In this week's episode, we're welcoming back an incredibly passionate and eloquent data analysis and reporting expert who is ALSO a returning guest:
Eliza Owen, Head of Residential Research Australia at CoreLogic!
In this episode, we'll use her brilliant insights to explore precisely WHY we see the numbers in today's property market, like:
If the housing market is undersupplied, why are some market values still falling?! Or how has the housing market defied economic predictions?
Tune in now to find out!
Free Stuff Mentioned
LISTEN TO THE FIRST 20 EPISODES HERE >>
MOORR MONEY MANAGEMENT APP:
👉 Apple: https://apple.co/3ioICGW
👉 Google Play: https://bit.ly/3OT86bW
👉 Web platform: https://www.moorr.com.au/
FREE MASTERCLASS:
- How to Build a Property Portfolio and Retire on $2,000 a week >>
FREE BEST-SELLING BOOKS:
- The Armchair Guide to Property Investing
- Make Money Simple Again
FIND US HERE:
- Website
- Instagram
- Facebook
- Youtube
In this week's episode, we're welcoming back an incredibly passionate and eloquent data analysis and reporting expert who is ALSO a returning guest:
Eliza Owen, Head of Residential Research Australia at CoreLogic!
In this episode, we'll use her brilliant insights to explore precisely WHY we see the numbers in today's property market, like:
If the housing market is undersupplied, why are some market values still falling?! Or how has the housing market defied economic predictions?
Tune in now to find out!
Free Stuff Mentioned
LISTEN TO THE FIRST 20 EPISODES HERE >>
MOORR MONEY MANAGEMENT APP:
👉 Apple: https://apple.co/3ioICGW
👉 Google Play: https://bit.ly/3OT86bW
👉 Web platform: https://www.moorr.com.au/
FREE MASTERCLASS:
- How to Build a Property Portfolio and Retire on $2,000 a week >>
FREE BEST-SELLING BOOKS:
- The Armchair Guide to Property Investing
- Make Money Simple Again
FIND US HERE:
- Website
- Instagram
- Facebook
- Youtube
Alright, folks, welcome back to the Property Couch podcast, and we've got an amazing episode for you today. We have got a guest sitting with us on the couch. Her name is Eliza Owen, and we're going to talk about why Interest rates rising and house prices rising too. Is this an anomaly? We chat about that too. We're also talking about houses versus units. Will that change in the future? What else do we have a minute?
Speaker 2:Well, Bryce, we're going to talk about an interesting phenomenon that's also happening where we're saying there's a huge under supply of houses, but in certain markets some property markets are falling. How does that work? How do we get this idea between purchasing versus living somewhere and the economic consequences of that conversation?
Speaker 1:The economic consequences of that conversation. Folks, this is an exciting show. Let's rip into it now.
Speaker 3:Welcome to the Property Couch where, each week, you get to listen to two of Australia's leading property and money experts Bryce Holdaway, co-host of Location Location, location Australia on Foxtel's Lifestyle Channel and co-host of Escape from the City on the ABC. And Ben Kingsley, chair of Property Investors Council of Australia and a back-to-back winner of the Property Investment Advisor of the Year Award. And both the partners of the multi-award winning Empower Wealth. Co-creators of Moor, the free lifestyle design app, as well as bestselling authors of the Armchair Guide to Property Investing and Make Money Simple Again. Stay tuned as they bring you the Insiders Guide to Property Finance and Money Management.
Speaker 1:Hi folks, welcome back to the Property Couch podcast and, ben, I'm excited not only to have you on the couch today, but I'm excited for a very special guest on the Property Couch. How are you?
Speaker 2:Made on well. It's another week of learning and education opportunity, so I'm thrilled to be here, to be able to be part of that program.
Speaker 1:Very deep. Our guest today, eliza, is a champion. It's been too long since we've had her on the podcast, ben, so we're excited to rip into her expertise and learn today, and our audience just needs to strap in and enjoy the ride. But before we get there, ben, it was our ninth birthday last Friday. Oh, we're on baby birthday. I didn't get to scream.
Speaker 4:I didn't have any of those.
Speaker 1:So just last little shout out, because we don't know how long we're going to do this for Ben, but we're giving away free reports. So you go to the propertycouchcomau forward slash property report and you can get your free report. So go and check that out. Just a reminder we're on our on our race for 100,000 subscribers in 2020 for Ben. So our request is if you listen to us and you haven't subscribed, would you please do that? It makes a difference so that we can get into the earbuds of more people and help them on their financial journey. And, of course, if you've enjoyed the podcast particularly on a day like today, Ben, when we got an incredible guest be great If you could screenshot and share it through the socials or send a text message to a friend to check it out. That would be super helpful. Ben, you've been busy this week. You had a webinar for Picker, and so that'll be available for people to watch on replay.
Speaker 2:Yes, it will. So, yes, the webinar was hosted and so basically we'll get that up on demand. So by the time we we go live, that should be available for those people. But it's the chair of Reba and she's given an economic outlook for the marketplace for 2024. So, and property outlook, I should say so well worth a listen.
Speaker 1:Here's a test for you, ben what's Reba, again Reba is the real estate association.
Speaker 2:I don't think of me as agents. Was it bias? Agents association? There we go Real estate association, real estate bias association. There we go, that was cheeky, wasn't it?
Speaker 1:Because I saw you napping on that and I thought, oh, it's like when you ask for the website and then you go, oh, I've got to really think about that. So there you go, hey, my mindset minutes today, ben, is around a paradigm that I want to encourage you, to encourage all of our investment community to adopt, and it's an idea around what is the variable that you want to maximize for as a, in this case for you and me as property investors. So the variable that I want to maximize, ben, is how long can I do this for, like how long can I stay in the game? That's the variable I want to maximize for. So it's not how can I earn the highest returns? Can I maintain this investment strategy over the next 30 years? I'm into my 30th, I'm into the third decade, ben, so I'm pretty happy. But to date, this is what I've tried, ben, from the moment I was interested in money. I've tried multi-level marketing, ben, probably I had to think about this morning probably five different companies, including the traditional one of selling some soap. Ben Websites. Clearly I'm interested in health. I've done supplements, so I've done MLM. And as I currently stand here today, ben, I'm not in an MLM, so that didn't.
Speaker 1:I wasn't able to sustain that over a long period of time. I did eBay trading, ben, where I'd go and look on eBay and I'd try and find someone who had a bunch of stuff that I could buy and then I could individually break it up into arbitrage and then I'd relist it on eBay so I'd try and make a margin. So I'm no longer doing that, ben, so I wasn't able to sustain that. I've done share trading. I bought a platform when I was living on Perth called Trade Tech, which had this wonderful thing called an accumulation index, ben, and the accumulation index was all about seeing price volume go down, so price go down and volume go up, which was an early indication that the big end of town was playing on that stock and it might shoot up.
Speaker 1:I'm not doing that anymore, ben. It didn't. I wasn't able to sustain that. I did a currency trading course.
Speaker 1:I've done margin lending, where I pulled people's money together and put it into derivatives trader and to try and get a margin. I'm no longer doing that, ben. I am having a swing at crypto, but that's having the most volatile ride that you could ever experience. So the point is that there's many things that I've tried, but and arguably there are things that you could earn a higher return on this year and in the next five years if you did something different. But the question you got to ask yourself is how confident are you that you can keep it going and sustain it? So I'm not interested in anything that's not sustainable. If I can't do it for 20 years, I don't want to do it for a day, and so I invested in my first investment property in 1999 and some 25 years later, I'm still in the game, as I know that you are too, ben. So that's what I want to encourage our audience today in our mindset minute is sustainability, not maximizing returns.
Speaker 2:Can I build on that price? I mean, obviously, last week we talked about sustained consistency, right, sounds like, yeah, you've tried a few things early on in life and that didn't work for you. I just then look at Warren Buffett and Charlie Munger and what they did. I think they started in 65 or 66 or whatever with Berkshire Hathaway Don't quote me on the year that they started. But Warren just released his latest essay and summarized.
Speaker 2:I saw some guy on Twitter basically say is it just you, is it just me? But is there anything new in this? And I went back to him he goes is that not the whole point? Isn't that not the brilliance in what they do? They just basically said I think they've got over $200 billion in cash Just waiting for just patience.
Speaker 2:Anyway, the point I'm making here is well, they just kept doing what they've kept doing and they buy great businesses at reasonable prices and they hold them for the long term. And, in essence, property investing is the same sort of thing You're buying. You're running a small business. It's usually a passive business. You're able to hold it for the long term. You've got margins of safety built into that if you've got a bit of land and you're just letting the market do its thing, based on the commerce that happens in that particular location. It's pretty simple stuff, I mean. A lot of people say it's an unfair advantage. Well, if it is, we're just smart, I reckon, because we're investing into something that we have that probability in our favor, which is where we want it to be.
Speaker 1:Folks, has that landed for you? Sustainability versus maximizing returns? Here you go, ben. Cue the boring music. Buy the right property correctly, finance it, buy it when your cash flow allows, hold it for the long term. There you go, folks. That's as the rocket science complex as it needs to be. But, folks, what are you maximizing for? Are you maximizing for how long you can stay in the game? It's a question to ask.
Speaker 1:Hey, we've got a Ripper guest today, ben, let's waste no further time. Let's cut to the conversation you and I recently had with Eliza Owen. All right, ben, we've got a very special guest today on the Property Couch. We are talking with Eliza Owen. She is the head of residential research in Australia at CoreLogic. Eliza has a wealth of experience in property data analysis and reporting. She worked as an economist at Residex, a research analyst at the Domain Group and previously as the commercial real estate and construction analyst at CoreLogic. She spent almost a decade as a housing market researcher, reporting exclusively on key issues including housing affordability, credit conditions and the impact of the COVID-19 pandemic on the housing market performance. Eliza is passionate about economics, is a popular keynote speaker, having presented to thousands across the real estate, finance and construction sectors. Welcome back to the Property Couch Eliza.
Speaker 4:Thanks so much for having me. It's so good to be here so good to have you back.
Speaker 1:You know that we didn't chat to you since episode 308. Today is episode 483. So that was back on the 15th of October 2020. There's a lot happened since then, eliza, that we can catch up with you on.
Speaker 4:There certainly is, so November 2020. No, yeah, rips right into it, love it.
Speaker 1:Nice. But hey, listen in that episode back in 308, we actually did cover a fair bit of the run waste. We had a couple of listeners to go back and listen to that if they get a chance. But at the beginning we asked you about your I guess your trajectory to be where you find yourself in the marketplace as a leading analyst in the property space and that was in summary. You wanted to be a leader in a bank. You started the call center at Residix. You were watching shows like Selling, housing Australia and Escape to the Country. You made no mention of location, location.
Speaker 4:I know I'm so sorry Every time I listen back to that. That was very foolish, but it was definitely part of the repertoire, Don't?
Speaker 1:worry, Thank you, Well recovered. And you but John Edwards, who headed up Residix. He believed in you and you started in Residix back in 2011, 2012, during the housing boom in Sydney and Melbourne, and you went hang on a second. This doesn't feel fair. You want to get on the ladder and so you got engaged in issues around housing affordability and tendency challenges. How did I go with the recap? Is there anything that we missed there?
Speaker 4:No, that's perfect. That's a great summary.
Speaker 1:But what we didn't talk to you about, eliza, was the conversation that we like to have here with all of our guests on the podcast, and that's what money conversations were like growing up for you, over the dinner table or in general, family discussions. So did you have them growing up, eliza?
Speaker 4:We didn't have a lot of conversations around money, but what was said, I think, was fairly basic, and I think that's because, partly because my parents themselves didn't have access to a lot of sophisticated financial advice they both left high school pretty young and I think it was also about protecting us a little bit. Like everyone, they've had their financial strife and achievements and I think throughout that they just kind of wanted to protect us from what was going on. So the advice was very basic. It was just work hard, behave in school, do what the teachers tell you, do what your bosses tell you and save a bit of your money and don't live beyond your means. And I think that that advice really carried through for a long time.
Speaker 4:To this day, I've never had a credit card. I bought my first home with my partner in 2022. And we bought very conservatively. I wanted to make sure I had my 20% deposit, I didn't want to be paying LMI, I didn't want to overstretch and accounting for any potential interest rate rises, because it was November 22 when I bought, so I wanted to make sure that we could afford any increases in rates. And it's funny because, as an analyst, I know that actually, if you do actually leverage yourself a bit more and try to get something more expensive. Or we bought an apartment, but I know that detached houses have accrued more value over time. But I still had my parents in the back of my head saying don't live beyond your means and just spend what you can afford. And so it's funny how that psychology can be affected by what you grow up with and what your parents instill in you.
Speaker 2:Yeah, very true. I mean, ultimately a lot of us don't fall too far from the tree and sounds like your examples are one of financial conservatism and leading potentially with a healthy level of skepticism potentially around any sort of investments. Did you notice your parents doing any type of investments, that anything at all outside of the family home?
Speaker 4:They, before having kids, they'd invested in a piece of land that I think at the time was going to be too expensive to do anything with, so they just sold it. They got very lucky with their owner-occupied home purchase. They bought a Federation home in Parramatta in the mid-80s and just a few short years later they had developers knocking on their door wanting to purchase it off them for basically three times what they paid. So I think through this one-off windfall they were able to set themselves up fairly comfortably as well as working incredibly hard. They didn't have the kind of tertiary education that my brother and I had access to, but maybe in their generation it was a little bit more common to not finish high school and not go to university and still be able to get a fairly good job that allowed them to leave comfortably.
Speaker 2:Now I always like to when I get a clue of also another sibling similar to myself and my brother. We're sort of polar opposites in terms of our level of restaking. How does it? How do you compare with your brother in terms of is he also financial conservative? Does he have a credit card, by way of example, or does he manage his money differently?
Speaker 4:Oh yeah so, and he really paved the way. In many ways he works in property as well. He works for a property developer, town planning background, so in many ways he's a mentor for me and someone that I've learned a lot from. But he's bought an investment property, he's had credit cards. He's probably extended himself a little bit more. I'm just thinking my family probably don't have financial conversations with me because I talk about it on a podcast, but he's really focused on maximizing his value and he sees the opportunity and he goes for it and he's quite brave in that respect, and it's just one of the many reasons that I really admire him.
Speaker 2:That's another great example of effectively two people growing up in the same household but different outcomes and different pathways. So it is a reminder of keeping an open mind in terms of what's possible for people, and that's part of our passion in terms of our job as educators is to just put that information out there, to help continue to keep informing yourself and then finding what feels right to you based on your risk tolerances.
Speaker 1:Eliza, you raised a really good point that I found interesting where you said look, I'm an analyst, I know that I bought an apartment, I've got the data that supports that houses have done well, and it kind of highlights this universal principle that I think is a great learning exercise for our audience, that we give better advice to others than we take ourselves. Because the thing when I'm talking if I'm giving advice to you, Eliza, or you're giving advice to me, or any of the three of us exchanging advice towards each other there is a devoid lack of emotion. It is a logical conversation. Oh, it makes sense that you would buy a house if you can, because historically you better than most know that historically that's performed better. But what we forget when we're trying to give advice to ourselves is it's not logic based, it's actually the first layer is emotion, and that emotion has to be broken through before we get to have that logical conversation with ourselves.
Speaker 1:And because a lot of people can make assumptions that I was having this conversation with a real estate agent just the other day and I said you got the front row seat to the best show in town, Like, why haven't you accumulated any investment properties? And he just says and then insert a more emotional response. This emotional response, this emotional response. This emotional response, whereas me logically goes you know the best. You got the inside. It's an insider's game. You've got all the insiders information. It would just make sense to me that you go forward. So can you speak to that point around, your decision around, because you said it. Oh, I know from the data I should have done this, but I did this. What was going on for you?
Speaker 4:Part of our decision to buy an apartment was benefiting from proximity to the city, so that was one of the reasons.
Speaker 4:I think there are sort of other lifestyle reasons that we went for an apartment over a house, but I think I was just a bit scared. I was scared, and it's partly because the upfront cost to home ownership for young people in this country is so high, especially in Sydney where we were buying. So I wanted to make sure that I had savings left over and savings aside, because for all the decades of growth that we've seen in Australia's property market, I guess I had this reservation of like, oh, but is it still going to continue once I buy? And we are coming into a lot more uncertainty when it comes to the interest rate environment as well and not going back to those COVID lows of 0.1% in the cash rate. We're possibly in a new era from the structurally declining interest rates that we saw from the global financial crisis. So I guess there was also this wonder around whether properties would see the same windfall and how much I was willing to invest as a result.
Speaker 4:But of course, since then, we've just reported that houses have hit a record premium on units across the capital cities and, of course, the right kind of unit can deliver a turn as well. But I think over time, units have suffered from the narrative and the events of developments that haven't worked out so well for people Opal towers, much of the 2010s, where we had a big investment boom in the unit sector in particular, and there was a higher incidence of apartment buildings going up that weren't as well constructed. And even when we were in the process of looking at apartments, old and new, many of them had issues and special levies and things associated with them.
Speaker 2:So, if I can just put a bow on this part of the conversation around money and decision-making and the emotional aspect of that, if you are going to seek advice, can I just recommend to anyone that you should always make sure that the advice you get is more bordering on conservative, because they're playing with your money as opposed to you know. There's plenty of spriggers out there that were talking up big games about how to make riches in property quickly. I would say please be careful in terms of who you're getting advice from, and if they're professional or qualified advisors, they should be very much cautious around spending your money as opposed to you know, basically going out there and saying, yeah, this is going to be easy, you're going to make a killing as part of that. So I think that rounds out that part of the conversation nicely.
Speaker 1:And I guess for our audience too. Ben Eliza is at the peak of the tree in this country around analyzing the property market. There are a few minds who have access to Intel and being able to curate that like she does, and she still also has those human emotional responses as well. So I think that should provide some comfort for our audience to go huh, all right, that's stuff that everyone faces as well and I guess it sort of reinforces Eliza you took action. In a decades time you're going to be well and truly rewarded for taking that action and I think that's going to serve you and your partner really well. Now you recently wrote a blog. If housing is so undisupplied, why are some markets falling in value? And it's a great question I feel like it's really worth leaning into, because you start that blog by talking about. Well, the narrative is clearly around this undisupply, with forward estimates by a peak body saying we've got 100,000 plus dwelling shortfalls by the end of 28. So if that's the overarching headline, why are some markets declining in value?
Speaker 4:Yeah, this is a great question and it's one that a journal actually initially asked me, trying to reconcile that narrative of so much of our government policy being focused on the supply of housing, not just the shortfalls forecast from Housing Australia, but in 2021 we have this whole inquiry into housing affordability and supply. Specifically, and when you look at the sales and purchase market of property, I think it's fair to say that some markets are oversupplied. If you look at Melbourne as an example, where we have been reporting prices falling, that is a market where, in the year to November 2023, you had about 81,000 properties that were purchased but over 90,000 properties were advertised for sale. So there is actually a bit of an oversupply in that sense. But the problem, I think, is that we conflate that idea of the market for property purchases with the overall property environment, because property is one of those unique assets.
Speaker 4:Dwellings is a unique asset in that it operates in both a private market, but it's also a social good and in that latter sense of people just fundamentally needing somewhere to live. We are undersupplied Whether or not people are ready to purchase, because that is influenced by things like economic conditions, interest rates, income, consumer sentiment. Fundamentally, we have a lack of housing, and that's probably reflected more in metrics like the rental market, where across Melbourne again using that as an example rent values were up almost 11% in the past year compared to the oversupply in the purchase market. So I think it's just about making that distinction between the two different markets, if you like, or the two different contexts for supply and demand of property.
Speaker 2:And Eliza in terms of that conversation. We know through looking at history that the household composition and the economics of that have changed over the last 120 years. I'm on record as saying that I think there was in the early sort of federation forming time Melbourne, by way of example, had between seven to nine people per household in those you know Terrace Houses down in South Melbourne and through Port Melbourne. They're obviously still a young, evolving country. Back then we have seen that household formation change a lot. How much do you see that playing into this story of supply and you know places place to live versus expectation on being able to live in your own property, by way of example?
Speaker 4:That's a really interesting point because you could argue that whether or not you supply more property that could be absorbed by additional demand through lower average household size. We saw a really interesting example of that through the pandemic period, where the average household size went from 2.6 people to 2.5 people on average roughly, and it added to dwelling demand by 120,000 properties, as estimated by the RBA, and that was amid international border closures. We weren't seeing a massive increase in population. So what it highlights for me is that there is a very important demand element and that perhaps the conversation around housing affordability has almost veered too much towards the supply element. I think the pendulum is swinging back to demand at the moment, especially in light of the stage three tax cut reforms, where more conversations are being had around tax reforms to assets, negative gearing, capital gains, concessions, land tax versus stamp duty. It's the demand piece that's going to be operating here as well, because if we can get people to actually occupy houses more efficiently, that's going to save us having to build more homes.
Speaker 2:I think it's an excellent point. I mean, ultimately, that's the law of economics and seeing where price elasticity works and where affordability works. We're seeing right now, obviously, new formations or greater formation of house smart or house sharing, as obviously rents get too expensive for some households, especially obviously in light of the costs increases that have been experienced by Investiture. We're talking, obviously, significant increases in terms of interest rates, but we're also seeing double digit increases in insurance costs and finally, some of the minimum standards that are also being introduced, adding thousands or of dollars towards those holding costs. So it really is important to recognise that these types of changes have direct and indirect consequences around how the economics work and then, ultimately, how the market performs.
Speaker 1:I think there's a really important way to round this out too in the blog, eliza, because you say it's just recognising there's a difference between the market for purchasing and the need for somewhere to live. And this is you, rounded out by saying supply and demand of dwellings can mean different things from a market perspective and a social perspective. And I think that's really the landing point here, isn't it that? For people to really get that, because those headlines can be confusing, and I think you've really articulated well that there is a fundamental need to have a roof over your head which doesn't apply to everyone to be able to afford to put that roof over their head.
Speaker 4:Yes, and that can be completely separate to ever purchasing a home, and that's where I think some really good examples that stick out are in the purchasing market. Values might fall, but fundamentally in our housing market we've failed to supply adequate dwellings and we're seeing some really worrying statistics that have come out over the past few years about increased applications for specialist homelessness services, and one that sticks out from the Productivity Commission's report in 2022 is the fact that no-transcript 1000 people were actually turned away from specialist homelessness services in the financial year 2020-2021. So just because prices are falling in the private market doesn't mean we've solved the social aspect of housing supply.
Speaker 2:It's a really good point. I mean because when you talk about the desire to buy a house now, remembering that effectively we've got two types of buyers. We've got owner occupiers, who buy for true owner occupied use, but they also buy for personal use so we see that in the AVS data which could be a holiday home or a second dwelling, obviously, where they might commute into a city but live rurally under the new sort of hybrid work arrangements. But then, of course, the other big contributor is the investor, who is providing around sort of 95% of the private rental accommodation that supports this. Now, you know that is the challenge that we're facing, but I think it really is important to understand what a true piece of demand looks like. So can you share with us when you're assessing what true demand is or what you say the desire to buy is shaped by? What are those factors that it's shaped by?
Speaker 4:It's shaped by financial conditions. So I mean, in the current context of what we're talking about, I think any lever that eases financially for some renters is going to trigger a buying decision. So the high interest rate environment would be influencing decisions to buy.
Speaker 4:The household savings rate, which has fallen to just 1% as of September of last year is going to influence the accumulation of a deposit which could influence home purchases. The Westpac Melbourne Institute Consumer Sentiment Index, which remains in deeply pessimistic territory, is largely correlated with changes in sales volumes over time. So how confident people are feeling about their financial prospects the economy employment is going to influence whether they're making a large financial commitment like purchasing a property. Income levels are really important and I think that's also something that shaped that breakdown in share households early in the pandemic, when we saw a big boost to household income through fiscal stimulus, people demanded more space, more housing, and real income levels are expected to rise in 2024, which could be a bit of an upside for housing demand as well. So these are just a few of the more economic factors, I think, that shape and determine the demand for purchases.
Speaker 2:You make a really good point in your article talking about, obviously, the current APRA 3% buffer and that borrowing power story. As higher interest rates go up, our borrowing power comes down. So for those potentially first home buyers looking to get into the market, they're also affected by that ability to actually access borrowing power to be able to buy into the current market. Do you have a view around? If interest rates are starting to come down, hopefully at the second half of this year, do you see then a need for APRA to keep that 3% buffer rate at its current level or do you think that there's an argument to bring it down?
Speaker 4:I think that there is certainly an argument to bring it down the way that inflation is tracking at the moment, the fact that there's probably not much of a need as it stands right now for further rate hikes. As I understand, apra have made no indication of revising that buffer, though, so it's something that prospective borrowers might have to deal with for quite some time yet.
Speaker 1:Eliza, your most recent blog was somewhat related to what we've been talking to, but it was just about the relationship breakdown between how the housing market has defied some of those economic indicators. You grouped it into two lanes. One was the correlation between interest rates and home values and the second one was you just touched on it just a second ago around the sentiment and sales. So can we talk on the first one, interest rates and home values? We've clearly seen the response initially to those rates was prices went south, but then it's recovered to your point earlier in our conversation to record highs in a lot of locations. So how did you reconcile that for the benefit of our community, when there's typically an inverse relationship between interest rate movements and home values, but it's seen that being defied?
Speaker 4:Yeah, this was pretty extraordinary, I think. When interest rates started moving through their most rapid rate hiking cycle on record, we certainly weren't expecting the housing market to get to fresh record highs, but it did by early 2023, despite the fact that there were even more rate hikes through 2023. This week put down to a couple of things. The first is that the pace of decline in the housing market that was occurring amid the start of rate hikes occurred as we reopened international borders. As we know, this has since led to record levels of net overseas migration of over half a million people coming into the country in the year to June 2023. Now most overseas arrivals, when they come to Australia, are initially going to be renters, but that also transmits to higher rent values, which may attract investors into the market and indeed, from the start of 2023, we started to see a recovery and investment activity. It also means that, even though 60 to 70% of recent overseas arrivals are renting historically, when they first get here, there is another chunk that will buy while they're in Australia or plan to live in Australia and be owner occupiers longer term. So that could be feeding through to the higher demand, the pushed up values that we saw through 2023. And even the reduction in the pace of decline through 2022.
Speaker 4:Another aspect is that and I think this is kind of tied into people's speculation of the cash rate and the fact that the market can recover even off the perception that there will be a steadying in cash rate or a decline in the cash rate is that a lot of high end buyers who were less reliant on debt were still participating in the housing market. And we know this because we saw data releases from APRA which showed that the share of people borrowing on 10% deposits and 20% deposits was declining. So people were basically having to take out less debt in their data, which signified less debt dependent purchases, and they were buying into the lower end of town. So areas like Brisbane, perth and Adelaide, despite massive increases in interest rates, had barely seen property values affected and since the onset of COVID through to January this year, we've seen increases of around 50% 50% in the housing markets of Perth, adelaide and Brisbane. So I think that the fundamental migration position and tailwinds for those markets has defied interest rate rises.
Speaker 2:It's an interesting story, isn't it, Eliza? Because I mean one bit of data. I'm pretty sure I saw it at the start of last year. Which really surprised me was PECSA's data on I think it was over 20%, I think it was 25 or 26% of people were paying cash for housing.
Speaker 2:Now, in terms of how they assess that and the same sort of thing in terms of how APRA assesses that, because Abras and I were talking earlier today about this, and that is that you know how you might structure a purchase If you've got equity in an existing property, you might release a loan split against that security and then ultimately use that as a deposit to pay for the 20% or the 25% on this property.
Speaker 2:Now, if APRA has no clue that that's actually taking place, what they're assessing it is that those people are bought cash to the table as opposed to the potentially taking equity out of that home, and so, because they're not cross-secure ties, there's none of that relationship that shows up there.
Speaker 2:So, in terms of APRA's insight into that area, I've still got some question marks about reliability of that story, but it still rings true that those people who have equity in their home do have a complete advantage as long as they've got to you know, to the story before gainful employment and income to be able to borrow the money. And with, obviously, the higher interest rates and the higher assessment costs or higher assessment rates, it's meant that effectively, borrowing power is pushing everyone into that sort of sub-600 price point and so all the investors are looking for markets that want investors ie Western Australia, South Australia and they are definitely going over there and buying that sort of more affordable stock compared to, say, traditionally, where they might have gone into Melbourne and Victoria. Because of the new land tax, which now kicks in at $50,000 and you've got an additional $1,200 of costs. The investors are basically saying not now, Victoria is not going to get our money in the short term because it's so difficult.
Speaker 4:And that's reflected in a relatively low share of investment finances a portion of new mortgages going out, whereas in WA the level of investment was almost a billion dollars in the month of December alone and that's pretty much back to where it was around 2014 peak iron ore boom level. So it's extraordinary to see so much of the uplift in WA housing values is being driven by investors. There's probably also a demographic piece there downsizes, for example, downsizing being the most common way to release equity and enjoy that for retirement. That would not necessarily create taking on more debt or necessitate taking on more debt.
Speaker 2:Well, it's really interesting, right? Because I mean prior to the recent decisions by the Western Australian government where they've decided not to have no grounds of ictions, because they looked at the data that came through to show that there was 21,000 less. So between that period that you're talking about, that 2014-2015 period, to effectively, I think, 2022, they did the data those bond registrations were down by 21,000 rental properties. Now that was causing chronic or rental shortages in that market. So they thought that if investors don't want to see that no grounds of ictions, they want to be in control of their property. And that has been a master stroke from the Western Australian government because it's definitely given more confidence in terms of getting into that market.
Speaker 2:And we're also seeing the Western Australian government incentivize those people in short stay accommodation you know Airbnb stuff. They're going to pay them a financial windfall to get them into the long stay accommodation. Now, I mean, states do compete against each other right for human capital, for economic mobility, and so Western Australia are making a big play to basically say we're a state that's ready for investment, ready for, you know, sort of bringing population growth into that area, and they're making all the right signals to bring, as you just said $1 billion worth of investment from other states and yet we see you know other states, like Victoria, who are basically saying no, no, we're just going to keep hitting the property investor and so that's billions of dollars that they're potentially losing out of that critical supply story and that's only going to put pressure on rents.
Speaker 1:I guess just to round out that to Eliza, that you touched on it too but all on the backdrop of a consumer sentiment that you've quoted as being as low as back in the recession of the 90s. But for all the reasons you've just described, that's helped defy the property market, despite that consumer sentiment being so low.
Speaker 4:Yeah, there was a big recovery in sales activity alongside an increasing capital growth through 2023, even though, as you mentioned, 2023, when you average out the monthly results of the consumer sentiment index, it came out as the second lowest on record, second only to the early 90s recession and that series going back to the 1970s.
Speaker 4:So that's been an extraordinary one. It's interesting to look at developments in the consumer sentiment index. In February it jumped 6%, taking the index to a 20-month high, even though it's still in that pessimistic territory. It's amazing to see how sensitive consumers appear to be off the news of a steadying in inflation and interest rates, and it's almost as though, when you take that with the auction clearance rates we've seen in the past few weeks, which have been sitting in the kind of low to mid 70s, it's almost like green shoots again for the market right now, which is quite bizarre given how your economic situation is a lot weaker now with low household savings and high cost of living pressures. So it'll be interesting to see whether that jump we've seen in market and consumer sentiment conditions through February is a kind of flash in the pan, or if it's the start of more optimism for the housing market.
Speaker 2:I think also the changes to the stage, the tax cuts which meant that I think, at like 87% of the population also get extra money coming in, hopefully from the 1st of July, also, I think, added to that sort of spike you were talking about there, eliza, I wanted to talk about, you know, given that, the fact that it is non traditional that we do see those types of prices rising, supply going down, how much of how much of reflecting on 2023, do you feel loss aversion through behavioral economics play a role in that? We know from the, from the evidence is that you know people feel losses two times greater than they feel again, do you think that there was a lot of people that decided to bunker in and try and hold on to their properties as much as possible, which then reduce the amount of supply?
Speaker 4:That's a good question. I think the housing market was still in that recovery phase through the beginning of 2023 is where we started to see values get back into positive territory.
Speaker 4:In most instances, where you see housing values a week, then you'll see people hold off selling. So I think that's probably contributed to a tightness in the level of new listings coming to market in some areas. Having said that, there are also areas where you get a combination of lower values and rising listings. That to me, is a little bit of a red flag and it's something that has been occurring in parts of the mortgage belt areas, so Northwest Melbourne, for example, the kind of Melton Bacchus Marsh region and some lower socioeconomic areas. Basically, what I'm getting at is these people might not have had a choice but to sell, given the sharp rise in interest rates and cost of living pressures, and people selling into a softer market. But generally, what you'll find is that when housing values are declining or they're significantly lower than a recent peak, you'll see fewer new listings being added to the market and you'll see a blowout in hold periods as well. So I think it's fair that people try and time their sales with good selling conditions.
Speaker 2:Well, I think there's also further to what you were saying. I mean, I was a little surprised in terms of how positive the market opened in the first three weeks of the new selling season. Let's call it the February test market that we normally see here On the back of at the end of September, end of 2023, we were seeing rising listings and those types of things as well. So can you talk to your thoughts around? If interest rates stay higher for longer and let's say, we don't get that rate cut in the middle of the year or in September, as most are predicting, how much do you see then more of that sort of force selling a potentially impacting sentiment and then obviously putting price pressures on the downside?
Speaker 4:So I guess the first thing I'd say is that indicators of force selling are highly localized.
Speaker 4:Broadly speaking, I think we've got a relatively high volume of listings across Sydney and Melbourne compared to the historic five-year average, but markets like Brisbane, Adelaide, Perth are still seeing listings volumes 25 to 30% lower than their historic average. I think the big headwind for housing market conditions at this stage, if rates are higher for longer, will be weaker economic conditions and the fact that a higher unemployment rate, a lower savings rate and high cost of living pressures are probably going to weigh on new purchasing decisions. But even then that weakening economic condition, the silver lining there is that you would presume it means consumption is drawing back, inflation will continue to come down and that actually signals a rate reduction. I think the big good news story that we got was inflation actually coming in under target for 2023. So not only was inflation coming down about as rapidly as it had been rising, but it came down faster than what the RBA had expected, and that's where we're starting to see more banks come out and call the first rate cut between September and December of this year.
Speaker 1:Well, as before we pivot. Just last thing on that is it's happened before in 2004 to 2008,. There was a backdrop of cash rate increases, albeit not a steep, and yet there was. There was value increases during that time as well, so there was a mining boom and again overseas migration coming. So it kind of helps our audience to understand that, despite the perceived inverse relationship and it usually is when interest rates are going down, that's a given. When they're going up, there's a whole bunch of other things that that kind of to your point before around, like localized issues and what Ben and I have been preaching for nine years, that Australia is not one big market. It kind of when interest rates are going up, that's when that's when the rubber meets the road for the real players in the game, because there's opportunity. But you've got to look where it is, because clearly there's evidence now in what you've just spoken to for the last 20 minutes plus and what happened back in 2004 and 2008 as well.
Speaker 1:Now I'd love to get your views on.
Speaker 1:You know, call Logic just released its report around the gap between house and unit values and you know there's that increase for housing and that's historically been the case right, and we talked about it at the top of the show. But my question to you is do you feel like we might have reached a pivot point where that gap could start to narrow, largely around the fact that we do have more people? You know, if we speak to the true demand for property, you know a lot of areas not having the, have the, the intent to buy but not the capacity. So therefore they're going to have to make a decision to either go much further out, past the commuter belt, to be able to afford a house, or they're going to make a decision to go all right. Well, I've got established friends and networks and cultures and activities and metropolises that I want to be around. Are we at a pivot point, or is it just the same as going forward? We'll just experience a bit of the same, where that that gap between house and unit values will continue.
Speaker 4:That's a great question. I feel like my my thoughts around apartments for owner occupiers in particular is that it's kind of a question of almost like an acquiescence to to living in a unit, because the benefits of owning your own home, as well as having more space, having a garden, is. The question is the fact that from a kind of logical investment perspective, detached house and land is more precious and will only become more precious over time through population growth. The premium on houses over units has blown out massively since COVID and there are, I think that there's a lot of long term factors that that influence the the premium on detached houses. But in the shorter term factors, I think it is that normalisation of remote work, it's the movement to areas out from cities. Even net migration to regional Australia is still relatively elevated where it was pre COVID, and we know that a lot of regional areas have more house stock. So that influences it as well.
Speaker 4:But just to give you some perspective, the pre COVID five year average of the difference between the median unit and house value across the capital cities is 17%. It's now sitting at 45%. So I don't see that premium being eroded any time soon, even amid affordability constraints and the the acquiescence of first home buyers to the unit segment has been pretty slow over time. If you look at ABS housing and occupancy data, they point to about 12% of recent home purchases being in the unit sector back in 2009, 2010,. Fast forward 10 years and that data is showing an uplift to only 17%. So it will happen, but it will happen very slowly and I think people will probably first and foremost, look to getting their own house and land over time, where they can, where they can afford it. But you know, as we discussed in my own personal circumstance, I think for some people the unit will work and it will be the more viable option, I think. I think, in short, like, yes, I agree, but I think it will just happen slowly that we'll see more of an uptake in the unit sector.
Speaker 1:There's kind of a segment too, because you know, as you put, that like the, the, the nirvana is a detached house and in a premium Location. That's still the nirvana. But it feel like there's just this sub million decision that a lot of Millennials will need to face and they'll need to go right Do I actually want to spend this limited, fixed amount of money and do I want to go Further out to get a house, or do I want to stay in closer? I feel like that's that's what I'm wrestling with in my head around that particular segment. Call it sort of 450 to 800. Where, where would they rather be? Would they rather be in a in a medium density, a slightly more medium density Place in the middle of Brissy, or do they want to go further out that has a commute and further away from their lifestyle? So it's kind of I.
Speaker 1:There's always going to be that divide for obvious reasons. It's just whether or not there's this, there's this pivot point decision for people, because I've had a conversation with one of the One of the younger crew in our. It's been an odd dinosaur's right. So I talked to the younger crew in the office and she's like I still want to start, I still want to stay in this suburb. I'm just gonna have to make a decision about the, the, the size of, you know effectively the size of the land they go from a house to a townhouse, to a unit, to an apartment or whatever. I'm just gonna have to make a decision on that because I don't want to move further out. So I think I think it's just that Little segment, sub 1 million, where that decision will be start to become difficult for people, not difficult but Challenging for them, which one which one.
Speaker 1:Do I choose the red or the blue?
Speaker 4:I think it's a good question to investigate. If you look at capital growth rates alone, say, since the start of the pandemic where we've seen the blowout between houses and units, melbourne unit values have only increased three percent between March 2020 and January 2024 house values 14 percent. Similar in Sydney, house values are up about 25 percent. Unit values are up 8 percent. There are some unit markets that have not moved in value for around five years high density markets like paramatter or pockets of the inner Southwest and I guess what I'm getting at is the units are there, it's just that they're not always in that high demand and I think if we were seeing more of an uptake of Relatively affordable dwellings, that would be reflected in demand and that would be reflected in growth rates.
Speaker 2:Yeah, look, it's an interesting story because, I mean, sydney is the trailblazer and if I if I can remember correctly, I think it was 2016 17 where, for the first time, in both Melbourne and also Brisbane, we were building or we had approved more units than houses. And so we we saw that as potentially being the trend, because there's no doubt, in terms of fundal, fundamental economics, we call it the substitution effect. Okay, and that is when something does get too expensive ie, bananas are very, very expensive We'll substitute for an apple. Now, obviously, that's a very simplistic Explanation, because we are talking about somewhere where I live my identity, how it makes me feel, all those sort of, you know, aspects of living and lifestyle that I get out of owning and or living in a dwelling in that particular location. But Sydney is our litmus test. It's actually still performed far better than both the Brisbane markets and also the Melbourne market. So when you do then start thinking about the Adelaide's and those type things, you really want to be sort of thinking about villa with a bit of dirt, townhouse and and obviously freestanding or duplex type dwelling and not get caught up in that risky place, because, yeah, the only place I've seen reasonable returns to your point, eliza, has been Sydney.
Speaker 2:You know, and you know some of those pockets where you're in, the smaller complexes, the one of five, one of six, one of eight, which is the stuff we've always said worth buying because the land to asset ratio you still got one eight for that land to asset ratio.
Speaker 2:And I mean I was in Sydney over the weekend for a for a friend's birthday and you know, walking around fresh water and manly in all those areas were starting to see some of those sort of smaller complexes. Now get, you know, development approvals to go to six stories rather than two stories or three stories, and so you know it makes economic sense potentially for those owners to sell to developers. And I think that Recycling you know that of that, that brown zone as we call it we, you know where you're getting that type of change will potentially keep happening. But until we get that generational acceptance in the likes of Melbourne or Brisbane, you know that apartment story is still gonna ultimately be challenged for a while and and I do want to pick up on what you were saying 2015-16 was it was a different buyer.
Speaker 4:Yeah, as you guys would know, it was the peak of it. Was this unprecedented? In concentration of investment in the market that was, and I think you could argue that stock was not built for owner occupied living it was not desirable for owner occupiers.
Speaker 4:And there are Hockets of development that you know probably still aren't very well Utilized because they weren't designed the right way, they weren't built with the right level of density or, you know, light getting into different buildings and things like that, so that that level of investment I doubt would be replicated because we've probably instilled a hesitation from investors based on the macro, macro potential interventions that we're I think you make a wonderful point there, eliza, and I mean I also think about you know, the, the Asian Chinese buyer at that time as well.
Speaker 2:You know that sort of Lego land type building is very accepted and that super high density living In in locations obviously like Shanghai, beijing, wherever you're getting jail, all of those centers are all so so it wasn't really different for them, but there was, there was no doubt. There was also mum and dad investors in Australia who were, who were buying into that particular story is that great demand of build that came through and ultimately led to an oversupply and and an underperformance in terms of, you know, the capital growth in those particular markets over that period of time and for the avoidance of doubt in my thinking, medium High density still off the radar.
Speaker 1:It's just that lower density In the, in the locations where people are literally going to go. Well, I still want to be around here, so I'm going to get the the lowest density I possibly can with my budget and I feel like there's maybe an Opportunity there. So thank you for your feedback there. Last thing we want to cover with you today, eliza, why we've got you is you mentioned that you're currently authoring the, the latest women and property report, and I just want to shout out that you and Effie, on the 8th of March, are doing a webinar. So it's an introduction to women and property 2024 with that gender equity and property ownership. So we're going to put a link in the show notes for anyone who wants to Jump on that. Because you're both friends of the property couch, we love having you both on. We really, really want to support and get people behind that.
Speaker 4:Thanks so much, Bryce. I'll just jump in and clarify. So our report is dropping Around International Women's Day and then our webinar is the 14th of all, there you go beautiful. Media team will kill me if I don't. I thought.
Speaker 1:I'd got the transcribe, the date then, but clearly I've got to work on that bit. Um, yep, the 14th of March, but um, I wonder we've got some. We've got some incredible women in our business, and One in particular is very, very passionate, came on our summer series and is a big advocate for for Women and property ownership. So what, what are some of the key themes that that we can talk to briefly today that you're observing as key takeaways from that report, and what do you think that More people should better understand about this particular topic?
Speaker 4:Yeah, thanks.
Speaker 4:I think what is most important for me in investigating the state of home ownership for women is that residential property is such an important wealth accumulation vehicle.
Speaker 4:It is, you know, outright home ownership is the key to a comfortable retirement, when it comes to whether or not you have housing costs by the time you're on a pension or, you know, living on a lower income.
Speaker 4:But because home ownership is not created equally, whether that's between gender or income or any other intersection of society, we need to look at how we can create more equity in that space. Interestingly, the, you know, gap for men and women in property is nothing on something that's tied to employment, for example, like superannuation, where the gap is around 30 percent and you know, is because of women's relationship to participation in the labor force. But you know, I think it's an important one to investigate and we commonly see this theme as well where women aren't investing as much in property as men are. So that's another, you know, just getting to the themes of why that might be, the RBA put out a really good bulletin in the past few weeks highlighting that women had maybe less financial literacy and economic understanding. So just finding how we can kind of bridge those gaps is going to make sure that Australian women live better.
Speaker 2:Yeah, it's a wonderful initiative. We're fully supportive of it. Our data also in terms of all of the sort of questionnaires we do on our more platform. Financial security is the number one reason why people actually invest or think about wealth. They want to be financially secure and, to your point, property is the essential foundation in terms of what underpins that security. So congratulations to you, obviously, and to Effie, in terms of putting that program together and continuing to build out that story, because yet we want to champion, to make sure that obviously, more and more women you know a man's on a plan or, you know, relying on some other source for that result isn't necessarily the way to go. You've got to basically plan to become what you plan to become and take action on that. So congratulations on that initiative and, yeah, if you're interested in getting along 14th of March I think I heard. So check out the details in the show notes and hopefully they can get thousands of people along to that webinar will be great.
Speaker 1:If you turn up on the 8th of March, like I said, Ben, you'll have six days to get comfortable because it won't be on until the 14th of March. So we will have the correct details with the correct links so that you turn up on the right day in the show notes. And that's a really important initiative and well done, as Ben said, to your contribution to that.
Speaker 4:Thank you so much and shout out to our Collegiate Marketing team they help us pull it all together. And now number one ally, researcher Kelvin Davidson. He is covering the same research over in New Zealand, yeah well.
Speaker 1:I did have a quick squeeze through last year's report and I noticed there was that Australia, new Zealand but a couple of the takeaways I took from it was that you know a big and you've talked to this the big discrepancy, a big portion of the discrepancy, is in investment property.
Speaker 1:In both Australia and New Zealand you can own more houses than women, and then there's low levels of joint same sex ownership too. So there's quite a few issues that can be worked through, but I think would you agree just to our earlier point around having the money over the dinner table discussion at the top of the show. It's the more often that we can get opportunities to have these conversations and remind of the basics, because it's a reminder for everyone that if you don't have a house over your roof, hope your head when you're in retirement, it's bad news. So it's therefore then shining a light to make sure that we can help as many people in parity get on to the property ladder. So again, well done on that. So, eliza, it's been too long that we've had you on the property couch. We appreciate all of your insights. Our audiences are better for the experience of listening to you today and on behalf of everyone here on the property couch.
Speaker 1:Thanks for joining us today.
Speaker 4:Thank you so much for having me. It was a great chat. Really great to be here.
Speaker 1:Mate, that time flew Like. It's nice for we were chatting with Eliza too that quite often, you know, in the landscape that she plays in, she has to talk to a journalist and they might take a sound bite or a snippet here, but the opportunity for us to really honor the amount of intellectual horsepower that is going into the blogs and the content that is being issued by that whole team. But you know, in this case, eliza, it's just a real privilege that you and I get to sort of linger and sort of tease out some of the, some of the concepts that she just eats up.
Speaker 2:Yeah, I mean obviously when I read the first blog article, I said I'd love to talk to this conversation and, fantastically, she agreed to come on, and part of that is also just reminding people about thinking about property in the short term, medium and longer term, what we were sort of saying before what game do you want to sustain in? And so this is. You know, when we see these types of patterns and when Eliza is talking about Melbourne not doing what you know, basically going against the trend, right, obviously, other markets are going up, melbourne seems to be going down, and so you start to think about short term versus medium and longer term. And that's the classic analogy from the Benjamin Graham, which is, ultimately, you've got to be thinking is it, are we in a voting phase or are we in a weighing phase? And so that ultimate under supply will eventually cause pressure on price values?
Speaker 2:But at the moment it's not. At the moment it's basically there are other factors that play here sentiment, borrowing power, interest rates that are playing against Melbourne and playing against property in Victoria. That will shift. And so if you're smart enough to be greedy when others are fearful, that's potentially an opportunity for you if you think about the long term weighing game that you're trying to play here Like, there will be a lot of noise, a lot of short term movements, a lot of data to look at in the short term, but ultimately the fundamentals will still ring true and that'll ultimately play out as a weighing game rather than a voting machine.
Speaker 1:Well said, mate. So, eliza, thank you for coming on and for contributing your incredible expertise and some of the amazing stuff that she's doing to help women understand what's going on in the disparity between that ownership is just amazing. So just a reminder folks check that out, share it with your friends. Two very, very good friends of the property couch in both, eliza and Effie's, are hosting that, so we'd encourage you to be a part of that. So thanks again.
Speaker 1:My life hack today, ben, is just a framework that I think I've covered it previously, but I just want to revisit it, right, because it's a way that you can stop feeling overwhelmed with the tasks that you have to complete. So a real life example Andrea, my wife, rang me yesterday and she was she's juggling some stuff that she does within our own family business. She's working on a startup app with a friend of hers around recipes and importing to that. We have a high needs child and she's also on her own health journey at the moment, right, so there's a bit going on. So she rang me feeling a little overwhelmed and this is the concept that I talked her through to help with that. And, ben, as you know, you can't be a profit in your own village. So you got to make sure that you can land.
Speaker 1:Well, ironically, land the plane on the conversations that you have. So here's what I said. I use the landing of the planes analogy. So what I said is picture yourself as an air traffic controller. So we're in Victoria. Imagine you're at a Tullamaran airport and you've just walked up to the top of the tower and all of a sudden you've got line of sight not only across the whole airport, but you got radio in from all the planes that are in the air. And one of the things that you have to do is the air traffic controller and apologies to any air traffic controllers who are listening to this vendor that I'm butchering it, but for the rest of us who don't understand it intimately, I'm sure you've got a radio out to the pilots and say right, who's landing first?
Speaker 1:Because we can't land two or more of you at the same time and there's a whole bunch of factors that go into that. You know who's got connecting flights, who's low on fuel, who's further away, who's into the wind, who can I turn away and send to another airport, all those sorts of things, and I feel like that's a beautiful metaphor that we can do for our own life, because quite often we can have a to do list of tasks that we feel like we have to do straight away. But the question we can do is go up into our mind and say, right, which plane needs to be landed first? And there was a couple of things on her to do list that didn't need to be landed in that day. They could actually be landed at the end of the week or even next week.
Speaker 1:And so it's resisting the, the, the frustration we have as human beings to use our brain as a storage device. So therefore, the way to get it out of our mind is we just get stuff done straight away without actually thinking of the sequencing or, or you know, to our planning terms, the optimizing, and that was very, very helpful. The feedback that I got from my daily beloved was that was helpful because the goal for the air traffic controller is to land them all safely, but in life we actually try and land them all at once. So my encouragement and my invitation to everyone in that community is, if you ever feel that sense or feeling that whatever's on your to do list now or at some stage during the week or has happened. Just imagine yourself as an air traffic controller with everything that you've got. Work out which planes I'm going to land today, which planes need to land later, and which planes need to be diverted to another airport that I don't need to to think about. So check it out, folks. Let me know if it works.
Speaker 2:Well said.
Speaker 1:Hey, what's making property news?
Speaker 2:Well, I just wanted to pick up and there's obviously going to be a recurring theme here where, now into the negative gearing and capital gains debate, we saw the Greens earlier in the week announced that they weren't going to support Labor's policy, which is effectively an excellent shared equity policy, to allow up to 40,000 new buyers get into the market with a low as a 2% deposit. So for single moms or low income earners, I actually think it's an excellent initiative, right. But of course, the Greens see a political opportunity here, as do, I should say, the Liberal Party, and so I'm super disappointed in the Liberal Party as much as I'm disappointed in the Australian Greens in not supporting this bill. It is a critical bill to allow for those people who are less fortunate than others or who find it hard, to say, for a deposit, to be able to get into the property market. The alternatives that I'm seeing, presented by the Greens party particularly, is to try and blow up the property market, try and effectively disrupt the marketplace, and that could have unintended consequences not only for, obviously, investor market but also for the owner or occupier in terms of what it might do to their property values, and ultimately then put the burden on government to provide more and more and more social and public housing, which obviously has an initial cost, but it also has a significant ongoing cost, which will ultimately mean higher taxes paid by all. So we've got to get the balance right. It's not an easy problem to solve for, and so I want to make that context, and obviously even Eliza today on our show mentioned a couple of other things that we need to be thinking about, not just in looking at supply, but also looking at some of the demand drivers around that.
Speaker 2:So I'm picking up on this story.
Speaker 2:I'll be obviously having more to say in terms of the unintended consequences and some of the misinformation that's being spread by the Greens. You'll see any of that in my Twitter feed stuff that I'm also doing when I'm countering Max Chandler Mather's comments that he's making there. So, but it just goes to show there's politics being played here by both the Liberal Party and also the Greens in not giving Labor supply for what is technically a pretty good policy. So I want basically both of them to pull their heads in and effectively help those people who are potentially able to get into the market to get into the market, and that's where we're a big believer that everyone should have an opportunity to buy into the Australian property market. There are different ways and views in which people believe in terms of how that should happen, but ultimately, our underlying belief is that, yeah, you know, as aspiring Australian, as someone who works hard, that you should be able to buy a property in Australia and, you know, be given that opportunity. And that's ultimately what's being neglected by them opposing this policy.
Speaker 1:So what's your key takeaway here? For people to land here today, ben, because you've now sort of gone across the spectrum and shown that you've had dissatisfaction with a number or all of the parties, which is good, but what's the key takeaway for someone who's listened to that message that they could do or take action or actually make a difference in this narrative.
Speaker 2:Well, I mean, ultimately they can, you know, write to their local members of Parliament and say, hey, I think this is actually a good initiative for those people who, you know, the biggest barrier of property ownership is the deposit.
Speaker 2:At the moment, this is allowing up to 40,000 people to get into the property market.
Speaker 2:Now, that's a lot of households, right In terms of that.
Speaker 2:Now they'll argue it's 0.02 of 1% of the overall property market.
Speaker 2:That's misleading, but it's political spin, right, we get it. But those 40,000 people, that's meaningful, it's life-changing for those households. So, giving them that opportunity and then ultimately, the government taking a strategic interest in the property that will be sold over time and that money, the gains that will be had from that, reinvested back into the program for the next generation of people, actually makes a lot of sense. So, from my point of view, that would counterbalance the argument of banning negative gearing or changing capital gains, which will disincentivise investment into the property market, which will ultimately lead to higher rents over the longer term, and that's not good for anyone. So, ultimately, that's the message here in terms of get your voice out there, have a look at the social media stuff out and maybe reshare it in terms of informing people about the unintended consequences that could come from poor policy decision-making and when you make those policies, the economic ramifications and market ramifications of market interference are always severe. They're always more severe than the good intentions that are ultimately led to them trying to intervene in a marketplace.
Speaker 1:Well, so there you go, folks. Big show, big guest, big February, ben. We snuck another episode into February just because of Leap here. We got this fifth one in. So we covered our outlook, we got an amazing guest, we talked about the summary of the summer series, we talked about what's holding people and getting them held up with their derailers, and you and I had a rather awkward conversation around how you can fail this year. So big February covered here on the property couch. But we're only just getting started, folks. So make sure that you strap in for another big year here on the property couch and, as I said before, we'd really appreciate it if you'd share and subscribe. That would be certainly helpful for us to achieve that, because you're not getting 100,000 subscribers in 2024, ben, until next week, mate.
Speaker 2:Knowledge is empowering, but only if you act on it.
Speaker 1:So thanks a lot. I'll see you next week, folks. Hey folks, bryce, here again. I just wanted to catch you real quick before you go.
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