The Finance Show With Joe

S2E8: Are Foreign Buyers Dominating the Market?

• It's Simple Finance • Season 2 • Episode 8

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Foreign buyers acitivty is on the rise in Australia by 27% in 2022/23. Foreign buyers were responsible for $1.9 billion worth of property sales in the last financial year, but does that spell disaster for Aussie buyers? Yes and no. 

Most property sales were under $1 million AUD and given that foreign buyers cannot hold onto property indefinitely, it seems to be adding to local housing shortages, but is far from the main driving force.

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Michael:

Welcome to the Finance Show with Joe. He's Joe, I'm just some schmo, and that's Manny.

Joe:

That's Manny. Manny is back, guys. Manny is back for another episode with the Finance Show with Joe. Sorry to cut you off, Michael.

Michael:

I'm just so excited to have Manny here again. I get it, I get it. It's pure excitement.

Manny:

Good to be back, gents. Thank you so much for having me.

Joe:

No, we really appreciate you taking the time and jumping on this episode, especially because this episode is a massive pet peeve of mine and people are like you can't always say bad things about immigrants or migrants and stuff, and there's some serious issues with some foreign investment. Michael, get me off this before I say something else.

Michael:

So basically we're going to be talking about foreign buyers and how well mostly our theories as to why they may be investing here or why they're doing anything. Because there's a few caveats with foreign buyers. If you're a foreign buyer let's just say, for example, from China they have to be approved by the what is it called the Foreign Investment Review Board. And if they're approved by that board and they meet all the terms and conditions and whatever, they can then buy in Australia. But if they are not a permanent resident or a citizen or whatever, as soon as they leave Australia, they have to then sell that property. The big reason why we're even mentioning this is because the big number, the big headline is foreign buyer activity is up 27% in the last financial year.

Joe:

Which is nuts, because that was for 22, 23. Yeah, we know it's worse for 23, 24. In 2022, 2023, the foreign buyer activity was up 27%, which is intense.

Michael:

That means 1.9 billion worth of sales. God help us.

Joe:

Like just kind of thinking about it $1.9 billion worth of sales. Let's call it a million of property. That's not 190 properties, that's 1,900 properties.

Michael:

Yeah, it's pretty nuts.

Joe:

And we know for a fact that it's like a lot of the properties were less than a million dollars in that time.

Michael:

Yeah, Basically 80% of the properties sold were under a million dollars, which it's just. There's a lot of really interesting numbers that came from this. It's not what you would expect.

Joe:

Yeah, so I want to start off with how they're dominating the market. Manny, I'm going to throw this question at you because the reason why a lot of individuals go to a buyer's agent is because they don't want to go to auction. And you hear every story at an auction, some foreigner came and they outbid us by $500,000 or they pushed up the price $300,000, $400,000, $500,000, a million dollars For sure, and that's like a lot of the time. I'm imagining people call you because they're like I'm sick of getting beaten. Yeah, definitely.

Manny:

It's very real. In the current market, the competition is immense, right, we have no supply. We have no supply, we have increased levels of demand. And then, to add to that equation, we have demand that's not even national or local demand, it's international demand, right? So how could prices come backwards? How can these price increases across the country stabilize? Stabilize is the word that I was looking for when we have all of these outside influences coming back into the market? Right, and yes, one of the biggest reasons why our clients reach out to us is they're just so fed up with losing properties at auctions and missing out.

Michael:

So looking for those off-market deals, there's less of a competition, For sure.

Joe:

So there's just one thing I want to add. When it's a foreign buyer, this is someone that's not a permanent resident.

Michael:

No, they don't live here. Well, I mean, they live here for a short amount of time.

Joe:

Yeah, so these are student visas. That's my theory. I think it's students, and then working visas.

Michael:

I'd have to look into it further, but basically you can only buy property here. This is what the review board's for. You have to live here to buy it. It can't be an investment. And if you are an investment, then there's a whole other level of approval that you have to do. And you can't buy established dwellings, you can only buy new dwellings.

Joe:

Okay, which is intense. So we see $1.9 billion of it being foreign buyer. Like $1.9 billion in the market is foreign buyer activity. The three most established states in Australia dominating the market, but there's one in particular. Oh my God.

Michael:

I couldn't believe it. Victoria by far is in the lead for foreign buyers 2,240 overall transactions in the 22-23 financial year.

Joe:

That's insane.

Michael:

Yeah, what's more insane is that second place is Queensland with literally half of that 1,121 sales.

Joe:

Why do you think it is that like people are, like the massive amount of people are wanting to purchase in Victoria, like is there there's good uni.

Michael:

There there's good unis, some of the best in the world. Is it because there's more opportunity.

Joe:

Is there more properties for sale there?

Manny:

I think the supply levels in comparison to other cities is a little bit more comfortable in Victoria.

Joe:

I would say what do you?

Manny:

mean by supply levels. Well, there's no shortage. There's shortages, but not as many shortages as we're experiencing, say, somewhere like Sydney. Right, Sydney, if you actually understand the topography of Sydney, we actually have no land left to develop. You have the coast, eastern suburbs. Once you get to the sand, you can't keep building. It Can't keep going yeah, we'll just try.

Michael:

Let's do a Dubai thing, they'll do it, we'll build the sand things.

Joe:

That's what they did in Singapore. They did reclaimed land on.

Michael:

Rainy Bay Sands. Where else are they going to go Exactly? But?

Manny:

yeah, as you were saying. Yeah, so you have the Blue Mountains. Once you get past Penrith you hit the Blue Mountains, obviously naturally landlocked. Past the Shire, you have the Royal National Park. So in between Sydney and Wollongong, it's, it's just National Park which is undevelopable land.

Joe:

The Greens aren't going to be happy if we try and knock that down. No for sure.

Michael:

Well, I mean, we should really just be expanding and not making Sydney this giant urban sprawl that it already kind of is. Yeah, that's true.

Joe:

That's definitely true. So, no, that does make sense. So that's Queensland sorry, victoria 2,240 homes. Queensland, 1,121. New South so that's, you know, roughly 3,700 transactions there, which is an intense amount of, you know, foreign buyers coming in just seeing Victoria it's just seeing it so high and just seeing the dollar value of the transactions.

Michael:

First of all, the developers there must be cheering absolutely absolutely well, because Victoria is the only it has built the most houses out of any state in Australia, which is probably leaning towards that. Yeah, it just is what it is. They've built the most Houses or dwellings.

Joe:

I only saw dwellings, okay, so I don't know if they're apartments or houses, okay because I thought to myself, if it's houses itself, land size-wise, victoria is smaller than New South Wales, new smaller than New South Wales. It's like twice, as New South Wales is twice the size.

Michael:

And Queensland is more than twice the size.

Joe:

And then Queensland is like four times the size. Queensland is massive, yeah, but it's just really eye-opening to see these numbers. The next number that really jumped out at me from the foreign investment report was properties under $1 million dominated the market as well 80%. Yeah, so that means that these were definitely apartments.

Michael:

Yeah, well, for sure, which is why I think they're students, they're buying an apartment, or their parents are buying them an apartment. They live there for the duration of their degree or whatever they're doing, and then they go, because another one of the rules that foreign investors have to, or foreign buyers have to, abide by is that once they leave Australia, they have to sell it, and if all these new things in Victoria are apartments, that makes sense.

Michael:

You can buy that apartment under a mill, and they're not allowed to buy established properties. They have to buy new stuff. So if these are new apartments again, that just sort of makes sense, doesn't?

Joe:

it? Yeah, for sure. Are we seeing like a little bit of a Dubai thing here where, like they're just kind of opening the taps and they're just like, yeah, foreign investments, but buy the new buildings, you can't buy any of the established stuff?

Michael:

I wouldn't know. I think it's a bit different because, like Dubai and stuff, they've got a very limited population. They've also got special privileges if you're a citizen there, right? Am I wrong in saying that?

Joe:

Yeah, why do you think it is that people are wanting to move and invest so much?

Manny:

in Australia. I think Australia, in the global scene right, it's pretty much a safe haven. Our property market, in comparison to other countries across the world, is actually a very safe property market.

Michael:

It's a safe market.

Manny:

Yeah, right, in terms of what we've sort of experienced historically over the years, right, if you have a look at the data, it's something like over the last 50 years, historically, our properties all over the country have increased by 8% to 10% per annum year-on-year growth. Taking into the mix, obviously, these are houses and apartments and capital cities, regional areas. It's the percentage altogether, but it is a very safe bet for a lot of these overseas investors, right? One thing that I've actually started to notice since COVID or since after COVID, so 2020 to now is a lot of buyers, agents and mortgage brokers have been specializing with helping Australian expats purchase property and get financing in Australia. That makes sense. They've built businesses around helping people that have moved from Australia to, let's say, hong Kong, right, and they're buying properties. They live in Hong Kong, they earn money in Hong Kong, but they're buying Australian real estate from overseas.

Joe:

So they're Australian citizens, become permanent resident in Hong Kong and then they're buying the property, they're taking their money out of Hong Kong. So they're Australian citizens, become permanent resident in Hong Kong and then they're buying the property, they're taking their money out of Hong Kong and they're putting it back into Australia. Is that what you're saying?

Manny:

Yeah, so expats right. So they've lived, once upon a time, lived in Australia, moved overseas whether it's Dubai, whether it's Hong Kong or Singapore for work opportunities. But they're just buying properties here in Australia and these buyers, agents, have built businesses to specifically help these people invest back into australia.

Joe:

Is the foreign market. Like I know, this is a stupid question, but I kind of want to get this in the episode. Is the foreign market pushing the prices up?

Michael:

I think it's a factor yeah, I don't think it's like the sole reason or anything yeah, but like you know, you know, we go to auction.

Joe:

We see, you know, the foreigners that are there, the immigrants that are all over there and stuff, and they're just, they're the ones that are usually winning these auctions.

Michael:

Yeah, yeah, but at the same time you said that the last auction you went at, it was a Greek guy who'd clearly been living here for ages and he bought it out. I think it's more like if you're already established here. That gap is widening.

Joe:

But the person that was bidding up against him was 100% a foreigner that couldn't speak English. I'm not trying to be racist here. They were there, it was a Chinese man his family and they're sitting there and they're the ones that are pushing the price up.

Michael:

I think it's working in tandem. Foreign investors are clearly interested in buying.

Manny:

They have the money, so they're willing to overpay for the property.

Michael:

Exactly difficult and then people who have already got properties and, for whatever reason they can you know, whatever strategy they have they're also increasing their, their portfolios um, do you think restricted supply has anything to do with this?

Manny:

yeah, yeah I mean, yeah, we've. We've had a restricted supply for some time in certain markets in the country. The government is missing in action at the moment. Right, they're not doing anything to sort of State and federal.

Manny:

Yeah, yeah Well, they're not doing anything to sort of incentivize. There's been little incentives, obviously, the you know increase in first-home buyer policy and you know stamp duty exemptions and you know and playing around with that to help first home buyers get into the market. But in the grand scheme of things there's really nothing happening to increase any supply. And when we're constantly seeing demand pressures from foreign investors, from East Coast investors, trying to invest in Perth that's one thing that I also want to touch on Demand is increasing month on month, days on market are reducing, properties are selling quicker and that's because there's no supply levels.

Joe:

So when you're talking about supply levels, are we talking about established properties that are approved or off the plan properties that are approved? I think both, Because the foreign investment like as you said, it has to be a brand new property. This wipes out so many people that want to buy a brand new apartment yeah, they can.

Michael:

They can buy off the plan and they specifically do it, even if it's land and house packages.

Joe:

Yeah, I remember I think you and I were working this is four or five years ago, I think we're working the same um suite the set, like. We like I was the broker in them, manny was the agent and we would have these foreigners come in, yeah, and they would buy four units at a time. Yeah, off the plan like not even blink.

Michael:

They'll be like okay, one, two, three, four not even ask for a discount.

Joe:

I want these four.

Michael:

I want to buy these I don't care what, how much it costs, just just just give it to me, yeah that's what it was like and it's just.

Joe:

I think we're doing a disservice to a lot of young australian kids, because I think there was a tiktok the other day. Some girl was like I've got a hundred thousand dollars of savings, I can't buy an apartment it's insane like what.

Michael:

What are you supposed to do if you could save that much money and then you still can't get into the market.

Joe:

Yeah, for sure so there was one interesting stat that michael and I were debating off camera and michael was like only 20% of the people that purchased it. Tell everybody.

Michael:

Okay. So most of the foreign buyers are not millionaires. About 20% of them are Okay. But we were saying and that's kind of like a logical fallacy, yes, because I thought about it immediately like a school mark 20% that's a fail. So clearly you did not do well in school.

Joe:

Yeah, you did not do well in school.

Michael:

There's not a majority, that much I know. So I was like, oh okay, clearly not that bad of idea, but 20% of those things, a lot of millionaires.

Joe:

I'm just going to add it all up. Right, so we've got 2,240. Vic. Right, you've got 1,121. New South Wales, so that's already 3,361. You add another 650. So that's going to be 3,000. No, it's actually going to be more than that, it's going to be 4,011. Okay, 4,011 of the transactions were foreigners. If we take 20% of that and we make them millionaires, that's 800 millionaires making transactions.

Michael:

Human calculator over here. I like math. That's what everyone's here for 800 millionaires.

Joe:

That's a lot of just new money coming into.

Michael:

Australia.

Joe:

That is an intense statistic. I love how the article tries to downplay it. The article is like only 20% of the people that bought were millionaires already. Yeah, but after they buy these properties.

Michael:

You know, I know, michael, even a schmo knows that their property is going to grow in value significantly. You'll literally buy anywhere in Australia. You're going to make money.

Joe:

Yeah, and it's going to. If they're not a millionaire yet, it's going to make them a millionaire quite quickly. Which brings me to my next point, which I wanted to bring you in on. Perth is trying to limit this.

Manny:

Yeah. So I was on the phone to a land developer in Perth recently trying to acquire some opportunities for our clients, right? Not all of our investors are investing in brand new house and land packages Majority of them, I'd say, we're buying established properties for. But from time to time we do get an investor who wants to take advantage of land and building right. So I was on the phone calling around all of these land developers in Perth and you know what the first question they asked me Is it an owner-occupier or an investor? And I said, okay, it's an investor, but why is that relevant? And they said, oh no, if it's an investor, sorry, we can't help you. We don't have any more allocation for investors. They said, oh no, if it's an investor, sorry, we can't help you. We don't have any more allocation for investors. So they're actually limiting the amount, which I think is a good thing.

Joe:

Yeah, I think it's a great thing, but they're limiting the amount of investors that are buying up these land estates because they want to maintain a percentage and a higher percentage of owner occupiers coming into these markets. So is that a state?

Manny:

law or is that just the real estate agent making the rule? No, I don't think it's a law. I think it's a like I would say it's council restrictions and requirements, but also land developers, right? Because at the end of the day, let's say you have an estate that you've built as a land developer and 80% of that estate is investors. That becomes an issue because you have people not maintaining their properties. You drive to the physical appeal or the physical look of that estate is not as nice because people aren't maintaining their front lawns and there's trash everywhere and there's bikes Not saying that renters are bad, but when you have a majority of owner-occupiers in a suburb, people take pride in the property.

Michael:

Yeah, it's yours, correct.

Manny:

Yeah, and historically right. What are the areas that have performed well in the market you look at? Different suburbs that have outperformed and continued. It's the owner-occupied market. Right, I said it on the first podcast owner-occupiers are record breakers Okay, they're the ones that come to the auctions. They'll overpay for the property because they take pride in where they want to live and they want their kids to go to this school and they want their kids to have public transport and they're looking for certain you know attributes in it.

Joe:

So they want to make sure they're in the right catchment, they're in the right zone and everything correct. I actually never thought of that, like my brain is just how much money can you make?

Michael:

Oh, it's all investment for you.

Joe:

That's me Like it's always been about how can I help people, how can I get them to make more money. I'm never sitting there thinking about end user where they're going to live, because you know myself, I've lived next to train tracks before, with the trains flying past, that you know. Two, three in the morning, and the people underneath me would always cook this food, and the people underneath me would always cook this food and the food would seep upstairs. As long as I had a room, I was happy. But in this particular situation, I'm not actually thinking of that. I'm not thinking to myself.

Joe:

You know what, if I live in an area where it's majority owner occupied, the property itself is actually going to be better. It's not going to be McMansions, as I like to call them, where you're buying these house and lands for $650, $700 and it's a buy one, spit one out kind of thing. It's serious. Okay, this is what we want and it's really cool to actually see Perth do that. They're like no, if you're coming here, you're investing here, you're going to be growing here Contribute to the city or the LGA or whatever.

Michael:

Do you think like? Do you think like East Coast cities are just kind of being greedy about this whole thing, like do you think that's coming into it, where we're just like, yeah, we don't really care, buy, sell, just as long as there's more investment and more money coming through?

Joe:

I think that's genuinely true. Like there's a lot of people, back in the 80ss they land banked. I rent right now off the Perich family. The Perich family own all of Oren Park. You know Oren Park that's theirs. Every building, every development, every house and land package everything. The contract of sale is coming from the Perich family. I think they're Lebanese or they're Croatian or something along the lines of that Croatian or Lebanese land developer, to say the least.

Manny:

We haven't seen them before.

Michael:

No.

Joe:

But I genuinely think, because now they're at their exit stages, where they're like I don't want to focus on building, developing anymore, I want to enjoy my money. Yeah, you know a lot of it, um, but I want to enjoy that stuff. Uh, they're thinking to themselves now okay, who can I sell to?

Manny:

I don't mind if I could do land lots, if I could do house and land packages like they're done, they got theirs yeah, one interesting thing that I've always noticed as well with um, the bigger land developers that bring to market better estates are always very picky in terms and they actually have, like certain restrictions in the contract of sale that you can't build the same sort of facade Like. Every house on the street needs to be a different facade, different colour. You can't just copy and paste and just build you know McMansions, mcmansions right and that's a.

Manny:

It's a good thing. Yeah, it makes things harder, but, as an investor, right.

Michael:

If we can buy in an area like that, you'll do well in the long term oh my god, because I'm living in elizabeth hills right now, which right next to cecil hills. Yeah, I am living with my mom. They I was when I first got there. I missed the house so many times because I couldn't.

Manny:

Yeah, they all look the same.

Michael:

They look exactly the same there's no trees or anything, so there's no like distinguishing feature, nothing it's just you walk or like drive straight past the house I drove straight past it like three times. My granddad ended up painting the like the archway in front of the door, green, just for something to stand out. But in the dark that green, I can't see it. So when I come home from work I don't know.

Manny:

I know now because of the habit. But Walking into someone else's house, oh legit, my dad did.

Michael:

He tried his keys on the next door, neighbor's door. Yeah, because he just assumed it was his house.

Joe:

Like you had to go paint the archway green, my mom calls it, walked into another house. Yeah, my mom calls it the truman show. That looks all like that oh really it looks nuts.

Michael:

I hate it, burbank and you literally drive into the next suburb, cecil hills, more established way, different houses it's complete. The vibe is just totally different, for sure, and it's good to see that they're.

Joe:

they're doing that activity in perth. It's great to see that they're coming back around and they're doing that activity in Perth. It's great to see that they're coming back around and they're just like no look, if you want to buy here, you have to live here, and I think that's a lesson learned from previous decades. If you guys remember, back in the early 2000s, you might have been too young for this, but you and I were literally just coming up. Perth was the thing because of mining, yes. And then 2014,.

Joe:

Iron ore, like China was like no, we've got enough iron now, thanks, yeah, see you later. Boom and bust, and it dropped like 60%, yeah. And then we had because this is when I first got into mortgages, homes and stuff and you know, just learning about the market, I'll never forget. Valuation done 2008,. Property was worth 2 mil. Valuation done 2015, 500,000. And they had a mortgage on it. You can't get out of it. They can't sell and get out. The interest rates were higher and they were just sitting there and they're like vacancy rates were through the roof too, yeah.

Joe:

So I think perth is remembering that and they're like, let's think longer term and this is where the foreign investment comes in and I'm scared to look at next year's statistics because you see a lot of the sporting events and we've mentioned this on a lot of episodes for perth sporting. They're doing the UFC, they did the WrestleMania, not WrestleMania. The Elimination Chamber there, 70,000-person stadium State of origin last year. They're investing a lot. Because it's the same time zone as China. I think we're going to see numbers that are higher next year. Yeah for sure.

Manny:

I remember back when we first started looking at Perth as an opportunity back in 2020, the first thing that a client would say to me is Perth really? It's my gut reaction too. Right, perth, I don't know. Prices haven't really done anything over the last 10 years. And I remember going into the nooks and crannies of the data and the metrics right, and having a look at all of the fundamentals and I guess when you sort of can interpret what that data is, based on historic growth, it makes it a lot easier to make an investment choice. But you could clearly see all the fundamentals were there where you know the market was heavily reliant on, you know mining and that sort of industry, and now it's a lot more diverse.

Michael:

Yeah, which is good for the city itself.

Manny:

Yeah. So that's, I think, where we'll obviously get the consistent growth and I really, I guess I hope for. I have personal investments in Perth, but also clients, right, I hope we don't see a repeat of what we saw in between 2008 to 2014. But things like limiting the amount of investors in these newer states you can't do anything with established properties. They're already established. But limiting the amount of investors that are coming into the newer states, I think, is probably one of the best things that they're doing to sustain the market over there right now.

Joe:

So what do we think is going to happen with the foreign investment market? Are we still going to see Melbourne outpacing everyone by double? Are we going to be seeing the same with New South Wales? Like New South Wales, 650 transactions. I don't believe that. I think we had a lot more foreigners doing that. Not believe it, as in statistics-wise, I just think it was people that recently became permanent residents bought in New South Wales. Yeah for sure.

Michael:

But I don't think that counts anymore as a foreign buyer.

Manny:

I wonder if that also counts as Australian expats people that have moved to Dubai or Singapore or Hong Kong right If they're a citizen does that count as foreign investment too.

Michael:

Yeah, this is something we'd have to actually do some research on.

Joe:

I think the biggest thing and I did it on that bloody TikTok that went viral, where I was kind of sitting there and I was like the median median income is 92,000, but the median house price is 1.6 million something along the lines of that, in New South Wales. Just have a think about that. In Dubai you could actually afford that because you don't have tax, but if you're on $92,000 a year, your take-home income is 70? Yeah roughly.

Joe:

Roughly that 22%. Let's call it 70K, and then after that I think it's higher than that, I think it's 25%.

Michael:

And then you've got to pay Medicare and possibly HECS, almost definitely HECS. Everyone's gone to uni.

Joe:

So let's say you take home income of $70,000 and then the median house price is 1.6. Well, if your deposit's even 30% and your mortgage is 1.2 mil, that means your repayments are going to be $7,500. You genuinely can't afford it. And even if you have a dual income, you still can't afford it because groceries buffer rates, like anything, even if you have a credit card. Petrol oh my God, petrol is so expensive. So I think New South Wales statistics for 2023-2024 are going to be so much higher, so much higher than what we've seen previously. Definitely potential for it, for sure, and I think Victoria I think Victoria won't be the highest transaction amount.

Joe:

I was honestly shocked that it was. It was, yeah, I think it's because they've got so many apartments going up in the city, it makes sense.

Manny:

And they build new parts of their city, a lot of their apartments. They're like vacant, just vacant. You're kidding.

Joe:

Is it like a Dubai thing? I keep mentioning Dubai, but is it like a Dubai thing?

Manny:

The government there sort of allowed and you have postcode restrictions now for that reason with major banks, but they kind of just rezoned everything in pockets like South Bank.

Manny:

To build it up, but it just got built up so quickly the supply well exceeded the demand, and price points there for inner city apartments haven't done anything Interesting Right, but it's crazy to see, like being Sydneysiders ourselves, where are the most expensive properties Piedmont, inner city apartments, bondi, like close to those hubs, but in Melbourne it's the complete opposite. You can buy a two bedroom apartment in South Bank, which is like literally in the heart of the city, for 550 or 600,000.

Joe:

Now, Like last year, Now now my friends did the exodus from Sydney to Melbourne Yep 2018, 2017, 18, everybody was moving to Melbourne because the house and lab packages were so cheap they bought. I think it's close to Essendon, which is close to the airport Yep, which, realistically, anyone that's been to Melbourne is that's a 20 minute drive from the city. Yeah for sure. If you live 20 minutes away from the city in Sydney, your house is worth $5 billion.

Michael:

I was going to say 20 minutes from the city that's 20 minutes away from the city.

Joe:

That's not worth like 5 mil or something like that, but they bought house and land townhouse, beautiful townhouse. They bought it for 780 and that's gone up to like 950. Yeah, and I think the thing with melbourne is because they don't have coast like we do, they don't have beach. The only beach they have is brighton or st kilda. They're not beaches.

Joe:

Yeah, the sand is rocks, yeah but, um, I think because, or because they can sprawl a bit more than what we can. I think that's why you get a lot more of the foreign investment. And, plus, they've got a better city. Like I can harp on Melbourne, like in terms of like living, like I can catch a tram, is that what they call it? Yeah, I don't know, it's an old, defunct device, device, but, um, you could catch a tram and get rail. If you want to call it, I had to. If I'm giving them a compliment, I've got to throw in a stab. Yeah, yeah, um, but they've got some weird thing and I think that's why you get a lot of the foreign investment there you're like I'm 20 minutes from the city and their their airport's 24 hour.

Joe:

Ours isn't yeah, yeah, that's because it's so far away from the city, whereas ours is mascot yeah, but I think now that I I think the Oren Park not Oren Park, but Badger East Creek When's that opening? 2025? Yeah, so I think once that opens, that whole area isn't going to spike. I think it's going to like explode in value. Okay, touch wood, explode. I'm Lebanese, I get it, but it's going to grow?

Joe:

at an exponential rate, and I think that is why we're starting to see those areas Austral. Austral has gone crazy and I can't wait for next year's data, because I think New South Wales is going to have the most amount of foreign investment out of all of them.

Joe:

Yep, I think I'm surprised it wasn't already these are my predictions for next year, new South Wales is going to have the most amount of foreign investment. You're going to see it possibly double Melbourne, because you're having a lot of Melbourne investors leave the market because of some new tax that they're bringing in. I'm not up to date on that one, I don't deal with Melbourne much and then I think Queensland is going to be close third or, if not, beat Victoria, because I think Queensland everybody sees the Olympics.

Joe:

I was literally about to say that I reckon Queensland will be top personally, I think the infrastructure projects You've sold a lot in Queensland recently haven't you, yeah, yeah, we've always been in the market.

Manny:

The issue with it right now is it's getting to a point where it's becoming unaffordable.

Joe:

Wow, even.

Manny:

Queensland. Yeah, yeah, yeah. You can't get a house and land package in a good quality area for less than $750,000 now, and the issue that we have is obviously interest rates are quite high at the moment in comparison to an average yield there of 4% to 4.5%. So it doesn't make sense for investors to be investing in those types of markets when you have stronger markets in Perth and Adelaide.

Joe:

Just for our listeners. What do you mean by yield?

Manny:

So the level of rent that the property is achieving as a percentage in comparison to the value of the property.

Joe:

So 4% yield on a 750K property is going to be 28K. Yeah $28,000 in the year, $28,000 a year. So that's not going to be enough to cover your rental repayments.

Manny:

Not when your interest rates are 6.5% to 6.8%.

Joe:

So let's say your interest rate drops to like 4.5%. Is that going to be able to cover it? Yeah for sure, or close to, but then you're going to have a lot more people in the market. It's going to drive the price up, that's it. So we're in a massive catch-22 where I think Australians are going to consistently get beaten by the foreigners.

Michael:

Unless some sort of policy is introduced that limits these kinds of things.

Manny:

They really need to work on policies and changes.

Michael:

Again, it seems to come down to greed. There's a lot of investment and in terms of a national economy, it's good for it.

Joe:

It's just bad for the people that live here. Okay, so what are your predictions over the next year, especially in regards to foreign investment?

Manny:

I think it will remain strong, definitely for sure.

Manny:

Foreign investment there's no, I guess, changes to policy to, I guess, impact or limit that, so it'll continue to grow.

Manny:

I'm really interested to obviously dive a little bit deeper into those statistics around what actually governs foreign investment with respect to people who have lived in Australia and then moved out, because that's a lot of what I'm seeing in the market Australian expats trying to come back into investing in the market and that's quite an interesting factor I would say.

Manny:

I believe that with the supply shortages, with the amount of migrants that are coming into the country, with the level of foreign investment that we're seeing right now, and the fact that there is a decrease in supply really because new supply that's coming into the market, council approvals, da approvals nationwide are lower and lower every year I think with those factors metro areas are going to continue to increase and become unaffordable. But I genuinely feel in the next sort of 18 to 24 months there's going to be an immense opportunity to invest in regional areas that are still considered affordable in comparison to metros. Places like Townsville, rockhampton you know regional Queensland locations and you know we've seen regional Perth or regional WA is outperforming the pace right, so I believe that those markets will have an even better opportunity for growth, wow.

Joe:

That's really good insight. Michael, I've got a very specific question for you as a recent first home owner. Okay, nice land, nice house, very WOG, good development opportunity later on. Yep, okay, nice land, nice house, very wog, good development opportunity later on. Okay, if you could give advice to someone that is looking to get into the market now after hearing all of this data, because, remember, you're the schmo.

Michael:

I am the schmo.

Joe:

Okay, after hearing me and Matty talk at length, what is your advice to anyone that's a first home buyer, right?

Michael:

now there's a few things. If you're lucky enough to be able to work with your family and you get along with your family and your family's doing all right, do it. Leverage it, because you're not going to do it on your own. I tried, it wasn't happening and that was with a partner and everything Not happening. Work with your family if you have the opportunity. Be willing to make sacrifices and where you want to live, because you're just not going to buy in bondi, like let's just be real here, it's just not going to happen. So look at western sydney. Western sydney is actually pretty great.

Joe:

There's a lot of really good things about western no, no, I'll punch on with anyone that says western sydney. There's something wrong with western sydney there's nothing wrong with western if I promise you, I promise I will go to bat for Western Sydney any day, have you like. Do you know how many great chicken restaurants there are?

Michael:

Yeah, el Chano. Just food in general, like all the food, all the ethnic foods, doesn't matter where it's from.

Joe:

Fantastic You're not going to do any better in Western Sydney, for sure. Cabramatta like just the side dish Best pork rolls?

Michael:

Oh, absolutely.

Joe:

Best, like just on that. Just on that, like we'll get back to your advice in a second. But cabramatta now offers food tours. Really, there are airbnb cabramatta food tours.

Michael:

I highly recommend everybody go on one, because the food like it's yeah, anyways, we've got a cabramatta anyways, further advice yeah, um, basically work with don't do it on your own is really the big overarching thing. You can't do it on your own without some help, whether it's from your parents, whether it's from a partner, whoever. You need help, because that's just where the market is. It's just how much everything costs For sure. And, yeah, just be willing to make sacrifices is really at the end of the day.

Joe:

And I'm going to finish off with if you can get into the market now, just get into the effing market. We're seeing some serious supply shortages and when Emmanuel or myself talk about supply shortages, we're talking about development approvals not going through, construction not starting and more people moving to Australia. And guess what, not everybody wants to live in a 12-person house.

Michael:

Let me put it this way. And there's another way, if you can look at it. If you go out further west with bigger land sizes, what you can do is you can subdivide that and if there's higher rates of migration, subdivide that, put up little quick houses and stuff obviously not complete shitholes, because you're not a terrible person and then put people in that. And there you go, rental income coming from that. And there you go, rental income coming from that, start paying off all this stuff and then there you go. The Lebanese dream. I think there's a lot of people hanging out with us. It's just what the wogs do. I don't know.

Joe:

And on that note, guys, thank you so much for listening to this episode of the Finance Show with Joe. I'm Joe.

Michael:

I'm Sam Shmo.

Manny:

And I'm Manny, thank you so much.

Joe:

You can find Manny at wwwinvestormatecomau. That's the one. All right. Your Instagram is at investormate, underscore. Fantastic, my name's Joe. You can find us. If you ever need any help with your finance first-time buyers, debt consolidation, refinance, tap into equity, any of those sorts of things you can contact us at it's Simple Finance on Instagram, wwwitsimplecomau, or you can reach out to us at info at itsimplecomau. And I think that's all the cheap plugins. I've got the low-hanging fruit. Thank you all for listening and we'll catch you on the next episode. See ya.

People on this episode

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Joseph Daoud

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Michael Lozina

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