1 00:00:11,240 --> 00:00:14,319 Speaker 1: Hello, and welcome to the Australian's Money Puzzled podcast. I'm 2 00:00:14,400 --> 00:00:18,439 Speaker 1: James Kirby, the welth editor at The Australian. Welcome aboard everybody. 3 00:00:18,760 --> 00:00:22,079 Speaker 1: I don't know about you, but it strikes me that 4 00:00:22,160 --> 00:00:26,119 Speaker 1: if I can get money out of my superfund to 5 00:00:26,200 --> 00:00:32,360 Speaker 1: do a Tommy Tuck or some cosmetic surgery, and the 6 00:00:33,040 --> 00:00:37,559 Speaker 1: cosmetic operators will help me fill out the form to 7 00:00:37,600 --> 00:00:41,640 Speaker 1: get my super out early, then I think you should 8 00:00:41,680 --> 00:00:45,080 Speaker 1: be able to use your super for your own property plans. 9 00:00:45,120 --> 00:00:47,600 Speaker 1: Now there's a debate about this. I'm quite aware of 10 00:00:47,640 --> 00:00:50,040 Speaker 1: that debate and I've come down clearly on one side, 11 00:00:50,080 --> 00:00:54,320 Speaker 1: which is unfortunately, I think there's no escape here. The 12 00:00:54,360 --> 00:00:57,880 Speaker 1: tax system is totally loaded in favor of the homeowner 13 00:00:59,360 --> 00:01:03,440 Speaker 1: and then everything has flows from that. And on that 14 00:01:03,560 --> 00:01:05,759 Speaker 1: basis alone, I think if it comes neck and neck 15 00:01:05,800 --> 00:01:08,760 Speaker 1: between super and owning a home, you need to own 16 00:01:08,760 --> 00:01:12,520 Speaker 1: a home in our tax system. And separately, as somebody 17 00:01:12,560 --> 00:01:16,039 Speaker 1: who has had a self managed super fund, I've already 18 00:01:16,120 --> 00:01:20,399 Speaker 1: used my super to buy an investment property, and not 19 00:01:20,440 --> 00:01:23,760 Speaker 1: only that, but I've used it in a fashion that 20 00:01:24,040 --> 00:01:27,120 Speaker 1: is really worth checking out. Not many people do it, 21 00:01:27,160 --> 00:01:30,240 Speaker 1: but you use your you use the super fund in 22 00:01:30,280 --> 00:01:35,399 Speaker 1: a non leverage way, so you're super fund, you the investor, 23 00:01:35,560 --> 00:01:41,080 Speaker 1: the listener do a joint venture with your SMSF, and 24 00:01:41,319 --> 00:01:46,360 Speaker 1: that joint venture buys an investment property the superfund, your 25 00:01:46,440 --> 00:01:50,400 Speaker 1: SMSF simply puts in equity and nothing else, no leverage, 26 00:01:50,440 --> 00:01:53,520 Speaker 1: no loans, pay no cost whatsoever. They just put in 27 00:01:54,200 --> 00:01:57,800 Speaker 1: a piece of equity fifty grand, one hundred grand. And 28 00:01:57,840 --> 00:02:00,040 Speaker 1: then in the future of say ten years time, and 29 00:02:00,080 --> 00:02:03,560 Speaker 1: when you go to sell that property, you simply whatever 30 00:02:03,640 --> 00:02:07,640 Speaker 1: you've made, whatever the superfund has made, you contribute that 31 00:02:07,680 --> 00:02:10,120 Speaker 1: back into your superfund, and you go your own way. 32 00:02:10,480 --> 00:02:15,400 Speaker 1: It's a very interesting principle, and there are bigger plans 33 00:02:15,440 --> 00:02:18,120 Speaker 1: afoot around that, which I'm going to introduce you to 34 00:02:18,400 --> 00:02:21,400 Speaker 1: in a moment. My guest is a person who's actually 35 00:02:21,400 --> 00:02:24,320 Speaker 1: devoted several years to this whole area and has a 36 00:02:24,360 --> 00:02:26,480 Speaker 1: plan I think you to capture our imagination. We're going 37 00:02:26,480 --> 00:02:30,880 Speaker 1: to talk about possibilities between super and property. We're going 38 00:02:30,960 --> 00:02:33,560 Speaker 1: to talk about what he has in mind and also 39 00:02:33,600 --> 00:02:36,640 Speaker 1: answer some questions. It's Simon Jones from Home Super How 40 00:02:36,680 --> 00:02:39,120 Speaker 1: are you, Simon good? Thanks James, Thanks for having me 41 00:02:39,160 --> 00:02:39,639 Speaker 1: on and for. 42 00:02:39,600 --> 00:02:40,519 Speaker 2: Your listeners for cheening it. 43 00:02:42,400 --> 00:02:44,280 Speaker 1: Oh nice to have you on. Nice to have someone 44 00:02:44,280 --> 00:02:47,800 Speaker 1: who's really across this, this whole concept. And before we 45 00:02:47,840 --> 00:02:50,720 Speaker 1: talk about your ideas, let's just talk about what is 46 00:02:50,760 --> 00:02:54,200 Speaker 1: and is impossible. Just now. With SUPER, I want to 47 00:02:54,200 --> 00:02:57,320 Speaker 1: sort of distinguish between what you can do and what 48 00:02:57,400 --> 00:02:59,240 Speaker 1: you might be able to do in the future. And 49 00:02:59,280 --> 00:03:02,639 Speaker 1: I brought up the cousin metic surgery thing there. It's provocative, 50 00:03:02,680 --> 00:03:05,799 Speaker 1: but it's true, it is, and I've done quite a 51 00:03:05,840 --> 00:03:08,200 Speaker 1: bit of work on that, but a journalism work, I mean, 52 00:03:08,240 --> 00:03:10,639 Speaker 1: I haven't done some cosmetic work, not as yet. 53 00:03:12,400 --> 00:03:15,240 Speaker 2: It's an interesting leading because, as you're right, there is 54 00:03:15,280 --> 00:03:19,919 Speaker 2: some different ways you can withdraw your SUPER and one 55 00:03:19,960 --> 00:03:22,840 Speaker 2: of those SUPER and housing has been interlinked for quite 56 00:03:22,840 --> 00:03:25,840 Speaker 2: some time. And one of those early release mechanisms is 57 00:03:26,080 --> 00:03:28,760 Speaker 2: in the event of financial hardship, and that's if the 58 00:03:28,800 --> 00:03:32,120 Speaker 2: bank is looking to foreclose on your home or a 59 00:03:32,120 --> 00:03:35,560 Speaker 2: local council for non payment of rates, and as a 60 00:03:35,600 --> 00:03:38,880 Speaker 2: last resort, you can essentially break the glass and withdraw 61 00:03:38,920 --> 00:03:42,080 Speaker 2: those funds. That part I've had some experience with, unfortunately, 62 00:03:42,160 --> 00:03:44,560 Speaker 2: helping some mums and dads and those in trouble with 63 00:03:44,720 --> 00:03:48,600 Speaker 2: financial hardships. Unfortunately, in that circumstance, you would think someone's 64 00:03:48,640 --> 00:03:51,640 Speaker 2: punished enough with the threat of losing their home, But 65 00:03:51,840 --> 00:03:55,440 Speaker 2: government imposes a twenty two percent withdrawal tax on that. 66 00:03:56,040 --> 00:03:59,480 Speaker 2: And we could argue whether tummy tucks are a necessity 67 00:03:59,480 --> 00:04:02,240 Speaker 2: in life, but for me, living in your own home 68 00:04:02,360 --> 00:04:05,760 Speaker 2: certainly is. So I've been advocating for the removal of 69 00:04:05,800 --> 00:04:08,560 Speaker 2: that twenty two percent tax. And we also found a 70 00:04:08,560 --> 00:04:11,000 Speaker 2: bit of a void and we built an online calculator 71 00:04:11,440 --> 00:04:14,400 Speaker 2: linked to our website to help people understand some of 72 00:04:14,560 --> 00:04:17,840 Speaker 2: the pros and cons of using a super last resort. 73 00:04:17,880 --> 00:04:20,560 Speaker 1: Just about that twenty two percent that you pay if 74 00:04:20,560 --> 00:04:23,120 Speaker 1: you take super out, Does that apply right if you 75 00:04:23,160 --> 00:04:24,400 Speaker 1: were a one week from retirement? 76 00:04:24,400 --> 00:04:27,039 Speaker 2: What it still apply does unfortunately? Yes? 77 00:04:27,200 --> 00:04:29,680 Speaker 1: Yeah, right, okay, very interesting just to kind of fill 78 00:04:29,680 --> 00:04:32,360 Speaker 1: in the landscape. First of all, for people just now, 79 00:04:32,360 --> 00:04:34,320 Speaker 1: there's very few things you can do. Assignment says it's 80 00:04:34,360 --> 00:04:38,039 Speaker 1: financial hardship, which oddly this some of the cosmetic treatments 81 00:04:38,040 --> 00:04:40,320 Speaker 1: fall under, and that's where money is coming out the 82 00:04:40,320 --> 00:04:42,760 Speaker 1: back door of supers. Very hard to take money out 83 00:04:42,760 --> 00:04:45,400 Speaker 1: to buy property, especially if you are in the convention 84 00:04:45,480 --> 00:04:48,599 Speaker 1: of the Big super Fund. There is plans afoot. That is, 85 00:04:48,640 --> 00:04:51,120 Speaker 1: at least the Coalition has a plan which would allow 86 00:04:51,160 --> 00:04:54,080 Speaker 1: people to take fifty thousand up to fifty thousand dollars 87 00:04:54,080 --> 00:04:58,120 Speaker 1: out of SUPER of any fond to put into their home. 88 00:04:58,200 --> 00:05:00,760 Speaker 1: That's a plan that's there at the moment. And in 89 00:05:00,839 --> 00:05:03,640 Speaker 1: terms of what you can do, there's very little, but 90 00:05:03,680 --> 00:05:06,040 Speaker 1: there is there is a plan. There is at least 91 00:05:06,040 --> 00:05:09,039 Speaker 1: a scheme existing. It exists, it runs since the days 92 00:05:09,040 --> 00:05:11,159 Speaker 1: of the Morrison government. It's called the First Home super 93 00:05:11,200 --> 00:05:15,880 Speaker 1: Server Scheme FHSS. It's terribly elaborate and complex scheme. Some 94 00:05:15,920 --> 00:05:18,240 Speaker 1: listeners have used it so where you can kind of 95 00:05:18,279 --> 00:05:23,800 Speaker 1: quarantine your contributions to SUPER into a bucket basically, which 96 00:05:23,839 --> 00:05:27,000 Speaker 1: you can then use to put towards your first home. 97 00:05:27,480 --> 00:05:31,400 Speaker 1: It's quite elaborate, it's quite niche. But that's all. Is 98 00:05:31,440 --> 00:05:33,240 Speaker 1: that all that's out there so far? Assigmon, Have I 99 00:05:33,279 --> 00:05:34,280 Speaker 1: missed anything. 100 00:05:34,400 --> 00:05:37,120 Speaker 2: That is any incentive? Yes, to help people save and 101 00:05:37,120 --> 00:05:40,280 Speaker 2: a tax effective mechanism really, but you know, it really 102 00:05:40,320 --> 00:05:44,520 Speaker 2: does depend. You mentioned the self managed circumstance there, and 103 00:05:44,560 --> 00:05:47,920 Speaker 2: whilst this does not apply to everyone, a self managed fund, 104 00:05:48,080 --> 00:05:50,440 Speaker 2: as you know, can buy an investment property. It can 105 00:05:50,520 --> 00:05:53,640 Speaker 2: also buy business real property. So for someone who's self 106 00:05:53,680 --> 00:05:57,080 Speaker 2: employed and they might be say a mechanic, and they 107 00:05:57,120 --> 00:05:59,400 Speaker 2: wish to buy the commercial property in which they operate, 108 00:05:59,760 --> 00:06:02,880 Speaker 2: that it allowable. But there's also there also is some 109 00:06:03,000 --> 00:06:06,320 Speaker 2: quirky ones where they may need to live on site 110 00:06:06,360 --> 00:06:09,719 Speaker 2: to actually operate the business. So there is actually some 111 00:06:09,800 --> 00:06:14,159 Speaker 2: circumstances where someone can essentially buy a property that's obviously 112 00:06:14,360 --> 00:06:17,800 Speaker 2: commercial there is a residence allowed. So there is all 113 00:06:17,839 --> 00:06:19,560 Speaker 2: sorts of quirky and wonderful ways. 114 00:06:19,600 --> 00:06:23,120 Speaker 1: And oh that'll be like an olive farm or something. 115 00:06:23,640 --> 00:06:26,200 Speaker 2: Well depends again, I'm not going to say any specific 116 00:06:26,240 --> 00:06:27,560 Speaker 2: can get myself in strife, but it. 117 00:06:27,600 --> 00:06:29,040 Speaker 1: Will be an obvious one. If you bought a farm 118 00:06:29,080 --> 00:06:31,240 Speaker 1: and house on it, would that be the sort of 119 00:06:31,279 --> 00:06:32,640 Speaker 1: thing where it might be possible. 120 00:06:32,680 --> 00:06:35,320 Speaker 2: That's pretty Sometimes the house is quarantine depending it could 121 00:06:35,320 --> 00:06:37,400 Speaker 2: be a security measure where you need to be on site, 122 00:06:37,520 --> 00:06:40,720 Speaker 2: or various other circumstances. But look, bits they are few 123 00:06:40,720 --> 00:06:44,560 Speaker 2: and far between. But previously you mentioned about doing a 124 00:06:44,640 --> 00:06:48,040 Speaker 2: joint venture with your fund and liking it to what 125 00:06:48,080 --> 00:06:51,440 Speaker 2: the proposed fifty thousand as you mentioned by the LNP, 126 00:06:52,200 --> 00:06:54,600 Speaker 2: and in that where you suggested you put the funds 127 00:06:54,600 --> 00:06:58,080 Speaker 2: back into super We argue that it should never leave 128 00:06:58,160 --> 00:07:00,520 Speaker 2: you should you should be able to do those joint ventures. 129 00:07:00,839 --> 00:07:03,200 Speaker 1: But just to clarify for the listener, before we talk 130 00:07:03,240 --> 00:07:06,560 Speaker 1: about what you're planning, just tell us about that how 131 00:07:06,600 --> 00:07:09,600 Speaker 1: that works. So someone with an SMSF, how they can 132 00:07:09,720 --> 00:07:14,200 Speaker 1: actually use equity funds from the SMSF to buy a 133 00:07:14,240 --> 00:07:17,600 Speaker 1: property and the individual through a joint venture with the 134 00:07:17,640 --> 00:07:21,240 Speaker 1: SMSF can actually do everything else, pet stamp duty, have 135 00:07:21,360 --> 00:07:22,280 Speaker 1: the loan, et cetera. 136 00:07:23,240 --> 00:07:27,640 Speaker 2: Yeah, correct, depending on again lenders and circumstances, because the 137 00:07:27,800 --> 00:07:31,280 Speaker 2: fund's assets should not be charged and held under a mortgage. 138 00:07:31,440 --> 00:07:34,040 Speaker 2: But there is circumstances where correct, there can be a 139 00:07:34,080 --> 00:07:37,800 Speaker 2: joint venture with the fund and that's not extraordinary. There's 140 00:07:37,840 --> 00:07:40,160 Speaker 2: the circumstances out there. It just gets a little bit 141 00:07:40,160 --> 00:07:43,440 Speaker 2: complicated though when it is a residence in the current form. 142 00:07:43,960 --> 00:07:46,560 Speaker 2: So just ensuring there's no financial benefits to the member 143 00:07:46,640 --> 00:07:48,560 Speaker 2: he is not or he or shea are paying the 144 00:07:48,760 --> 00:07:49,400 Speaker 2: market rent. 145 00:07:50,400 --> 00:07:53,800 Speaker 1: Yes, you cannot stay a single night in that place 146 00:07:53,880 --> 00:07:58,160 Speaker 1: if you own it in that arrangement because it's strictly 147 00:07:58,160 --> 00:08:00,480 Speaker 1: for super return, isn't it? 148 00:08:01,480 --> 00:08:04,840 Speaker 2: No, there is some carve outs with respect to repairs, 149 00:08:05,120 --> 00:08:08,200 Speaker 2: or if it is a holiday home that's say independently 150 00:08:08,240 --> 00:08:11,320 Speaker 2: managed and you are only staying for a for a week, 151 00:08:11,400 --> 00:08:13,520 Speaker 2: and if it's peak peering, you might still have to 152 00:08:13,560 --> 00:08:16,960 Speaker 2: pay full freight. So there is some circumstances, and it's 153 00:08:17,360 --> 00:08:21,720 Speaker 2: highly dependent on circumstances and ensuring that the fund obtains 154 00:08:21,760 --> 00:08:24,800 Speaker 2: commercial returns no matter who is in the property. So 155 00:08:25,240 --> 00:08:28,600 Speaker 2: there is some quirks, and that's where often trustees can 156 00:08:28,600 --> 00:08:31,040 Speaker 2: get themselves into strife if they just overstep that mark 157 00:08:31,160 --> 00:08:34,400 Speaker 2: or not do everything to satisfy the regulations. 158 00:08:34,960 --> 00:08:38,360 Speaker 1: Okay, but the reason listeners that I'm trawling through this, 159 00:08:38,720 --> 00:08:42,920 Speaker 1: I'm basically showing and trying to demonstrate to you that 160 00:08:43,920 --> 00:08:46,599 Speaker 1: under law, if you like are under the arrangements we 161 00:08:46,679 --> 00:08:52,800 Speaker 1: have in super there is the possibility already to use 162 00:08:53,320 --> 00:08:58,360 Speaker 1: cer superfund not just my property, but that you, an 163 00:08:58,400 --> 00:09:02,559 Speaker 1: individual investor in country with your SMSF, can buy property 164 00:09:02,679 --> 00:09:05,680 Speaker 1: together and the SMSF can put in the equity and 165 00:09:05,720 --> 00:09:09,080 Speaker 1: you do everything else, and then at the end of 166 00:09:09,080 --> 00:09:12,080 Speaker 1: the arrangement, you sell and the super fund gets what 167 00:09:12,120 --> 00:09:16,559 Speaker 1: it's entitled to. Something not dissimilar to the home equity 168 00:09:16,600 --> 00:09:19,439 Speaker 1: shared scheme, which is just basically looks like it's going 169 00:09:19,480 --> 00:09:22,120 Speaker 1: to get proved through Parliament this week, and that would 170 00:09:22,160 --> 00:09:24,800 Speaker 1: be where the government, for instance, shares with you and 171 00:09:24,880 --> 00:09:27,160 Speaker 1: they can take up to forty percent of a property 172 00:09:27,160 --> 00:09:28,880 Speaker 1: and you can take the rest and then in five 173 00:09:29,000 --> 00:09:31,480 Speaker 1: or ten years time when you sell, you split the proceeds. 174 00:09:31,600 --> 00:09:34,320 Speaker 1: I'm just basically lanning these things out, Simon, so that 175 00:09:34,360 --> 00:09:36,920 Speaker 1: we can give people will have some context to what 176 00:09:36,920 --> 00:09:38,599 Speaker 1: we're going to talk about next. And I should have 177 00:09:38,640 --> 00:09:43,319 Speaker 1: said also Simon's background is in advice at all, at 178 00:09:43,400 --> 00:09:46,280 Speaker 1: various levels over the years, at fairly high levels in 179 00:09:46,559 --> 00:09:49,920 Speaker 1: the financial advice sector. Okay, we'll be back in a 180 00:09:49,920 --> 00:09:55,120 Speaker 1: moment and we're going to talk about the possibility about 181 00:09:55,160 --> 00:09:59,240 Speaker 1: how you and your superfund, any superfund, a big superfund, 182 00:10:00,679 --> 00:10:15,880 Speaker 1: buy a home together. Back in the morning. Hello, welcome 183 00:10:15,880 --> 00:10:18,600 Speaker 1: back to the Australians Money Puzzle. I'm James Kirby and 184 00:10:18,640 --> 00:10:24,120 Speaker 1: I'm talking to Simon Jones from Home Super Okay, Simon, elevator, pitch, 185 00:10:25,640 --> 00:10:27,599 Speaker 1: tell me what you've tell me, what you've planned in 186 00:10:27,640 --> 00:10:30,320 Speaker 1: the simplest terms that at its very best, if it 187 00:10:30,360 --> 00:10:31,680 Speaker 1: came to pass, how would it work? 188 00:10:33,080 --> 00:10:37,760 Speaker 2: You can buy your home with less debt? As and 189 00:10:37,840 --> 00:10:41,680 Speaker 2: more security. Utilizing your super fund as a co investment partner, 190 00:10:41,800 --> 00:10:45,760 Speaker 2: so a shared equity arrangement whereby your fund takes an 191 00:10:45,760 --> 00:10:48,520 Speaker 2: equity stake, you don't need as much money to buy 192 00:10:48,520 --> 00:10:53,000 Speaker 2: the property and there's less obviously less opportunity going back 193 00:10:53,040 --> 00:10:54,520 Speaker 2: to the bank and more to your fund. 194 00:10:55,000 --> 00:10:57,840 Speaker 1: That's the elevator pitch. Okay, very good. And the fund 195 00:10:57,880 --> 00:10:59,760 Speaker 1: can be any fund. It could be any of the 196 00:10:59,760 --> 00:11:03,760 Speaker 1: big funds if they sign up to the idea. Okay, Now, 197 00:11:04,080 --> 00:11:07,240 Speaker 1: I would have thought I know a fair bit about 198 00:11:07,240 --> 00:11:10,800 Speaker 1: super but it's like a language, isn't it. It's endlessly 199 00:11:11,320 --> 00:11:14,679 Speaker 1: full of surprises and contradictions. I would have thought that 200 00:11:14,840 --> 00:11:17,600 Speaker 1: it was impossible to do that. But you've had some 201 00:11:17,679 --> 00:11:20,640 Speaker 1: legal among other things, you've had some legal direction, if 202 00:11:20,640 --> 00:11:23,959 Speaker 1: you like, from on your board. You have an advisor 203 00:11:24,320 --> 00:11:29,319 Speaker 1: who's also a partner at Minternesson and she has established 204 00:11:29,960 --> 00:11:35,720 Speaker 1: that there is no legal there's no current legal blockade 205 00:11:35,840 --> 00:11:36,680 Speaker 1: to what you're planning. 206 00:11:36,720 --> 00:11:40,440 Speaker 2: Is that how it sits correct? And once again it's 207 00:11:40,480 --> 00:11:43,800 Speaker 2: all about it depends. It depends on the circumstance of 208 00:11:43,920 --> 00:11:47,760 Speaker 2: the deal. And with respect to ours, the individual must 209 00:11:47,760 --> 00:11:50,880 Speaker 2: be approved to buy the home on their own outright 210 00:11:50,960 --> 00:11:54,520 Speaker 2: with a bank before we even get involved, because otherwise 211 00:11:54,559 --> 00:11:57,800 Speaker 2: we would be providing financial assistance and giving a member 212 00:11:57,800 --> 00:12:00,840 Speaker 2: an opportunity that they wouldn't normally have. So that's a 213 00:12:00,840 --> 00:12:03,920 Speaker 2: crucial that's a crucial hurdle number one that we address 214 00:12:03,960 --> 00:12:08,120 Speaker 2: at the outset. So again just ensuring that if they're 215 00:12:08,160 --> 00:12:10,520 Speaker 2: eligible to borrow six hundred thousand, we know now the 216 00:12:11,320 --> 00:12:14,560 Speaker 2: average mortgage is about six forty and the average first 217 00:12:14,600 --> 00:12:16,959 Speaker 2: time buyers thirty five years of age. So if they're 218 00:12:17,000 --> 00:12:19,840 Speaker 2: borrowing six hundred thousand, they've been approved for that amount, 219 00:12:20,120 --> 00:12:23,520 Speaker 2: and they've got their deposit and twenty percent deposit, we 220 00:12:23,559 --> 00:12:26,680 Speaker 2: can then look at utilizing some of their super to 221 00:12:26,720 --> 00:12:30,079 Speaker 2: bring that six hundred thousand dollars down to an amount 222 00:12:30,320 --> 00:12:34,560 Speaker 2: depending on their balance, and invest that prudently in the property. 223 00:12:34,800 --> 00:12:36,880 Speaker 2: So we're not providing as a said, we're not providing 224 00:12:36,880 --> 00:12:40,360 Speaker 2: that leg up. It's just another avenue of finance utilizing 225 00:12:40,440 --> 00:12:43,720 Speaker 2: equity instead of just all debt and deposit. 226 00:12:44,880 --> 00:12:47,360 Speaker 1: And then for the customer here, what it means is 227 00:12:47,400 --> 00:12:49,839 Speaker 1: that their mortgage is smaller. 228 00:12:50,840 --> 00:12:55,160 Speaker 2: Correct correct, and their serviceability buffer is essentially also increased. 229 00:12:55,679 --> 00:12:57,920 Speaker 2: Not only that, mostly when they're buying their first property 230 00:12:58,240 --> 00:13:02,040 Speaker 2: will lend. Two thirds of these are bought jointly, and 231 00:13:02,360 --> 00:13:04,880 Speaker 2: you might be considering there with your mortgage broker, the bank, 232 00:13:05,000 --> 00:13:07,280 Speaker 2: or relying in bed do we fix or do we 233 00:13:07,360 --> 00:13:09,840 Speaker 2: leave it variable? And this also offers a little bit 234 00:13:09,840 --> 00:13:12,040 Speaker 2: of a hedge against that because, as I said, to 235 00:13:12,120 --> 00:13:15,760 Speaker 2: be to utilize this product, you must have your finance 236 00:13:15,840 --> 00:13:18,520 Speaker 2: approved at six hundred thousand, and the banks have obviously 237 00:13:18,640 --> 00:13:21,000 Speaker 2: used their buffer on top of that. So we've pulled 238 00:13:21,000 --> 00:13:24,520 Speaker 2: that back even further and provided an additional buffer. And 239 00:13:24,600 --> 00:13:28,120 Speaker 2: the equity from the fund going in obviously does not 240 00:13:28,200 --> 00:13:31,200 Speaker 2: affect interest rate variations for the debt component. 241 00:13:32,360 --> 00:13:37,520 Speaker 1: Okay, now, folks, part of the logic here and the 242 00:13:37,520 --> 00:13:41,080 Speaker 1: imperatives behind this idea is there so many people of 243 00:13:41,120 --> 00:13:44,640 Speaker 1: course now are retiring with the mortgage. If you think 244 00:13:44,640 --> 00:13:48,320 Speaker 1: about it back not that long ago, say ten years ago, 245 00:13:48,480 --> 00:13:51,439 Speaker 1: so a what a quarter of lumpsom withdraws were used 246 00:13:51,480 --> 00:13:55,040 Speaker 1: to pay off a mortgage. By two seventeen that had 247 00:13:55,040 --> 00:13:58,480 Speaker 1: gone to thirty percent, and now it's climbing higher and higher, 248 00:13:58,480 --> 00:14:01,520 Speaker 1: where something like slim majority of do you know the 249 00:14:01,559 --> 00:14:04,400 Speaker 1: number assignment is it something like half of all retirees 250 00:14:04,440 --> 00:14:06,640 Speaker 1: now as they approach retirement, they still have a mortgage 251 00:14:06,640 --> 00:14:07,680 Speaker 1: you need to pay off something. 252 00:14:08,720 --> 00:14:11,920 Speaker 2: Correct. I think it's between fifty five and sixty four. 253 00:14:12,200 --> 00:14:14,280 Speaker 2: The average balance is about two hundred and thirty odd 254 00:14:14,400 --> 00:14:17,280 Speaker 2: thousand and what the funds speaking with some funds that 255 00:14:17,400 --> 00:14:20,200 Speaker 2: the apro figures are around thirty percent of all lump 256 00:14:20,200 --> 00:14:23,440 Speaker 2: Some withdrawals are going to repay mortgages. So that's not 257 00:14:23,520 --> 00:14:26,120 Speaker 2: the intent of super And some funds we've been speaking 258 00:14:26,120 --> 00:14:28,280 Speaker 2: with they said the numbers actually closer to forty percent 259 00:14:28,480 --> 00:14:28,880 Speaker 2: for them. 260 00:14:29,440 --> 00:14:31,600 Speaker 1: So your yeah, I love your point. Your point is 261 00:14:31,640 --> 00:14:34,880 Speaker 1: that for all this talk that you can't touch your 262 00:14:34,920 --> 00:14:38,240 Speaker 1: house with super, if one in three people when they 263 00:14:38,280 --> 00:14:42,040 Speaker 1: get finally get there some super and retire, they get 264 00:14:42,040 --> 00:14:44,360 Speaker 1: a lump sum, and one in three people turn around 265 00:14:44,360 --> 00:14:48,160 Speaker 1: and spend it on their home having accumulated debt all 266 00:14:48,200 --> 00:14:51,320 Speaker 1: their life. Yeah. Correct, This is the macro picture you're 267 00:14:51,320 --> 00:14:55,880 Speaker 1: putting in now, just to try and see how this 268 00:14:56,000 --> 00:14:59,520 Speaker 1: might really work. Has any super fund signed up with 269 00:14:59,560 --> 00:15:01,160 Speaker 1: you yet to do this. 270 00:15:02,040 --> 00:15:05,040 Speaker 2: No, now, a couple of signed NDAs, and they're very interested. 271 00:15:05,160 --> 00:15:07,880 Speaker 2: But like with most super funds, they're very, very slow 272 00:15:07,960 --> 00:15:10,760 Speaker 2: and prudent. And this obviously is on their radar now 273 00:15:11,120 --> 00:15:14,160 Speaker 2: and the Treasury's paper in I believe it was twenty twenty, 274 00:15:14,480 --> 00:15:18,480 Speaker 2: Federal Treasury did a report on retirement and retirement income 275 00:15:18,600 --> 00:15:21,080 Speaker 2: and found the vast majority of retirees who are owned 276 00:15:21,080 --> 00:15:23,480 Speaker 2: their home. We're in a much stronger financial position and 277 00:15:23,920 --> 00:15:26,120 Speaker 2: we've known that for some time, but it's been great 278 00:15:26,160 --> 00:15:30,320 Speaker 2: to have Federal Treasury confirm that in their studies. So yeah, exactly, 279 00:15:30,400 --> 00:15:33,000 Speaker 2: we're looking to do a front end essentially arrangement rather 280 00:15:33,040 --> 00:15:34,960 Speaker 2: than leaving it to the back end and where it's 281 00:15:34,960 --> 00:15:38,360 Speaker 2: not the intent of Super whatsoever. And it's interesting now 282 00:15:38,360 --> 00:15:42,560 Speaker 2: that banks are using SUPER for that serviceability test and 283 00:15:42,640 --> 00:15:47,440 Speaker 2: for elder Australians to borrow money, utilizing SUPER essentially as 284 00:15:47,480 --> 00:15:50,480 Speaker 2: part of the credit assessment and not even really as 285 00:15:50,480 --> 00:15:53,120 Speaker 2: a backstop anymore. For those that are sixty years of 286 00:15:53,120 --> 00:15:55,560 Speaker 2: age who are looking to borrow funds, some of the 287 00:15:55,560 --> 00:15:58,520 Speaker 2: banks are very happy to use as the repayment plan. 288 00:15:58,840 --> 00:16:01,240 Speaker 2: And that's an interest one because as we know, the 289 00:16:01,240 --> 00:16:04,560 Speaker 2: Big four have essentially exited the funds management space. I 290 00:16:04,600 --> 00:16:07,160 Speaker 2: think the last one left is Beta in their platform 291 00:16:07,200 --> 00:16:10,200 Speaker 2: with Westpac, but they're still essentially getting their hands on 292 00:16:10,640 --> 00:16:13,560 Speaker 2: Super in lump sums to repay that debt. 293 00:16:13,680 --> 00:16:15,680 Speaker 1: To repay the debt. That's right, and they know it's there. 294 00:16:15,680 --> 00:16:17,840 Speaker 1: Of course, it's on their books. One of the things 295 00:16:17,880 --> 00:16:20,600 Speaker 1: I think reading, and I have to freely admit, folks, 296 00:16:20,600 --> 00:16:24,160 Speaker 1: I don't regularly read the Australian Superannuation Law bulletin, but 297 00:16:24,280 --> 00:16:26,680 Speaker 1: if I could speed read, maybe i'd read it. But 298 00:16:26,960 --> 00:16:30,480 Speaker 1: I have been pointed to a piece in this by Simon, 299 00:16:30,520 --> 00:16:32,720 Speaker 1: and it's by Ruth Stranger, who is, as I say, 300 00:16:32,720 --> 00:16:34,920 Speaker 1: a partner at Minter Ellison, a specialist in this area, 301 00:16:34,920 --> 00:16:38,280 Speaker 1: an advisor also to his operation Home super. Tell me 302 00:16:38,320 --> 00:16:40,600 Speaker 1: if I'm wrong here, Simon, but it seems to me 303 00:16:40,680 --> 00:16:42,280 Speaker 1: when you get through the whole thing and she comes 304 00:16:42,280 --> 00:16:45,080 Speaker 1: to a conclusive what she says is there appears to 305 00:16:45,120 --> 00:16:48,120 Speaker 1: be no blockage in law to what you are planning, 306 00:16:48,600 --> 00:16:52,120 Speaker 1: but unfortunately the nature of the arrangements at the moment 307 00:16:52,200 --> 00:16:54,120 Speaker 1: means that you can't get a sort of a binding 308 00:16:54,200 --> 00:16:57,280 Speaker 1: ruling before you start, so it has to be sort 309 00:16:57,280 --> 00:16:59,680 Speaker 1: of tested in real life. And that might be what's 310 00:17:00,240 --> 00:17:03,880 Speaker 1: making the super funds slow. Would that be? I may 311 00:17:03,960 --> 00:17:04,679 Speaker 1: under a tracker. 312 00:17:05,119 --> 00:17:07,840 Speaker 2: Yeah, that's a fair point. But with most innovation in 313 00:17:08,040 --> 00:17:11,720 Speaker 2: super with large funds, it is essentially that chicken and 314 00:17:11,760 --> 00:17:14,920 Speaker 2: egg sort of scenario. Unfortunately, because OPRA do not have 315 00:17:15,040 --> 00:17:17,320 Speaker 2: and this is no fault of the regulator, it's policy, 316 00:17:17,359 --> 00:17:19,720 Speaker 2: and I actually really do feel for the opera staff 317 00:17:19,720 --> 00:17:22,800 Speaker 2: in some of these circumstances. So there's no real window 318 00:17:22,880 --> 00:17:24,680 Speaker 2: or avenue for the funds to say, hey, look, we're 319 00:17:24,720 --> 00:17:27,240 Speaker 2: testing this product, what do you think. And speaking to 320 00:17:27,280 --> 00:17:31,280 Speaker 2: another gentleman recently that built a retirement income product where 321 00:17:31,320 --> 00:17:33,399 Speaker 2: he had a battle with for the regulator for quite 322 00:17:33,400 --> 00:17:37,000 Speaker 2: some time a number of years before they essentially stopped 323 00:17:37,000 --> 00:17:39,720 Speaker 2: any action towards him because they then said, okay, this 324 00:17:39,840 --> 00:17:42,640 Speaker 2: is a fair product. We understand it now. So you can, 325 00:17:43,119 --> 00:17:45,280 Speaker 2: on one hand, you can get frustrated, but on the 326 00:17:45,320 --> 00:17:47,840 Speaker 2: other the whole point really is to innovate. It's not 327 00:17:47,920 --> 00:17:50,280 Speaker 2: up to regulator's or the government to innovate. That's an 328 00:17:50,280 --> 00:17:52,880 Speaker 2: interesting one. So yes, it would be helpful. And our 329 00:17:52,920 --> 00:17:56,280 Speaker 2: discussions with OPRA, yes, they pressed us on all manner 330 00:17:56,320 --> 00:17:59,720 Speaker 2: of issues from liquidity diversification and how it will all work, 331 00:18:00,040 --> 00:18:01,960 Speaker 2: and couldn't find anything wrong with it, and their last 332 00:18:02,000 --> 00:18:03,840 Speaker 2: space of advice was, look, we'll just keep an eye 333 00:18:03,840 --> 00:18:06,720 Speaker 2: on you. So for some of the funds. They understand 334 00:18:06,760 --> 00:18:09,480 Speaker 2: how that works. Were approached by a quite a large 335 00:18:09,520 --> 00:18:11,919 Speaker 2: fund just recently after Ruth string Is Peace in that 336 00:18:12,080 --> 00:18:14,879 Speaker 2: law bullsm so it provided them with some confidence and 337 00:18:14,920 --> 00:18:18,399 Speaker 2: they understand that process with apro. But it is, as 338 00:18:18,440 --> 00:18:21,000 Speaker 2: I said, it's an interesting space in that regard where 339 00:18:21,280 --> 00:18:22,200 Speaker 2: there's no avenue. 340 00:18:23,080 --> 00:18:25,720 Speaker 1: So there you are, folks. How about that that you 341 00:18:25,720 --> 00:18:30,080 Speaker 1: could use your own super fund to put in equity 342 00:18:30,280 --> 00:18:34,880 Speaker 1: in your own home, and that your super fund basically 343 00:18:34,960 --> 00:18:42,400 Speaker 1: gets to diversify, It gets into a pretty conservative, reliable 344 00:18:42,560 --> 00:18:44,920 Speaker 1: stream of investment compared to some of the stuff they're 345 00:18:44,960 --> 00:18:48,760 Speaker 1: doing overseas and private equity at the moment, and you 346 00:18:48,840 --> 00:18:51,880 Speaker 1: get to have less of a mortgage. I like the idea. 347 00:18:51,960 --> 00:18:55,400 Speaker 1: I'd love to see it come into play. I will 348 00:18:55,440 --> 00:18:58,720 Speaker 1: say to you, Simon, if you try to create something new, 349 00:18:58,840 --> 00:19:00,320 Speaker 1: it can take a long time, but it can really 350 00:19:00,320 --> 00:19:02,560 Speaker 1: pay off. I'm thinking of someone like green Talk well 351 00:19:02,680 --> 00:19:05,720 Speaker 1: back in all I don't know the nineteen nineties who 352 00:19:05,760 --> 00:19:08,760 Speaker 1: spent years and years trying to get the first exchange 353 00:19:08,760 --> 00:19:11,800 Speaker 1: treaded fund off the ground in Australia, which was the 354 00:19:11,840 --> 00:19:16,119 Speaker 1: Gold Exchange Treated Fund, and of course years now on 355 00:19:16,160 --> 00:19:19,880 Speaker 1: the rich list and it's the FSA are a household 356 00:19:19,880 --> 00:19:22,239 Speaker 1: of things, so best of luck with it and I 357 00:19:22,280 --> 00:19:24,440 Speaker 1: hope that you get to breakthrough soon. What would be 358 00:19:24,440 --> 00:19:25,960 Speaker 1: the best thing that could happen to you next? 359 00:19:27,040 --> 00:19:28,840 Speaker 2: The best thing would be for a fund to take 360 00:19:28,880 --> 00:19:31,200 Speaker 2: it up and help us do some initial full investments 361 00:19:31,240 --> 00:19:33,720 Speaker 2: and break the ice. Essentially, I don't see that being 362 00:19:33,720 --> 00:19:36,800 Speaker 2: too far off. But yeah, look, we're not essentially inventing 363 00:19:36,840 --> 00:19:39,439 Speaker 2: something here that people don't want to use it. The 364 00:19:39,480 --> 00:19:42,639 Speaker 2: idea really has come from Australians and we've just listened 365 00:19:42,640 --> 00:19:44,880 Speaker 2: and worked out a prudent way to do it. It's 366 00:19:44,880 --> 00:19:46,920 Speaker 2: interesting how do you get paid as a super fund 367 00:19:47,000 --> 00:19:49,400 Speaker 2: or as a manager or as home super and being 368 00:19:49,400 --> 00:19:51,480 Speaker 2: in the industry for a long time, there's plenty of 369 00:19:51,560 --> 00:19:54,119 Speaker 2: meat on the bone. So actual return to us was 370 00:19:54,160 --> 00:19:56,399 Speaker 2: the last thing I worked out and how we actually 371 00:19:56,400 --> 00:19:59,320 Speaker 2: get paid. I do appreciate some comparisons to others in 372 00:19:59,320 --> 00:20:01,119 Speaker 2: the market that have done really well, but no, the 373 00:20:01,160 --> 00:20:03,640 Speaker 2: real driver here really is, as I said, just building 374 00:20:03,680 --> 00:20:07,320 Speaker 2: something that Australians really want and deserve. In my opinion 375 00:20:07,640 --> 00:20:11,119 Speaker 2: and interesting discussion, they're about other avenues and around the world. 376 00:20:11,600 --> 00:20:14,280 Speaker 2: In the US, you can take up to fifty thousand 377 00:20:14,280 --> 00:20:16,920 Speaker 2: from your four oh one K plan, but it must 378 00:20:16,960 --> 00:20:20,720 Speaker 2: be in the form of a loan, and roughly just 379 00:20:20,760 --> 00:20:24,199 Speaker 2: over thirty percent of the US home buyers do that, 380 00:20:24,760 --> 00:20:28,080 Speaker 2: and it's actually even more convoluted. It's more restrictive. They 381 00:20:28,119 --> 00:20:30,439 Speaker 2: do get to pay a slightly lower rate than they 382 00:20:30,480 --> 00:20:33,120 Speaker 2: would with the bank, so they can essentially plot pay 383 00:20:33,160 --> 00:20:36,359 Speaker 2: the Fed reserves rate rather than the bank's rates, but 384 00:20:36,680 --> 00:20:39,439 Speaker 2: it is very convoluted. If they misrepayments, they're in all 385 00:20:39,480 --> 00:20:41,720 Speaker 2: sorts of strife with the irs and the like. So 386 00:20:42,000 --> 00:20:44,359 Speaker 2: we did research around the world, and yes, there's other 387 00:20:44,440 --> 00:20:46,199 Speaker 2: avenues and some other countries that are a little bit 388 00:20:46,240 --> 00:20:49,040 Speaker 2: more liberal on this we've taken up. We've still taken 389 00:20:49,080 --> 00:20:51,919 Speaker 2: a really prudent approach to make sure that the fund 390 00:20:51,960 --> 00:20:54,520 Speaker 2: gets a commercial return and that the member does not 391 00:20:54,840 --> 00:20:57,840 Speaker 2: essentially have that. And people might think of when I 392 00:20:57,880 --> 00:21:00,560 Speaker 2: say have that sort of financial assist and some people 393 00:21:00,600 --> 00:21:02,840 Speaker 2: might say, well, they're paying back less of the line, 394 00:21:02,840 --> 00:21:05,680 Speaker 2: So there's a there's financial assystems there. But I must 395 00:21:05,680 --> 00:21:08,480 Speaker 2: put the caveat on that you no longer own one 396 00:21:08,520 --> 00:21:11,080 Speaker 2: hundred percent of your home. You may only earn eighty 397 00:21:11,080 --> 00:21:15,119 Speaker 2: percent and your fun owns twenty percent, so that's essentially 398 00:21:15,200 --> 00:21:16,280 Speaker 2: the trade off as well. 399 00:21:16,320 --> 00:21:18,600 Speaker 1: Okay, very good, Well I wish you look stick around 400 00:21:18,640 --> 00:21:27,960 Speaker 1: and we'll do some questions here. Hello, welcome back to 401 00:21:27,960 --> 00:21:31,119 Speaker 1: the Australians Money Puzzle. I'm talking to Simon Jones of 402 00:21:31,160 --> 00:21:33,560 Speaker 1: Home Super. You probably don't know Simon Jones. You probably 403 00:21:33,600 --> 00:21:36,520 Speaker 1: don't know Home Super, but you may soon because he's 404 00:21:36,560 --> 00:21:40,200 Speaker 1: got a very ambitious plan. But it's actually quite practical, rational, 405 00:21:40,920 --> 00:21:44,520 Speaker 1: and I would think that it may well get off 406 00:21:44,560 --> 00:21:47,240 Speaker 1: the ground because the super funds, the big super funds might, 407 00:21:47,520 --> 00:21:50,280 Speaker 1: rather than trying to squash it because it's in some 408 00:21:50,320 --> 00:21:55,200 Speaker 1: way arrival to them, could actually incorporate this idea. We'll see. Okay. 409 00:21:55,600 --> 00:21:57,720 Speaker 1: Question from Tim, I love the show. Have you heard 410 00:21:57,720 --> 00:22:00,920 Speaker 1: of this piece of bureaucracy? I just receive this from 411 00:22:00,920 --> 00:22:05,680 Speaker 1: the read Estate administoration. Are they for real? Please note, 412 00:22:05,720 --> 00:22:08,480 Speaker 1: as you may be aware, for Australian residents selling property, 413 00:22:08,480 --> 00:22:12,280 Speaker 1: when the contract price is over seven fifty thousand, that is, 414 00:22:12,840 --> 00:22:15,440 Speaker 1: the seller must provide an ATO clear and certificate prior 415 00:22:15,520 --> 00:22:18,600 Speaker 1: to settlement, or the buyer must withhold twelve five percent 416 00:22:18,640 --> 00:22:21,159 Speaker 1: of the purchase price to provide to the ATO for 417 00:22:21,280 --> 00:22:26,920 Speaker 1: more information and to work certificate please click here. Thank you, Tim. 418 00:22:27,320 --> 00:22:32,239 Speaker 1: The paperwork and certification in relation to property settlement and 419 00:22:32,320 --> 00:22:35,639 Speaker 1: buying and selling property remains. For all the talk of 420 00:22:35,840 --> 00:22:40,919 Speaker 1: digital progress and simplification, it's still to kenzie, And as 421 00:22:40,920 --> 00:22:42,879 Speaker 1: far as I'm concerned, I can't believe it. I'm talking 422 00:22:42,880 --> 00:22:44,679 Speaker 1: with a friend who's buying a home at the moment 423 00:22:45,119 --> 00:22:47,080 Speaker 1: and has is late to the party, has never bought 424 00:22:47,080 --> 00:22:50,280 Speaker 1: a home before, and they just cannot believe how much 425 00:22:50,320 --> 00:22:54,680 Speaker 1: they have to sign et cetera. Any comments on that one, Simon. 426 00:22:55,000 --> 00:22:57,040 Speaker 2: No, it's it is. It is a process, so it 427 00:22:57,119 --> 00:23:00,520 Speaker 2: can be a convoluted process and very detailed. But fortunately 428 00:23:00,520 --> 00:23:03,159 Speaker 2: it's such a serious commitment and there is lots of 429 00:23:03,200 --> 00:23:05,280 Speaker 2: hoops to jump and contracts to song. 430 00:23:05,720 --> 00:23:08,960 Speaker 1: Imagine you're you're you're in an advanced, an elite level 431 00:23:09,040 --> 00:23:11,040 Speaker 1: of paperwork, and you're what you're trying to do when 432 00:23:11,040 --> 00:23:13,119 Speaker 1: you're actually trying to do something that is new to 433 00:23:13,200 --> 00:23:15,480 Speaker 1: the system, as opposed to inside the system, which at 434 00:23:15,560 --> 00:23:19,560 Speaker 1: least you are at least inside the system. Tin Okay, Cynthia, 435 00:23:19,720 --> 00:23:21,960 Speaker 1: is it true that Sydney prices are falling? I see 436 00:23:21,960 --> 00:23:25,639 Speaker 1: no evidence whatever of this in my neighborhood. Yeah, but 437 00:23:25,800 --> 00:23:28,720 Speaker 1: you probably wouldn't notice and no point two percent monthly 438 00:23:28,800 --> 00:23:31,240 Speaker 1: drop in your neighborhood, Cynthia, unless you had some sort 439 00:23:31,240 --> 00:23:35,080 Speaker 1: of extraordinary calculator calculator and you were counting it all up. 440 00:23:35,119 --> 00:23:38,560 Speaker 1: But it is happening. That is what the big researchers 441 00:23:38,600 --> 00:23:41,640 Speaker 1: are telling us. I think the interesting thing is that 442 00:23:41,760 --> 00:23:45,000 Speaker 1: on a monthly basis, prices are falling ever so slightly 443 00:23:45,000 --> 00:23:49,040 Speaker 1: Insidia Melbourne zero point two percent percent, something like that. 444 00:23:49,440 --> 00:23:52,360 Speaker 1: But it will accumulate, of course. And the very interesting 445 00:23:52,960 --> 00:23:56,040 Speaker 1: aspect of it is that some as the rates, particularly 446 00:23:56,080 --> 00:23:59,160 Speaker 1: as the rate cut forecast get pushed out into next year, 447 00:23:59,240 --> 00:24:01,400 Speaker 1: they've been pushed off from February to March, from March 448 00:24:02,040 --> 00:24:04,640 Speaker 1: up to me. Now you see that there is forecast 449 00:24:04,720 --> 00:24:06,879 Speaker 1: now that the big cities, city and movement will actually 450 00:24:06,880 --> 00:24:09,800 Speaker 1: see price detains next year somewhere between one and five percent. 451 00:24:10,400 --> 00:24:13,880 Speaker 1: And I imagine that's entirely possible. At the same time, 452 00:24:13,960 --> 00:24:16,480 Speaker 1: I forget that they're getting ten percent plus just about 453 00:24:16,480 --> 00:24:20,400 Speaker 1: everywhere else in the other cities, so very divided market 454 00:24:20,440 --> 00:24:24,120 Speaker 1: at the moment property ways, was it always this divided 455 00:24:24,160 --> 00:24:27,720 Speaker 1: simon in your experience that they're getting such different returns 456 00:24:27,720 --> 00:24:28,439 Speaker 1: in different cities. 457 00:24:29,119 --> 00:24:33,320 Speaker 2: Look, I believe so it's a chemic really geographically specific 458 00:24:33,600 --> 00:24:36,959 Speaker 2: certain areas, and really the main drivers are population and 459 00:24:37,000 --> 00:24:41,399 Speaker 2: the capacity of that population to purchase the property. So 460 00:24:41,880 --> 00:24:44,280 Speaker 2: population number one, twenty five people turning up at an 461 00:24:44,280 --> 00:24:47,960 Speaker 2: oction instead of five, and those that have the capacity 462 00:24:47,960 --> 00:24:50,760 Speaker 2: thanks to the lower regiest rates or borrowing capacity really 463 00:24:50,800 --> 00:24:53,600 Speaker 2: are the main drivers. But we had such sensational growth 464 00:24:53,640 --> 00:24:57,679 Speaker 2: throughout the COVID period and we often don't see those pullbacks, 465 00:24:57,840 --> 00:25:00,280 Speaker 2: but it happens more often than people realize. It's just 466 00:25:00,320 --> 00:25:03,320 Speaker 2: that we see share market updates every evening, we don't 467 00:25:03,359 --> 00:25:06,840 Speaker 2: see your specific home price update. And you can these days, yes, 468 00:25:06,920 --> 00:25:09,119 Speaker 2: you can even lot onto your own bank. Some of 469 00:25:09,119 --> 00:25:11,800 Speaker 2: those will give you those estimates and they don't change 470 00:25:11,800 --> 00:25:15,040 Speaker 2: as quickly as as markets, and they can be quite 471 00:25:15,119 --> 00:25:18,720 Speaker 2: opaque and have some ranges that seem hard to work out. 472 00:25:18,760 --> 00:25:21,800 Speaker 2: But the reality is you only really know the true 473 00:25:21,840 --> 00:25:23,440 Speaker 2: value the day you buy the property and the day 474 00:25:23,440 --> 00:25:25,280 Speaker 2: you sell it, and everything else is a little bit 475 00:25:25,280 --> 00:25:28,159 Speaker 2: of a guestimation and that but it certainly does vary 476 00:25:28,320 --> 00:25:30,240 Speaker 2: a lot more than most people realize. 477 00:25:30,720 --> 00:25:33,160 Speaker 1: Yes, I mean, look at Melbourne, it's down. It now 478 00:25:33,359 --> 00:25:37,040 Speaker 1: is down this year three percent. They're talking about next 479 00:25:37,119 --> 00:25:43,600 Speaker 1: year five percent. This is why Brisbane, Adelaide and Perth 480 00:25:44,119 --> 00:25:49,440 Speaker 1: absolutely or seen double figure increases in the scent period 481 00:25:49,920 --> 00:25:52,760 Speaker 1: that is this calendar year. Okay, finally one from Shawn. 482 00:25:53,280 --> 00:25:57,320 Speaker 1: I saw that Rental Affordability Index was released. Too much 483 00:25:57,400 --> 00:26:01,360 Speaker 1: gnashing of teeth in the media because rents are going up. 484 00:26:01,520 --> 00:26:04,040 Speaker 1: But isn't this wonderful news for investors? Why is there 485 00:26:04,040 --> 00:26:06,640 Speaker 1: so much negativity about rents going up? Shouldn't we celebrate 486 00:26:06,640 --> 00:26:09,560 Speaker 1: this win for hard working investors? Well, it depends on 487 00:26:09,560 --> 00:26:11,520 Speaker 1: who you are, as full shown, If your rent's going up, 488 00:26:11,560 --> 00:26:13,480 Speaker 1: you don't like it if you're paying, But if you 489 00:26:13,560 --> 00:26:16,720 Speaker 1: are a property owner, then of course you like it 490 00:26:16,800 --> 00:26:22,080 Speaker 1: and rentally yields. The big issue is whether you're yield 491 00:26:22,440 --> 00:26:25,280 Speaker 1: is going up. That is the percentage income you get 492 00:26:25,359 --> 00:26:27,480 Speaker 1: as a percentage of the AMOUNTI paid for the property. 493 00:26:27,960 --> 00:26:31,280 Speaker 1: And it has inched up a little, but only ever 494 00:26:31,359 --> 00:26:35,600 Speaker 1: so slightly actually in recent times. And we will now 495 00:26:35,640 --> 00:26:39,360 Speaker 1: see what happens next. If we have falling we could 496 00:26:39,400 --> 00:26:44,120 Speaker 1: actually have falling prices and rents still rising. That's not impossible, 497 00:26:44,720 --> 00:26:48,280 Speaker 1: but would be very unusual. Wouldn't it, Simon, It's technically possible. 498 00:26:48,480 --> 00:26:50,240 Speaker 2: And I think we often know have a look, yes, 499 00:26:50,280 --> 00:26:53,440 Speaker 2: we know that landlords and investors may be affected by 500 00:26:53,520 --> 00:26:57,360 Speaker 2: interest rate rises, but the actual cost of maintenance and 501 00:26:57,520 --> 00:27:01,640 Speaker 2: the inflation essentially affecting some of the other things around 502 00:27:01,680 --> 00:27:04,760 Speaker 2: being an investor really does have an impact on rents, 503 00:27:05,040 --> 00:27:07,600 Speaker 2: And look, it is an interesting space, and I often 504 00:27:07,640 --> 00:27:10,159 Speaker 2: think that the average mom and dad landlord gets a 505 00:27:10,160 --> 00:27:12,240 Speaker 2: little bit of a bit of a hard time, particularly 506 00:27:12,240 --> 00:27:16,919 Speaker 2: when affordability is so tight right now. And for my mind, 507 00:27:17,280 --> 00:27:20,000 Speaker 2: having an investment property, it really does favor actually a 508 00:27:20,000 --> 00:27:22,879 Speaker 2: new build anyway, because there's a lot of non cash 509 00:27:22,960 --> 00:27:26,240 Speaker 2: deductions and what might mean by that is depreciation on 510 00:27:27,359 --> 00:27:30,919 Speaker 2: your property fixtures and fittings that investors can really assist 511 00:27:31,000 --> 00:27:33,200 Speaker 2: them for, incentivizing them to go into property. So for 512 00:27:33,320 --> 00:27:36,480 Speaker 2: my mind, with respect to rents and the market in general, 513 00:27:36,600 --> 00:27:38,479 Speaker 2: I really can't understand for the life of me why 514 00:27:38,760 --> 00:27:42,560 Speaker 2: the government does not purely put a pause on tax 515 00:27:42,720 --> 00:27:46,040 Speaker 2: benefits for negative gearing or just tax benefits generally for 516 00:27:46,200 --> 00:27:50,199 Speaker 2: existing properties and just leave that door open for new builds, 517 00:27:50,200 --> 00:27:53,040 Speaker 2: your grandfather, the existing investors. But what that would do 518 00:27:53,160 --> 00:27:57,120 Speaker 2: overnight would encourage a lot more local investors to invest 519 00:27:57,280 --> 00:28:00,760 Speaker 2: in brand new builds and assist The number one priority 520 00:28:00,800 --> 00:28:02,480 Speaker 2: in my mind is Mohans. 521 00:28:03,200 --> 00:28:06,639 Speaker 1: Okay, very interesting. Well look, thank you very much for that, Simon, 522 00:28:07,160 --> 00:28:09,000 Speaker 1: and thanks very much for coming on the show. And 523 00:28:09,200 --> 00:28:12,040 Speaker 1: great to hear your plans and best of luck with them. 524 00:28:12,359 --> 00:28:14,480 Speaker 2: Thank you, James, and thanks again you listeners. 525 00:28:14,320 --> 00:28:19,040 Speaker 1: Thank you, and thanks to Leah samuelglu who produced today's show. 526 00:28:19,400 --> 00:28:23,000 Speaker 1: Let's have some correspondence, folks. Let's have some more questions 527 00:28:23,440 --> 00:28:28,400 Speaker 1: that the property investors take over the inbox. The email 528 00:28:28,560 --> 00:28:33,000 Speaker 1: is the Money Puzzle at the Australian dot com dot au. 529 00:28:33,280 --> 00:28:33,960 Speaker 1: Talk to you soon.