Speaker 1: Hello and welcome to The Australians Money Puzzle podcast. I'm
Speaker 1: James Kirby, the editor at The Australian. Welcome aboard every body.
Speaker 1: You know, one thing we haven't really spoken of in
Speaker 1: any great detail on the Money Puzzle as been climate
Speaker 1: change and not so much the issue, but what it
Speaker 1: means for you as an investor or for that matter,
Speaker 1: as a property owner. And we're certainly getting a serious
Speaker 1: perspective on the impact of natural disasters fires, obviously in
Speaker 1: the case of the Los Angeles fires that are currently
Speaker 1: in the news so much. Also some fires in Australia,
Speaker 1: as you would have some summers, are worse than others.
Speaker 1: But we still have issues this year. We've had issues
Speaker 1: in Victoria and the Grampians, for instance, and I think
Speaker 1: it's time for us to look as property investors and
Speaker 1: investors at this issue and whether we can also realistically
Speaker 1: expect that this remains something of an issue in coastal
Speaker 1: areas or regional areas or out the bush. Because I
Speaker 1: supposed to extraordinary think about the Los Angeles fires as
Speaker 1: that they were suburban and there is nothing I'm afraid
Speaker 1: to say that we can't have suburban fires in Australia,
Speaker 1: which simply cannot rule that out. Likewise, we can't rule
Speaker 1: out dreadful summers in the future, which will be something
Speaker 1: like dreadful summers we've had in the past, and how
Speaker 1: that might affect properties in various areas, and how we
Speaker 1: will respond to that, and how would investors respond to that.
Speaker 1: So the obvious issue with fires is insurance, but I
Speaker 1: think a deeper issue is property value. Now, on that issue,
Speaker 1: I have been talking on and off for some time
Speaker 1: with Narrati Economsty who is the chief economists at Ray White.
Speaker 1: She's been on the show before, but we talked most
Speaker 1: trees above all this, and she had also been using
Speaker 1: a report which had been done on this issue, an
Speaker 1: academic report which was done on this issue at the
Speaker 1: University of New South Wales, specifically specifically on fires and
Speaker 1: property values. Hi, Narada, how are you?
Speaker 2: Hi? Thanks for having me.
Speaker 1: Great to have you on. As always, look, I think
Speaker 1: most people listening to the show would presume that it's
Speaker 1: basically bad news if there's fire in an area, that
Speaker 1: that area will be damaged, not just in terms of
Speaker 1: it's the natural damage or the insurance damage, but it
Speaker 1: would be damaged as a property zone for some time,
Speaker 1: and so would neighboring zones. What have you found out
Speaker 1: of late from this academic work.
Speaker 2: Yes, so the research that the University of New South
Speaker 2: Wales did show that absolutely there is a negative impact
Speaker 2: on property values. It looks specifically at property values, so
Speaker 2: obviously there's a lot of other damage that takes place,
Speaker 2: but the research found between a six to twenty four
Speaker 2: percent impact on property values. But interestingly that the recovery
Speaker 2: was generally quite quick, So the recovery was between eighteen
Speaker 2: months and two years. So even though the impacts were great,
Speaker 2: things tended to bounce back. But there was a lot
Speaker 2: of nuances and I think this is the key with
Speaker 2: the research, that there was many things which impact influenced
Speaker 2: that impact and as a result is it does make
Speaker 2: it quite difficult to calculate exactly what will happen once
Speaker 2: we do see more natural disasters happening.
Speaker 1: But their work so far came to the conclusion that
Speaker 1: bushfire zilms and there can be anywhere coastal didn't it
Speaker 1: didn't make a difference. In fact, floods and fires as
Speaker 1: I recalled, didn't really make a difference natural disaster in
Speaker 1: an area damages the property value for a short period,
Speaker 1: and this recovers, and it recovers in line with the market.
Speaker 1: Is that right, So if it covers back to where
Speaker 1: it was, so there's no there's no evidence of permanent
Speaker 1: damage to property prices from fires in an area.
Speaker 2: Can we see or that far? No, I don't think
Speaker 2: we can say that far. I mean there are there
Speaker 2: are many influences in terms of how quickly and whether
Speaker 2: whether the era will recover. I guess the first one
Speaker 2: is the desirability of the area. So if you know,
Speaker 2: we know that people love to live near rivers, they
Speaker 2: like to live near beaches, they like to live near
Speaker 2: bush and as a result, if that area is fire
Speaker 2: damaged but it's highly desirable it it does tend to
Speaker 2: recover quicker. Insurance. There's a big one you mentioned insurance earlier.
Speaker 2: If it is an area that is well insured and
Speaker 2: people are able to rebuild, often they will rebuild better,
Speaker 2: better homes, perhaps more flameproof homes or more beautiful homes,
Speaker 2: and that also does impact property values. The wealth of
Speaker 2: an area makes a difference. If people are wealthy, they
Speaker 2: tend to be better and should, but they also do
Speaker 2: tend to build nicer homes when they do rebuild, and
Speaker 2: then nothing important importantly is it's the government response as well.
Speaker 1: So if the.
Speaker 2: Government does make the area more fireproof, if they can
Speaker 2: put in measures to prevent something similar occurring again, then
Speaker 2: that does tend to lead to people feeling more safe
Speaker 2: to rebuild and to buy in these areas. I think, though,
Speaker 2: what the findings did show is that not everywhere recovers,
Speaker 2: and you know, I think that's the key. That there's
Speaker 2: some area, you know, you look at flooding, for example,
Speaker 2: Brisbane River, the flooding of that made little impact of
Speaker 2: property values long term because people in Brisbane love living
Speaker 2: near rivers. But if you have a look at somewhere
Speaker 2: like Lismore, then that has had a much greater negative
Speaker 2: impact and the recovery hasn't been as quick and perhaps
Speaker 2: a little bit to do with the desirability and perhaps
Speaker 2: also because it isn't such a wealthy area as places
Speaker 2: close to the Brisbane River are.
Speaker 1: So would it be fair to say that prime property
Speaker 1: there's no evidence that prime property long term vndues are
Speaker 1: damaged by fire.
Speaker 2: And I think, you know, I think coming back to
Speaker 2: all the influences on the price on prices bouncing back.
Speaker 2: It is prime property and it is insurance related. And
Speaker 2: also I think too there's an element with insurance that
Speaker 2: at some point insurance premiums will be too high for
Speaker 2: people to see these areas as being worthwhile living in,
Speaker 2: and that will definitely have an impact on price on pricing.
Speaker 2: But for now, people are accepting the premiums that are
Speaker 2: put in place, accepting the risk, and as a result,
Speaker 2: prices are coming back following these natural disasters taking place.
Speaker 1: So what would disturb that repeated fires? Is that? Is
Speaker 1: that the issue that might change things?
Speaker 2: Yeah, I think it's I mean, obviously repeated fires. I think,
Speaker 2: you know, price pricing is one thing, and be extremely
Speaker 2: distressing to have to live through multiple fires. But also,
Speaker 2: I mean, premiums will do rise after natural disasters. We
Speaker 2: know that that takes place. But at some point there
Speaker 2: would be for every individual that would be a tipping
Speaker 2: point at which insurance costs are not worth it for
Speaker 2: them to live in these areas, despite them being incredibly
Speaker 2: attractive and desirable areas to live in.
Speaker 1: Okay, have we any data on the level of uninsured
Speaker 1: people in these areas? No?
Speaker 2: I mean, I'm sure the insurance Council would probably have
Speaker 2: some data on that. But you know, we do know
Speaker 2: that there are areas around Australia that, do you know,
Speaker 2: that are very very expensive to ensure, and then these
Speaker 2: areas are often flood prone or bushfire prone, so you know,
Speaker 2: and again coming back to the desirability of the area,
Speaker 2: there's always that between you know, what you're paying on
Speaker 2: insurance and how much you really want to live near
Speaker 2: a beach or a river or a bushfire prine area.
Speaker 1: Okay, so you're the chief economist of very White, So
Speaker 1: tell the listeners, from what you know now and from
Speaker 1: reading these reports, how they should approach property in an
Speaker 1: area where they are knowingly taking the risk of fire
Speaker 1: or flood, which are plenty of areas, and some of
Speaker 1: unfortunately some of the most attractive areas in Australia, like
Speaker 1: Brisbane River a very good, very very very good example.
Speaker 1: You've got areas in Brisbane, like Saint Lucia that are
Speaker 1: literally they are they have been underwater many times in
Speaker 1: their history and it will probably happen again.
Speaker 2: Yeah, so I guess I mean the first point would
Speaker 2: be looking at insurance premiums. I think that would be
Speaker 2: a critical one can you ensure what is it possible
Speaker 2: to ensure for particularly flood. You have different insurance have
Speaker 2: different views as to how they'll ensure for flood and bushfire.
Speaker 2: So that would be my first step. But secondly i'd
Speaker 2: be looking to at the house. You know, how well
Speaker 2: would the property with standard fire, how well would it
Speaker 2: with standard flooding? And what we found on the Brisbane
Speaker 2: River is that following a lot of the flooding that
Speaker 2: took place, people did rebuild and they did put the
Speaker 2: homes on higher still, so you know that that's obviously
Speaker 2: safer than a home that is closer to the ground,
Speaker 2: So that would also be critical. But also looking at
Speaker 2: government what the government has done to prevent a similar
Speaker 2: occurrence happening again. And you know there is a lot
Speaker 2: that government can do in terms of preventing bush fires,
Speaker 2: preventing flooding, and I think that would also be something
Speaker 2: I'd be looking pretty closely to see what's being done
Speaker 2: at that level.
Speaker 1: If I was a buyer of a property, is it
Speaker 1: how hard is it for me to figure out it's
Speaker 1: bush by prawn areas? That's obviously a very clear sort
Speaker 1: of marking of territory across Australia. But more generally, if
Speaker 1: I'm buying a property in a metropolitan or a suburban area,
Speaker 1: can I I find out easy enough it's the propensity
Speaker 1: for flooding or fire in that district.
Speaker 2: Yeah, look, I'd say so. I mean I haven't looked
Speaker 2: in every area across Australia, but you know, most local
Speaker 2: councils do have data on flood prone areas, when state
Speaker 2: government certainly focuses a lot on fire proofing and or
Speaker 2: you know their level of fire risk in in certain areas.
Speaker 2: And then then I think too, you know, there are
Speaker 2: some areas that we know are very flood prone and
Speaker 2: that you know, just understanding places like Brisbane River. We
Speaker 2: know it floods. It doesn't flood everywhere. There certain areas
Speaker 2: that it floods worse than others. But a lot of
Speaker 2: this as well is now well documented. So I think
Speaker 2: really understanding that risk. And also I think too, people's
Speaker 2: attitude to risk is always very different to you know,
Speaker 2: some one person may decide that even a very slight
Speaker 2: risk of bushfires isn't worth it, whereas another person made
Speaker 2: aside that you know, they really want to live in
Speaker 2: a bush fire prone area, and they're prepared to take
Speaker 2: that risk.
Speaker 1: That's a very valid point that your attitude to risk
Speaker 1: and that's obviously relevant to all investors all the time
Speaker 1: on all sorts of issues, and that whole thing of
Speaker 1: your risk profile are your risk disposition and it's something
Speaker 1: I suppose our listeners should keep in mind when they
Speaker 1: are assessing your property. And separately, you could be practical
Speaker 1: and literally look at things like flood maps for your district,
Speaker 1: et cetera, and be aware of the history of the
Speaker 1: area as well. Okay, terrific. And We've got lots of
Speaker 1: questions which I've wanted to have you involved in. Some
Speaker 1: of them I think are absolutely right off your alley, narrator.
Speaker 1: So we'll take a short break and we'll be back
Speaker 1: in a moment. Hello, Welcome back to The Australian's Money
Speaker 1: Positive podcast. I'm James Kirby, the wels editor at The
Speaker 1: Australian talking to Narrati Economy Chief economist Seth Raith White,
Speaker 1: regular on the show, always very good on all issues
Speaker 1: for US property buyers and investors. So, Narrada, I have
Speaker 1: a couple of questions here which I have which I
Speaker 1: have curated especially for you. The first one is from Jeff.
Speaker 1: I'd like to hear some expert advice, and of course
Speaker 1: we don't give advice, Jeff, we are simply giving information here. Nonetheless,
Speaker 1: he asks some property buyers that serve property investors advice
Speaker 1: where to buy based on the same data analytics. Is
Speaker 1: there risk that some markets will be distorted by all
Speaker 1: the investors being coached to look at analytics or to
Speaker 1: move in the same direction. This idea was first raised
Speaker 1: to me on another podcast that I suggest you listen
Speaker 1: to in order to properly understand my hastily written question.
Speaker 1: Unless it is a topic that others have been talking
Speaker 1: about outside my circuit of knowledge, I don't like the
Speaker 1: tone of the hosts. Don't worry about that, Jeff. Okay,
Speaker 1: really good point. I mean, this is your game, right,
Speaker 1: data analytics, property analytics. There was a time, I expect
Speaker 1: that the gulf between what you knew and what the
Speaker 1: average investor, every day property investor new, was enormous, right.
Speaker 1: I mean it used to be a big deal. To
Speaker 1: even find out how much the house that you were
Speaker 1: looking at sold. In the past, you had to go
Speaker 1: down to the titles office. I mean, it's inconceivable to
Speaker 1: someone who was in that market of what you can
Speaker 1: do today in two minutes, name a district in Australia
Speaker 1: and in two minutes I can find out a hell
Speaker 1: of a lot about it, or a single property on
Speaker 1: the internet for free. So what's the flips? Is there
Speaker 1: a flip side of that that that some people are
Speaker 1: running around heavily, perhaps in an amateur fashion, this sitting
Speaker 1: that analyx while you're doing it in a professional fashion.
Speaker 1: I thought you'd like this question. I kept especially for
Speaker 1: you as I say.
Speaker 2: Ah, okay, you know, I suppose even the best experts
Speaker 2: get things wrong. And you know we saw it in
Speaker 2: the most recent optic in house prices that when inter
Speaker 2: straight started to rise, we had a lot of people
Speaker 2: coming out and saying process with crash and I didn't.
Speaker 2: So I think, you know, it does show that even
Speaker 2: people with the best information and don't can often get
Speaker 2: it quite incorrect. The other point, right is is quite
Speaker 2: interesting though around a lot of advisors pushing people into
Speaker 2: certain locations around Australia. And I think this is where
Speaker 2: you do need to look closely at an investment from
Speaker 2: a personal level and look at it in terms of
Speaker 2: what is the rental yield why buying? Is it capital growth?
Speaker 2: Is it rental return? What's your time frame? Also the
Speaker 2: level of also how you would respond if what is
Speaker 2: being claimed doesn't take place. And I think that's particularly
Speaker 2: around capital growth. It is incredibly difficult to predict capital growth.
Speaker 2: So if that property is purchased at seven fifty thousand
Speaker 2: and it stays at seven fifty thousand for five years,
Speaker 2: is it still okay for you to buy at that price,
Speaker 2: because realistically, you know that would be I mean, realistically
Speaker 2: the worst case would be fall in pricing. But if
Speaker 2: someone is claiming the narra will see strong growth, and
Speaker 2: you know, I think I'd be taking that fairly carefully.
Speaker 1: Well, I just just a bit and ask you one thing.
Speaker 1: But it is true, though, isn't it. I mean, if
Speaker 1: a rising tide lifts or boots, and if someone says
Speaker 1: Perth is going to lift, Perth is going to lift,
Speaker 1: right in a way, you could buy the worst house
Speaker 1: on the street in Perth and it lifts. It will
Speaker 1: the data analytics to that extent in the on average
Speaker 1: will work for you.
Speaker 2: Yeah, I mean, I mean, but path does bust, you know,
Speaker 2: I think this is one of the one of the
Speaker 2: things that we have seen. Well, I mean, I think
Speaker 2: this is one of the Perth does come up a
Speaker 2: lot in this discussion because Perth we did see a
Speaker 2: lot of people buy in Perth following you know, finding
Speaker 2: following various mining booms and did become very unstark. Perth's
Speaker 2: property prices dropped for you know, ten fifteen years and
Speaker 2: so it was quite a disasters situation. Also, rents didn't
Speaker 2: grow and then vacancy rates were high. So you know,
Speaker 2: I think a lot of people were very cautious. So
Speaker 2: when we did see a lot of property advisors saying,
Speaker 2: go to Perth, it's a really good idea. You know,
Speaker 2: there was a lot of skepticism as to as to
Speaker 2: what was going to happen there. Personally interesting because it
Speaker 2: has risen. It's it's you know, the strongest price growth
Speaker 2: area over the past five years. So you know, people
Speaker 2: that did buy early stage did do very well. Rents
Speaker 2: have doubled, and you know, it's been a it's been
Speaker 2: a good outcome. But you know, I think, I think,
Speaker 2: I mean, you do need to look at these recommendations carefully.
Speaker 2: You do need to understand understand more broadly what's happening
Speaker 2: in that area. People in Brisbane have done very well
Speaker 2: a lot to do with population growth, So you know,
Speaker 2: I think there's there's certain things that you can look
Speaker 2: at in terms of, you know, why prices are moving
Speaker 2: or why they are expecting to move. But also you
Speaker 2: do need to look at areas like Perth quite carefully,
Speaker 2: like mining towns in Wa quite carefully, because as soon
Speaker 2: as you are in an area that's driven by one
Speaker 2: economics sector, which mining in this case, it does become
Speaker 2: much more susceptible to a boom bus cycle compared to
Speaker 2: someone like seeing in Melbourne, which less likely to say
Speaker 2: such wild swings in pricing.
Speaker 1: Yes, okay, I suppose he's it's always he's alluding to
Speaker 1: that whole issue of which comes across all investing, not
Speaker 1: just property, top down or bottom up. So the top
Speaker 1: down investor would say, buy a house in this town
Speaker 1: because the data suggests that this town is five years
Speaker 1: behind the rest of the country and so if the
Speaker 1: whole town is going to lift. But the bottom up
Speaker 1: investor would say, by this particular property in this town
Speaker 1: where all things aren't neutral, but this is an exceptional property,
Speaker 1: and that's the sort of bottom up approach, right, So
Speaker 1: he's I think, in a way, if I can paraphrase
Speaker 1: or play with Jeff's question, he's kind of saying top
Speaker 1: down investing in property was probably not a big thing
Speaker 1: once upon a time because people didn't have the range
Speaker 1: of the wherewithal to even know what the trends were,
Speaker 1: to dig deep in terms of data analytics, or to
Speaker 1: say or to cherry pick and say, look, I live
Speaker 1: in Brisbane, but I think I'll buy in Perth or
Speaker 1: vice versa. And that's a much stronger theme now for
Speaker 1: property investors. So it does change things. So the data
Speaker 1: just a final thing on Jef down the data, the
Speaker 1: amateur data an analyst. Is it a good thing or
Speaker 1: a bad thing?
Speaker 2: Look, I think it's a good thing. I mean talking
Speaker 2: about the top down, bottom up. I mean people historically
Speaker 2: have only bought in their local area because they understood
Speaker 2: property in their local area, and it did it did
Speaker 2: lead to you know, I mean, I think it has
Speaker 2: created quite a lot of wealth for people that have
Speaker 2: done that top down because people have looked more broadly
Speaker 2: and looked at places like Perth and regional areas and
Speaker 2: have put investment into these areas.
Speaker 1: So that's also helped. So all of those.
Speaker 2: Things have really changed, have really changed property investing?
Speaker 1: Okay, all right, very good, Daniel asks talking to some
Speaker 1: Rediset agents, they've noticed that social media, mostly Instagram, is
Speaker 1: proving a great way to promote and sell property. Do
Speaker 1: you think going forward property marketing will more heavily involve
Speaker 1: social media? Now we have to take this question. Do
Speaker 1: noticing that I happen to be employed by a gigantic
Speaker 1: media company which is not a social media company, and
Speaker 1: you're employed by White which is a real estate agent.
Speaker 1: So I suppose they they can go in any direction,
Speaker 1: but in terms of using social media, and they may
Speaker 1: well use it more than I know. What do you
Speaker 1: think of Daniel's question? Will it become will is it
Speaker 1: become important? And will it become more important?
Speaker 2: Well, it's it's definitely becoming more important in media. I mean,
Speaker 2: the media landscape has changed significantly with social media in
Speaker 2: terms of selling property. That's an agency using it, you know,
Speaker 2: we know that having that a lot of them do
Speaker 2: have very strong social media profiles, they do have followings.
Speaker 2: Luxury it is in particular, there is quite a quite
Speaker 2: a campaign. We've got some of our really top agents
Speaker 2: to pretty good videos that they put on on.
Speaker 1: Oh I've seen these videos. They're extraordinary, and they're extraordinary. Yeah,
Speaker 1: I mean I mean you say you're kidding, Oh, this
Speaker 1: is all for one property. I suppose if the houses
Speaker 1: were fourteen million, you can spend fifty grand on a video. Yeah.
Speaker 1: But what about social media in terms of your work
Speaker 1: and in your trying to understand the market to what
Speaker 1: extent do you tunnel through social media or is it
Speaker 1: relevant to your Yeah?
Speaker 2: Absolutely, I mean we get leads through social media. That's
Speaker 2: an important form of lead generation for us. So it's yeah,
Speaker 2: I mean it is absolutely being used, and it is
Speaker 2: It is something that can be quite experimental as well.
Speaker 2: And I think the nature of social media allows it
Speaker 2: to be quite experimental because you know, if something doesn't work,
Speaker 2: you can pull it off and pull it off the
Speaker 2: social media channel and so but you know, it's just
Speaker 2: a transition. I mean, people used to sell property through ads,
Speaker 2: they then move to portals. Social media gives another way
Speaker 2: of selling property. The other thing too, I mean if
Speaker 2: you have a look at new properties, in particular, if
Speaker 2: you look at apartment projects and house and land projects,
Speaker 2: I mean they sell heavily through social as well. That
Speaker 2: a lot of them will be trying to build communities
Speaker 2: and build their own audience, and by doing so, they
Speaker 2: can more directly target people that like their type of product.
Speaker 2: Maybe look at a really good apartment developer that they
Speaker 2: would have. They would be working heavily in building their
Speaker 2: own audiences to really have a greater influence on their
Speaker 2: buying behavior in the future.
Speaker 1: That's interesting. These these agents, these star agents that have
Speaker 1: a big social media following and sell luxury properties. Do
Speaker 1: you think a large element of that is pure voyeurism
Speaker 1: where people are just watching and looking at it, just
Speaker 1: that they look at television shows rather than de facto
Speaker 1: buyers of those luxury properties every buys.
Speaker 2: I mean, I mean, you're not if you're getting thirty
Speaker 2: thousand views of a video of a beautiful property, that's
Speaker 2: not thirty thousand buyers, obviously, But I think it also is.
Speaker 2: I mean people, you know, we all love looking at property,
Speaker 2: but if you're seeing an agent doing a fun video
Speaker 2: on a beautiful property in a suburb that you're not
Speaker 2: familiar with, then you know, perhaps that would give you
Speaker 2: a little bit more interest in that suburb. So, you know,
Speaker 2: I think there's a lot that goes on in social
Speaker 2: but absolutely the way that they're using it and the
Speaker 2: impact that it's having on their revenue and their their
Speaker 2: ability to build a pipeline, and it does seem to
Speaker 2: be working for them.
Speaker 1: Okay. I saw a video last year on my area
Speaker 1: broad in my area being based at Melbourne, and it
Speaker 1: was this absolutely top range apartment development. It was actually
Speaker 1: I can name what it is. It was the department
Speaker 1: development at the Old Summer. It's called The Summer. It's
Speaker 1: in Saint Kilda in Melbourne, which of course was full
Speaker 1: of all these celebrity buyers and the video for the
Speaker 1: sale of that was so good that I actually said
Speaker 1: to people in other countries just to show that the
Speaker 1: area I lived at its very best. That is. But
Speaker 1: the same block as has since had disputes between these
Speaker 1: various celebrity millionaire owners over various issues, which is all
Speaker 1: great fun for the voyeur, and no doubt it's been
Speaker 1: on social media too, but it is a dimension of
Speaker 1: property that's very interesting. It is growing. Thank you for
Speaker 1: that question, Daniel, really really interesting. I think we could
Speaker 1: come back to that and perhaps we might try and
Speaker 1: find out more for our listeners on that one. All right,
Speaker 1: we'll take a shortbreak. We'll be back in a moment
Speaker 1: with two questions from Ryan and Andrew. Hello, Welcome back
Speaker 1: to the Australians Money Puzzle podcast. James Kirby here with
Speaker 1: Narratorconospy from the Rape White Group. Narrator is a regular
Speaker 1: on the show and I know Nerida for a long
Speaker 1: time in various guises over the years where she's always
Speaker 1: been in properly, always been an economist in that area,
Speaker 1: So she really is someone who has a very knowledge
Speaker 1: of the world we are analyzing every week here. Okay, Ryan,
Speaker 1: I want to get some financial advice on a few
Speaker 1: specific questions relating to selling a property. Is it possible
Speaker 1: to get financial advice on these things alone without a
Speaker 1: financial advisor going through all my finances in charge of
Speaker 1: me for all that, Ryan, I'm sorry, this is not advice,
Speaker 1: it's information, And the information I'm going to give you
Speaker 1: about advice is you can't. That's the whole problem, that's
Speaker 1: the whole debate. You can't get bite sized advice. You
Speaker 1: can't walk into a financial advisor and say I've got
Speaker 1: an issue. I've got an issue I inherited two hundred
Speaker 1: grand I want to buy an apartment for six hundred grand.
Speaker 1: That's all. Nothing else. I don't want to talk about
Speaker 1: anything else. They can't legally do that with you. They
Speaker 1: cannot do bite sized advice. They must take all your
Speaker 1: issues into affair. They must, they must produce statements of
Speaker 1: advice or documents of that ilk and they are so
Speaker 1: petrified by by falling for out of the regulations that
Speaker 1: they will say to you, sorry, take it or leave it.
Speaker 1: So short answer to you, Ryan is that you can't.
Speaker 1: Is there anything you know, Narada that would challenge what
Speaker 1: I said there? Yeah, I mean it's something I'm covering
Speaker 1: all the time, and you know, there's there's there's this
Speaker 1: issue in there's an effort in Parliament at the moment
Speaker 1: to change that. But I wouldn't be waiting for it.
Speaker 1: I gotta tell you, folks, because in a way, at
Speaker 1: a certain point, I don't think that we should have
Speaker 1: a situation like we have where you must literally, you know,
Speaker 1: where you have this absurdly regulated, overregulated framework around advice.
Speaker 1: But at the same time, being realistic about it, you
Speaker 1: probably will never get to the day that you can
Speaker 1: cheaply get advice because you can't get good advice cheaply.
Speaker 1: I think that's something that's kind of at the bottom
Speaker 1: of a lot of these issues and frustrating for everyone.
Speaker 1: But it's true. Making it worse is the fact that
Speaker 1: you can't I get a single chunk of advice, if
Speaker 1: you know what I mean, a sliver of advice. You
Speaker 1: have to get the whole thing. Ryan and I would
Speaker 1: add as an additional warning on that one. Obviously, advice
Speaker 1: from people inside the property industry about property is rarely independent. Okay.
Speaker 1: Final question from Andrew, longtime listener and fatter the podcast.
Speaker 1: I read with the interest your recent article in The
Speaker 1: Australian about the forty year mortgage. As house prices keep
Speaker 1: increasing relative to anual salaries, it seems inevitable that loan
Speaker 1: contracts will extend into retirement. Yes, and then he says
Speaker 1: he really. Then he has a scenario. He says, I
Speaker 1: was wondering whether we are entering an era where people
Speaker 1: will not be expected to discharge their loans while they're
Speaker 1: working during their working lives. Rather, they will only increase
Speaker 1: their equity during their lives and draw on at to
Speaker 1: retire using whatever equity remains such as superannuation, until their
Speaker 1: home is returned almost entirely to the institution when they die.
Speaker 1: Somewhat dystopian, but not unrealistic. Perhaps, Yeah, it's not unrealistic
Speaker 1: at all. Have you any sense of how many people
Speaker 1: now go into retirement with the mortgage and what it
Speaker 1: used to be.
Speaker 2: I mean, I agree, I think it is increasing that
Speaker 2: people do obviously take on bigger debt. They take on
Speaker 2: bigger debt later in life. Banks are quite keen to
Speaker 2: provide debt at any not I mean obviously really old
Speaker 2: people that won't, but they do.
Speaker 1: Yeah, I think that you're onto something. There was there
Speaker 1: was a time I would say to people in their sixties, listen,
Speaker 1: don't bother trying to get the mortgage. I mean, you
Speaker 1: have the chance. That's totally changed, yes, But also it
Speaker 1: means that that people are retiring with mortgages. So what's
Speaker 1: the impact of that on the property market.
Speaker 2: Well, I don't think it's necessarily a bad situation. If
Speaker 2: they are still one still able to pay the mortgage
Speaker 2: through you know, whatever superannuation or whatever they have. I
Speaker 2: mean that that would be one outcome. I think another
Speaker 2: one would be downsizing. And again not a problem that
Speaker 2: if you've got a you know, you've got your big
Speaker 2: family home at that point, you're still owning, owing a
Speaker 2: certain amount of money on it, selling and buying something smaller,
Speaker 2: you could still come out pretty well.
Speaker 1: So I don't think it's.
Speaker 2: I mean, the banks obviously are lending based on the
Speaker 2: fact that people will still have debt in retirement, so
Speaker 2: I mean they've obviously adjusted their views as to how
Speaker 2: this works. But I mean, you think of a forty
Speaker 2: year mortgage, I mean the latest you'd be able to
Speaker 2: get one and pay it off in forties would be,
Speaker 2: you know, in your late twenties, so you know, we
Speaker 2: know that people are getting mortgages at a much later
Speaker 2: date than that.
Speaker 1: So the people are getting longer data mortgages to reduce
Speaker 1: the annual cost of the mortgages that they're taking on,
Speaker 1: and the banks are broadening it all the time, so
Speaker 1: they're getting longer and longer, and these products which are
Speaker 1: very rare one time, are now common forty year mortgages
Speaker 1: in the system. I suppose one of the debates then,
Speaker 1: is why about super is if you are, you know,
Speaker 1: if you are working towards the situation where you finally
Speaker 1: get your super and you're getting it to pay off
Speaker 1: a mortgage, why did you put so much into super
Speaker 1: if it was only going into mortgage in the first place,
Speaker 1: when you could have paid it off years earlier. That's
Speaker 1: a debate for another day. That's a debate for another show.
Speaker 1: All Right, we might have to leave it at that,
Speaker 1: but it's been always good to have you there. The
Speaker 1: terrific Thank you very much. On this aspect of the
Speaker 1: fires is most interesting. I think people would I certainly
Speaker 1: assumed that a fire in an area did enormous damage
Speaker 1: to it long term. Instantly. That's what I assumed, and
Speaker 1: the evidence is not so simple at all, it would
Speaker 1: seem so Thank you very much. We'll talk to you
Speaker 1: again soon.
Speaker 2: Thanks for having me.
Speaker 1: That was never the color species the chief economist at
Speaker 1: the rape Y Group. Thank you everybody for listening today's show.
Speaker 1: Keep those emails rolling. See how interesting even that bunch
Speaker 1: of questions on that specific issue were today. Your questions
Speaker 1: are the lifeblood of the show, so keep them rolling.
Speaker 1: The email is the money puzzle at the Australian dot
Speaker 1: com dot AU. Today show was produced by Leah Summergloo.
Speaker 1: Talk to you soon.