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The Property Couch
608 | REIA President: Are Governments Making the Housing Crisis Worse? - Chat with Jacob Cain
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Recorded just days after Victoria welcomed a new Premier, this conversation couldn't have come at a more pivotal time.
Ben and Shane sit down with Jacob (Jake) Caine, President of the Real Estate Institute of Victoria (REIV) and the Real Estate Institute of Australia (REIA), to unpack one question that's shaping the future of Australia's property market:
Are governments solving the right problem... or creating new ones?
From Victoria's rental reforms and proposed auction reserve price changes to the Federal Government's new tax policies and anti-money laundering (AML) laws, Jake explains why the industry believes many well-intentioned reforms are producing unintended consequences.
Drawing on REIA's Senate evidence, independent modelling and frontline industry experience, the conversation explores what these changes could mean for housing supply, affordability, investor confidence and everyday Australians looking to buy, sell or rent property.
If you've been wondering whether the latest reforms are helping or hurting, this episode will be your answer. Listen now!
Free Stuff Mentioned
- Nathan Mawby: Property sector puts Ben Carroll on notice over Allan’s ‘damaging’ reforms
- REIA:
- REIV: The 8-Point Blueprint for Marketing of Residential Real Estate in Victoria
- Jake’s Article for The Age, 11 August 2025, “Peak real estate lobby backs underquoting overhaul”
Guests & Episodes Mentioned:
- 595 | Building Inspections, Hidden Defects & A Risky Govt Proposal (Buying a Home | Part 2) – Chat with Paul Baker & Myles Clark
LISTEN TO THE FIRST 20 EPISODES HERE >>
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608 | REIA President: Are Governments Making Housing Crisis Worse - Chat with Jacob Cain
SPEAKER_02All of them across the spectrum, left, right, centrist, all showed the same thing, right? A decrease in the delivery of housing. Tell me that's not going to fall up.
SPEAKER_03That'll be on the headstone of the Allen Government. A solution that doesn't solve the problem.
SPEAKER_01You're tuning in to the Property Couch, Australia's number one property, finance, and money podcast. Featuring the titans of the industry since 2015. We're trusted by tens of thousands of investors on their journey to financial peace. This show is powered by more.
SPEAKER_00Thanks, Optien. Thanks to the Couch Crew for joining us for another episode of The Property Couch. Now, there has been some big news, and it just so happens that very fortuitously, we have a very special guest who's joining us today, who's right in the know and right in what's happening here in Victoria. Yes, we are talking about the change of the premiere of the state of Victoria. We now have a new premier. So I'm going to introduce our guest straight away because it is such an important show, and we've got so many things to cover off. Because once I introduce you to our very special guest, you'll understand that he is one of the leading voices here in Victorian real estate, but also uh plays an important role in the Australian real estate market. So who am I talking about? I am talking about Jake Kane, who is the president of the Real Estate Institute of Victoria, the R A I V, and also the president of the Real Estate Institute of Australia. Now he is also the former CEO of Ray White CRE, and he has over 20 years of experience in residential and commercial real estate, and that's why he's become one of Australia's leading industry voices, advocating on behalf of property owners, investors, real estate professionals during a period of significant policy and market change here in Victoria. Significant word for it. So welcome and obviously welcome to my couch crew, Shane, Pope. Thanks for having me. We wanted to get straight into it today, guys, because it is it's been a big um you know 24 hours. We're recording um a day or so before we go to air, but we we we now have a new premier. We do Ben Carroll. Um but take us through um your yeah, tell us about your dealings um with the government um and how has that been for you in terms of dealing with the premier and dealing with um the Labour government in general with the property market in Victoria?
Why REIV Says Government Stopped Listening
SPEAKER_02Yeah, look, in the simplest possible terms, it's it's been a frustrating period for the sector, for the REIV in particular. Um we've worked really hard over the past few years in particular to sort of rebuild relationships that got damaged throughout that COVID period. We were um pretty um strident in our criticism of the government at the time in terms of their approach to the the property sector, the real estate sector, and as a result, you know, that sort of damaged some of the relationships and some of the influence that we had in the corridors of power. Over the past um few years, we've really sought to remediate and and improve that relationship. We've acted in good faith, we've um been less vocal in our opposition to some of the um publicly, anyway, in terms of some of the initiatives and and policy changes that have been put forward by the government. And has that has that helped repair some of those relationships, do you think? Or is it certainly we're back in the rooms that we'd been blocked out of for a period of time. But I think our experience is is not unique to us as a sector. And you hear this across the spectrum, whether it's health, whether it's education, whether it's police, that this is a a government, yeah, b business in general. Right. It's a government that has become convinced of its own righteousness and rightness when it comes to policy conception and implementation, and have stopped listening to experts. Um, we would consider ourselves to be experts in the field of of the property sector. Certainly. Um and we have repeatedly come in with empirical evidence, with um positions that you know uh could have honed, refined some of the policies that have been put forward um by the government over the past few years and and repeatedly um been told, yes, we we understand where you're coming from, but we're going in a different direction. And as I said, not unique to us.
SPEAKER_00And not unique to some of the dealings I've had with other governments around the country. Yeah. Same sort of thing. They'll they'll listen, you'll bring the evidence and the empirical data, and then they'll they'll they'll they'll give you lip service. Yeah. So thank you for that information. But we're gonna go in this direction because exactly that. They've got an agenda and they don't like feedback in terms of what that agenda looks like. What's disappointing about that from an outsider looking in, and from anyone who has to deal with government and try and get laws that make this economy great and stronger, and then everyone prospers under that, is this idea that that they just won't listen. And and ultimately off the back of not listening, um, we're seeing the you know the fallout of that in terms of a very, very ordinary economy, highest levels of unemployment, um, highest rates of small businesses failing in this state, uh, and they're still on their agenda. And it sounds like the idea of uh attacking them didn't work, but the idea of you know building and trying to form relationships is also getting a bit of a stiff hand.
SPEAKER_02Yeah, look, I think I think that's probably that the product of the past few years has been that we're we're in the conversation, but still not having the influence that that we think we should have. Um we we do approach all of these conversations, you know, not from a purely adversarial or um negative perspective, right? Like we want to be positive, productive partners in terms of building a policy and regulatory environment that's good for as many people as possible, right? And the reality is, you know, that I the government, we we talk about intent versus outcome a lot in terms of the policy and advocacy question, you know, conversations that we have. And we understand the intent of so many of these policies has been to provide a more equitable uh housing system for for all Victorians, right? But I've as you've pointed to, the outcome really hasn't been that. You know, I can point to say, you know, changes to the Residential Tenancies Act 135 back in 2020, a subsequent, you know, 30 to 40 changes that have come in, right? And that should have produced a healthier rental system for renters, investment um property owners, property managers, professionals in the sector. I don't think anyone across that spectrum asked today would feel better about the the state of the rental market in 2026 as opposed to what it was in 2019, 2020. Right. And that's and that that that's that that's renters, that's investors, that's um property managers that are operating in the spectrum. So when we say the intent was positive, the outcome has been effectively negative.
SPEAKER_03It was during that period of time, uh, pre-COVID and into it, I actually owned an agency. Yeah. And we had a rent roll of 270 odd properties, and and I managed staff and all those properties through the changes into and out of the omnibus legislation. And staying in touch with the industry now, I'm a buyer's advocate, but staying in touch with that industry now, you're exactly right. I there's not a single relationship I hold within the state of Victoria of uh business owners and rent rolls that says it's better in any meaningful way or minor way than it was before.
SPEAKER_02Yeah.
SPEAKER_03It's significantly harder and more expensive. The burnout of staff is higher, the turnover of staff is higher. Um, tenancies from inception with new tenants coming into the market, particularly I shouldn't say particularly, but but new tenancies are more adversarial as a starting point between property managers and tenants. And in all the years leading up to before 2020, when I was working in that side of the industry, it was always there was a there was elements of camaraderie across the sector between the professionals and the tenants and the landlords to get some sort of outcome where everybody benefited. And that's been eroded through the policies. Intent was there to make it better. The outcome is such that it's now an adversarial space.
SPEAKER_00Make no mistake, this government thinks they're well-meaning. They're in to your point. That's like this is they think that what they're about to do is is well-meaning for the people that they're trying to support. In this case, it's obviously the tenant, you know, tenant in the conversation. But what they are locking out is expertise, to your point. Um, and they are doing it in a narrative that says, oh, that's just self-interest, self-interest. Yes. You in the industry, they're dismissive. You're just, yeah, it's very dismissive. And and unfortunately, that takes the general public into a space where it's like, well, maybe it is self-interest. But the the whole idea is we want a vibrant property market. Yeah. We want that market to be performing at its best. And whenever you bring macro-prudential interference into markets and you don't let them operate, you get unintended consequences. Yep. Some of those unintended consequences, as we're seeing in the state of Victoria, is there's so many disputes now that we've got a separate mediation um that has that's had to be established.
SPEAKER_03Outside of VCAT.
SPEAKER_00Outside of VCAT, because VCAT was getting clogged up, and we've now got, and and they haven't stopped. Um, I'm gonna, this is a little visual demonstration, but thanks to um to news.com.au and the team there at News, and particularly to um to one of the journalists there, um, Nathan Um Mulby, he he sent me a list, and like this list, there's 40 41 um reforms that have occurred just under the Allen government in terms of that. So on, you know, like we would we could spend two hours just basically dissecting each of the. But what I am gonna do is, well, I mean, obviously, we'll put the the story that Nathan put up in regards to these, but we'll also, I mean, he might cut some of these out of his final story, but we're just gonna bring this laundry list up just to basically show um what's happening so our community can get context around what we're talking about. Now, we have a lot
Jake Caine's Money Story
SPEAKER_00to talk about, and a fair, a fair bit of it is about government policy. Yep. But let's just take a pause because all new guests on the show, Jake, we want to get to know a little bit about you and who you are outside of the work that you do. And we start normally with your money story. So um, psychology of money is really important because if you don't organize and get in control of your money, there's probably no chance of you getting to some level of financial security and financial freedom. So um tell us a little bit about your backstory when you were growing up. Did your mum and dad, and did you talk about money around the dinner table at home?
SPEAKER_02Yes, and not necessarily in a uh particularly strategic uh or tactical fashion. Yeah, my I'm second-generation uh real estate. My my father, who uh uh is uh you know well known in this the sector as well, um, started a business. Uh he was an exceptional sales agent, you know, routinely in the top hundred in the country, um, champion auctioneer as well, you know, in the in the context of Victoria as well. But he was a he was a boom or bust guy, you know, and particularly during the 80s or 90s, I know it's like booming for a while. He's one of those that generation that you know when when you're flying, you're flying and you um you live big and you spent big and um in and enjoyed that. And then sometimes when when the there was market downturn and and things got a bit tighter, then things got tighter. And so I suppose like growing up, I I experienced that as a as a young person, as a as a kid in a family where um there were times where you know it was um amazing holidays and you know, Mercedes-Benz and cool houses, and then moments when it wasn't quite so good, you know, things were things were a bit tighter. And I think that's probably um shaped my attitude towards um investment, towards money.
SPEAKER_03So did you adopt what you were exposed to or did you educate separately and go to something more stable?
SPEAKER_02I I think I probably um you know balked at that, you know, that uh some of those those times when it was tough, you know. Um and that you know, they're tough periods during the 90s as well. You know, I was at private schools and my parents were were having to go in and ask for, you know, um the schools to to give us a bit of grace period around school fees and whatnot, my sister and I. So I think that conditioned particularly us as the the older kids in the family before things stabilized and my dad matured and my mum matured and their approach became a a a little bit more.
SPEAKER_00So it sounds like you took the right lessons out of that. Now, I I always like to ask um how many other siblings?
SPEAKER_02Uh three other siblings, so one of four.
SPEAKER_00Yeah, so one of four. Um, has anyone of the others, without naming names or whatever, adopted uh boom bust lifestyle? Because we remember we, you know, it's nurture nature. We are what we see. We don't fall too far from the tree in some cases. Has everyone taken the right lessons out of that?
SPEAKER_02I think so, yeah. We're all I would describe myself as probably, you know, sort of fiscally conservative when it comes to personal finances. You know, yeah. That that being said, like obviously I you know was a owner of a business. Um I have some entrepreneurial tendencies, but uh I keep them in check, you know. There's always a a cost-benefit uh sort of risk analysis in there, and I I tend towards the um the the the the more risk-averse. Very good.
SPEAKER_03Yeah, I'm just going out on a limb. You never auctioned when you're in real estate or you did? Nah, wasn't it? Yeah, yeah. That goes with the boomer bust people, that big bravado at the start. Private sales for you. All right, so all the way. Yeah.
SPEAKER_00So we know basically how you've obviously you know fallen into the real estate agent market um through that backstory as well. So thank you for
Federal Tax Reforms Explained
SPEAKER_00giving us a bit of a story. I want to pivot now to talk about um your role at the REIA.
SPEAKER_02Yep.
SPEAKER_00So that is obviously a significant role as now president of the Peak Association representing the real estate uh marketplace in Australia, the federal tax policies uh and housing reform agenda that's going on there, or or should we say just the tax hikes that are impacting property? Um, did you see them coming? Um, tell us a bit about the backstory in terms of that, because I want to go to a statement that you put into the Senate Economics Legislative Committee soon, but just broadly, did you see it coming? Was there any consultation? Um, how are they running policy out of uh out of the bubble in Canberra?
SPEAKER_02Yeah, yeah, uh great question. Did we see it coming? We had prior to the previous election written commitments from all of the major parties um as to their policy positions in regard to the the property sector. Um, and there was confirmation there from the ALP that they would not pursue uh CGT or negative gearing changes. Uh obviously now we sit here um 18 months hence and um they changed their position. They changed they changed their position.
SPEAKER_00But they didn't lie, they changed their changed their position.
SPEAKER_02That's right, right. Um as to consultation, no, and look, we we we are not alone from the the property sector in in that respect. We sought, we we started to hear the rumblings and and the whispers coming through in anticipation of the you know the the formation of the um uh the uh Senate Select Committee on the function of CGT, which was um uh a misstep, I think, by by a friend of ours in the political world from the uh Liberal Party. I won't refer to a name, but someone who allowed that committee to get up and that effectively translated into a pathway for this change to come in, uh these changes to be considered and adopted.
SPEAKER_00Um I don't think that was the only one that was greasing the wheel. I think obviously that was initiated by the Green Senator.
SPEAKER_02Yeah.
SPEAKER_00Um and obviously there was the co-chair of that, um, which was the Liberal
REIA's Senate Warning
SPEAKER_00person, but I think there was some other greasing going on behind closed doors with the Labour Party as well, in terms of trying to get that CGT uh story up because no negative gearing was on that table there in terms of that. Can I just spend a quick second just reeling off some of this data? Yeah, for sure. Because I think this is a really important point, and then we'll bring you in show in terms of what it's like though. So, this is your opening statement to the Senate Economics Um Legislation Committee, and these were the key data points. More than 7 million Australians currently rent, yet treasury modelling suggests that these reforms will help around 75,000 renters become homeowners over a decade. That's roughly 1% of renters. Independent modelling commissioned by the REIA, Master Builders Australia and the Housing Industry Association, the HIA, and the Property Council found 14,032 fewer dwelling starts, 1.9 billion less construction output, GDP down by 1.374 billion, 2,000 plus fewer construction jobs over the first four years from the changes alone. And even after including the government's 2 billion housing support package, the net outcome is still about 8,000.
SPEAKER_02Yeah.
SPEAKER_00Yeah, 8,700 fewer homes, which is higher rents, lower GDP, and almost 3,900 fewer construction jobs.
SPEAKER_02Yep. So um, yeah, uh you can you can choose your terminology there, but uh again, we talk about intention and outcome. Yeah, and the outcome of this um is wholly negative for the housing market. It is counter um productive to the ambition of the stated ambition of these policies, um, which is to make housing more equitable and affordable.
SPEAKER_00The disclose stated ambition.
SPEAKER_02Yeah.
SPEAKER_00Because the hidden ambition, and I this is I'm not putting words into your mouth, Jake, yeah, but it's obviously it's all about raising taxes for the for the you know for the future. So putting putting capital gains tax 30% on shares and other asset classes says to me that this housing inter intergenerational inequality was the the smokescreen for raising taxes more broadly. So come the federal election in 2028, they'll be able to introduce a wave of changes to uh individual PAYG tax. That's that, and they're that because they got under so much pressure, Jim Chalmers has actually said, just wait, because once we see this revenue stream coming in, we'll tell you all of these tax cuts you're about to get as well. Okay, because we got a nominal $2.70 or something tax cut for this round. Yeah, but that's that's so they're unfortunately they're using property because if this was all about property, why why put a 30% capital gains tax on shares, right? And move away from that. So make no mistake, people. Um, this is this is the agenda. And to that point, they didn't want to they didn't want to consult with industry because they knew that there was a bigger story going on here as well.
SPEAKER_02Uh well, I won't touch that one. I'll leave that one for you. Uh stay within my domain, yeah. I look, I I've I've given up really in trying to um you know forecast uh or or speculate about you know genuinely what what the underlying principles are in terms of a lot of these policy conceptions. But if if we go back to the fundamentals of uh the impact here, um they are um you know indisputably negative for the housing market. And they don't deliver on on you know the ambition, the stated ambition, as we uh as we said, of making housing more uh affordable and accessible. The treasurer himself said, you know, a week or two before the budget that supply was the main game in terms of uh addressing the affordability issues here. And and this our modelling there, you know, like again, we get a key. You went independent for your modelling too, didn't you? We went independent, yeah, absolutely. And you get um painted with a brush, you know, the the housing minister said it's self-interest. Uh I I always push back against that and say, look, it it's not self-interest, right? Like a our constituency is anyone that touches a home in Australia. So our constituency is exactly the same as yours as yours. It's probably broader, right? Because the the healthier the housing market is for us as real estate professionals, the more properties under management, the more properties transacting, the better for us, right? Right? But also it means that people can live where they want to live, that they can get into homes, whether that's a rental home, whether that's their forever home, whether that's a home they're transitioning through on their journey through the property bigger, smaller, across, whatever the case may be. You know, that the better the the more effective and equitable that housing housing system is for Australians, the better it is for everyone in that system. But we had independent modeling done, and our modelling aligned broadly with all of the modelling undertaken by think tanks, by government-associated bodies, all of them across the spectrum, left, right, centrist,
Why Housing Supply Could Fall
SPEAKER_02all showed the same thing, right? A decrease in the delivery of housing, right? When we're sitting there against a national housing accord with a 1.2 million home target over five years, which is already modeled by everyone to fall short of that very significantly. We're on track for about a negative three hundred thousand delivery on that. And we're in a structural housing deficit, any policy that doesn't support the delivery of new housing should never have been contemplated.
SPEAKER_00The budget papers talk about thirty two thousand less dwellings being Built. They acknowledge it. They acknowledge it.
SPEAKER_03It was their own paperwork from Treasury said we're not going to make it.
SPEAKER_00Correct. But this is where I mean this is where the spin comes in, and this is why I get frustrated with any. I mean, I'll call out any bad policy, and this is bad policy. Because the reality is we're going to see a situation where they're saying they came to an alternate view because of supply. That was the like they said, the current settings weren't working. They were telling us that the current settings weren't adding to supply. Yet they're bought in different settings that actually doesn't increase supply. And we all know, we all know the enemy of capital growth is supply. And we all know the enemy of putting rents higher is also more rental supply. And so they had what, $2 per week?
SPEAKER_03They said it was only going to be $2 a week adjusted for rentals. And so far it's been modeled at nine. So that we had we had nine in normal.
SPEAKER_02That's what our modelling showed. And look, I think I was having this conversation with someone earlier on. Oh Scott Rawlison, the CEO of REIA, who is having some conversations with some of the government over the past couple of days. And the the one thing you can't predict in modelling, right, is human behaviour. Correct. Right? And if you you I mean, you guys obviously have an enormous um breadth of clients who are property investors. And property investors are responding to this in their own idiosyncratic idiosyncratic way, right? And it might not like notionally these changes are coming in, it might not impact them directly, right? But people are responding and they will tweak rents and they will put rents up. Yes, they will to be um protectionist around and around their investment. A lot of investors right now are going to have to shift their um their investment model from this, you know, historical, you know, we'll we'll take the loss up front in uh exchange for the capital gain down the track. As that CGT model you know changes, then they they need to you know move from a negatively geared to a positively geared property. They need to the the rationale behind the investment shifts from that long-term capital gain to this is a revenue-producing investment for me on an ongoing basis.
SPEAKER_03And the only person who pays that shortfall if they do switch from negatively
The Hidden Cost of Investor Behaviour
SPEAKER_03geared to positively geared properties is the tenant. The tenant has to fork it out after tax. Yeah. Like and they can't invest in shares or anything to make extra money to make their ends meet because the government takes 30% of that as well.
SPEAKER_04Yeah.
SPEAKER_00So I I I love um you know, human um psychology and and behavioural economics. So we're talking about some cost bias. So if I've put an investment in place and also the endowment effect, which is also very positive, you know, you know, in terms of powerful. Uh so in other words, if you take something from me or you ban, I'm gonna react in a pretty um, you know, uh powerful way in terms of how that's gonna be. So what we are seeing is definitely that those people who have got grandfathered properties are holding on to that.
SPEAKER_03Yeah.
SPEAKER_00And that that that's that I think that's a good thing because it's gonna keep some supply there. But there's still a bit of uncertainty around um what I'll do for the new purchase because I'm you know, like at the end of the day, I'm still trying to get a capital gain. That's the main reason why I go in investing. Um we are definitely seeing that, you know, from a uh a price point of view, if you're sub-600, you may not be wise to invest in property. But the numbers, you know, you're putting yourself into a marketplace where the the value of the land is questionable, which is that's the thing that appreciates.
SPEAKER_03So maybe there's and those markets can be quite transient when you're sub-600 and you know an hour from a CBD. Correct. They're good sometimes over 20 years. Yeah. They're not good over 20 years. Yeah.
SPEAKER_00So so you know, and but there could also be, you know, a group of people that are that are uneducated who chase yields and potentially run into those markets. And so that's the that's the trade-off. But this is my problem with, you know, when you set certain legislation, these are the you know, the consequences that you're gonna get as opposed to letting a free market do its thing and take the red tape out and all those types of things. So I think I think there's been some good takeaways in terms of that. Um, I am what I want to move on because we've got some important topics to get onto now. Um Victoria government is proposing uh auction reserve price reforms. Jake, can you just take us through what they're proposing and then um take us through some of the uh the research that you've done in this area as well to sort of say whether this is a sensible idea or not?
SPEAKER_03And can I also just add to that, can you take us through the RAIV would have had some consulting done with the government
Victoria's Auction Reform Proposal
SPEAKER_03about what a better approach may have been if the policy was coming. Can you share with us what your intended policy would have been as opposed to what is being delivered at the moment by the former Allen government? Yeah, former Yeah, that's that's uh we've got to adjust, right?
SPEAKER_02Yeah. Uh yeah, so look the time line for for the the um the proposed changes here, you know, it all kind of kicked off um sort of middle last year, June, July, when there was um, you know, significant uh coverage uh in the Fairfax media around um again the purported um endemic nature of of underquoting. Yes. Again, I th I think um at the time, and this was uh this is you know uh feedback that I provided to the the journalists, who you know, credit to the the team, they did an incredible job of you know research and and preparing this um this series of of uh articles that covered the issue.
SPEAKER_04Yep.
SPEAKER_02Um but you know there's there's confusion as to what underquoting is effectively out there in the marketplace. And there's a tendency to assume that if the property sells over the reserve, that that is uh fundamentally underquoting, which um anyone who's operated, yeah, um not just as a real estate professional or a you know property investor, but anyone who's uh uh who's within the market understands that that's um that's not the case. Um and it certainly the the I think the overwhelming majority of the reporting presented it more in that light. You know, it blurred the that it acknowledged that this isn't effectively or in um you know indisputably underquoting, but it blurred those lines in terms of the volume. You know, we're talking tens of thousands of of cases where property sold above the reserve, you know, which again we would argue is is a good outcome for the the owner of the property, and it's a that's a job well done by by the real estate professional that's represented them. Um the government picked up on this, and and they they did invite us in for consultation around um you know their proposed uh reform. The proposed reform, which is what is being presented and is being debated in the in the parliament literally, probably as we sit here, um, is that all owners need to disclose their reserve price seven days prior to the auction. So the feedback from us was again intent versus outcome. Yes, we understand that you're trying to make the property market um more transparent. You're trying to save buyers' time um when they uh come to um auctions and find that the you know the reserve price was was higher than their budget, you know, which again is the exception rather than the rule from my perspective. It's the market dynamics that take the the properties beyond um the affordability piece for so many buyers.
SPEAKER_00Emotional buyers are out there.
SPEAKER_02That's that's right. Um our view that this was it was that this sort of impeded the rights of um the the vendor or the seller, it um limited their ability to um make an informed decision about what was in their best interest, and ultimately that it didn't really solve the problem that the government was trying to solve. And look, I I've made this point, I made it in a in an op-ed um for the age newspaper around this time last year that it isn't it it isn't about the the the deception, right? And that is out there, we need to stamp it out, it's a t it's a terrible practice and it is a waste of watch it go, yeah, all of that stuff. But it is not endemic and it is not as widespread as people think it is, right?
SPEAKER_04Agreed.
SPEAKER_02The real crux of the issue here comes back to the same thing we've been talking about, right? Is what people are disappointed. They they come to an auction, they had their hopes set on securing this property, and they find out that other people at the auction had more capacity and more will.
SPEAKER_03Well if you have seven bidders at a at a successful auction, that's right. And that's a lot of people that are disappointed, particularly in in family housing markets. Mum and dad, two kids, second or third home, moving to where schools are, and they go, Well, I I missed it by 30.
SPEAKER_00Yeah.
SPEAKER_03It's so there's disappointment around that process, but there is a winner too.
SPEAKER_00Or the price discovery is two and a month. That's that's how it works. That's how you get price discovery. It's not it's a non-fungible asset, it's not something, it's not a it's it's a you know, heterogeneous asset, right? It's not a homogeneous asset. That's right. So you so no two properties are the same. So you're going to get these types of things. I get their intent. We need to do price anchoring and we need to make sure, and then obviously it saves people from doing their building and pest inspections and doing all of those, you know, some people pay for contract reviews and all of that type of thing. Cool. So they're trying to they're trying to help those um uneducated buyers to not waste money.
SPEAKER_03And that's fair enough because from a buyer's agent's perspective, like if you're paying retail value as a as a um as a purchaser, if you're paying retail value for a building inspection and a contract review with a law firm, every time you like a home, it can it can be in excess of a thousand dollars every time to check the paperwork to then turn up and miss by 50 or 60 can be devastating. Yeah, your home search should not cost you that much money. So I understand that, and I'm on board with changes to help protect those people and that interest. Yeah, but this what they've said they're gonna do and what they've done, shockingly, don't align. There you go.
SPEAKER_02And so look, you know, to your earlier question, right? Like go back to the timeline. What we did when the government
REIV's Eight Better Solutions
SPEAKER_02um, you know, and in response to the overwhelming sort of interest in the topic, is the the real estate institute convened a special working group, right? And it had um people from you know the CEOs of some of the biggest franchises in in the state, in the country, to be perfectly honest, some of the biggest business leaders, people from regional, people that were auctioneers, buyers agents, etc., the full spectrum, and the government and the opposition were invited to participate in this. The government committed to participate in this, and they attended a couple of the meetings. But what we wanted to do was solve precisely these issues, right? Is build, deliver a set of policy recommendations that would give greater transparency, preserve the rights of the sellers, but support buyers to buy, you know, in an informed, less costly fashion. So some of the recommendations we had eight recommendations that came out of that. Um, our recommendation around the disclosure of prices, reserve prices was again, we there's a 10% range in there. Now there's no requirement for the reserve price to sit within the 10% range. Yep. Right. We thought three days prior to the auction, the owner has to set their reserve price and it has to be within the 10% range. Now, that 10% range can shift. That's the it's the owner's prerogative. But three days before, everyone that's contemplating bidding on that property come Saturday, come Thursday, whenever the auction is scheduled for, they know within 100 grand or 50 grand or wherever the price sits that within that range, the reserve will be, right? So that they're they're in contention there.
SPEAKER_03Yep.
SPEAKER_02Beyond that, mandatory building and pest inspections to be provided at the outset of the campaign, right? Undertaken by the owner, but the successful buyer, the person that purchases it, um, actually buys that. They pay for that building and pest inspection, right? The r the rationale behind that, they've got a similar system in Canberra. I want to understand this because I'm pressure with this. The rights of the building inspection transfer with the with to from the the owner to the purchaser. So hypothetically, in the event that there were issues with that building and pest inspection, i.e., you know, its accuracy wasn't, you know, um where it should be. The purchaser has recourse.
SPEAKER_03I don't mind that. Okay. And no one's been able to successfully explain that.
SPEAKER_00We've had um obviously the association of um independent uh you know property and building inspectors on the polyps.
SPEAKER_03Paul Baker was on the truck, right?
SPEAKER_00Um and the the challenge with some of those is the minimum requirements on those are the problem, right? Like if you want an exhaustive building and pest, um, you want it done properly, right? So and that's that's the yeah, whereas if they water it down, um then there's going to be lots missed, and then everyone will then work out I've got to go and do my own anyway. Yeah. Just for confidence before I bid. Well, that's that's an interesting one.
SPEAKER_02I go look, I this the the the government actually adopted this element uh of testing. And I was uh like you know on 3AW on a variety of different um media things arguing against building and pest inspection uh inspectors, and they're like, you know, you don't understand the industry, there's so many bad operators out there, and you know that that they won't rely on it, and real estate agents will exploit it. And I was like, hold up, buckaroos, right? That's a you problem. Yeah, that's not an us problem. Yeah, sort your industry out, right? Like what our expectation is when we commission a building and pest in inspection is that it is accurate, right? That it is rigorous and that it it would hold up under under scrutiny. And and so we said the same thing to the government. We said you implement this, then you have to, you know, there's accreditation regulations that go alongside that to ensure that whomever commissions that that they get a quality product that is you know indicative of the quality and and the condition of the property as well.
SPEAKER_00So that that's a way of potentially solving it. But I think we want to go to the main issue that we see here now. Yeah. Is that in your own research, what did you find when you surveyed vendors, future vendors, what's their intentions if this legislation comes in? So let's say, you know, it it comes in in its current form. Yeah. Um, you know, what are the concerns about its current form? And then what do you think is going to happen? Because we know that there's going to be a behavioral change.
SPEAKER_02Yeah.
SPEAKER_00What is it going to look like?
SPEAKER_02Yeah, back to your sort of behavioral economics. We again independent research commissioned by the Real Estate Institute of Victoria in this context, more than a thousand respondents, um, property owners overwhelmingly. Um, 94% of them said they would change their approach to selling. Well, you should go to. Right. And so if they change it. That would be either transitioning to a private sale or expression of interest, which look auction, it should be remembered that auctions represent less than one in four sales in the Victorian context, right?
SPEAKER_00But it's Victoria's still, and sorry, Melbourne is the the auction capital of the Victoria. That's right.
SPEAKER_02And it's still only 25%. Yeah 20, 25% of total sales, right? It is the most transparent method of sale.
SPEAKER_00That's what I've got written down here. Absolutely. There is no argument.
SPEAKER_03There's the person that's going to pay more than me just over there. I'm just going to pay another thousand. That's it. So I have to do that.
SPEAKER_02You get to stand in the street or in an auction room and look your competitor in the eye, and you can tell whether the competition is still there, whether it's strong, whether it's waning. And you can make that decision in an informed way. Correct. It's not worth it to me, right? Private sale, expression of interest, you don't have that. It takes the transparency, the competition that exists from out in the light and puts it in the dark. Right? That's you know, and that they all have their merits.
SPEAKER_00I've got a higher offer here, Jake. Yeah. Um I'm not going to tell you what it is, but I've got a higher offer here. If you want to buy this property, like no transparency at all. You've got to better. You've got to better it.
SPEAKER_03All the all the agents that I used to go that would work in the industry and go, so you can just give me, I can't give you any help, but fill that contract out, give me your you can have one offer, and I won't call you ever again. You just get to make one offer. So make it your I would suggest no conditions, 30 days. And I would go above the range. Yeah. Like what negotiation tactic? How do you work with that? No. Where's the transparency in that?
SPEAKER_02100% ridiculous. It is it's still an auction, it's still competition, it's just a sealed beard auction, right? Where you you go and you don't know if you've you know lost by a buck or won by 150,000, right?
SPEAKER_03You know, and that's like I would argue in both scenarios, that's devastating. Yeah. To lose by a dollar would be soul crushing, and to find out you have overpaid your nearest competitor by 150,000, like Exactly.
SPEAKER_00But I can still run the auction in a sort of boardroom style setting, right? But I but to the point I can put people in different rooms and I can just go around. Yeah, you can do it on the phones. I can do it anyway. Yeah, that's like I want to my intention here today is by five o'clock I want to get the best offer on one of these pieces of paper. I'm not gonna tell you, and so to your point, I can't read body language, I can't read pace, interest, debates that are going on. I'll lose all the time. I mum and dad having a quick chat between beers. Yeah, uh, all of it. Again, it's intent, we understand it, policy execution, yeah, pathetic.
SPEAKER_02That's right. And look, I I think when and we've said this, we said, if you want transparency, adopt the eight things, the eight recommendations we've made. Because it it actually, like I've I've actually never been more confident of a suite of solutions that could give that to you know, give confidence to the buying public, preserve the rights of the vendor, and have people feel okay about the entire process, right? Like I genuinely thought after we came out of that, this is such a strong set of recommendations, right? That that genuinely solves so many of the issues that people have. It doesn't solve the disappointment, it doesn't solve the affordability, but in it that it comes as close as possible. But this, you know, and and that the the response of a thousand plus Victorian homeowners is testament to that, right? So that and their response is we'll set the prices really high. Yep.
SPEAKER_00So within weeks, within weeks, we're going to see uh the journalists writing stories of people saying, I went into a boardroom auction, there was no transparency, and then that'll be the next problem because they haven't solved it properly.
SPEAKER_02Exactly. You know, so again, a s a solution that that doesn't solve the problem, unfortunately.
SPEAKER_03So that'll be on the headstone of the Allen government, won't it? A solution that doesn't solve the problem.
SPEAKER_00Yeah, look, uh time will time will tell. Can we can we talk just Alan? Um, you know, uh Dan the man, yeah, now Ben the man. He has a chance, yeah. Well uh yeah I'm gonna do something there, right? They're still stitched by the same fabric, so I'm not I'm not a big not a big believer, but I yes I'm a fire brand. Everyone knows it about the community and about what I say. You know, I just call out bad governance and bad government. Um all right, so I think we've exercised our demons on that one, but let's see what comes out of parliament. And obviously, for those people who are outside of Victoria, um, let's see what also comes out. I mean, we saw we saw in Queensland where you can't actually give a god, it's a problem. Totally different. Like this all sounds too hard. Let's just ban it. Was there, you know, was the like. You can just put the word auction up. That'll just let's let's just have no transparency at all. Okay, it's wild, isn't it?
SPEAKER_02Yeah. I think I I I I have this debate with with um agents from from Queensland, and they're like, just adopt our system. And I was like, mate, the genie is out of the bottle here. There's like there's never a world where we go back to the top.
SPEAKER_03You'd have to delete statements of information, you'd have to, it would just, you would just be undoing unbelievable. Yeah, it can't be done.
SPEAKER_02But you know what? Just to I'm not to harp on the recommendations, you know, because obviously I love them. But you know, one of them was was that all sales results needed to be disclosed um within 48 hours, right? We were we were genuinely about let's give the market the information they need, right? Right? So you can have the most informed, um informed buyers going around there, and if they see a reserve that they think is completely unrealistic, they can f say that.
SPEAKER_03And they're not, you know, they It's like how can you say that? Because on Saturday this one sold for X, and you're telling me Monday this is worthwhile. I know what you're doing. You're trying to, the vendor's trying to protect it, but right, so it does help. My only issue with that, um, and I had this discussion uh routinely with purchasers and homeowners as well, who we come into contact with, was that there are um sensitive-natured sales and individuals who need to be protected with their sales results.
SPEAKER_02There were caveats in there again to you know, but the example we're thinking of, you know, potentially you know, domestic violence contests, etc., where um you know there is you know certain instances of high-profile people that you know you know having their that information could expose them to you know risk of some some description. And there'd be a a mode by which you could you know make an application for withholding that information. But overwhelmingly that there would be out there. And that potentially would be happening before the sale.
SPEAKER_03That would be at titles often. They'd be looking for an exemption at the outset. It wouldn't be in the 48 hours rush after sale, obviously. It would just be a non-disclosed sale. Yeah.
SPEAKER_02We wanted a market where you know there's so much access, you know. Effectively, we've got a version of that right now. It's the like just delayed. The democratisation of data means that our the buyers today are better informed than they've ever been in at any point in history, right? Make it as absolutely transparent as possible there, and you can get to a point where you don't need a statement of information. Like that was my my rationale is we can get two years hence from this if you implement these, yeah, and we can get rid of all of this complexity around compliance and whatnot, because it's such an a transparent play, a marketplace in which to operate, right? Where again the market still determines the outcome. To your point, uh, Ben earlier on, you know, it is heterogeneous, right? Like every property is different, even within an apartment building. You go like the view from floor ten is different from from floor eight, even at the same time.
SPEAKER_00Now I've got an incentive to knock one home down and make two. Yeah. And so I'm gonna pay a premium on that. land to make two. Now, so everyone's looking at the, you know, oh look at this this beautiful renovator's delight. And I'm like as a first home buyer, I'm thinking, wow, this is going to get me into a suburb that I never thought I could afford. And I'm going to go in there and I'm going to get smashed.
SPEAKER_03Yes.
SPEAKER_00And then I'm going to blame someone for it. It's like, well, at the end of the day, that person who was bidding might have been in a suit, but he might have been bidding for a builder who is going to put two homes on it. Two toothics on it, right? And and that's that's that's what that's the disclosure and transparency. You'll never know. Because as a competing buyer, I'm not going to tell you my strategy, what I'm going to do with the land. Of course. It's future productive use. I'm just trying to get the best deal I can possibly get and I'll you know I'll do my way of professionally intimidating, you know, an auction where I might be looking confident. We're going to do a video like I've got deep pockets and all those. Anyway, that's the point. So there's never perfect solutions. The market is going to be the market. And what we've always said to our community if you're unsure and you don't think you can compete and win against professionals, engage a professional to help you do it. Right? Get the results that you want to get as part of we don't lose many. All right the third topic because uh I'll try and keep it within the hour or just over AML which stands for anti-money laundering compliance obligations have been rolled out from the 1st of July for real estate for the real estate industry. You are playing a bit of catch up to obviously what's happening in financial services and in also mortgage lending and so forth. So let's talk to those changes because Shane you've obviously been leading our program inside our business and obviously from your point of view Jake you've been you know sort of guiding industry and getting feedback in terms of how this happens. So Shane do you want to tell us what the policy changes are and then Jake if you can sort of just take us through what you've been hearing how it's been implemented what are the lessons so far and ultimately you know where we go from here because I think the community needs to understand that if anyone is going to be buying or selling a property there you This is happening now. This is happening to you and you will be asked for certain information that you'd be like what's this all about and you need so there's going to be an education learning program that's going to go on here but over to you Shane in terms of what's happened. Thanks and then we'll we'll get uh Jake in on the conversation.
SPEAKER_03So the uh the government introduced the AML legislation to start from July 1 and it's basically a um an expansion on what was called Tranch 1 which was for financial planning and mortgage broking or financial services and mortgage broking mortgage lending and so now tranch two has come into effect which is just an expansion of what was there for the real estate industry specifically around buying and selling what you'll experience as a purchaser or a seller now is you'll go through what's called a KYC check and know your client check and you have to provide if you engage a real estate agent and you're selling you provide them with your name, your contact details and verify your ID. If you're using a buyer's agent to buy a property the same thing.
SPEAKER_00And because property is one of those vehicles that you can launder a lot of money through. Huge amounts. So obviously that's the intent is you know it's trying to people are trying to wash um a money that's gained through corruption and also potentially sales of drugs and what have you and try and legitimise that money through washing it through real estate. So it's actually a pretty good initiative.
SPEAKER_03I like so I as as can I say from the outset the AML intent is excellent. Yes. I don't have any issues with it. And the execution of all the things we've said that are you know pretty poor in our discussion so far, it's not bad. It's not great but there's actually scope for this to be really good. We're a month in and I want to take your view on this as well but we've implemented with a service provider to help us with all of our checks for either the KYC is know your client, KYB is know your business. So if you're a if you're a self-managed super fund or if you're a company and you're buying in a trust or anything like that, that's a separate check. And there's a cost associated with that. The issue that's turning up for me in this at the moment is that we have buyers who are in conditional contracts and because it's so new we have largely real estate firms outside of conveyances coming to us and requesting these details that we're not comfortable giving yet. There's a little imbalance in the timeline for when information needs to go to other parties and also there seems to be for all the education that was put out in this space leading up to it was largely about the fear of God and the fines that people will get if they don't comply being the businesses. But the reality of the implementation of this great initiative is that a purchaser is now having to do a KYC check potentially at their own expense with their financial planner and separately with their mortgage lender and separately with their buyer's agent and also separately with the agent they're buying the home from or through. So there's four opportunities for this industry to turn up overnight and and money to be paid when maybe the reality is there should be a central place where these checks happen. I mean this issue is I'm getting a lot of emails heading up this section for our business at the moment from agents saying you have to give us the details or the sale won't go through, which is not true, not accurate and we're having those discussions as we go but how are you finding the birth of this tranche 2 AML in real estate?
SPEAKER_02Let's go back a little bit first and foremost when we talk about consultation with government chalk
A Rare Example of Good Consultation
SPEAKER_02and cheese on this one. So um Austrak effectively falls under home affairs now. Consultation throughout over the past two years has been phenomenal. Great. Well it feels like that well done government excellent job and that's and yeah like credit credit to Ostrak for the for the way that they've engaged with the sector credit to um our our CEOs at the REI level um Scott Rollison from the national perspective and and the CEOs in the states and territories they all chipped in and the the version of these um reforms that we have that these laws that have come in are the are the best that that we probably could have hoped for. It feels pretty good. Yeah and they they listened you know there's an ex example you know in terms of you know timing of of some of these um KYCs for for purchases from the the the real estate agent's perspective you know initially they were in at 14-15 days right and we said this doesn't actually work it's not real in the context right of of how the the the workflow you know so it's not 28 28 days or three days prior to settlement whichever is the earlier precisely which largely means that every contract in Victoria by and large goes unconditional before 28 days.
SPEAKER_03Yeah. It's like that's that's the rule.
SPEAKER_02The exceptions don't that's right yeah but but again that they listened to the feedback they sat in there and they had a much shorter turnaround for the introduction and like the delivery of these reforms than than you you might have hoped for really um from from an industry perspective again like macro terms we're we were one of five countries across the world that hadn't implemented the Transto reforms and we weren't in good company. You know one of those ones where you're like looking at the list going great okay whether it was the DRC or something like that, you know, Iran and um so it it needed to happen. It is you know for Ben to your point like this is both contribution by our sector to a public good which is you know trying to eradicate some of the vilest most heinous crimes that are committed around the world. Yep the kind of things you know that that you know only happen in the darkest corners or unfortunately not you know but but get financed through through property. And I also think you know Shane to your point it's an opportunity for the sector right we're a sector that hasn't got the best reputation right hasn't isn't trusted isn't considered to be ethical by incorporating the these checks into our workflows we're actually it's an opportunity for us to again sort of demonstrate our reliability our trustworth trustworthiness um and our our again our contribution to that greater good as well which which I actually firmly believe that that we have you know a massive contribution to the the communities that we serve that goes unrecognized but this is a means for us to sort of uplift it to a nice duty of care as part of that particular story. Now yeah Shane that the and this is this is the one kind of weak spot and it's been you know in terms of the the institutes around the country and the consultation we've had with the sector people like why are we doing this at at you know finance at conveyancer at estate agent why why can't we you know consolidate this process down and have to to your point like sort of one sort of source of truth if you like that can that can take care of this. Is there still consultation that can happen on this because it's yeah reforms reforms can still happen right uh and we and look we've we've got we've got you know a bit of a win in in some areas where like a conveyancer can share the information with an agent.
SPEAKER_03Yeah they do the ad hoc reliance agreements I've seen those for but I mean for my two cents on it for the months that we've been doing it surely if you are accredited as an AML KYC KYB service provider once that's obtained that person that can then be shared amongst the businesses that require it with a caveat that under the Privacy Act they can't be used for marketing purposes. You can't go my database if you are the selling agent and you get the purchases details before it goes unconditional you can't contact them about are your finances due or have you paid your deposit or any of that. Like there should be some way of getting that done I think there is reform for that available.
SPEAKER_02I think there's a future where where that can be done and you know that I can I get into that room for reform discussion I got some thoughts. Yeah yeah just share your thoughts too Jake and you'll take them on back absolutely and look I I I they Ostrack has said to us you know these these are a work in progress great but let's let's that's really good to hear I I see you know technology is is going to be the the solution around the the KYC C D D part. I think the concern remains around like the reason this applies along the the workflow along the value chain however you you know want to the reason it's so important to bring real estate professionals into into this conversation into this process is it's these different views that people these the insights that people have into the per the perpetrators here right like real estate professionals have a unique opportunity to meet face to face with with with these people right and you know the it's the pub test. Something doesn't smell right here let's flag it. Let's flag it. And I'm can the the the concern is as I understand it is that sort of the if if the that there's the green tick that comes along the the way from a a C uh C D KYC perspective. Can you just explain what a CD customer due diligence I apologize.
SPEAKER_00It's effectively the same thing as KYC as KYC now I mean look I know our community wouldn't be engaging in these types of activities. So the takeaways for for our community are what's it going to cost me?
SPEAKER_02Well firstly making me aware of it which we've just done and then is it going to cost me like what are we seeing are we seeing um agents and uh buyers are they packaging it up with the services they're providing or are they charging uh one off fee or what what what's the it'll it'll form you know for for a seller it'll form uh you know they'll pass on the probably not the administrative so much as the technological costs so a lot of their costs yeah yeah right effectively you know if if they're paying a sub for a uh a subscription for a technology provider that they you can you know log in and put your details in bang ding ding ding ding green tick you you're good to go um you know that that will be included in you know a a broader administrative fee which which generally packages up those costs yeah um for uh yeah I mean from a buyer advocate perspective I imagine a similar sort of you know um that's we're we're trying to at the moment at the moment it's part of the package but it's the reality is coming that it might have to be a separate we're not we're not there on that yet but we'll probably have to chat about that further.
SPEAKER_00But yeah I think I think it's one of the things as it gets more and more digitized, hopefully uh you know if it's 20 bucks or 30 bucks or whatever. Yeah. I mean the problem with it is is if there is a lot of administrative piece to and it's a couple hundred dollars. I mean I know now in terms of some of the compliance minutes that I have to do for the multiple companies that we own and it's a $200 tax invoice for every every adoption that I'm sort of doing like well I'm not sure it's costing $200 but I but there is a there's still a cost right I've still got course I've still got to coordinate the timings of everything to make sure that I'm gonna be exactly right to check it out. So there is so it is a question. I mean any type of regulatory change comes a cost which is what we're coming back to earlier when we're talking about the reforms in in the rental market for the Victorian government the the cost of running property running a small private rental accommodation business in Victoria has skyrocketed because of higher compliance costs because the property manager is saying it's taking me a lot more lot lot longer for me to to actually administer and and look after your property so I'm gonna on charge those fees to you and you're gonna on charge those fees to the consumer which just happens to be the renter. So you know like anytime we anytime we look at reform and we agree with these reforms so please don't think that that you know we're certainly giving this one a big tick.
SPEAKER_02And it should it should be noted I suppose you know particularly for a lot of your audience and your your clients in particular the
The Real Cost of AML Compliance
SPEAKER_02more complex the structure of their their ownership and entities then the more likely it is that they're going to be uncomfortable about about some of the questions that are being asked and that's that this is we we've always you know from day dot argued that Ostrack where they failed was investment in communic communicating what this looks like to the general public right when when when someone who's never asked you for this kind of information before says Ben what's your source of wealth you know how did you actually purchase agent is at the end you know and you're like are you kidding me dude like I'm not telling like that's not none of your business right exactly right but I can't like we're seeing in lending now right where you know that there's there's no doc and low doc loans that we used to have that's what caused the GFC.
SPEAKER_00Now we've got new lenders and lenders coming in with uh you know accountant letter certifications right so the accountant letter and we know that there's a few Dodgy accountants out there who are writing certification letters because they're connected or you know to the buyers agencies and the lending the the you know the the mortgage broking businesses tell me that's not going to blow up. You know like in terms of the but this is you know there's a new product that hit the market this week I won't name the lender because I you know I'm not accusing anyone of any wrongdoing here. But what I am saying is right so a self-certification letter or or a letter from your accountant saying that you can afford this property well now that we've got this uh you know sort of AML stuff and know your customer stuff there's going to be some interesting questions that are kind of come up and come back on it that are going to come back on it. And look one of the other important things that have all that's also potentially going to stop this because we know that you know there were certain lenders who had over eight weeks eight different applications for eight different trust loans from the same borough that that they couldn't match up. Like that's wrong. Right. And so this is where that is you know there's no way known this person can afford these at but anyway it didn't blow up so we'll let that one go through the keeper. But the now well what what I understand is the credit check officers are now doing data matching to hopefully then pick up who's the directors of these companies. Yep and oh okay that that's interesting. They applied for four other loans with three other lenders um in the recent period of time and they've all got the same accountant's letter you know and and we know that there's been some major fraud going on with the big banks um directly and also through some broker groups and and accounting are what they call third party introducers as well. And this has all got to do with fraudulent pay slips and fraudulent financial documents and it's money laundering. So what they're doing is they're all or let's say it's international money transfers that are going on so they take they buy a three million dollar house uh using uh fake documentation uh they get the loan and then the loan's paid off within six months and it's a four million dollar loan right and then all this money starts flooding in right so it cleans the money and so that's what we're seeing and we know uh you know reported in the AFR and all that that we're around sort of billions and billions of dollars that have found this way in you know in terms of that and we know Austrack the $10,000 that they you know track and all those type of things Westpac are being prosecuted in terms of you know not doing their AML correctly and so forth. So this is what happens right like crooks try and you know beat the system to try and get around the system and if there's large amounts of money involved in terms of for brokers or anyone else buyers agents whatever it may be they will try and bend the rules for self-interest as well. And they think that they're doing the right thing by the customer because they're getting them out there to try and buy their next property and property prices always go up. You know they always go up so I I think that just wraps our you know the importance of good governance and good regulation is important. I don't think we want a free for all open markets have their place in terms of letting the market dictate the things but there are some checks and balances that we need and having this conversation with Jake today is a big part of that. Jake I'm going to give you the final word for today's show. Let's focus back put the lens back on Victoria where to from here for this Victorian
Can Victoria Recover?
SPEAKER_00property market. What needs to be done because there's it's the second biggest economy in the country our property prices are at least $100,000 off what you might consider fair value, fair land value compared to what's obviously happening in other states and territories. What do we need to do to get um the real estate market and the the Victorian market back into its natural position, regression to the mean, which is the second best property market in the country how do we get back there?
SPEAKER_02It's interesting you know we have cycled through um this you know positional shift you know up and down that ladder. You know the assumption is we're always number two and we should be number two after after Sydney after NSW but we we have dropped down and and come back up before but I I I think you know that this our fate has been in our own hands. You know there there's there's no escaping the fact that you know that the the state remains in a malaise after the COVID you know and that that what we endured during that period was a massive knock to our confidence. I think it's been exacerbated by as I said earlier on a a government that has become increasingly hubristic, convinced of its own um you know correctness around the policy and and you know the outcomes we're seeing day to day in terms of the the impacts we this is no longer a state that the business that in private investors want to put money into because of of the weight of regulatory change, the nature of the regulatory change um and that that's acted as a massive disincentive right and as a result we we find ourselves in this kind of deflated um context. If there's a silver lining right is that I think a lot of the the regulatory change that's happened here will be emulated across other states and territories. Right?
SPEAKER_00Yes we are seeing a copycat or you know but it is coordinated to let's make no mistake that you know the rental associations have their nine or eight eight or nine point you know sort of mandate program that they're trying to implement which is counterintuitive to what the investor wants. So there's that in itself clashes. Yeah and if that clashes then okay the government's going to have to spend hundreds of billions of dollars in providing you know public and social housing. But that's not going to happen. They don't have the money for it. So it's interesting.
SPEAKER_02And it'll be interesting to see what the impact of that is you know on a national scale as you know we we are the the front runner in a lot of this reform. And the the benefit of that is that we now the investment community here and those that are from interstate but are looking in understand the implications of some of those changes and so they know how to navigate them better um and you know where to find the the opportunity. That said as much as I am absolutely reluctant for further reform like the the you know for this state to turn a corner the the regulatory environment does need to change again. You know we we've touched on red tape again I won't be the only one arguing this you know if you speak to any peak industry association whether it is MBA, PCA, HIA, UDIA, all of them will say the same thing and we all sit on the same boards that advise being taxed into productivity. 100% you know the cost of delivery of new housing in Australia about 40 cents in every dollar goes to a government levy or s or tax yeah right?
SPEAKER_03Let that land people when you're 40%.
SPEAKER_0040% so
The Biggest Barrier to Housing Supply
SPEAKER_00that's 40 cents in every dollar just to produce it. There's housing affordability solved right there.
SPEAKER_02Exactly if you go if you go a million dollars is the median dwelling cost in Australia near near enough right across the country. By dwelling I mean everything whether that's a house an apartment we're at a million dollars average meet you right 40% of that is a tax or a levy just halve it just halve it right government take 20% less than you're currently taking yeah right and that million becomes 800,000 that's a whole lot more affordable for the average punter Out there that's trying to get their first home, right? Or trying to upgrade from a one-bedroom unit to a townhouse that they can have a family in. And that is all of that's tied into the red tape that goes into construction, the the take that the government has. We can do this, we can make delivery of new housing more affordable. And we can do it here in this in this state.
SPEAKER_00But it starts a strong economy, gentlemen. And they say that history doesn't repeat itself but it rhymes. Does it ever heard that statement before? Yeah. Who was our last premier to be sacked in a sitting office? It was John Cain. And what happened? He stuffed the economy.
SPEAKER_02Yeah.
SPEAKER_00Right. And so obviously then Joan Cooner came in and no, you know, hubris. They thought they were still doing the right thing, and the economy still crept itself until they had, you know, and it was the same problem. We got ourselves into an enormous amount of debt, and then Kenneth had to come in and basically sell everything to try and recover that. And remember, we also had uh uh an all uh a debt recovery that was added to our rates, um, and that was when um every household in Victoria, if my memory serves me correctly, and hopefully someone reached out to me, I've got this wrong. We were in around $10,000 per person in debt. Where we sit right now today is around $53,000 per person in debt in this country, in this state, I should say. So make no mistake, people. The most important thing that any political party can do is run a strong economy. And a strong economy is one that's free and open to operate, where people take risks, they innovate, they produce productivity, they they produce more with less, which is a good thing because it's also anti-inflationary. They employ and we all get the greater prosperity off the back of that. So I I I'm a single, everyone knows I'm a single issue voter, and that is I will vote for who's got the best economic policy because that's all that matters. Because when you get great economic policy, the the economy's in flow, the taxes spin off that, and we basically have uh a better standard of living and quality of life. On that note, I'll said. Thank you, Jake. Thank you, Shane. Thanks, mate. It's been a great show. Hopefully, you've enjoyed being a fly in the wall. This conversation will probably still continue. This will go a little bit after. Yep. But just remember, knowledge isn't parent, but only if you act on it. See you next week.
SPEAKER_01Hey folks, Opti here, your smart money sidekick Inside More. Just one quick thing before we sign off. If you're new to the Property Couch community, welcome. One quick tip to help you get the most value from the show. Our first 20 episodes cover the foundations we build on every week. And yes, listening on one and a half speed is totally acceptable. If you're short on time, download our free binge guide. It distills those episodes into one easy read with heaps of visual diagrams, alongside free tools inside more, your all-in-one financial home, to help you organize your money and plan your next best move. Check out all the links in our show description. And just a quick reminder before you go anything we cover on this podcast is general in nature. It's not considered to be financial advice, and we certainly recommend that you seek out professional advice before making any financial decisions. Once again, everything mentioned is linked in the show description. Ready when you are. Catch you next week.
