Property Hub - Investment Insights & Inspiration - Get Invested: Australian property threats and opportunities with Bushy Martin and PK Gupta

Episode Date: December 20, 2024

Bubble trouble? Property market crash? Housing crisis hope or hell? Bushy Martin shares his perspectives with PK Gupta. This interview with Bushy was recently published on PK Gupta's popular property podcast, where he answered key questions including: Is the housing supply crisis getting worse and will the government solve the housing crisis? Is rampant immigration the solution to Australia's long term economic fortune and what is it's impact on housing market? What are the biggest threats to the Australian property market? Are we in a bubble? Where and how will people will lose money in property? Which markets will outperform? And much more! Don't miss this episode as we continue to review the year that was and look ahead to the year that will be in property. Subscribe to Property Hub for free now on your favourite podcast player. Take the next step - connect, engage and get more insights with the Property Hub community at linktr.ee/propertyhubau Book a personal solutions session with Bushy to go deeper on your specific property needs or challenges Continue the discussion with likeminded investors and experts on The Property Hub Collective Facebook group Get a copy of Bushy's book, Get Invested, for FREE, and find out what it takes for you to invest in living more, working less Get all Property Hub info here linktr.ee/propertyhubau About Get Invested, a Property Hub show Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Get Invested is part of the Property Hub podcast channel, your home for property investment insights, inspiration and stories from Australia’s top property experts, investors, leaders and analysts. Subscribe now on Apple Podcasts, Spotify and YouTube to get every Get Invested episode each week for free, and also get full access to RealtyTalk, Australia’s top online property show for red hot property investing news and insights direct from property industry leaders and influencers. Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, show producer Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast networkDM Media.  For business enquiries, email [e-mail] omnystudio.com/listener for privacy information.

Welcome to Get Invested on the Property Hub podcast channel, the leading weekly show for Australians who want to learn how to unlock their full self, health and wealth potential. I'm your host, Bushy Martin, and each week I go deep with the best investors, experts, leaders and founders to find out what it takes to break free from the grind, discover freedom and to live by design. Subscribe now and join me and get invested in the life that you really want. Let's get started. Hi, proud fighters. Welcome back to another special episode of Get Invested. And given the time of the year as we run into the end of another year and starting to think about

another one, you will have seen that in a couple of recent episodes and a couple of future episodes, we're helping you to reflect on the year that was, to take in some learnings and to start thinking about what, if anything, is going to be different and what do you need to be doing differently in the year ahead. So to add to that equation, I had a great chat with PK Gupta on his podcast a couple of weeks ago to dive deeper into some of those subjects. And I'm going to share that discussion with you today to add to what we discussed last week, because PK has a happy knack of bringing out the best of the worst of the best in me in relation to my thoughts generically at a helicopter level on what's likely to be happening

and has happened in property and the learnings attached to that. So in today's very special episode, we are covering some pretty interesting topics and going into a lot more detail with things like, is the housing supply crisis getting worse and will the government solve the housing crisis? We touch on the rampant immigration that's been imposed on Australia in recent times in a catch-up post-COVID and is it the solution to our long-term economic future and what impact will this have on the ongoing housing market? We talk about what are the biggest threats to the property area, talking about elections and other influences. Are we in a bubble? What does that mean and where to from here? Where and how will people lose money in

property meaning forward, and the question that's on everyone's lips, which markets will outperform? So I hope you enjoy this great conversation with PK. We're certainly on the same page in relation to it. Make sure that you take it in, reflect on it, apply it to your situation, because there is no one-size-fits-all with this, but it helps to give you the facts rather than a of the opinion-based fiction that gets promoted to keep us nervous, keep us scared, and keep us making quick public decisions rather than work for millions.

So enjoy, and let's get invested. Hi, everyone. My name's PK, and here I have Bushy Martin, who I've had on the show before, and I think, I don't know how long ago it was now, maybe a year or two. March 23, PK. Oh, there you go. the exact month. So it was a really popular episode or episodes. I can't remember if we did one or two, but I think people, you guys really gravitated and resonated with Bushy.

For those of you who don't know Bushy, he's a family man. He's a very experienced property investor. He basically started from nothing 20 years ago and him and his wife have now built a really large international portfolio. They really have an international view of investment and the world as well. So, and that's something I'm going to get into in this episode. And they've basically kicked all their goals out of the park. You know, they built a brilliant lifestyle, 200k plus passive income. I don't know where it will be at the moment, but the greatest thing about Bushi without trying to flatter him is he's kind of, you know, he's kind of a big deal in terms of he's pretty popular, but at the same time, he's just kind of real. And I'm saying this in front of you,

Bushy, because he's not like trying to tow a party line or a piece of agenda. And that's what really excites me about this episode. We're going to talk about a lot of things that perhaps other people won't talk about. And we're going to talk about them really honestly. For example, The Trump election win, we'll touch on that. We'll talk about, in terms of the next few years, the housing supply crisis in Australia. And is the government really even trying to solve it? And what are they doing?

Because it seems like a lot of smoke and mirrors from where I sit. We'll talk about the rampant immigration into Australia and how that is going to further exaggerate the housing crisis. And once again, what are the solutions to that without causing a recession? We're also going to talk about the biggest threats to the housing market. For example, the elections, federal election coming up next year. Are we in a bubble? Is that negative gearing removal potentially going to burst a bubble?

Where and how people might lose money in the next few years investing in the housing market? And then Bushy's a very, in his own words, but also in my words, very measured and circumspect sort of guy. So he's not one to say, oh yeah, Brisbane's going to boom by 19.25% or anything like that. But we'll try to touch upon as best we can, which areas are likely to do better versus worse. So a bit of a long introduction, Bushy, but I think you deserve it. Thanks so much for coming on. No, I really appreciate the opportunity and both sort of humbled and honoured to join you again, PK.

I think the resumments that came from our initial chat back in March last year, what's been really interesting to me is that I think we operate from the same values and the same base. We call it pretty straight and it's unfiltered from that perspective. Neither of us have got an agenda to push. because i'm at a stage now where i'm doing this because i want to not because i need to but i need

purpose and i've spent so long in property and i love property so much that the opportunity to share and and give an independent objective commentary on what's happening to help people make better informed decisions themselves is is a big part of my mission and it's really interesting pk that I've mentioned this to you a couple of times before, but since you and I spoke last year, there's been a constant stream of your tribe reaching out to us, and that's, I think, because we're operating from the same place. So I think there's a burning and growing need for what we're both doing in this space to really give some clarity and comfort to people and educating them in a way that enables them to do it themselves, not to rely on others or outsource their future to someone else and then pay the price for it. so we're very excited about this and you're probably the only person though i would consider because i don't do many interviews like this anymore uh but uh probably the only person i would consider doing a regular uh property report so the old pk bush uh view of life uh

will be more more than happy to to do that when and if that's appropriate to you and your audience and similarly to get invested audience yeah no i just want everyone to know that bushy you know lifestyle design is kind of his forte when it comes to using property to create the ideal lifestyle he wants and that finance side of things the lending strategy all of that which often people ignore is something that he's really good at and I know a lot of people reached out to you from my YouTube channel and everything so I'm glad because you know I know that you'll take care of them you know in terms of those facets of investing so um but let's let's get into i i really want to have a frank conversation um you know everyone knows that

we're in a housing crisis um everyone knows that the government has this somewhat arbitrary 1.2 million new dwellings goal that they think um will solve the housing crisis i.e it will create enough houses to match the both organic demand and also demand from overseas migrants that are coming in to Australia. I think my first question to you, Bushy, is, you know, so far those targets have not been met. They've not even been met to like 50 or 60%. The government knows this. I mean, they're not stupid, I would imagine. They know it's really hard to get the right labor the right materials construction prices are really high the government itself is not manufacturing or creating the houses it's the private sector but a lot of these builders

are going bust so i think it's kind of a moot topic insofar as we know that target is not really going to be met but the more tricky question is why do you think the government isn't doing more to actually solve this issue yeah i there's a couple of couple of things that if i'd step back far enough i think would i add an overview on this because it's really easy to get lost in the weeds of this exercise and and it's very prevalent i think that as a consequence of that and as a result of the fact that humans like to simplify things down to a point where it's easily comprehend. So we try and simplify very complex systems, which property is, by the way. The impacts on property are extremely complex. I often say that there's more combinations

and influences on property than there are the combinations on a Rubik's Cube, which is 48 trillion, which is 48 with 18 zeros on the end of it. Because it's like trying to forecast the weather. And the mistake I think we make is that we try and boil it down to a couple of simple metrics and we miss the point. So why is that relevant to what we're talking about around the whole housing supply debate and the government's impact on this? Many years ago, sadly, and this is where the housing crisis

was really formulated and I was directly involved in this PK from the outside the government made a decision that they would no longer provide services so really simple there was a it used to be called the yellow pages test now a lot of people probably don't know what the yellow pages are but the yellow pages used to have the white pages where all phone numbers were and the yellow pages were all the advertising pages and I was actually brought on by the Commonwealth Government back in the mid-90s to privatise the Australian Construction Services Department. So at that point, the governments at all levels were very active in housing provision. So we had housing commissions and whatnot around the country.

And they stopped doing that when they applied this privatisation test. So what's now happened is we've got a situation where the underlying needs of affordable housing and those most in need were provided with housing and a roof over their head directly by government. They had their own construction teams, their own property management teams. So that layer of concern was directly looked after. And that was appropriate then and I think it's still appropriate, PK,

because if we're serious about providing decent lifestyles for all Australians, then there are those that fall below the line that need to be accommodated. Now, I understand the whole Thatcherism come privatisation debate that filtered into Australia during that period. And as a result of that, that Yellow Pages test, I sat in front of a minister and had this argument with him actually during that time because I used to be an architect

and project manager at that stage at the beginning. I had the chat that David Joel was his name and I said to him look mate I think you make a massive mistake in privatizing this because housing is a basic need and government needs to understand and have control over what they're doing in this space because if we sell the farm if we we outsource hospitals we outsource schools we outsource housing then we the underpinnings of our of our economy and our society are at risk. And what that meant was by handing that baton over to the private sector, two things now happen. The government can throw money out and then point the finger at everyone else as to why it's not happening. So it alleviates them of accountability

and responsibility directly because what I have come to see is that politicians of all levels and government at all levels don't want to take responsibility. They always want to be just funding the issue and then pointing the finger. Because why? If you're going to get criticised, you're going to lose government. So I think there's a deliberate strategy that sits in, whether it's aware or unconscious, I don't know,

but I think that's a fundamental outlook. The other thing that goes with that, of course, as soon as you hand provision of anything to the private sector, there's an inbuilt profitability component why because if a business is doing something it has to make the profit to continue to survive and it has to factor in risk and particularly in housing where if they're going to build housing which could take 12 to 18 months because of the dynamics of property like the weather conditions I spoke about before a lot of risk is going to come in there's a lot of potential change that will impact. So that needs to be factored in to the

cost base to make sure that they continue to survive. As a result, we're then in a situation where we're always going to be in a just after time. You've heard of the old just in time approach that Japanese take. Well, we're always going to have a just after time delivery of anything if the private sector is driving it because we need to factor in those risks that they need to make a profit. So we're always going to be behind the eight ball when it comes to provision. And underlying all of this, of course,

the government knows that about 54% of our personal wealth resides in housing. So it's a fundamental wealth effect contributor to the overall health of the country. And anything that's going to get in the road of that or any action taken that can potentially reduce that will lose votes which will lose government. So I think there's a – and it's probably not even

a conscious thought, but because of the way we are set up and the systems that support that, then no government is going to allow property to fail or values to drop, not sustainably anyway. We'll see minor drops in areas and locations over time, but the overall trend line continues to be up. That being the case, we've got a system where politicians have got to be perceived to be doing something.

So they'll tinker with the edges and they'll throw these reactive half-assed suggestions in the pot, which gets plenty of media coverage, and it's kept at the top of the pots because the media now have, with their ownership of domain and partly at realestate.com have an active contribution and they need the income from those sources to continue to survive. So housing affordability in the housing crisis becomes a very convenient topic to keep at the top

of everyone's talking agenda because it affects every one of us. So I think if you put those things together, are we going to solve the housing crisis? No, not until, I believe, the government steps back into the arena, gets their hands dirty with provision of housing, particularly in the affordable housing piece for those that are in need, and then leave the rest to the private sector. But until that happens, throwing money at the problem and relying on the private sector, it's just never going to happen. Some would say that's a pretty bleak outlook, but I think it's pretty realistic. I mean, you have to follow the money trail, right, as they say, to find the true incentives. And it's interesting, Australian government builds the least amount of houses amongst any democratic government, almost from the entire world.

And we have the highest house prices, especially in big cities like Sydney, etc. What I'm wondering, I mean, coming to recent news with Trump winning the U.S. presidential election, obviously he won his base, turned out to vote his base. You know, it's very much those middle class working people who feel that they're worse off now than they were four years ago because of cost of living, because of inflation, all these types of things. Do you think that in Australia, we're going to come to a tipping point where there are enough people that have just had enough? I mean, you know, the independents, the Greens, etc., they seem to get more and more power. They put across various quite dramatic suggestions, like rent freezes, or in my humble opinion, quite dramatic suggestions. And then, you know, it seems in the Australians, I guess, that it's the far left that kind of, you know, catches those suggestions and wants to implement them. But everyone else is kind of like, guys, that's that's quite extreme.

And then they don't actually get anywhere. But, I mean, will it require a Trump-esque figure to come in and really shake up the Australian economy and solve the housing issue? or on the flip side is australia completely different to the u.s because there's enough people that are well off enough and those that aren't well off enough or on the lower end of the socioeconomic spectrum they're few and far between and they don't you know the do you know what i'm getting at what's what's australia's tipping point Oh, I think we've just had a great lesson in the US, PK. As I mentioned briefly offline before we jumped in,

I think there's some really big takeaways from what we've just seen happen in the US that is about to happen potentially sometime between now and September next year here in Australia with the federal election coming up. And my biggest takeaways that I took from that exercise outside of the property effects but they will influence the property effects is that the US election and Trump's re-election demonstrates to me that people are sick and tired of the spin the hidden agendas the career politicians the career media they want to hear direct from source

and they might not respect or even believe what's being delivered and you know let's let's face it Trump is fairly erratic. He can change direction pretty quickly based on who he likes, not necessarily based on rational support. And now he's unbridled because the people that were constraining him last time around are gone. He's got true believers in behind him now. But the example we've just seen where I think he's cut through and he's a genius, I think, in terms of his ability to get the message to the people who matter,

is by using podcasts like this and by using Twitter and social media platforms to go direct to source. So cutting out the middle person, cutting out the political spin, cutting out the media who are filtering the message and putting a slant on the message and pushing their own agendas as a consequence. So what that's telling us, and if we go beyond the US even, PK, if we look in recent times, virtually every incumbent or current government has been overturned. And the reason for that, I think, is partly because of that vacuum of trust and truth that we are continuing to see. But more importantly, I think generally across the board, and this is happening in Australia, so it's not being reported, I think, as strongly as it needs

to, but everyone's doing it tough. Yes, inflation is calming, but as you and I know, inflation is looking at the rate of growth. But what we're forgetting is that prices have gone up, you know, on average about 40% across the board. Yeah, they're already up 30% to 40%. Yeah, and they're not going down. So inflation coming down doesn't mean prices go down. That means that we're stuck in a situation

where we're paying much higher prices. Wages haven't shifted much. You know, Australia has a massive productivity issue, which is a big part of the problem, And that'll feed back into the immigration story in a minute, I think. But I think because our wages are struggling, we're working harder for less and paying more, then there's a lot of the silent majority are very disgruntled,

very disgruntled out there. And the silent majority don't talk about it much and it doesn't get reported very much because the extremes tend to get the, it's the United Squeaky Wheel that gets most of the oil. But I think the current federal government should be very nervous on the back of what we've just seen in the US because the conditions that apply in the US on a smaller scale are exactly what we're experiencing right here, right now. and whether the government is responsible or not for our way of life going backwards, they are held to blame and the ballot box will be a very telling exercise sometime

between now and September next year. The Queensland election, as an example, is another clear case of that. It's not a matter of looking at the policies. That's right, you've had a go, things have got worse, you're out. yeah we we mightn't mightn't think the the alternative is much better but at least it's fresh it's new let's let's give it a go so i think that's what's going to drive it and do i think a a strong person type of approach uh would be relevant australia yes i do uh again i don't want to color the discussion or get off track too much here but i i think australia having

having spent some time in other parts of the world, is the most over-compliant, over-restricted country in the world. You know, I've spoken about the US a bit already, but, you know, if I compare my time in the US and the time here, wow, things felt a lot easier in the US. Here, there's a whole industry, being the OH&S industry, yes, needed. We need to have safe and compliant requirements generally. But I think the pendulum swung too far.

As a result of that, we're tied up with bureaucracy. We're tied up with triple-checking everything. That together with that void of truth and trust in any institution means that someone who comes out with some semblance of intelligence and is strong and calls it how it is, not how people think they want to hear or what they're telling people, what they think they need to hear will do very well and you know i've said often if i ever went into politics which i never would by the way and because i had some interaction years ago in that

that arena and that was enough to put me off for life uh but the uh if someone came in and said my role is to uh take out one layer of government because i think local government state government in federal government for a population of 26,000 is almost ridiculous. If we took out one layer of government, which freed things up and sped things up, and then had some strong, straight-talking, sensible leaders in this country who tell how it is and are prepared to have the difficult conversations and the unpopular conversations.

But the thing that's working against us there, I think, PK, is that we've got such short election time cycles that taking a long, long-range view just isn't perceived as anyone's interest. So once we start taking a strategic long-term view, things will change, but there's no incentive to do that. Yeah. Yeah, no, I think that's a great point. One thing that strikes me about, you know, I think a lot of people know here in the U.S.

at the moment we're creating another base here so that our family can be nomadic. um i find that when people ask me you know what what's australia's economy all about what do you guys do i sort of fall back on mining and resources of course that's there um and then there's the tourism industry which most countries have anyway there's obviously education exports um and then there is the housing market and you know a lot of these videos that i do a lot of common comments that i get are people saying oh pk housing is a ponzi scheme you know in australia etc and i'm like yeah i agree with that i do agree that in a sense that is a ponzi scheme because it's a self-fulfilling prophecy and so many people are making money in in the housing

market and it you know it just gets bigger and bigger because of that that reason but when people in America, they asked me about Australia, you know, I start to come to the conclusion that all of our main industries are reliant on China, you know, that whether it's iron ore, coal, of course, I know gas goes to Japan, other places like that as well. But, you know, tourism, you know, mostly China, let's be honest. And the same with education. And of course, we have IT, financial services, but those are all, you know, they're not things that drive the middle class. They're not things that drive an economy forward so for me you know then the americans they look at me and they they you know in a kind of puzzled way because uh the american spirit i'm starting to

learn is all about ingenuity and innovation and creating something and solving the world's problems and i'm not here to say america is better than australia or vice versa i love australia you You know, that's my home. But it's different. And so I guess the next question I have is to do with the economy because we all talk about the housing market, but long-term, let's take a 20-year look, a 30-year look ahead. The housing market can only be healthy insofar

as the genuine economy is healthy. You can disagree with that as well, Bushy. You know, feel free to do so. We can immigrate people here, you know, import people here till the cows come home maybe that's a solution but what's your thoughts on the long-term health and prospect of australia as a country and what do we need to change to improve that to retain our status as a as a genuinely wealthy democratic nation that has stable politics yeah good point that's a big question is a big question yeah yeah with that uh so i'll i'll

I'll bite off a couple of chunks and then we'll work our way through it. But I think, again, if we look by example, the most successful economies and sustainable economies around the world, and let's face it, the US is a great example because it's the biggest economy around the world and affects every other economy as a consequence of that. The best ones are the ones who produce, not service. and the danger that we have is that we are a service-based economy

which relies on other drivers to make it happen. You've touched on that already and hence why we are so reliant on China and I think there's over a third of our imports go to China, so particularly in the resources because why? Because China makes things. China is also a major manufacturing economy and it's the it's the production that creates the employment that funds the incomes that allow people to pay for houses and continue to pay more for houses so i think i think we've got some

risks underlying risks in our economy because we sold the farm that privatization thing that i spoke about we privatized everything we sold power to overseas providers uh the only thing left are the miners really and quite a few of those have international shareholders so that that is that the major thing that we produce the constraint that gets gets in the road of that to some degree though is that we have a low population base so you know you can fit the population of Australia into New York just to give you some context so that that's how small we are in comparison. But I think the danger here with that is if we don't break through some of the rules and regulations that get in the way of allowing people to be creative and to break

through the boundaries, like the states do, I've spent enough time in the states, that there is a different outlook generally. It's a very positive, can-do, respect accomplishment, applaud achievement, whereas the the tall poppy syndrome here in Australia tends to keep us down and and that becomes self-fulfilling as well if we're always knocking people down who are who are making a difference then that stops other people from doing it and it keeps the lowest common denominator in play so I think there's some there's some attitude and outlook issues that need to change in Australia complemented by a framework that allows us to take some risks and to do some new things and really applauds innovation

that isn't there that will allow us then to establish a production base. And it doesn't have to be physical production. You know, if we look at the California in the States and all the work they're doing in the AI and whatnot industry, that is still producing. That's a major producer which is creating great incomes which will have flow on into property.

Those are the things that we need to start thinking about if we're serious about creating an ongoing sustainable economy with an ongoing sustainable housing sector that's supporting it. At the moment, as I sort of briefly mentioned before, because over half of our wealth sits in our housing and government knows that, they're going to do whatever they have to do to support that. And we've seen a couple of really great instances already.

The GFC, the COVID pandemic, straight away the government dropped rates poured printed money poured poured them in to support asset prices and as a consequence of throwing that petrol on the fire we saw asset prices shoot up far more than what they normally do so we're out of kilter with and we're coming to the tail end of that now we're coming back into more normal variable property conditions I believe as we're moving forward and that's probably going to take a bit of getting used to for people who've only been involved in property for the last five years. But bring that on because this is where true property investors who know what they're doing and make the effort to educate themselves

on what really counts are going to do well. The lazy investors, the ones who rely on others or don't do anything, we're still the ones who just don't do anything because it's never the right time and I'm too scared. They're the ones who'll be left in the dirt and they're the ones who'll the big losers in this. Sure. Immigration is really being the saving grace, I think, for many parts of the housing market in Australia to keep it buoyant and keep demand above supply, given that rates have risen so much. As you said, everyone knows it's a statistical reality that we would be in a recession if it wasn't for this amount of migration, both students and permanent residents. The question that I have for you, and it's a tricky one, can we perpetually solve

our economic woes by constantly importing people into this country? I mean, the anecdote that I'll share with you is like Sydney. Now in October, Sydney prices just started to soften out a little But I think they went back, you know, 0.01% or something like that, which is nothing. But nonetheless, they've risen a lot, even despite interest rate rises. You know, even post-2022, they've risen a lot. This is, you know, one of the top three most expensive cities in the world. Local people can't afford things, right? I mean, you talk to a normal person on a normal income of, you know, I think the median income

in Australia is around 60, $70,000. Average is around six figures, whatever. But those are pretty good incomes on the world standard, but there's no way anyone can afford, you know, freestanding or even semi-detached house in Sydney for that. Are we becoming like a Monaco? Is the future of Australia and the Australian housing market one of like Monaco where local people, they kind of, if they can't afford it they move out they do something else and then it's just these rich foreign people who are like either investing here or moving here you know australia was number two i think after dubai on the biggest millionaire migration movement in in the world recently over the last one or two years as well it it just seems like it seems crazy so it's kind of a not

really a question was it so i suppose my question is can we constantly bolster our economy and keep it alive by just perpetually importing both funds and people yeah it's a really good question and a couple of things there to start with i don't think population is the single determinant driver of what's happening with property and in fact i don't think any single metric is a driver because of that complexity that we've already touched on. However, we've got an economy, a very ageing economy, okay, and the mass, that big bubble of boomers that are going through that are going to come out of the workforce

and rely more heavily on government support and the public purse for health and every other thing, if we don't replenish the workforce with income earners, with the right skills, and this is where the challenge as always is, is finding the right skills to satisfy what the economic needs are, then we'll become a third world country very quickly. No question about it.

And we're not the only country that's faced this either way. So I think, again, I get pretty annoyed and pretty tired of commentators blaming population or blaming interest rates or whatever the metric of the week is, because that's what it tends to be. Whatever's going to grab the headline of the moment is the one that everyone starts to focus on and lose sight of the bigger picture.

But I think population is partly the answer to what we've already touched on. If we're going to create a vibrant, innovative economy, the best way to do that is through diversity. No question about it, because if you've got all of the same, if it's all the same white males that went to the same schools, that have the same church and the same beliefs, there's no testing the edges with that.

And Australia was brought up on the back of that with the convict start and everything that came across. We've always been an immigrant nation. I think we always will be. And I actually encourage it. This is my own personal views. I think diversity is the best part of what we do. The problem we have and the mistake we make is shoehorning them all

into one location. Yeah. And I think what the policy needs to really address is spreading and diversifying that mix to satisfy where the needs are and then come up with appropriate solutions. We're a massive country. We're really only living on the border. We're close to the water.

that there's still a massive opportunity in this country that I think is untapped. And that's part of its attraction too, by the way. You've travelled a lot. I've travelled a lot. I think Australia's the best place to live in the world by far. It's just an awesome lifestyle location. And if you work hard enough and you're smart enough

about what you do with your money, which is what you've done and what you are helping other investors do, then you're creating the choices to live the way you want, where you want, and put your time into things that are important and bring that on. I think that's actually a very good thing, PK. So I actually embrace immigration not as a solution but certainly a contributor to the ongoing health of Australia,

not just for housing reasons, not just for economic reasons, but the diversity and the cosmopolitan feel that brings to us as a nation and allows us to broaden our own horizons and embrace differences and celebrate them is a big part of what the future of Australia needs. So I encourage it. I just think we need to be smarter about who and who we bring in with the skills that are required and where we place those people so that they're actually spreading the word rather

than concentrating everything into Sydney and Melbourne, which is where predominantly most of the initial immigrants go to and it creates more rental pressures than housing pressures, to be honest, because most people rent for the first one to four years once they land here and then get themselves on their feet before they're in a position to be able to look at getting into housing. I don't think we're going to become a monarchy

I think there'll be areas of the country like most countries where there are those glitzy places where the rich and famous like to hang out again is that a bad thing? no I don't think so but there's enough breadth and depth and scope there

to encourage a much more diversified economy and a housing profile as a consequence of that right brilliant answer The right type of immigration with the right skill set in the right places. And I mean, it's always a catch-22. The people who come, they need a place to live, but then we need people to build those places. So that's always a tricky thing.

Looking more near-term, Bushy, you know, let's say a six-month or 12-month look ahead, we're starting to see, and I want to be honest about this, because I don't think enough people who are trying to sell you a service or a product are honest in the property space. We're starting to see the national housing market, if there is one, just starting to turn to become a little bit more softer. You know, of course, Perth has been, everyone knows Perth has been booming. Now that's, you know, the boom, the rate of boom is at least slowing down.

Same in Brisbane. Some regional Queensland is just like going bananas, but let's say that's an outlier. Sydney and Melbourne, you know, very, very soft. We're seeing a different market to what it was even 12 months ago, where basically everything was still going up, perhaps except Victoria. Where do you see the biggest, what are the biggest threats to the next six or 12 months? What do you see that could occur? And of course, there's always markets within markets, always good time to buy. It's always good time to buy, provided you know where and how. I think we both agree on

that and that's how we've built our portfolios but at a macro if we can talk at a macro what are the biggest threats in the in the near term that may you know really take the rug from underneath the the national housing market yeah okay that's another big question to get our teeth into because again there's a lot of real influences on that uh first thing i just want to touch on because, again, the old bubble chat is being talked about a fair bit again. And this is purely, like, I don't think there's a year I've been involved in property, and that's getting close to 50 years now, PK, where the doom and gloomers haven't been talking about some sort of crash.

Never happened yet. Yes, there's been corrections. Yes, there's been softenings. We would expect that. I think what we're seeing now, as I've touched on very briefly before, is a return to what I would call more normal variable property conditions. So I think the petrol of the pandemic is actually finally burning out. So, you know, if you look historically at property performance,

the average capital growth rate on an annual basis ranges anywhere between about 5.5% to just under 7%. Yeah, we've seen in a lot of places, you mentioned Perth, Adelaide's another, Queensland's the same, experiencing two to three times that over the last two or three years. Now, that's unsustainable. And anything that grows too fast is going to correct. It's like a spring. If a spring extends too far, it's going to find its equilibrium. And that's exactly what I think we're coming into now.

So moving forward, I think our economy is a bit soft. per capita the interest rates here in Australia are pretty much amongst the highest in the world so I know myself that initially I thought well rates are about where they were but if you look at the level of debt that most Australians now have that creates much higher pressure

and a softer and more reliant economy and a weaker position as a result of that Now, we've touched on this as well. The influences are going to come into that because over a third of our exports go to China. China's economy is soft already and they're already stimulating their own housing market by trying to generate internal growth.

That's going to get worse now potentially because we know that Trump is talking about 60% tariffs on China and there's a direct flow-on effect because if you're putting 60% cost on goods to America because they want to put up a big fence and shorten the yard in America, then there's going to be less demand for Chinese goods because most of our resources goes to China

and then there'll be a downturn in that. So I think WA is heading for some challenging times. To some degree, Queensland, because there's a lot of resources that come out of Queensland as well. So I think that's going to calm the jets in relation to that. Beyond that, I think quite a few of the markets are being perception-driven by the negativity that's promoted through the media.

So as an investor, I'd be interested in your thoughts on this. I always look beyond the noise to what the fundamentals and the data is actually telling us, and I'm a contrarian. So one of my concerns I've had in the property space in recent times is that there's a lot of what I call momentum investors who, let's call it what it is, I think they're lazy investors who are outsourcing their future and putting it in the hands of others and not educating themselves to have enough knowledge

to know what's being said to them. And as a consequence of that, the Pied Pipers of the particularly a number of high-profile buyers agents around the country If you talk a great story and you use a lot of the truth but apply it to a pretty average solution, shoehorning people and getting them to fight each other into locations that may have some challenges. And what that means is a lot of people are coming in at the top of the market, so they're using that confirmation bias to say, well, everyone's doing it, it must be okay. But those areas that have had very substantial out-of-character growth, like parts of WA, they are going to peter out. and I've been in this game a long time, it's not unusual to see areas come back 5% to 10%

and then they'll flatten out for a period before they then go through their next phase. In fact, it's unusual not to see that. There's almost always a small correction. Always, always. But again, our memories are very short and we just don't learn from history. So we've had this uncharacteristic artificial period

over the last five years in particular that allow people to think, oh, well, this is great, it's going to keep going. So I think that's challenged, but there's also opportunities in that as well because, as I sort of said right from the outset, what Trump does, who knows? And there's a difference between what he can do and what he wants to do as well. So I think the tariff exercises will come because he can implement that tomorrow, no question about that. But there's also a number of other wild cards in the mix that will trickle down. So probably one of the wild cards I'm worried about is talk of Elon Musk taking over the government austerity program in the States and slicing government.

You don't shrink to grow. It's a pretty fundamental law of nature. You just don't shrink to grow. So I think there's potential concern in that. And if you are reducing that and you're potentially throwing 15 million people out of the country, the deportation exercise, I think that's going to be much more difficult to manage because they are wage earners and income tax providers. So there's going to be a big bite to the economy as a consequence of those two things. But offsetting that then, there's a natural oil and gas supplies in the US that if they want to tap into it, they can take advantage of it. So there's lift and drag exercises in all of that that will flow back into us because we're very service based and we rely on these other economies.

What happens in China in particular, but to some degree the US and the interaction between the two will have a definite impact here. so I'm expecting it so bring that together in terms of what does that mean I think we're back into a situation where we need to be focusing as a contrarian need to be focusing on low risk investments in areas that are it's never been more important in in my view to focus on areas that are about to experience growth and and and there's a lot of a lot of things to look at but I like to keep things pretty simple because it's not rocket science, but I often talk about the three I's and the three P's. So the three I's, what are they?

It's newly committed infrastructure, so road, rail, technology. That's the first I. I'll cover them quickly. So infrastructure is the first I, industry is the second, incomes are the third. And we need to put on our future telescope, not our rearview mirror with this, and imagine what's going to happen with these drivers.

So committed infrastructure is road rail technology essentially because that opens areas up and makes them more accessible and therefore people are more attracted to them. The industry diversity with new and growing industries creates jobs which build the wages, which is the third part, it's the strong and growing incomes. If an area is within the vicinity of those key fundamental growth drivers, it's going to do okay in the long term, irrespective of what's happening now.

So I want to apply that directly to, let's take the case of Victoria right now. Victoria is on the nose in the media. Any opportunity to talk about the land tax, the restrictions on Airbnb, you name it, they're going to throw at it. And that sentiment factor, that media sentiment factor does influence behaviour because that's where we're getting our information. So I think, as a contrarian who likes to swim in a pool before others throw their line in,

I think there are opportunities in regional growth hubs within Victoria in particular, to some degree New South Wales, to some degree Queensland also, that I think provide great opportunities in that space. And something that's linking all of those three is the inland rail construct, which is open away, And I think that's going to support some of these regional corridors that have the critical mass.

One of the important things here is to have a community with a critical mass that has the diversity and the way to support to be sustainable. And I'd say that because populations of 25,000 to 30,000 minimum that have three or four growth industries, might be renewables, it might be some of the growth areas that are enabled by the technology that allow the lifestyle livers to do it. And then if you overlay that with the right sizing of the baby boomers, because they're cash buyers, they're coming through and they're making lifestyle

decisions. They are choosing to live in well-serviced regional areas because it's a better lifestyle and it's not tied up with traffic and big houses that they don't need and they don't want to maintain anymore so i think if you if you pull those together those are the sorts of locations i i'd be starting to focus on i don't want to talk about specific towns because i don't want to add to this market moving uh if so exercise that that aerates its own problems i think yeah pk uh so so i'd probably i think the race has been run in wa uh i think adelaide's not much I've always said that was that was run before Perth wasn't it I thought so yeah I thought and it's always been the Stephen Bradbury it it came to the fore because everyone else

went through their quiet period it's now caught up there's been a lot of catching up Hobart and Tasmania has been another example of someone who had a an area that had golden run and is now struggling but there if those three eyes that I spoke about applied and then you focus on so that's the area piece but if we're going to bulletproof what we're doing as investors then for me uh it's focusing on what doesn't change not what is going to change yeah and what's not going to change australians if we look at the profile of the property beyond the location piece then we're talking three to four bedroom homes on a block of dirt that's not too big and not too small. It's got a flexible way out that enables people to work from home. It

has that technology support. It's those sorts of properties and also in an area that doesn't have more than 30% renters in that area because that tends to dilute the pride and therefore the value that's added to the properties. We focus on those unchanging aspects more them the changing pieces. And we then take a long-term view. So again, this is my own bias here, but I think time's your biggest friend to make compounding do its work. So I often talk about TLC, PK. Give yourself lots of TLC time, leverage, and compounding growth are, I think, the essence of what successful property investment's all about. If you are de-risking your portfolio by doing that, you're diversifying it by not having one big property

in one spot, but having a number of properties so that the cash flow affordability is there in a rental yield that's allowing it to be sustainable long-term. Then if we're taking a 15 plus year timeframe, the where doesn't matter quite so much because over time everything reversed to the mean. So unless you need equity upfront and early to contribute to further properties, then if you're taking a 15 to 20 plus year time horizon, then as long as the property is investment grade, but it has that owner-occupier X factor appeal. Again, one of the mistakes a lot of investors make is they focus on the investment boxes. But when we rationalize our portfolios down the track because we're never going to live off the rent.

When we rationalise our portfolios in 15, 20, 25, 30 years' time to convert that into cash flow, we want to be selling that property to an owner-occupier who represents 70% of the property buyers who buy with their heart, not their head. So street appeal, having owner-occupier appeal and that X factor about the property that's either there now or has the potential to create. So I think we're moving into a zone now where manufacturing equity and value adding is going to become more important

to realising investment goals. So cosmetic renos or the ability to subdivide, not necessarily do it but have the potential to do it, is going to add to the potential value of the properties that we look at. So if we just stick to those basics and then just let time, the talent, the tax office and capital growth do its work, it still isn't that hard.

Yeah, yeah. uh great great answer and i think some of the areas that you mentioned i think we're on the same page you know some people will say oh but look regional victoria has already grown so much you know since uh the covid pandemic started but i think in my view you know this spring analogy that you you mentioned where you know something that goes up has to then course correct there's a very accurate analogy there are however some markets that if they or some towns or cities if they're structurally different then it's actually well now we need a bigger spring okay and now there's not going to be that you know if they have an additional job

center if they have a additional employment industry like you know those acronyms that you are using very very usefully um they they can really mean that even if an area has grown i'm not saying 100 or 50 but if it's grown a lot actually there's a lot left in it because it's fundamentally a bigger beast than than what it was before so i think and certainly not everywhere but some pockets of regional queensland uh regional victoria sorry regional new south wales um i it's like i won't mention anything now otherwise you know tomorrow prices will be up by 200k already but um uh yeah i think that there's certainly some those are the next horizons and i think people should be bushy i still get people saying dming me saying uh pk this buyer's

agent is suggesting i buy in parallel in in adelaide and i'm thinking hang on a second like we were buying there in 2020 and now it's gone up like like almost 120 percent or you know it's like guys like you said don't outsource um insource insource everything insource everything take accountability take responsibility and once you've insourced once you've understood then strategically outsource what you know is really technical for example mortgage broking someone like bushy you know what i mean so this is uh this is something that i think is is important one question i had for you though um as a threat you know you talked about those macro global threats a local threat that i see people talk about negative gearing all the time i don't want

to talk about that in this episode because i fundamentally don't believe it's a big rock in the jar and i've done other videos to explain why that's the case um but capital gains tax discount if that capital gains tax discount is abolished or you know you get that 50 discount if you hold a property for more than 12 months if people don't know if that is completely wiped away there's no discount or if the it's reduced to 25 what are your thoughts on that do you then think that there will be a max mass exodus from investors they'll sell their properties or at least a reticence on people then buying for investment purposes yeah i do i think people vote with their feet and my own view linking back to housing supply we know that because of the way

the australian market is now structured 80 percent of housing supply comes from the profit sector Mums and dad investors, pretty much. And I think if someone who is investing in their own future and also reducing the impact on the public purse later on, because they won't need the pension, they're going to self-fund their retirements and their lifestyles, who's taking a risk over 20 to 30 years about something that may happen, it's not guaranteed to happen, none of this is guaranteed to happen,

then if we are serious about trying to make some sort of dent in housing supply but also to allow people to fund their lifestyle down the track then we need to be incentivising investors more not penalising them because my view is we're going to cut off our nose to spite our face it'll have all of the opposite effects to what people are talking about because the discussion around negative gearing and capital gains is about housing supply.

They believe that if we penalise investors, that's going to open up stock for more people to live in. Well, it doesn't help the supply problem at all. In fact, it's another disincentive to take that risk. And if you actually do the numbers on it, and I've done the numbers on it because I had a look at this recently when this old bugbear of negative gearing and capital gains discount got raised again, it's like, here we go again.

It's every two or three years it gets a guernsey. Every election pretty much it gets a guernsey. If you look at what the true discount is when it's applied to your income, it's not much. It's not earth shattering. But if you just keep chipping away, if you're making properties more expensive to hold, you're removing the ability to soften the loss through negative gearing,

you're still a loss. you're still losing money people are losing money every year on the property with a hope of a future gain and then you're going to make it worse at the end when they do sell by taking more of it back into the public coffers then you are going to drive people out because they'll look at other alternative investment classes that don't have those that level of risk and those sort of restrictions and for the risk reward ratio it's going to make other asset classes look more attractive so so i think we need to take a broader based variable approach to this and at times rather than eliminate things we might vary some things to achieve a certain goal but if the

reliance is still going to be on the private sector uh you and i and everyone listening and watching to actually continue to provide housing then if we clip their toenails too much no one's going to do it so i think those things need to remain in fact in the short term to get us back to where we need to or closer to the supply targets we should be adding more incentives to mom and dad investors not exactly if the government's not going to build and we don't have enough houses then incentivize the private sector mom and dad investors or if you don't want to invest incentivize them because of you know left-leaning policies which may have you know a certain credence, then build yourself.

You know, someone's got to build, either private sector or public sector. I think it's a really good discussion we've had, Bushy. The sun is rising and it's going to come on my face very soon, so we better wrap it up soon. But is there anything that you would like to share that we haven't discussed that you're particularly passionate about or anything that I didn't ask you or I should have? I think we've covered most of it pretty well.

I love our discussions, PK. I think we only just scratch the surface when we talk. So if and when the opportunity is appropriate, we'd be more than happy to join you to continue that discussion. I'm keen to get you more often involved with our podcast, the Get Invested podcast under the Property Hub. I just think you share some really straight, down-to-earth, database, fact-based, evidence-based information

that helps people to make much better informed decisions. And what I love about it is we're educating people so that they're taking on board the information that's going to help them to be able to see what's actually happening and then make better informed decisions themselves. I guess the only thing I would close on saying is because a growing part of what we're doing now in conjunction with a lot of your people

is to be their holding hand in the early stages, happy to do that because our our goal is to educate those investors and yes give them the eyes ears arms and legs initially while they're building that knowledge and confidence to get right results and more importantly to filter and protect the investors in terms of what everyone else is suggesting so you know a couple of takeaways here that i that i like to reinforce is don't go for one-stop shops make sure that every person of your property team is independent of each other because it's out of the differences between those and that the pros and cons of suggestions from each

that you're going to be able to then understand the complete picture and make a decision that's right for you, not for someone else. The one thing I haven't touched on much today is that there's so much talk about strategy, PK, but most of it's tactics. It's not a strategy. I think a true strategy starts with the end in mind and looks at your lifestyle. so how do you want to end up living and what does that lifestyle cost and then so that's what you

can do and what sorry that's what you want to do and what you need to do the finance piece through what we do the bare facts uh it's just people to understand what they can do and those two determine what your property strategy and property tactics need to be so if you if not clear on what the gps looks like and it is a gps not a not a roadmap because things change yeah and you're not clear on what your capacity and the cost is, again, one of the things that we spend a lot of time doing, PK, is getting right down to how much per week is a property going to cost you on year one, three, five, 10, 15, you're on once every cost involved in buying and holding a property and then weaving in any depreciation or other benefits that can be

applied to it so that they've got, because the biggest mistake I've seen investors make is they're not clear on exactly how much is going in or out of their pocket every week and the sustainability of property to last the 15 years to enjoy the fruit. If that's not thought about and well-encompassed, you can get yourself in a lot of trouble. If you want to dive in for a quick personal solution session just to investigate any of that, feel free to book in with us. Just jump on the KnowHow Property website

and hit the purple book appointment button and I can spend an hour with you just chatting through what, if anything, we can assist you with. But, mate, I just want to close on, despite the diatribe of negative information that floats out there, I still believe if you're clever about what you do and how you do it and where you do it, then property is still a very good vehicle to achieve your financial freedom and future lifestyle goals. You just need to surround yourself with the right people to help you get there. And if I was, I mean, I'm very biased, but if I was starting off in 2024 or 2025, then I would do things basically very similar way as I did them when I started off in 2011. Property is a great asset class. Other people can probably make more money in other asset classes, but I know I couldn't fully stick to real estate.

It's for lazy people, somewhat lazy people like me. So that was very good to have you on. Bushy, thanks for your insights and your candor, demeanor, and for sharing your thoughts on the macro stuff, which I think needs more and more conversation and dialogue as the audience and also property investors mature and look beyond just their surroundings. So thank you so much for coming on, and I'm sure we'll chat again soon. Thanks, PK. You bring out the best in people, PK. you've got a style and approach that allows people space

to really expand comfortably in a relaxed way so you create a great environment and I'm very humbled to join you Thanks for tuning in to Get Invested on the Property Hub podcast channel your home for property investment insights and inspiration

Make sure you subscribe to Property Hub for free Get your weekly dose of Get Invested inspiration along with every episode of Realty Talk Australia's top online property show for red hot property investing news and insights direct from industry leaders and influencers. And finally, I'll see you next time.