The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1386 BUDGETS UNPACKED: WHAT BUYERS, SELLERS & PROPERTY PROS NEED TO KNOW
The latest federal budget has landed with significant implications for property investors and home buyers across Australia. While many anticipated sweeping changes to the property landscape, the reality brings targeted adjustments that carefully balance market needs against housing affordability challenges.
First-home buyers emerge as the clear winners with crucial threshold adjustments that acknowledge current market realities. As interest rates climbed, many potential buyers found themselves in a frustrating paradox – earning too much to qualify for assistance programs yet struggling to secure financing for even modest properties. The budget addresses this by increasing both income thresholds and property price caps, a welcome change in markets where entry-level one-bedroom apartments now regularly fetch $740,000 or more. This adjustment recognizes that yesterday's affordability metrics simply don't work in today's property environment.
Property investors can breathe a collective sigh of relief as negative gearing provisions remain untouched despite considerable speculation about potential reforms. Meanwhile, the budget introduces fascinating support for prefabricated housing through regulatory refinements and potential grants. These manufactured homes represent a genuine housing innovation, offering complete two-bedroom dwellings for as little as $40,000 that can be installed within a single day and achieve impressive rental returns between $600-$1,000 weekly. The regulatory framework adjustments could dramatically accelerate adoption of these affordable housing alternatives across Australia.
The conversation around foreign investment restrictions reveals mixed perspectives on whether limiting overseas buyers genuinely addresses housing supply challenges or simply serves as a crowd-pleasing political move. For anyone navigating today's property market, understanding these budget implications provides critical context for making informed decisions about buying, selling, or investing in the months ahead.
The big, big, big, big big budget comes out last night. What does it mean to negative gearing today? What does it mean to first-home buyers today? What property changes are in there? We're going to unpack it. Stay tuned. I'm the ringleader, so let's go. Oh, Lisa, this is your favourite topic. You love talking numbers.
Speaker 2:Love it, love it. You know, it's really funny, because if someone had told me back in high school that my career was going to be all about or not all about but you know vastly about numbers I would have said there is not a chance in the world. And here I find myself all day, every day, having to deal with numbers, so which actually I've come to enjoy, mark.
Speaker 1:And I've even come the same set of numbers you're dealing with. So you know not it's, it's little it's. You know you get used to that type of crunching yeah, and, and also one data, data.
Speaker 2:You used to talk about data and I'm like, oh, roll my eyes. Now I'm like constantly looking at data oh, my god, oh my god. So what do you reckon about?
Speaker 1:this budget Lise.
Speaker 2:Look, I think you know, like with any budget, there's always winners and there's always losers. I think you know you're going to find there's going to be people that are going to be happy with it and there's going to be people that are not happy with it. There was probably not as much focus on housing as I thought there was going to be. Housing and property. The not as much focus on housing as I thought there was going to be, housing and property. The biggest winners what I've taken out of it is the biggest winners seem to be the first-time buyers.
Speaker 1:Yeah, it's interesting because I felt like there was a lot of talk in the budget about the budget prior to the budget, about property, but then I think the things that actually realistically hit the ground. You're right, there's not like it's good, but, yeah, not what we thought.
Speaker 2:I mean, I was just chat-GPTing it actually, mark, a few minutes before we just came on, just to get a good synopsis as to exactly you know what related to property there. There wasn't. There's not a whole lot Like I would have thought that there would have been a massive, massive focus on it, and I suppose that you know the whole low to medium density that's just come through. That's a big focus and I know that that's got nothing to do with the budget, but you know there's definitely going to be a huge amount of change there. But definitely those first-time buyers, that seems to be the big one, doesn't it?
Speaker 1:where that threshold got lifted significantly, yeah. So I think what's interesting with the first-home buyer stuff is you, because when it came into play, interest rates were low so you could qualify for a loan quite easily with your income for a first home buyer loan. But it got to a stage where the interest rates were so high you needed to have this. Even just for a basic first home buyer home. You needed to have an enormous income. Then you didn't qualify because there was a, there was a qualification of you. You earned too much as the first home buyer. It's like, hang on a sec, if I can't, I'm only buying something for 600 grand and I'm earning too much as the first home buyer. It's like, hang on a sec, if I can't, I'm only buying something for 600 grand and I'm earning too much as the first home buyer. What else is anyone going to buy out there? So they really needed to move that threshold. They really needed to move that threshold. So big tick.
Speaker 1:So the income threshold been moved for first-time buyers in the budget.
Speaker 2:Yeah, which is massive. So and it got moved from, was it 950,000 mark up to 1.3? No, that was the income threshold.
Speaker 1:Okay, so let's break it down for everyone is good, because, um, lisa, I can go through numbers with you, but the actual income a buyer needed to earn to buy a property. So, for instance, the government said you want to buy something for 600 grand. They said, how much do you earn? You said 100 grand and they said no, you weren't too much, and I went. Well, the broker said I don't earn enough. And you're saying that like it just didn't match up. So now there's a bit of matchy-matchy. They've increased that what income you're earning a year to match the property value. Because the interest rates change, you almost need 50% more income for the same loan. Yeah, so that's been changed. And then they changed what you've just referred to. They've changed the big number, the top line number, the property purchase, the asset value number. That's gone up now as well, because in Sydney you couldn't buy much in some of the mainstream suburbs.
Speaker 2:Well, if you have a look, for instance, at and we've actually just gone through this with our daughter but if you have a look at, even instance at and we've actually just gone through this with our daughter but, you know, if you have a look at even entry-level property prices on the Northern Beaches, I mean those one and two bedroom apartments, now this is an affordable area. You know, people used to, for instance, be looking to buy maybe in the eastern suburbs, and then they couldn't, so they started turning their attention towards areas like the northern beaches that were much more affordable. But now we're very quickly catching up as well. So, entry level, um, for an apartment on the northern beaches, if you're a first-time buyer, you used to be able to pick up a one-bedroom apartment for, you know, five hundred and fifty thousand dollars. Um, we just sold one in dy.
Speaker 2:Um, a neat and tidy one-bedroom apartment, relatively renovated, quite close to the beach, pacific Parade, lots of apartments on that particular pocket there, and that just transacted for $740,000. That's for a one-bedroom apartment. So they really just had to lift it, didn't they? Two-bedroom apartments, I mean, you know? So they really just had to lift it, didn't they? Two-bedroom apartments? I mean, you know we just sold one. A two-bedroom, you know like needed a huge amount of renovation quite close to the beach ground floor. We just sold a two-bedder in DY for $900,000. It had to be done.
Speaker 1:It had to move up Otherwise. Yeah, and DY is not, I wouldn't say, a premium suburb across Sydney where you know it really should be qualifying for first-time buyer stock with basic one-bettest and two-bettest. So you know it's smart. What else?
Speaker 2:Yeah, so definitely first-time buyers are the winners and you know I'd hazard a guess, mark that that's going to really continue to fuel that lower end of the market as well, that one and two-bedroom apartment market, which actually has been performing really well over the last 12 months. I mean, I know, you know, we're often talking in the office about how much those property prices have jumped. It's always supply versus demand and even though there is usually quite an oversupply of one and two bedroom apartments on the market, there's also a massive demand. So you know, this first home buyer assistance here, this first home buyer scheme, is certainly going to just continue to fuel that, wouldn't you think?
Speaker 1:Huge it is. Now negative gearing. There were threats that were there were going to be changes with the negative gearing in this budget. There were uh, it's been on on the um the headlines in the newspapers for a long long time negative gear and negative gearing. You know it's not right. It shouldn't be there, should it be abolished? That sort of stuff didn't make the cut in the budget, thank god, and you know it's um, it's. It's a big thing that fuels investors negative gearing so I'm glad they didn't touch it. Um, but that was probably my biggest thing in this budget. I was like if they do that they'll be really dumb and they didn't do it.
Speaker 2:Yeah, yeah, yeah, definitely. Um, the other thing was these pre-fabbed houses, so there seems to be a little bit of assistance around that. I'm actually all for these houses, mark. What is a?
Speaker 1:pre-fabbed house.
Speaker 2:So it's something that basically, the easiest way to describe it is it's a house that comes on the back of a truck and you know that's the easiest way to describe it. So, rather than having to, you know, have a whole lot of builders there that are building a property, you know that could take months, or, you know, a couple of years to build, this is a house that comes on the back of a truck and it literally is put together within a matter of days, sometimes even the same day. It's incredible.
Speaker 2:It's sometimes even same day. It's incredible.
Speaker 1:What a great, great thing to do, cheap and fast, and throw it in your backyard.
Speaker 2:I'm surprised we're not seeing more of them out there Me too and they've come a really, really long way. I know we were actually at the Easter show I think it could have even been last year or the year before and we saw this company there. Not a paid advertisement, guys. We saw a company there called Same Day Granny Flats and, fyi, I think Granny Flats is a really bad name for a really, really good product. Shocker, yeah, isn't it Like we need to find a new name for these fabulous properties.
Speaker 1:Same day house.
Speaker 2:And the thing is is that you know they're cheap. So I think it was about, was it 30 or 40 grand Mark for the little house yes, $39,995.
Speaker 1:$39,000 for a house, two-bedroom house.
Speaker 2:How many square metres? 40.
Speaker 1:$5,000 for a house two-bedroom house. How many square?
Speaker 2:metres Forty, I mean, you know, and they are immaculate, absolutely immaculate. So you know what a great product and you know you plonk something like that into your backyard and you know you're able to achieve a very, very decent rental out of it. And they are really neat and tidy, they look great which is the main thing and they're very, very easy to get installed.
Speaker 1:It was like those tiny. It's like a tiny home but twice the size.
Speaker 2:Yeah, no, really nice, like cute little kitchen, nice bathroom. I don't know if it comes with air con or not, but you know they're honestly phenomenal, product phenomenal, and they go up the same day you literally call those guys. Next week you're gonna have one of them delivered.
Speaker 1:It's unbelievable you plug it in like a dishwasher. Now in the budget they've talked about um fine-tuning the compliance and the and the and the um and a grant um to grant for development of these to be, you know, faster, stronger, better. But I think there was just this huge grey area about how do we treat these. We have a building code of Australia, very clear code for building if you want to build a house, but we don't have a very clear code for these um, these medium manufactured homes. I know more laws which makes me bananas, but they do need to it but when they do introduce more laws, it's more acceptance and it's it's more versatility to where they can go. So that's going to be interesting um our friends and family to be living in um manufactured homes and I think what a great option when you're a, you know a young, a young couple or a young single or a retired single um or couple and you don't need much um. It's a good option and it's good the government's acknowledging them in their budget.
Speaker 2:I agree. And not only that, but they achieve really good rents as well. So you know, for one of these little prefab houses, guys, you know, and they sort of range anywhere from about 35 metres squared, I think, up to about 60 metres squared you can expect to achieve a rental on these properties for anywhere between sort of 600 to. You know, some of them we've seen achieve up to 950 or 1,000 a week, depending on what you do, depending on what you do to them. Know, some of them we've seen achieve up to $950,000 or $1,000 a week, depending on what you do, depending on what you do to them. Like, some of them got beautiful big terraces, how you landscape it, if you're going to give parking and all that sort of stuff, so they can achieve phenomenal rents and the rental market absolutely loves them. They absolutely love them.
Speaker 1:So that's the take on the budget that we've seen, that we think most affect us. When there's anything else, if we dig into this budget that we find, we'll let you know Well done, go Liberal, sorry, and should say Labor, should say Labor.
Speaker 2:Listen. It doesn't matter what you say. You can't please everyone. Never talk politics, Lisa. Never talk politics. Anything else you want to add before we go? And then there was obviously foreign investors was another thing. That's all coming to a big grinding halt as well. What's your take on that? You happy?
Speaker 1:about that. What's your take on that?
Speaker 2:Are you happy about that? Look, I'm sort of a bit two-sided with it all. I understand why, but I think it's quite. I also think it's quite aggressive, like I do understand why. I know that there's a housing crisis, but I think there's other ways that probably it could be addressed. I think stopping people from coming here and investing from overseas I'm not sure that that's the right approach. But I guess from the government's perspective, they've got to look at all angles. You know we've got to look after I guess you know our own first. So I'm a bit two-sided on it. I don't know if that's the solution there. I think there's probably other ways. But anyway, you know, whatever, look, mark, I'm not. You know, I'm not a politician. I look at things from, you know, a very practical aspect and I don't know that that's the right approach. I don't know that that's the right approach.
Speaker 1:Good for votes. What do?
Speaker 2:you think?
Speaker 1:It's good for votes. You know, when I see stuff like this, I think to myself you know, we never saw any, so we never had the guy coming in his jet from China and buying 10 houses Like we never see any in our area. So I'm like I felt like it was more of a. You know, we want to win the hearts of the community rather than the hardcore reality. We want to stop them buying.
Speaker 2:Okay, can I? This is a subject that I actually really really want to address, though. Can I just talk about expats for a minute? I know that we're just sort of moving to a slide. Yes, I want to talk about it.
Speaker 1:You said short today, and now we're five minutes over.
Speaker 2:Okay, okay, let me just quickly address it and no this is a topic for another day, but we do need to talk about the expats Mark and the real estate agencies that are calling up these poor vendors Talking about expats.
Speaker 2:Okay, that's a topic for another day. Guys, Be careful. All I want to say is do not drink the Kool-Aid. Do not drink the Kool-Aid. Beautiful vendors of mine the other day drank the Kool-Aid Actually, not the first ones this week either. I've heard it a handful of times about real estate agencies calling up saying we've got an expat. Guys, do you honestly think that expats do not have access to the internet and that only that one agent has got access to some rich person coming from overseas with a bag full of cash? Be careful.
Speaker 1:You couldn't be stopped, could you, lise? You had to, you had to, you had to, yeah, you had to.
Speaker 2:Unstoppable. That's it.
Speaker 1:Have a great day everyone. Thanks, lise.
Speaker 2:See you guys. Take care, pleasure.
Speaker 1:Bye, bye.