,320 Speaker 1: thought they were going to get a fift percent discount, 497 00:26:42,520 --> 00:26:43,760 Speaker 1: but they're probably brand fathered. 498 00:26:44,280 --> 00:26:45,680 Speaker 2: Yeah, that's a really good point. 499 00:26:45,840 --> 00:26:48,080 Speaker 1: Yeah, all these things are generally If you didn't, I mean, 500 00:26:48,119 --> 00:26:50,280 Speaker 1: there would be there would be a lot of trouble 501 00:26:50,320 --> 00:26:53,000 Speaker 1: I with think politically. Okay, but thank you, Bruce. This 502 00:26:53,080 --> 00:26:56,480 Speaker 1: is always information only, not advice, of course. Okay, Melissa, 503 00:26:56,640 --> 00:26:59,879 Speaker 1: Hello Melissa, what are your feelings about income protection and 504 00:27:00,040 --> 00:27:03,480 Speaker 1: life insurance paid from within superannuation. I've left it late 505 00:27:03,600 --> 00:27:06,240 Speaker 1: to consider insurance, and now that I have my first child, 506 00:27:06,560 --> 00:27:11,560 Speaker 1: I'm refocusing on my priorities. Okay, Well, very broadly, and 507 00:27:11,600 --> 00:27:13,560 Speaker 1: this is for all the Melissas in the world. It's 508 00:27:13,600 --> 00:27:17,160 Speaker 1: not an individual piece of advice. But paying your life 509 00:27:17,200 --> 00:27:19,399 Speaker 1: insurance inside your super probably makes a lot of sense 510 00:27:19,760 --> 00:27:23,679 Speaker 1: because you're super fun unless you have an SMSF and 511 00:27:23,680 --> 00:27:26,040 Speaker 1: you haven't said so, your big super fund will get 512 00:27:26,040 --> 00:27:28,440 Speaker 1: a much better deal on life insurance than you will 513 00:27:28,480 --> 00:27:30,240 Speaker 1: as an individual should you call up one of the 514 00:27:30,240 --> 00:27:32,440 Speaker 1: big life insurers and try and do a deal with them. 515 00:27:32,840 --> 00:27:35,880 Speaker 1: So it is one of the advantages of having yourself 516 00:27:35,880 --> 00:27:38,520 Speaker 1: in a big super fund. Income protection insurance I put 517 00:27:38,560 --> 00:27:40,679 Speaker 1: to one side. To be honest, that's a whole debate 518 00:27:40,720 --> 00:27:43,199 Speaker 1: about whether you ever needed and at what point you 519 00:27:43,240 --> 00:27:45,000 Speaker 1: needed and where you need it. It costs a lot, 520 00:27:45,080 --> 00:27:47,560 Speaker 1: I know that, and I might just put that one 521 00:27:47,640 --> 00:27:51,040 Speaker 1: to one side. But on the life insurance broadly, for 522 00:27:51,560 --> 00:27:54,160 Speaker 1: most of the time you get a better deal. It's 523 00:27:54,200 --> 00:27:57,840 Speaker 1: inside your super fund, all right. And David says, you 524 00:27:58,680 --> 00:28:02,240 Speaker 1: claim that you can negatively gear shares as easily as 525 00:28:02,240 --> 00:28:06,080 Speaker 1: you can negatively gear property, and that's inaccurate for three reasons. 526 00:28:06,119 --> 00:28:09,240 Speaker 1: Margin loans of higher interest margin loans are subject to 527 00:28:09,280 --> 00:28:16,480 Speaker 1: margin cause margin loans offer lv or as compared with property. Yes, okay, David, True. However, 528 00:28:16,760 --> 00:28:18,919 Speaker 1: you don't have to be It doesn't have to be 529 00:28:18,960 --> 00:28:21,000 Speaker 1: a margin loan. It doesn't always have to be a 530 00:28:21,000 --> 00:28:23,920 Speaker 1: margin loan to negatively gear shares. So I suppose the 531 00:28:23,960 --> 00:28:25,760 Speaker 1: first thing I wanted to talk about with you, Eliaiah 532 00:28:25,840 --> 00:28:29,080 Speaker 1: is it is a funny thing that you can negatively 533 00:28:29,080 --> 00:28:31,800 Speaker 1: gear shares of property. And for a long time they 534 00:28:31,800 --> 00:28:35,320 Speaker 1: were both negatively geared, and there was they were commonly 535 00:28:35,320 --> 00:28:40,160 Speaker 1: negatively geared. And then around the gfcch a while ago, 536 00:28:40,200 --> 00:28:43,600 Speaker 1: I admit, the whole thing of negative gearing shares was 537 00:28:43,680 --> 00:28:46,280 Speaker 1: just like forgotten. It was just like pushed to one side, 538 00:28:46,320 --> 00:28:49,120 Speaker 1: too dangerous. But everyone said, yeah, I keep going on 539 00:28:49,160 --> 00:28:52,800 Speaker 1: the property. So there seems to be a cultural acceptance 540 00:28:53,480 --> 00:28:56,320 Speaker 1: that you can negatively gear property but not shares, but 541 00:28:56,360 --> 00:28:57,120 Speaker 1: you can do both. 542 00:28:57,320 --> 00:28:59,880 Speaker 2: Is that because shares were rising so consistently posted to 543 00:28:59,880 --> 00:29:01,400 Speaker 2: you with lower interest. 544 00:29:01,240 --> 00:29:04,200 Speaker 1: Right pre GFC. Yeah, yeah, yeah, there was a long 545 00:29:04,240 --> 00:29:07,160 Speaker 1: there was, there was a long good spell. Yeah, absolutely, 546 00:29:07,200 --> 00:29:07,400 Speaker 1: very a. 547 00:29:07,360 --> 00:29:09,400 Speaker 2: Bit out of my wheelhouse here now that way, you've 548 00:29:10,000 --> 00:29:11,560 Speaker 2: mentioned shares, not property. 549 00:29:11,800 --> 00:29:14,480 Speaker 1: But it fell. But as we often mentioned and recall 550 00:29:14,520 --> 00:29:17,680 Speaker 1: on the show, shares fell fifty in two OA two 551 00:29:17,720 --> 00:29:20,000 Speaker 1: oh nine. Now that hurts a lot of people. But 552 00:29:20,120 --> 00:29:23,600 Speaker 1: to David's point, David and anyone who's interested in this, 553 00:29:24,120 --> 00:29:27,600 Speaker 1: you can negatively gear shares number one, number two. Yes, 554 00:29:27,720 --> 00:29:31,480 Speaker 1: margins are are common but they are not the only 555 00:29:31,560 --> 00:29:35,040 Speaker 1: way that you can borrow to buy shares and negatively gear. 556 00:29:35,080 --> 00:29:39,200 Speaker 1: There's all sorts of structured products, equity builders and all 557 00:29:39,240 --> 00:29:40,880 Speaker 1: the sort of thing out there from the banks. There 558 00:29:40,960 --> 00:29:43,920 Speaker 1: is also just general loans of a various type where 559 00:29:43,920 --> 00:29:46,720 Speaker 1: you can just get a loan, and of course how 560 00:29:46,800 --> 00:29:49,240 Speaker 1: you gear is up to you. I mean, some people 561 00:29:49,400 --> 00:29:53,600 Speaker 1: use their mortgage if their spare capacity on that. That's 562 00:29:53,760 --> 00:29:55,880 Speaker 1: obviously the only negative there is. The lower the rate 563 00:29:55,960 --> 00:30:00,520 Speaker 1: you pay, the lesser negative gearing sort of works. But 564 00:30:00,600 --> 00:30:03,040 Speaker 1: I'm just making the point that yes, you can negatively 565 00:30:03,080 --> 00:30:05,480 Speaker 1: gear into shares, and it doesn't have to be margin loanes. 566 00:30:05,520 --> 00:30:07,400 Speaker 1: I'll take your point, David that margin loanes have all 567 00:30:07,440 --> 00:30:11,240 Speaker 1: those issues, but you can do it outside margin doones. 568 00:30:11,280 --> 00:30:13,520 Speaker 1: We might come back to this another time when we 569 00:30:13,640 --> 00:30:19,320 Speaker 1: have someone more willing to wade in, sorry David, of 570 00:30:19,440 --> 00:30:22,160 Speaker 1: share trading, which obviously we couldn't possibly ask Eliza Oh 571 00:30:22,400 --> 00:30:25,080 Speaker 1: to do because she is a property expert and has 572 00:30:25,120 --> 00:30:27,760 Speaker 1: been terrific on the show today. Thanks at Elizah. 573 00:30:27,480 --> 00:30:28,800 Speaker 2: You thanks so much for having me. 574 00:30:29,040 --> 00:30:31,120 Speaker 1: Really good to have you in the studio and lovely 575 00:30:31,200 --> 00:30:32,840 Speaker 1: to talk, as I say, face to face. We'll do 576 00:30:32,880 --> 00:30:35,840 Speaker 1: it as often as we can on the show. Okay, folks, 577 00:30:35,920 --> 00:30:39,160 Speaker 1: keep those emails rolling. The money puzzle at the Australian 578 00:30:39,280 --> 00:30:41,760 Speaker 1: dot com dot au talk to you soon.