WEBVTT - Why house prices are fuelling an intergenerational war 0:00:02.240 --> 0:00:04.360 Nine podcasts. 0:00:06.400 --> 0:00:10.760 Well two studies have now confirmed that housing in Australia's 0:00:10.800 --> 0:00:17.760 major cities have become quote impossibly unaffordable unquote impossibly unaffordable. 0:00:18.280 --> 0:00:22.360 Sydney has been judged the least affordable city in the world. 0:00:22.920 --> 0:00:27.160 The median house price requires almost fourteen times the median 0:00:27.280 --> 0:00:30.600 wage to actually get into it and buy it, and 0:00:30.640 --> 0:00:33.000 that's been increasing over the years. Now this is fueling 0:00:33.040 --> 0:00:36.440 a lot of things in Australia. In particular, a generational 0:00:36.560 --> 0:00:41.959 war is beginning. Boomers are the target. Baby boomers already, 0:00:42.200 --> 0:00:47.680 Federal Treasurer Jim Chalmers has talked about intergenerational justice. To 0:00:47.720 --> 0:00:50.080 my mind, that means screw the boomers, look after the 0:00:50.120 --> 0:00:53.800 next generation. There is a social media trend to attack 0:00:53.920 --> 0:00:57.280 anybody over fifty to fifty five who's got a few dollars. 0:00:57.880 --> 0:01:02.920 There is class and age warfare resentment building in Australia 0:01:03.600 --> 0:01:05.800 over time. On this podcast, I want to look at 0:01:05.800 --> 0:01:10.120 the various frontline issues in generational wars, and this is 0:01:10.160 --> 0:01:14.160 the first one. Housing. One commentator described the cost of 0:01:14.200 --> 0:01:18.479 housing as a national emergency. It's freezing younger buyers out 0:01:18.480 --> 0:01:20.520 of the market. What I want to do here is 0:01:20.600 --> 0:01:24.440 explore real estate, explore housing affordability. What can we do 0:01:24.760 --> 0:01:27.039 for supply, What can we do for demand? What can 0:01:27.080 --> 0:01:31.400 we do for availability? There are other issues too, downsizing investment, 0:01:31.800 --> 0:01:35.560 taxes on property, land tax, stamp judy. You can't walk 0:01:35.640 --> 0:01:38.640 in the front door of your house without being taxed. 0:01:39.319 --> 0:01:43.679 Millennials and gen ygen X tend to say older homeowners 0:01:43.680 --> 0:01:47.640 are the problem, milking the system with tax benefits, forcing 0:01:47.720 --> 0:01:52.040 up prices. Boomers gen Z even say, come on, toughen up. 0:01:52.080 --> 0:01:53.840 We did it, You've got to do it as well. 0:01:54.320 --> 0:01:57.320 With me. Two people expert in the area, the Housing 0:01:57.360 --> 0:02:01.760 Expert Panel, Doctor Nicola Powell is head of research for Domain. 0:02:01.960 --> 0:02:05.880 She has fifteen years experience as an academic and private 0:02:06.200 --> 0:02:10.160 analyst and economist. One of the country's leading experts and 0:02:10.240 --> 0:02:13.639 with me as well Scott O'Neill. He's a property investment expert, 0:02:14.000 --> 0:02:17.079 founder of the company Rethink Investing, who has done very 0:02:17.120 --> 0:02:20.560 well with his own investing. He's a licensed real estate 0:02:20.639 --> 0:02:25.440 agent who has veered into professional property investment. I'm going 0:02:25.480 --> 0:02:28.480 to break this down into several areas. In particular, first 0:02:28.480 --> 0:02:32.280 home buyers. Generational wars are starting. I reckon, there's this 0:02:32.400 --> 0:02:36.160 real resentment towards people, older people with houses from those 0:02:36.200 --> 0:02:40.119 who haven't. Houses in Australia are amongst the most expensive 0:02:40.120 --> 0:02:45.840 in the world, impossibly unaffordable. Recent reports have said impossibly unaffordable. 0:02:46.040 --> 0:02:48.880 So who's cleaning up, who's making the money? Who's making 0:02:48.919 --> 0:02:51.160 the money, Scott O'Neil, you're an agent, an investor, you're 0:02:51.160 --> 0:02:52.200 making a fortune out of this. 0:02:52.560 --> 0:02:55.520 Well, as you said, I'm an investor. 0:02:55.560 --> 0:02:58.640 We're finding more people are defaulting to investing rather than 0:02:58.680 --> 0:03:01.920 purchasing a family home because of the reasons you mentioned it. 0:03:02.280 --> 0:03:05.760 If you're living in a capital city in Australia, it's 0:03:05.880 --> 0:03:08.440 just out of reach for most families, and even in 0:03:08.480 --> 0:03:11.840 the regional areas it's really getting up there. So people 0:03:11.840 --> 0:03:15.160 are just renvesting and they just rent where they live 0:03:15.400 --> 0:03:16.520 and then invest somewhere else. 0:03:16.639 --> 0:03:18.000 That's what's happening more and more. 0:03:18.080 --> 0:03:20.679 And what they're buying properties they wouldn't necessarily live in. 0:03:20.680 --> 0:03:22.760 They're not buying flats or units or something like that. 0:03:23.600 --> 0:03:25.919 Also, just more affordable houses. 0:03:26.480 --> 0:03:29.720 There's obviously people investing in units, but those that can, 0:03:30.000 --> 0:03:33.760 they'll go to the cheaper capital cities potentially or regional 0:03:33.800 --> 0:03:36.560 markets and instead of spending two or three mil on 0:03:36.600 --> 0:03:39.120 a house in Sydney. You'll see them buying a seven 0:03:39.240 --> 0:03:43.040 hundred and fifty grand smaller property somewhere else around the country. 0:03:43.480 --> 0:03:46.680 Quite location agnostic is what they're doing. 0:03:46.720 --> 0:03:50.320 It's more budget dependent and yeah, that's what's happening more 0:03:50.320 --> 0:03:51.640 and more in the search. 0:03:51.360 --> 0:03:52.240 Of a bit more yield. 0:03:52.400 --> 0:03:55.480 You've done a subturb job avoiding the question. Who's making money? 0:03:57.400 --> 0:04:00.960 Well, the baby boomers are, obviously because they held the properties. 0:04:02.920 --> 0:04:05.480 But look, anyone that's sort of in the market is 0:04:05.480 --> 0:04:08.120 doing very well at the moment. There's been incredibly strong 0:04:08.160 --> 0:04:11.600 capital growth for you know, especially in the last fifteen 0:04:11.680 --> 0:04:15.880 twenty years. It's been a remarkable growth phase and there's 0:04:15.920 --> 0:04:17.920 been very little blips on that rado as well. 0:04:18.000 --> 0:04:20.480 But Nicola, I'll ask you a mum too, But I 0:04:20.480 --> 0:04:23.240 don't take that seriously. I've owned a house for a 0:04:23.279 --> 0:04:25.480 long time. I see the value of the house go up. 0:04:25.640 --> 0:04:27.760 I want to sell it in a good market. I've 0:04:27.760 --> 0:04:29.640 got to buy in a good market. Where's my gain 0:04:30.279 --> 0:04:32.880 I mean on my downsize and therefore take a bit 0:04:32.880 --> 0:04:35.360 of equity out of it. Where's the game, Nicola, who 0:04:35.360 --> 0:04:36.440 do you think is making money? 0:04:36.600 --> 0:04:38.480 I think those that have been established in the housing 0:04:38.520 --> 0:04:42.039 market for many years are the ones that are benefiting 0:04:42.120 --> 0:04:45.920 from price growth. I think that we have to consider 0:04:45.960 --> 0:04:48.039 that the property market is really at the heart of 0:04:48.080 --> 0:04:51.919 the Australian economy. About seventy percent of Australia's household wealth 0:04:51.960 --> 0:04:55.159 is tied to the value of our homes. And you know, 0:04:55.160 --> 0:04:57.760 when you look at the valuation of property across Australia, 0:04:57.800 --> 0:05:01.360 it's over eleven trillion dollars. This is a significant amount 0:05:01.400 --> 0:05:04.280 of money. I think what you've got, and this is 0:05:04.279 --> 0:05:06.920 probably what you're alluding to, is you've got this growing 0:05:06.960 --> 0:05:09.680 gap between the haves and the haves nots, and if 0:05:09.720 --> 0:05:12.000 you are a young person in today trying to get 0:05:12.040 --> 0:05:16.160 a foot onto the property ladder, it is extremely challenging. 0:05:16.520 --> 0:05:20.479 And I think it's particularly a growing gap between those 0:05:20.640 --> 0:05:23.240 that don't have family members to be able to lean 0:05:23.279 --> 0:05:24.560 on for financial support. 0:05:24.880 --> 0:05:27.240 Bank of mummy, durn yeah. 0:05:27.040 --> 0:05:29.080 Bank of mom or nanam pop. I think that what 0:05:29.120 --> 0:05:33.240 we've got to be real here is that generational wealth 0:05:33.680 --> 0:05:37.479 could likely skip a generation. I think boomers passing on 0:05:37.520 --> 0:05:42.000 their financial wealth might not necessarily be to their children, 0:05:42.040 --> 0:05:46.120 it might be to their grandchildren. I think Australia it 0:05:46.240 --> 0:05:49.920 is so embedded in our culture to buy a property. 0:05:50.240 --> 0:05:53.960 I think that that Australian dream still runs very strong 0:05:54.760 --> 0:05:57.599 in Australia. But if he's seen as a measure of 0:05:57.720 --> 0:06:02.520 success and wealth creation, and that has been established in 0:06:02.560 --> 0:06:04.640 Australia for many, many, many years. 0:06:04.720 --> 0:06:06.840 But is it gone? Is it over? Is it dead 0:06:07.400 --> 0:06:11.160 the Australian the house with the backyard? Is it unattainable? 0:06:11.279 --> 0:06:13.920 So I'm going to answer that in a slightly different way, 0:06:14.040 --> 0:06:16.839 but I will answer your question. I don't think it's dead. 0:06:17.200 --> 0:06:21.279 I think that the dream to own your own home 0:06:21.640 --> 0:06:25.039 is still very much, deeply a bit embedded in our culture. 0:06:25.480 --> 0:06:28.800 I think what we have seen change, it's more the 0:06:28.880 --> 0:06:31.200 quarter acre block with a hills voice in the backyard. 0:06:31.560 --> 0:06:35.280 It is actually what we're purchasing is changing. We live 0:06:35.279 --> 0:06:37.040 in some of the least dens cities in the world. 0:06:37.279 --> 0:06:40.000 We have global cities, we have beautiful cities. You know, 0:06:40.080 --> 0:06:44.600 Sydney is the best city I have probably ever been 0:06:44.920 --> 0:06:50.120 lucky enough to live in. But it is very unaffordable. 0:06:50.160 --> 0:06:53.560 And I think today's first time buyer, they are purchasing 0:06:53.640 --> 0:06:57.560 a unit that is what's realistic for a first time today. 0:06:57.600 --> 0:07:00.480 All their rent vesting has Scott alluded to I think 0:07:00.520 --> 0:07:03.680 the whole concept of re investing was born in Sydney 0:07:03.680 --> 0:07:05.719 because it is such an expensive market. 0:07:05.720 --> 0:07:08.000 Okay, renvesting is one thing, but you talk about the 0:07:08.080 --> 0:07:11.200 dream exists, it's just been adapted a little. We're going 0:07:11.200 --> 0:07:12.600 to live in a townhouse, we live in a flat, 0:07:12.600 --> 0:07:14.520 we're going to live on the outer suburbs or anything. 0:07:14.800 --> 0:07:16.880 I don't know that that's actually got through yet that 0:07:16.920 --> 0:07:19.480 people might need to do that. Who wants to live 0:07:19.480 --> 0:07:22.680 in the outer suburbs where there's no services and that 0:07:22.720 --> 0:07:26.440 the traffic takes twice as long to get in and 0:07:26.480 --> 0:07:28.680 you're living in a mansion that you put holes in 0:07:28.680 --> 0:07:31.120 the wall if you lean against them. Scott, what do 0:07:31.720 --> 0:07:34.040 you think is the dream dead or shaky? 0:07:34.400 --> 0:07:34.600 Look? 0:07:34.640 --> 0:07:38.520 It is definitely shaken and you can tell like I 0:07:38.560 --> 0:07:41.080 actually think there's going to be This trend's going to 0:07:41.120 --> 0:07:42.240 go a lot further as well. 0:07:43.160 --> 0:07:45.520 You know, you look at parts of Europe in you know. 0:07:45.640 --> 0:07:48.360 I'd call it a more mature market that's been around, 0:07:48.440 --> 0:07:50.920 more established than our sort of young country is. And 0:07:52.000 --> 0:07:55.480 lifelong renting is a big thing over that. It's going 0:07:55.560 --> 0:07:59.160 to happen here due to cost of construction, the fact 0:07:59.160 --> 0:08:02.360 that people are we're not keeping up with the demand, 0:08:02.560 --> 0:08:06.200 and with high immigration and just the way this country 0:08:06.240 --> 0:08:09.520 is just never catching up with a supply of the market. 0:08:09.600 --> 0:08:10.480 It's just inevitable. 0:08:10.520 --> 0:08:14.080 Things are going to get more expensive and it's just 0:08:14.120 --> 0:08:16.400 going to be kind of part of life. So unless 0:08:16.400 --> 0:08:19.560 you get helped from mum and dad or grandpa and grandma, 0:08:19.760 --> 0:08:23.400 it's going to be pretty difficult to buy a nice 0:08:23.480 --> 0:08:26.480 house in a sablage market when you're up against people 0:08:26.560 --> 0:08:28.080 that are a generation ahead of. 0:08:28.000 --> 0:08:30.160 You with more savings life long rinting. 0:08:30.360 --> 0:08:33.640 Yeah, and then the recussion of that long term is 0:08:33.679 --> 0:08:36.840 you could imagine more than half the population becomes lifelong renters. 0:08:36.920 --> 0:08:39.040 That I think will create a bit of a political 0:08:39.160 --> 0:08:41.959 risk because if more than fifty percent of people believe 0:08:42.000 --> 0:08:44.439 they'll never own a home, they're going to vote more 0:08:44.480 --> 0:08:47.760 towards tenant friendly policies. We're seeing this happen more and more. 0:08:48.840 --> 0:08:51.640 You're obviously seen the likes of Victoria with the land 0:08:51.720 --> 0:08:55.040 tax increases that we're trying to bring in some laws 0:08:55.080 --> 0:08:58.640 into Queensland that would have had a similar impact, and 0:08:59.200 --> 0:09:01.800 you know, it's just going to be no grounds evictions. 0:09:01.840 --> 0:09:02.680 Things like this are going. 0:09:02.600 --> 0:09:05.480 To become more and more common, which could put the 0:09:05.520 --> 0:09:07.400 investing at a bit more of a risk. 0:09:07.559 --> 0:09:10.160 I'd like to get into government involvement soon, do you 0:09:10.320 --> 0:09:14.559 do you agree with that assessment Nikola that the future 0:09:14.600 --> 0:09:17.920 is lifelong renting for the majority, or at least few percent. 0:09:18.600 --> 0:09:22.840 So the rental market plays a really important role in 0:09:22.920 --> 0:09:25.559 providing a home to many Australians. About one third of 0:09:25.640 --> 0:09:28.720 US rent I think the concept of longer term leases 0:09:28.880 --> 0:09:32.920 is something that we should be really adopting. I think 0:09:32.960 --> 0:09:35.440 that we've always had a portion of our population that 0:09:35.640 --> 0:09:38.960 are going to be lifelong renters, whether that's through choice 0:09:39.080 --> 0:09:40.920 or whether that's through the fact that they just don't 0:09:40.920 --> 0:09:45.520 have the financial means. I think ultimately, probably what Scott 0:09:46.000 --> 0:09:48.559 is alluding to is that more and more people are 0:09:48.679 --> 0:09:51.240 just going to face the inability to actually purchase their 0:09:51.240 --> 0:09:53.440 first time, which means more of them are actually going 0:09:53.480 --> 0:09:55.679 to be locked in the rental market. And I think, 0:09:55.720 --> 0:09:59.199 you know, we have seen huge amounts of rental reform 0:09:59.320 --> 0:10:02.680 in across different states and territory governments in recent years, 0:10:02.960 --> 0:10:05.959 and I think the rental market is a huge point 0:10:06.040 --> 0:10:09.920 of our property market overall. I don't think that we'll 0:10:09.960 --> 0:10:11.679 ever get to the point where fifty percent of our 0:10:11.720 --> 0:10:15.240 population will be lifelong renters though that is a significant, 0:10:16.360 --> 0:10:19.640 large chunk of our nation, and I think, you know, 0:10:19.640 --> 0:10:22.200 we've got to think longer term, you know, when you 0:10:22.280 --> 0:10:26.800 think about baby boomers, and the biggest increase in demographics 0:10:26.800 --> 0:10:28.840 over the next five years is going to be those 0:10:28.840 --> 0:10:31.680 in their golden years. And particularly when we get to 0:10:33.160 --> 0:10:36.320 when baby boomers are passing and they are passing on 0:10:36.360 --> 0:10:40.240 their generational wealth, what you're going to actually see is 0:10:40.880 --> 0:10:44.720 a wave of rejuvenation from about in a middle suburbs 0:10:45.040 --> 0:10:48.240 and you will see governments moving and they will increase 0:10:48.280 --> 0:10:51.520 density in some of these prime inner city locations. And 0:10:51.600 --> 0:10:53.839 one you mentioned, Neil that you wanted to talk about 0:10:53.840 --> 0:10:57.400 government policy. We really need to see increased density. We 0:10:57.480 --> 0:11:00.360 need to make sure that we are utilizing not only 0:11:00.360 --> 0:11:04.280 our housing stock that we have already built effectively. We 0:11:04.360 --> 0:11:06.840 need to make sure that we're utilizing the land that 0:11:06.880 --> 0:11:10.720 we have on offer around infrastructure that is already there 0:11:10.760 --> 0:11:12.840 that can take that high level of density. 0:11:13.200 --> 0:11:16.160 There's a lot of resentment building towards baby boomers in 0:11:17.559 --> 0:11:21.040 social media and the rest of it, and the resentment 0:11:21.080 --> 0:11:25.840 goes along the lines of you've done it, You've occupying 0:11:25.840 --> 0:11:27.680 all the houses you've got all these tax breaks to 0:11:27.720 --> 0:11:30.880 get there. What and I get to Scott point about 0:11:30.880 --> 0:11:34.880 fifty percent rental. Eventually, as you say, Nicola, the baby 0:11:34.880 --> 0:11:38.920 boomers move on, die and the kids get the money. 0:11:38.960 --> 0:11:42.280 Don't they then go and buy houses or inherit the houses? 0:11:42.400 --> 0:11:46.040 I mean, in the end, these generations that are complaining 0:11:46.120 --> 0:11:48.360 very loudly at the moment are going to end up 0:11:48.400 --> 0:11:51.040 with the boomers' money unless they drink it all on 0:11:51.080 --> 0:11:51.679 a golf course. 0:11:52.880 --> 0:11:54.839 Sounds great, that, doesn't it that? 0:11:55.360 --> 0:11:58.760 But isn't that the reality? It's got the money that 0:11:58.920 --> 0:12:02.640 the generational well held by baby boomers will filter down. 0:12:02.880 --> 0:12:06.400 Yeah, look it's and it's already starting to happen. People 0:12:06.400 --> 0:12:10.440 are obviously either personally guaranteed or doing early early handovers 0:12:10.440 --> 0:12:15.800 that gifts for deposits. So, like Nikola mentioned, there's a 0:12:15.880 --> 0:12:18.920 massive transfer of wealth. I don't know the exact statistic, 0:12:18.960 --> 0:12:21.320 but like I've heard, fifty percent of the total world 0:12:21.480 --> 0:12:23.840 wealth is going to get transitioned over the next twenty 0:12:23.840 --> 0:12:26.040 odd years. So it might be able to correct me 0:12:26.080 --> 0:12:29.120 on that exact figure, but it's a significant number, and 0:12:29.200 --> 0:12:29.600 a lot. 0:12:29.440 --> 0:12:33.040 Of it's held in property stops as well, and it might. 0:12:32.960 --> 0:12:35.959 Skip poor old genets and go straight to Gen y 0:12:36.160 --> 0:12:39.080 or millennials potentially depending on the age. 0:12:39.120 --> 0:12:41.400 But yeah, it's already started. 0:12:41.480 --> 0:12:45.960 It's basically from now onwards, and yeah, there's going to 0:12:45.960 --> 0:12:47.800 be huge transitions. 0:12:48.280 --> 0:12:51.760 Ask you both, is that social media surge? Correct? Have 0:12:51.840 --> 0:12:58.160 the boomers done too well? Have they been closeted by 0:12:59.040 --> 0:13:02.920 government policies? Have they have they had too much of 0:13:02.960 --> 0:13:06.920 an advantage in establishing this housing wealth. 0:13:08.040 --> 0:13:09.800 I think we need to go back to what the 0:13:09.880 --> 0:13:12.640 core is here, and that is that we have not 0:13:12.960 --> 0:13:17.000 been building enough homes over the past two decades and 0:13:17.000 --> 0:13:19.959 that's what has created one of the drivers to continuous 0:13:20.000 --> 0:13:22.720 price growth over the last two decades. We have spent 0:13:22.800 --> 0:13:25.880 most of that time in a period of undersupply. When 0:13:25.880 --> 0:13:28.400 you look at what population growth has been sitting at 0:13:28.480 --> 0:13:30.640 versus the homes that we have built that are new, 0:13:31.679 --> 0:13:33.960 we haven't been meeting that. So not only do we 0:13:34.040 --> 0:13:36.240 have an undersupply of housing, there is a whole portion 0:13:36.280 --> 0:13:39.320 of Australians that are actually under housed, which means that 0:13:39.360 --> 0:13:41.760 they are not actually living in a home that suits 0:13:41.800 --> 0:13:44.640 their current needs. So I kind of flip it back 0:13:44.679 --> 0:13:46.880 to what we were talking about slightly earlier, which was 0:13:46.920 --> 0:13:49.640 around policy. You know, it goes back to the argument 0:13:49.640 --> 0:13:52.120 is should population growth actually be tied to the number 0:13:52.120 --> 0:13:54.840 of homes that we can actually supply, because if we 0:13:54.960 --> 0:13:57.600 had built enough homes, we would not be in the 0:13:57.640 --> 0:14:00.720 scenario today where you know, Sydney's house price is sitting 0:14:00.720 --> 0:14:02.640 at one point seven mill. 0:14:02.600 --> 0:14:05.640 Two points that why haven't we built more homes scott policy. 0:14:05.800 --> 0:14:08.679 Like you mentioned those sort of inner ring suburbs, they 0:14:08.679 --> 0:14:11.400 have not had the density increases needed. There's a lot 0:14:11.440 --> 0:14:15.079 of protectionism in many suburbs, and rightly so in some areas, 0:14:15.120 --> 0:14:17.720 but the infrastructure hasn't caught up. 0:14:17.760 --> 0:14:18.440 In many areas. 0:14:18.480 --> 0:14:22.880 There's a default for people to move into certain capital 0:14:22.920 --> 0:14:25.680 cities instead of going into other markets, and that's due 0:14:25.720 --> 0:14:30.800 to jobs, that's due to just lifestyle choices. You've seen 0:14:30.840 --> 0:14:33.520 some markets become more affordable, like the lights of Melbourne, 0:14:33.600 --> 0:14:35.080 but then you've got others that have gone. 0:14:34.960 --> 0:14:35.440 The other way. 0:14:35.560 --> 0:14:38.640 So it's, yeah, it's a bit of a mixed bag. 0:14:38.680 --> 0:14:42.400 But look, we are under supplied massively, and that's there's 0:14:42.400 --> 0:14:45.440 a bit of a people still prefer going for the 0:14:45.520 --> 0:14:48.000 house and there's going to be a lot more units 0:14:48.000 --> 0:14:50.200 built in the near future, so that will solve some 0:14:50.280 --> 0:14:52.480 of it, but then some people don't want to buy 0:14:52.520 --> 0:14:55.120 and live in a unit forever as well, So maybe 0:14:55.160 --> 0:14:56.600 the culture needs to do well. 0:14:56.640 --> 0:15:01.040 Yeah, we get back to undermining that dream and changing 0:15:01.040 --> 0:15:03.120 the culture, and the culture is still no. I want 0:15:03.160 --> 0:15:05.720 a house. I want a house, and it might be entrendy, 0:15:05.760 --> 0:15:09.240 little inner city suburb with a tiny backyard. I don't 0:15:09.280 --> 0:15:11.240 particularly want to live out of town. I want a house. 0:15:11.240 --> 0:15:15.640 You got to change that attitude. The other thing you 0:15:15.640 --> 0:15:19.520 talk about population, Australia's population in two thousand and was 0:15:19.600 --> 0:15:22.600 nineteen point two minion. It's now twenty seven and a 0:15:22.600 --> 0:15:25.880 half minion. That is a forty percent increase, near enough 0:15:25.880 --> 0:15:28.560 for forty percent increase in twenty five years. Is that 0:15:28.640 --> 0:15:30.720 too much for the housing market, Nicola. 0:15:31.440 --> 0:15:33.400 We haven't been able to construct enough homes to meet 0:15:33.400 --> 0:15:35.440 that population growth. You know, when you look at a 0:15:35.480 --> 0:15:37.520 really simple line chart and you do the change in 0:15:37.560 --> 0:15:39.960 both of those are homes built versus the number of 0:15:40.000 --> 0:15:44.160 new residents to Australia. We haven't been able to match that. 0:15:44.640 --> 0:15:47.480 And that's due to various reasons, due to red tape, 0:15:48.360 --> 0:15:51.320 due to the high costs, due to even you know, 0:15:51.920 --> 0:15:57.520 rise in cost of construction, project feasibility, even productivity has 0:15:57.560 --> 0:16:00.560 been diminished in the construction in the construction industry is 0:16:00.640 --> 0:16:05.080 extremely strained. And what you've got is this dynamic currently 0:16:05.120 --> 0:16:07.400 in our housing market where you've got a really wide 0:16:07.480 --> 0:16:10.960 price gap between the price it costs to buy a 0:16:11.000 --> 0:16:14.280 new home versus the price it costs to purchase an 0:16:14.400 --> 0:16:18.360 established home. And so what you have is Australians quite 0:16:18.400 --> 0:16:21.320 rightly are going to establish homes because they're technically cheaper 0:16:21.320 --> 0:16:24.320 to build, but we're never going to actually stimulate the 0:16:24.480 --> 0:16:27.040 new supply of housing until we see a leveling out 0:16:27.120 --> 0:16:30.560 between that difference. We need to really focus on policy 0:16:30.600 --> 0:16:34.240 that drives demand to new homes if we want to. Ultimately, 0:16:34.240 --> 0:16:36.880 for me, the core policy is how do we deliver 0:16:37.400 --> 0:16:39.600 more homes to Australia because we don't have enough field. 0:16:39.800 --> 0:16:41.960 But you seem to be suggesting we should be linking 0:16:42.000 --> 0:16:46.000 our population growth, which essentially means immigration. That's the only 0:16:46.000 --> 0:16:48.160 thing we can control. We're not going to control the 0:16:48.160 --> 0:16:52.040 birth rate, and that's not all staggering anyway. But are 0:16:52.080 --> 0:16:56.040 you suggesting we should link immigration or population growth to 0:16:56.120 --> 0:16:59.640 housing supply and there's no houses available, therefore no immigration 0:16:59.680 --> 0:16:59.960 this year? 0:17:01.440 --> 0:17:03.680 I think it should be something that is highly considered. 0:17:04.200 --> 0:17:08.320 Get it, It'll never happen because immigration covers up recession. 0:17:08.440 --> 0:17:11.200 Exactly, so it would never happen. So then it goes 0:17:11.240 --> 0:17:14.240 to how we actually can stimulate the supply of new homes, 0:17:14.240 --> 0:17:16.240 and that's where you need those policies. So it might be, 0:17:16.280 --> 0:17:18.320 for example, we've got a wave of new first home 0:17:18.359 --> 0:17:22.080 buyer policies coming into place. It should be things like 0:17:22.640 --> 0:17:26.080 stimulating first home buyers and steering them towards new to 0:17:26.119 --> 0:17:28.199 help stimulate the construction of new home. 0:17:29.240 --> 0:17:34.080 Well, I'm still looking for the emerging generations. Get somebody 0:17:34.119 --> 0:17:36.800 to blame that can blame the boomers? Can they blame 0:17:36.840 --> 0:17:39.119 immigration as well? And immigration is a very positive thing 0:17:39.160 --> 0:17:41.520 for the country in many, many, many ways. But can 0:17:41.560 --> 0:17:44.560 they blame immigration for the fact that housing is what's 0:17:44.600 --> 0:17:46.640 the term term possibly unaffordable? 0:17:47.280 --> 0:17:49.840 Yeah, I think that can because there's a million extra 0:17:49.960 --> 0:17:52.440 people in the last twelve months as well in Australia, 0:17:52.480 --> 0:17:55.040 so that's a very strong increase, you know, roughly three 0:17:55.040 --> 0:17:58.560 and a half percent. So we haven't we haven't introduced 0:17:58.600 --> 0:18:01.840 the same level of supplier nic Clobe mentioned, and there's 0:18:01.920 --> 0:18:04.520 no chance that we're going to be keeping up with 0:18:04.560 --> 0:18:07.280 the next wave as well, so you know, you keep 0:18:07.280 --> 0:18:10.120 falling forward further and further behind. If there's one hundred 0:18:10.160 --> 0:18:14.520 people trying to buy fifty houses, prices are going to 0:18:14.560 --> 0:18:16.359 go up. And that's that's what we're up against. 0:18:16.440 --> 0:18:20.560 Government seems to ignore this. Does anybody seriously put to government, look, yes, 0:18:21.200 --> 0:18:24.800 houses are IMPOSSI kept coming up the phrase impossibly unaffordable. 0:18:25.000 --> 0:18:27.680 One of the reasons is your immigration poblicy. So anybody 0:18:27.680 --> 0:18:30.360 ever raised that with government and got a reaction. 0:18:30.359 --> 0:18:34.880 I think it has been discussed. Fore, I'm not sure 0:18:34.960 --> 0:18:37.800 what the outcome of that, probably very negative given that 0:18:38.000 --> 0:18:40.480 there has been no change. I think one of the 0:18:40.480 --> 0:18:42.680 other kind of elephants in the room, though, is also 0:18:42.760 --> 0:18:47.040 stamp duty. Stamp duty is a massive disincentive to move 0:18:47.440 --> 0:18:50.280 and one of the key issues across our current housing 0:18:50.720 --> 0:18:54.080 stock is that we are not right sizing our homes. 0:18:54.480 --> 0:18:56.480 So what that means is we have a large portion 0:18:56.520 --> 0:19:00.479 of Australians living in homes that far exceed seed them needs. 0:19:00.760 --> 0:19:03.240 And I'm not saying that, you know, an Australian can't 0:19:03.240 --> 0:19:06.280 have a spare bedroom. You know, it's functional. We all 0:19:06.440 --> 0:19:08.439 love that additional room. If we're able to afford it. 0:19:08.720 --> 0:19:12.160 But when you look at census data, sixty five percent 0:19:12.280 --> 0:19:15.520 of owner occupiers who own their home outright have two 0:19:15.680 --> 0:19:20.200 or more spare bedrooms. And we have a disincentive to move, 0:19:20.240 --> 0:19:24.560 We have a disincentive to relocate for work opportunities because 0:19:24.600 --> 0:19:27.640 of that high cost barrier. And also what you see 0:19:27.720 --> 0:19:30.600 is people don't buy a home that they think they're 0:19:30.640 --> 0:19:32.359 going to live in for the next three years. They 0:19:32.400 --> 0:19:33.800 buy a home that they think they're going to live 0:19:33.840 --> 0:19:36.160 in for the next ten years. And that is because 0:19:36.200 --> 0:19:38.399 they want to reduce the amount of stamp duty that 0:19:38.440 --> 0:19:41.840 they pay on their life of buying and selling property, 0:19:42.280 --> 0:19:45.040 so they leap a property type to factor in the 0:19:45.119 --> 0:19:47.919 growing family over that ten year period. Whereas if we 0:19:47.920 --> 0:19:50.800 didn't have stamp duty, what that would mean is that 0:19:50.840 --> 0:19:53.600 we would be more inclined to actually right size their 0:19:53.600 --> 0:19:55.880 heart at our homes. And we don't have this right 0:19:55.920 --> 0:19:58.000 sizing issue in the rental market, which we know is 0:19:58.080 --> 0:20:00.880 much more free form, is much more easier to jump 0:20:00.920 --> 0:20:02.520 between different rentals. 0:20:02.840 --> 0:20:06.080 Yeah, just a personal story about stamp duty, and you're 0:20:06.119 --> 0:20:10.200 quite right, living in a large house, comfortable house, probably 0:20:10.240 --> 0:20:13.879 bigger than needed, good suburb worth a fair bit of money, 0:20:13.960 --> 0:20:17.040 and when my kids were small, I thought I should, really, 0:20:18.520 --> 0:20:19.879 because I was earning good money, I should go and 0:20:19.920 --> 0:20:21.760 get a bigger mortgage and buy a bigger house, buy 0:20:21.760 --> 0:20:23.600 a bigger, better house and a bigger bit of suburb 0:20:23.800 --> 0:20:26.600 as an investment. Capital gains tax free and the rest 0:20:26.600 --> 0:20:29.919 of it. It made financial success, except I worked in 0:20:30.000 --> 0:20:32.080 radio and you're never sure you'd have a job next week, 0:20:32.480 --> 0:20:35.840 so I wasn't willing to risk that mortgage. Then when 0:20:35.840 --> 0:20:38.560 I came to sell the house and downsize, I thought, 0:20:38.600 --> 0:20:41.200 if i'd done that, i'd have a property worth probably 0:20:41.200 --> 0:20:44.080 twice what that one was worth. And the reason I 0:20:44.080 --> 0:20:45.800 didn't do it is we use the money that would 0:20:45.800 --> 0:20:47.760 have gone on stamp duty to renovate the other one. 0:20:48.080 --> 0:20:49.119 And I guess that's typical. 0:20:49.160 --> 0:20:51.800 Scott is yeah, And I do a lot of work 0:20:51.840 --> 0:20:54.920 in the commercial field and we're seeing a lot of 0:20:55.440 --> 0:20:58.119 new policies come through on that front to help with 0:20:58.200 --> 0:21:01.400