Property Hub - Investment Insights & Inspiration - Get Invested: Part 2 - Dr Cameron Murray on property & fresh economic thinking

Episode Date: February 9, 2024

Continuing our conversation with Dr Cameron Murray, we get into the economics of housing and property investment. Last week, Dr Murray talked about his story and the foundations of his economic philosophies.  This week, we deep dive into the wonderful wide world of economics and how it affects property and housing and what this means to you, along with many other interesting topics. A highly respected economist and author, Dr Murray specialises in property and housing, environmental economics and corruption, and he dabbles in just about everything from macro, to money, to institutions, to evolutionary economics, and much more. Enjoy the episode! Connect with Dr Cameron Murray https://www.fresheconomicthinking.com Join our Facebook community Join the The Property Hub Collective, connect and learn from likeminded investors and experts. Join the Property Hub community on Substack! Sign up to get Australian property news, opinion and episodes in your inbox: https://propertyhubau.substack.com/  Three easy ways to Get Invested right now: Subscribe to this podcast now, if you haven’t already, and get the inspiration delivered to your podcast feed each week Get a copy of my book, Get Invested, for FREE, and find out what it takes for you to invest in living more, working less. Go to: https://knowhowproperty.com.au/get-invested-free-ebook Join the Get Invested community. Each month Bushy sends a free and exclusive monthly email full of practical ‘Self, Health and Wealth’ wisdom that our current Freedom Fighter subscribers can’t wait to get each month. Just visit bushymartin.com.au, scroll to the bottom of the page and sign up. 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 Google Podcasts 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.

I remember I was on a podcast in May in 2020, right when the bank economists were saying, oh, prices might fall 30% nationally. And I said in that podcast, prices are more likely to rise 20% than fall 20% because of the low interest rates. And I said, if you look historically, higher employment is not a, it doesn't correlate with falling house prices. It's just not a thing. And people said to me, where did you get your degree? The back of a cornflakes packet, all this sort of stuff, right? And of course, 12 months later, all those guys that got it wrong were now explaining why prices went up.

Welcome to Get Invested on the Property Hub podcast channel, the leading weekly show to help you unlock your 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 live by design. Subscribe now and join me and get invested in the life you really want. Let's get started. Hi Freedom Fighters. Let me start this week with a very quick analogy. Our car GPS is an absolute masterpiece of logic, but it's psychologically dumb. How we actually behave and how our GPS thinks we behave often don't coincide. The GPS

defines our task in simple mathematical logical terms based purely on a couple of variables, getting to our destination as quickly as possible. But it exhibits no sensitivity to context, our preferences, our inbuilt bias and our individual changing behaviours. Our GPS knows everything about what they know and just about nothing about anything else. So everything is defined and purely viewed in these terms and everything else is ignored. Navigational systems all assume we're trying to reach our destination as quickly as possible, but we're not all average and inert lumps of freight. If we're on holiday, we may wish to take longer, more scenic routes. if we're commuting home or trying to make it to the airport on time we may choose to take slower

back streets that avoid traffic jams so in this way our gps is blind to solutions outside its frame of reference it focuses on the logical but ignores the psychological and the behavioral sadly many of our self-proclaimed property experts and forecasters are very similar they boil complex dynamic property conditions down to simple rational reductionist models that rely on a few metrics and massive assumptions. But as I keep saying every property and every street and every suburb is different to every other and so are buyers and sellers behaviours. Now it's often said that what we measure we can manage but there's a flip side to this. What we mismeasure we can also end up mismanaging and misreading and this is the danger of relying purely on limited

historical data and reductionist models and a small number of metrics to predict property movements. It's why most of these self-proclaimed property forecasters assume everything except responsibility and they've successfully predicted about nine out of the last two property downturns because we all know that property actually behaves more like ever-changing clouds than precision clocks, and property analysis is much more an intuitive art as it is a rational science. So reliable property researchers and analysts are few and far between in my experience, and they're much more like alchemists than economists. But today, we're very privileged to enjoy insights from one of them, as renowned author Dr. Cameron Murray from Fresh Economic

thinking joins us for part two of our great conversation where we're actually going to deep dive into the wonderful wide world of economics and how it affects property and housing and what this means to you along with a bunch of other interesting topics so welcome back and let's get invested again Cameron. Thanks for having me again Bushy. Cameron I'm really looking to getting you this on it we've had a couple of green room chats already on on things of interest but to sort of start the discussion, what mistakes and miseries do you see many making when it comes to housing and property? Oh, that's a good way to start. A lot of my research is about the supply. And I guess

maybe we should start there. The word supply can mean about 50 different things, yet we still use the same word. And so one of the big misreads I get is that people try and apply economics and say it's demand and supply without being specific about what they mean. So sometimes we mean supply is the stock of existing dwellings. Sometimes we mean it's the change in the stock, so the net additions to the stock. Sometimes we mean it's how many dwellings are for sale at a given point in time on online websites. Sometimes we mean it's the number for rent. Sometimes we mean it's the economic idea of supply,

which is a hypothetical schedule of willing sellers at different prices, a little bit like an ask curve on a share market or an exchange. So we sort of misread it because a lot of people are out there pretending to do economic analysis and they want to use the right words, but they don't actually know what they mean underneath it. And I think if we could get rid of the words demand and supply and say for demand, whether we mean population or willing buyers of property assets

or renter households currently active or some more accurate phrase, we might just improve the housing debate at an order of magnitude in terms of its quality and consistency because a lot of the time it's not about being accurate or precise or communicating. It's about seeming like you understand stuff by using economic jargon.

So I think that's a big mistake is to get trapped into using economic jargon without being precise about it. Yeah, extremely well said. And the misuse of words or the lack of understanding of terms and words can perpetuate bad thinking around those exercises, as unfortunately we get to see in the mainstream media all the time. So what I'd love to then put some context

around this whole exercise then is to get your thoughts on what are the major drivers and influences on housing and property and housing values as well, if we can. Right. Where should I start? And I have a whole book on this topic coming out in February, The Great Housing Hijack. You can pre-order now.

So any listener, feel free to find that. But maybe it's worth me sharing. I've got five big concepts that I think are useful for comprehensively understanding. Do you think it's worth we go through the five? Absolutely, yeah, I would love to. I think it's pretty fundamental. Yeah, good idea.

So in economics, we have this idea called an equilibrium. And essentially what that means is when you have a choice between all two alternatives, you choose the one that makes you better off. So, for example, if there's a supermarket checkout, two checkouts, and one queue has two people and one has 10, that's not an equilibrium because the last four people from the 10 queue can switch to the two queue

until there's six in each queue, right? And then it's an equilibrium because for the next person choosing each checkout there's no difference right but that that i mean that's a very deep economic insight and i think there are five ways that this applies in property and i think if you do that you pretty much um don't get surprised by what the market does it's very uh comprehensive so the first one is the asset price equilibrium and that basically says for every dollar you spend on property, you could spend it on some other asset, right? So you put a dollar in a share market, you can put it in the bank, you can put it in property. So they're like the two supermarket

cues, property or other assets. And so over the long run, the rate of return on each asset should be the same. And if it wasn't, people would have swapped their money. They would have sold property and bought shares. They would have sold shares and bought property. And if you look at long-term studies of the rate of return on different assets it's around seven percent for the last hundred years pick any asset class right yep um and it must be because if it was if it was systematically different uh people would swap from one to the other and so the asset pricing you know equilibrium what houses the asset price of houses is affected by what's happening in all the asset markets in the economy all the alternative asset markets and that's why for example we use monetary policy to

influence asset prices because if the uh the return on cash goes down people don't want to hold cash they want to hold other assets so they switch from cash to property so that's that's sort of i think the key insight um part of that too is that undeveloped property property where you can build houses or can build offices is also an asset right it's got a value and it makes a return from capital gains and you can switch that into cash or you can switch it into a building by combining it with other assets with cash to do construction so i think if you can understand that property is an asset it's affected by conditions in all asset markets you know you're a huge step to understanding the evolution of prices over time now it doesn't mean it's always equal asset markets

It's a renown for being cyclical, and guess what? So it's the property market because people are second-guessing each other and we end up all going one way and all going the other. So that's fine as well. So that's the first big idea I think is useful. The second big one is, well, housing, for example, gets its value from rent, right? That's the income flow that you get.

Where do rents come from? Okay, well, just like the two supermarket checkouts, people have the choice of spending on housing or spending on other goods and services right and so if you're spending 10 of your income on housing you might go oh i could spend an extra 10 and buy a better house or live rent a better house or a better location and so i'm going to keep spending more of my income on housing until there's no benefit from trying to get a better house or buy other consumer goods and services and the interesting part about that is that for the past 100 years households have roughly spent 20 percent of their income on housing

there was a 1911 rent inquiry okay what were people spending on housing oh 20 percent of their income on housing there was a 1939 rent inquiry oh what was people spending on housing oh 20 percent of their income on housing there were various ones in the 70s because of the inflation right rents for adjusting incomes and everyone got worried just as they are now yep and and it's it's likely that this 2023 20 of income on housing for rentals and of course the reason rents are going up in a lot of places because incomes are going up they don't go up by themselves they go up they go up because people are paying because the only you're only outbidding the next renter right and they're using their income to outbid you and so across the market

as a whole yeah it's true a lot of people are spending a lot of their income on housing but across the market of a whole that's not the case okay the average is still roughly where it was yeah one of the issues we're seeing now is because incomes are changing at different rates for different types of people okay different households are adjusting and moving and outbidding other households whose incomes didn't go up so for example your typical tradies may making like over 20 percent more nominal income than two years ago right i think they their incomes for self-employed construction workers went up 15 percent in one year so you've got a whole bunch of people making 20 to 30 percent more income plus if they're working more hours plus if their

spouse is working and then you've got a whole bunch of people who in kind of working those secure jobs um who haven't really seen any change and so you're getting this reshuffling of the deck at the moment but you're getting the rental equilibrium 20 percent yeah so so therefore what if incomes go up rents go up and prices go up because prices are capitalized rents based on conditions and asset markets the third equilibrium is about spatial we call it spatial equilibrium or locational right so you can either choose to live in one location one supermarket queue or another and if the benefit exceeds the extra cost of moving then you move right of course you move and so that's why young people move to the big cities that's why internationally people move

into sydney and that's why many locals move out of sydney when they get outbid by other people because they can get similar incomes in other areas and they can get a lot cheaper housing so the net benefit of moving is there and you see that so there's a gradient then in terms of rents within cities within suburbs of cities between cities and that's why there's that gradient it's an equilibrium outcome of a few people adjusting to sustain those different rents so i think that makes a lot of sense and that's why for example you get increasing rents when you get lots of development in an area because it becomes a relatively more attractive place to live when there's shops nearby and a pool and a school and all that sort of stuff yeah so the the benefit of

moving there outweighs the cost the fourth one is called the density equilibrium and that basically says on the on the production side of housing on any property at a particular location there is a density of housing at a point in time that will make you the most money so out in the suburbs it might be detached houses on lots that are 400 square meters but a few suburbs in it might be detached houses on what's 300 square meters and if another suburbian it might be townhouses and another suburbian it might be low-rise apartments it's not quite you know doesn't justify the cost of high-rise and then in the center it's just high-rises everywhere and so you that what that shows is that even if you try and plan you know we create our planning regulations to get more

density in in regional areas or in outer suburbs it might not happen because it makes you less money to build a high rise than to build some townhouses uh because the price per square meter that you sell for it can't justify the cost of building a high rise and this is one of the things i teach planners uh when i do training workshops is that you can't just plan for high density there is a a market limit as well right so if you if your planning rule on density is below what the optimal thing is for the market everyone's going to argue with you to make it higher because they make more money if your planning rule is above what's optimal for the market no one's going to care but they're never going to build what you plan for because it's not worth it

and you've got to decide what you want to do if you want to so we've got an example here in bean lee which is south of brisbane in logan and the town plan says you can build 90 story 90 meter tall towers here and of course it's super cheap there the tallest buildings five stories high and even then given construction costs recently you probably wouldn't get more than townhouses anymore no but it's been 90 90 meter height limit for the last 10 years okay but then you've got lots of prime locations in sydney that are preserving more historical areas where you could build more densely and the question is well do we have a reason to protect this or do we not because there is a going to be a market here if we change the world so that's the density

equilibrium and the two cues here are basically for any property owner should i go up an extra story and does that is that worth the extra cost of going up the extra story or the extra density like in terms of detached housing lots you know do i make more money selling um uh 10 400 square meter lots or 2200 square meter lots you know there'll be a right number there and the final one is is where there's a lot of debate at the moment is called the absorption equilibrium and the absorption is kind of the word i use to say it's not supply it's the rate at which property owners take up opportunities to build houses and essentially the two cues supermarket cues there uh build today or build tomorrow right because you don't have to build um yeah you don't have

to build property is a right not an obligation to build so you choose when to do it and how quickly and if you're building too fast today you'd actually make more money taking that last dwelling out of the queue today and putting it into tomorrow's queue and so what that means is that when prices are rising quickly in the cycle everyone wants to build at those periods because that's the time when putting stuff into the future is not worth it and when prices are soft or not rising then you've got this benefit from delaying and and that's the absorption equilibrium if you get that you know if you can understand that you can sort of see why the idea that oh we can make all the houses cheap by just letting people build houses doesn't work because they don't want to

build faster there's a built-in speed limit here because if they built faster they'd make less money tomorrow right so across all these property owners in the market there is an optimal rate to convert undeveloped property assets into developed ones and i think really understudied you know i think there's a there's an underlying principle that sits uh uh under and wraps up everything you've just shared and and that's the important recognition and understanding that that property is an asset it's a it's actually an investment asset uh and and and a lot of people i i think tend to either forget or ignore that exercise, particularly when we're talking about housing affordability

and social housing and everything else. And it means that, you know, in reinforcing everything you've just shared with us, which has been fantastic, by the way, that left to the private sector, which all housing in this country now is pretty much provided by the private sector, they're only going to push the button on increasing the supply of housing in whatever format we want to call that when it's profitable to do so.

So I'd love to, I guess, now leverage into that because for as long as I've been involved in property, and it's been many decades now, Cameron, there's been this never-ending debate about housing affordability, accessibility, rental crises, and the supply debate. Can you share your thoughts on that? And I know you've done some work on this, looking at historically, which we touched on in the first part of the exercise. So I love your thoughts on all this.

Okay. It has never stopped. It is the age-old problem. I'll give you two examples just to reinforce how normal this is, okay? I know the media likes to say, oh, something happened last week, therefore it's abnormal, even if it happened, you know, every week. I still don't understand what makes something news first, not news, but that's just a different question.

In 1836, Charles Darwin, the father of evolution, famed biologist, arrived in Sydney Harbour on his ship HMS Beagle in January in 1836. It could be 1832. I always mix those years up. I never knew he came to Australia, so I've just learned something. You did. Thanks for sharing that.

you go you can find his diary from his ship and the first paragraph of the first day's diary from being in sydney he writes the number of i'm going to paraphrase because i don't have it in front of me the number of newly built homes is truly astonishing nevertheless everybody complains about the difficulty of procuring a house what do you reckon the population of sydney was in 1836 be very small what what are we talking 15 000 15 000 and here we were 15 000 people wide open country no planning rules no limits on anything and everybody's complaining about the price of housing okay here's another example um in online games where they create housing markets and property systems these mega multiplayer online games they're often prone to housing crises

rental spikes asset price spikes and a chronic shortage of housing all the complaints that we have are replicated in computer games when we replicate the property market so i reckon it's probably not something that's happened recently i reckon if these five equilibria if you understood them you would make sense of oh incomes really jumped okay rents will probably go up oh interest rates went down oh asset prices will probably go up even if rents fall for a while oh okay prices have stopped rising oh probably people will stop building houses for a while as quickly oh okay it all it all fits together and it makes sense not only of sydney in 1836 or victoria in the 1880s land boom or in sydney in the 1910s when there was a rental inquiry or again during

the depression it just makes sense of it all um as the way economies adjust like the property market is such a large part of the economy right yeah um it's it's you know between construction between rents and imputed rents on owner of occupiers you're you're talking a quarter of the economy or 20 right we spend 20 of our income on rents so roughly speaking 20 of the economy is devoted to maintaining producing and renting housing um so it's really tied to these macroeconomic cycles so yeah and i mean i as back in 2003 i remember the prime minister's first home ownership task force was a big one they proposed shared equity schemes and then late in the 2000s boom the act adopted a shared equity scheme called land rent scheme and you'll notice that there's a lot

of that going around this cycle as well um seems to be the last part of the cycle shared equity becomes all the rage um so yeah if the cycle is sort of the other forgotten part so yes property is an asset yeah which means which means there's this great symmetry in property markets so someone's cheaper rent is someone's bad investment return right and i think politically if we don't acknowledge the symmetry we're going to just keep this pretend game going for many more decades um you know uh imagine imagine if rents fell 50 imagine if we did orchestrate oh okay so the 10 trillion dollars worth of housing in australia is now worth 5 trillion yet the um 5 trillion of mortgages is still worth 5 trillion like we're just basically

making ourselves poor from an asset sort of side perspective, which doesn't really make sense, does it? It doesn't. And, again, I love your thoughts on this. That's never going to happen. There's so much of our personal equity. I think it's something like 54% of the average person's equity is tied up in the value of their home.

From a government voting perspective, if nothing else, in terms of politicians making sure they stay in power, they're never going to let that happen, are they? What's your thoughts on that? No. So 67% of households are owner-occupiers. So you already got two-thirds there. And I have a friend who's hilarious. He goes, oh, I really want prices to come down. But man, as soon as I've got that contract, I want them to go up. So you're already two-thirds, right? And in addition, there's about 2% of rent-vestors. So you've got 69% of households, basically. yeah um 18 percent of households altogether are landlords and so they're typically the most politically important they're either politicians themselves so the average politician has two and a half investment properties so you know i've estimated that there's about 16 000 councillors

state politicians and federal politicians in the country and if they had two and a half properties each a million bucks you're talking 13 billion dollars right just from them yeah so they're not going to orchestrate you know crushing their own balance sheets are they no way and then you've got to consider their families their friends their social networks they own you know hundreds of billions of dollars so so that's not going to happen and electorally it's not going to happen and monetarily it's not going to happen because we manage the economy with monetary policy which relies on the housing price transmission mechanism right so we kind of when we get to the nitty gritty we realized that we can keep prices up with monetary policy if really there was a collapse

and construction stopped we would boost we would try and boost prices and construction right so we've got this automatic built-in counter mechanism so yeah on the whole that's just a fairy tale that i don't think anyone really believes but it's convenient thing to say day in day out if you don't want to do anything about housing but you're copying political flack for for example the rental price adjustment that's happening right now you've got to be seen to be doing something but then deep down i'm going well this is just what property markets do but i can't say that to anyone because i've got this 30 percent of upset people who are renters and i want them to vote for me too yes beautifully said and i i think that's the the issue here that there's a the politicians are and

and it's it's no different now than it has been but they've got to be perceived to be doing something uh so that they talk about rent freezers and and all of the other junk that goes with that but i think that the really interesting thing for me and i and we we started touching on this in our green room discussion was uh government's role in this because i you know i'm old enough now to remember the days back in the the 70s when governments were actively providing social and public housing to look after provide that safety net for those that were in strife and not uh as we are now pointing the finger at the private sector and making it their issue when the private sector is profit driven and therefore they're never going to build housing unless they can

make money out of it so what's your feeling on all of that and and what do you think government's role needs to be if we're serious about uh the ongoing discussion on this whole issue yeah yeah so so just so let's just define the problem a little bit we've got two-thirds of households that own their own home in the private market and they're happy, basically, if prices go up. If they fall, we'll bail them out with a cheap mortgage with our monetary policy. So now we're down to 30% of households.

A lot of them, for the typical renter, quite a few of them end up being homeowners. So we get about 100,000 new first-time buyers each year. And a lot of them are just young students from wealthy families who are going to be fine as well. So we're really talking about a sliver of the population, 20% say, that are really going to struggle renting for a long period in their adult life. Yeah. And what do we do for them?

Well, nothing, basically. The private market has an incentive to maximize, right? Property owners want to maximize their returns, not minimize them. And so we can see that in, for example, the new build-to-rent type models that are coming along. those property owners don't do super bargain basement places they do top of the market top of their market which is how they make the most money also you'll see them with um you know gym memberships included and office you know hot desking spots and all this stuff to try and maximize the you know it's for rent for the right tenant it does maximize value for them yeah but

it's not the tenants that are struggling to rent in the private market or are being forced to move further and further from the city when their rents come up for renewal and so we've got this you know small section of households and you know the trick is home ownership is like rent control because the landlord is always giving you a favor and never putting the rent up right so we can either encourage home ownership or we can provide a landlord who will just not put the rent up on them right and so what works around the world and has worked historically is for government agencies of various types to build houses for people and rent them at cheap regulated prices and if we had say 15 of people in a system like that we'd only have 15

left in the private rental market so if rents doubled the issue would be halved because there'd half as many people exposed to that rapid change in rents and so you know i'm a big fan i think governments should build roads i don't think we should only have private roads i think driving would be very expensive and people complain about the rent for for driving right totally and yet somehow and we want the government to do the power lines and the sewers and the stormwater we want but as soon as we hit the front fence oh we're incompetent we don't know how to build anything okay you built all this really big difficult stuff all the way to the fence and now you just can't put the house on it you don't even have to do it you just pay someone so i'm a big fan of

public housing social housing whatever you want to call it regulated price housing i think you can do it two ways my preferred way is a parallel ownership system yeah so what do you top set up you mean or pardon me a sweat equity type arrangement or oh no no so in singapore for example you buy public housing you purchase it right and it's yours and you can trade it again and move to a different one yeah and so it's like a parallel scheme yeah and only people who qualify who don't own property elsewhere who are residents who could buy a new one from the public housing provider can buy in the parallel system so you just create this cheap parallel market a little bit like public schools right we have public schools you can move to another one if you move

and you don't pay for it and you can get out of it if you want you can sell it you can get out of there and go to a private school you can sell your public housing and move to a private one and so that's sort of what I propose and I think the the reason to for the ownership model rather than the public landlord type thing is just purely and going back to what I said in our last conversation i'm into this efficiency i'm an analytical person who is into efficiency and um when you're managing other people so this is what we call an economics principal agent problem right the renter knows what the house is like but the landlord has to make the decision and what to pay and how to fix it whereas if you buy it then it's your decision right and so if you have a parallel

home ownership system you buy it at a cheap regulated price you own it for your lifetime if you want a new kitchen you do it if you want if you don't want to fix the leaky roof you don't fix it but you you avoid all the fights because there's no one to fight with yes you have if you have a public landlord just like we have fights all the time with private landlords you're just replicating that again right so and that that sense of ownership and control that which is an important human need that comes from that and therefore the likelihood those properties are going to be better maintained and looked after because that that sense of participation rather than the victim exercise at the at the end of the chain is going to have a whole raft of benefits

i would have thought i agree and i think the trick is the earlier you get into this the more you realize oh i have an asset i can look after it maybe that changes your mindset in general about investing in assets right and um so i know in singapore once you turn 21 you can apply as a couple to buy off the plan from the public housing provider and i interviewed a couple there who just paid 350 000 singapore dollars for their new apartment and i said well what would it cost you in the private market well there's nothing really here because 80 of dwellings in singapore are from the public housing provider but you know you have to pay a million bucks or more to get a private a condo or an apartment and so look there's heaps of variations on it I'm not saying that's the

perfect one Australia would have its own variation you'd have new detached houses in the suburbs you'd have lots of townhouses through the middle rings and you'd have apartments you'd have a choice and just like you have schools distributed through the cities and no one thinks that's impossible you have lots of little public housing options and the you know and people can resell it and trade and move so that it's got the built-in flexibility so i think if we're really serious about avoiding this ongoing 100 plus year 200 year issue in housing you either get everyone to you either you get more people out of the market either because they're previously bought in their owners or they're renting at a regulated price or they're in some kind of public home ownership

scheme the fewer people exposed to those rapid changes in market prices uh the better we all are and i mean that's the long-term benefit of owning that's why we own in retirement imagine being retired and having to outbid all these new youngsters moving into your suburb right that's why we think it's good and that's you know that's why a property is an asset right it's giving you these future benefits a lot of people say in superannuation oh we shouldn't let you buy housing it's not an asset right it's not providing you an income in retirement i'm like yes it is not renting is an income totally 500 bucks a week of not spending is the same as giving you 500 bucks a week and spending 500 well it's better than that because you've had tax into it then it's

actually more important than that so where it skips the middleman right of paying these extra cash flows so i think if anyone's serious about housing it's minimizing uh the private rental market or and having um non-market options for those who needed while recognizing that probably 85 of households will still be in the private market either renting or owning right yeah yeah so yeah and and no one loses in that exercise that that's the thing you don't pick political fights either you're not saying hey everyone i want to crash the value of your biggest asset hey landlords i want to i want to you know take away what you can charge your tenants so you're avoiding the political fights as well um which i think is underappreciated so i don't

know why it hasn't been more popular and i think a few governments now so in queensland where i live the state government's acquiring a lot of housing and sort of ramping up they've come under enough pressure yeah but here's here's the issue right i don't think you can ever solve these adjustment periods so when everyone's income's rising even if it's only five percent of people in the private rental market some of them are going to get squeezed out onto the street yeah because of that adjustment yeah so in terms of like the homelessness during these adjustment periods you know you need some kind of buffer stock of unoccupied for example in brisbane we have these covid quarantine facilities and there's a political debate about oh should we offer these to homeless

people because they've got beautiful kitchenettes and showers and and and and the council wants to do that but the federal government doesn't want to give them credit and all that sort of stuff right but you know we we saw during covid we can do stuff so if we want to deal with the homeless part like that very small end point well we just have to do it right we put everyone up in hotels when they are homeless during covid i'm sure we could come up with something better more long term i agree i respond to these periods the question for me is the political will because, you know, these solutions are out there. You don't have to dig very hard to find them.

You've done a lot of research, so you've looked into the near gritties of it, but you've only got to jump on Google and spend a couple of hours and you'll start to come up with thoughts that haven't been embraced. Why don't we have the political will, Cameron? Look, yeah, you know, I wish I knew because when it comes to pet projects um we seem to have the will like the olympics in brisbane all of a sudden oh we can build stadiums and accommodation for athletes not accommodation for homeless people or people getting squeezed with rent but we can definitely do it for athletes and all of a sudden things

click into gear and i just think hang on a minute you want to spend how many billion on this all of a sudden um and yet all the rest you're going to ignore a two-week event yeah exactly two-week event in 10 years time oh we're going to spend 180 million acquiring this site we're going to spend 30 million relocating the dog racing track we're going to spend 5 billion or like an undisclosed number of billion on the main stadium um in queensland we have the casino we we we conveniently sold off 10 of the cbd that was owned by the government didn't put any housing on it just a casino on a secret deal for your mates i think sydney may have a casino on the harbour who knows um so it's it's pure political will right it's pure political will um i just think that for

the the um how i put it just remember 67 of people aren't paying attention because they live in their own home yeah maybe some of their kids maybe not maybe they feel like they're wealthy enough that their kids are fine so again i think it's just a minority issue that is hard to tackle let me give you an example so in switzerland and germany renters have very high protections right very high legal protections and their their life lifetime rents too aren't they they're not like yeah one or two year cycles uh yeah so your obligation after a certain period you roll into this long-term obligation and there's only sort of three reasons you can force someone out of your rental property so it's a very you know and i'm a fan of some of those rules for slowing down

the rental market right um and i might come back to that but in those countries it's fewer than half of people own their own home because renting is such a stable and secure thing and so in those countries you do have that political constituency for renters and public housing tenants and all those things whereas here it's the the political calculus is the other way around yeah yeah yeah it's very hard yeah i guess let's think about it in terms of political clout while there's a lot of lip service paid to the homeless uh exercise in terms of real impact it's not going to get a politician to bang the table because it given they're only there for three years or a bit more it doesn't really matter now i'm being a bit cynical in that state

yeah i agree oh if it came to their suburb things would happen very very quickly like let's be clear um but yeah as a general rule and and i think it's also worth acknowledging that you know the homelessness increase we're seeing in australia is a global one in 2023 and it's also a normal part of the cycle i remember in the late in the 2000s right at the end of that cycle there was heaps of homelessness and and then it disappeared right we hit the end of the cycle prices crashed all of a sudden our houses everywhere everyone wanted to rent up everything um and and there was a stable 10 years and now we're having that point in the cycle but we're having it globally as well uh it's not just locally and i and i think perhaps i'm just speculating here

that because the cycle doesn't it sort of solves itself many times after a few years yeah uh that it's just not never hits that threshold of political sustained well i think what's i mean and you would have heard this before but the the thing that resounds for me is what we learn from history is we don't learn from history because the cycles are there and and already we're forgetting that only a couple of years ago we had a cataclysmic uh global shock uh that was more about reaction than the reality by the way but that's that's another discussion uh that has thrown everything out and and and almost the cycles in in most developed countries are actually in sync now as a consequence of that so that homelessness exercise that we're experiencing

here is also being experienced in the u.s and everywhere else that that has gone through that process but if we if we step back and thought well okay well this is actually a normal part of what's happening and this is the transition in the cycle so we've just got to come up with solutions that can accommodate those homelessness drivers and i and i do think it's a government responsibility uh because again relying on the private sectors it's just not going to happen uh it would then alleviate this and and would get it off the headline so we can focus on more important things in this this endless debate but uh one other thing i'd love your thoughts on because again there's a lot of media uh chatter around this at the moment and uh and

that relates to the uh migration and and population influence on housing and you know there's a lot of people now saying close the gates and everything else uh what's what's your thoughts around all of that yeah so this is one of those areas where everyone likes to call me names because i say that you know over 200 000 net migration is probably a little bit high and probably 100 000 is closer to an optimal rate if we're thinking in terms of that efficient overall efficiency yeah because because you need one dwelling for every two and a half extra people um so so that's got to be factored in i guess uh in terms of what we're seeing now we're seeing the same spike in immigration in canada the uk australia uh not so much the us but it's a post-covid catch-up in

countries that are essentially trying to boost immigration and i think there's a at the end of the day is a little bit of a political incentive to conceal poor economic conditions with extra migration, which is fine. I think most people acknowledge that. But in terms of affecting the housing market, I think where the data suggests to me it has large but temporary effects. and let me explain why um everyone who moves here has to rent or buy from only the small pool of dwellings that are currently advertised right and so rent rental houses turn over every two years on average or 1.5 years or whatever it is yeah and so you only get you know whatever one one uh 18th of the number of drugs so one 18th of 33 so about a percent of

um rental dwellings each month are available right and yet everyone who wants to live somewhere has to rent from that one percent of rental dwellings they can't just not live somewhere for a year until all the other dwellings come up for sale so you're squeezing them through this little narrow doorway and so what that means is temporarily you can get these big deviations of this rental equilibrium. So people will spend more of their income on rent because literally everyone's trying to squeeze through the same doorway.

But over time, what happens is people adjust and they move into larger households. So more people per dwelling or people don't move out. And so we change the composition over time as the stock turns over and that brings the effect back down and we get back down to that 20%. So in 2006, we massively boosted immigration and rents increased.

but then we had the 2010s construction boom and in fact rents were falling in sydney from 2017 till the early 2022 yeah right yeah it was still over 200 immigration because all those adjustments had happened we go oh actually because of this we can actually build more houses oh because of this people are moving in with their mates oh there's actually a for example student housing industry growing in response to this so we adjust and so just like it was okay in 1923 to not worry about the big Australia of 26 million in 2023 I don't think I'm worried about the long-term outcome it's just these short periods where the adjustment has large effects on everybody else and so I think if we had immigration fluctuating around 100,000 rather than fluctuating over 400,000

something this year yeah um we it would not be noticed everything would be easier in terms of expanding infrastructure because every house a friend of mine peter fibs is a professor emeritus professor he says well every house approved by the council is also an obligation for infrastructure yes they don't just they can't like that council has obligations to have infrastructure standards so every time someone comes yeah we've got to build in the house but yeah every kid needs a spot in a school every street needs to be sealed all the stormwater has to be dealt all everything has to happen as well right and and the standards today very different so if you go back to the the 1960s and 70s we had quite a high population growth and we

had high immigration periods there newer states didn't have stormwater they didn't have sealed roads schools just went to church halls right uh we didn't have electricity we didn't have internet fiber we didn't have a lot of stuff we didn't even have sewers in most of the cities till goff whitlam in uh yeah it was the early 1970s was his big achievement right and so yeah okay just putting houses without electricity or toilets on sticks is easy uh and people say oh we historically had high rates population growth in the past i'm like yeah okay do you want to just build unsealed roads and drop toilets and know anything or do you want everyone to live to the standard we've now come to expect in 2023 which means we're going to have to do a lot of investment

for every additional household and that's a really important point that you're making there is that what people aren't factoring into their thinking is our expectations because what we expect now as normal is very different from what's what's happened in the past so and that comes down to the the type of housing the size of housing what goes into that housing the services that go with But, I mean, as you've touched on, I think we live in the best country at the best time in the world, and a lot of us take that for granted, sadly, but when we impose those ever-escalating expectations on the housing environment, then there's no great surprise

that the cost and otherwise is something we're chasing. But if we then put it back into the transitional cycles that you've very well overlaid over the discussion, which puts some really good context into it, then all of a sudden it's not a one-off problem that's new. This has been happening every time the economy has gone through these sort of changes. So I love your thinking around that.

So let me just wrap up on the immigration. I think it's going to come off next year. I think there's a bit of catch-up. I think the political pushback we're seeing now will tighten up a few of the really overly generous type visa classes. And I think in a few years' time, this will sort of wash out rents, sort of the rental squeeze will have eased off from that effect. So I think the effect is temporary, but it's going to last two

to three years. So after three years, we'll be like, oh, okay, it's not that anymore. Yeah, no, definitely said. Now, it's something that I know you've spoken about on your blog and in some of your own podcasts in recent times is the NIMBY and the YIMBY phenomenon being, you know, not in my backyard and yes, in my backyard. What's your read on its influence on housing and property and the evolution that you're seeing in that sort of a thought response? Yeah, it's hard to say that it's had substantial policy effect. I like to say we've been upzoning like crazy for 20 years. I used to work in the infrastructure charging regime

for the Queensland government, checking on all the council's planning schemes and what they're charging, what infrastructure they're building. So I'm very aware that we've been trying to upzone like crazy, allowing more density on each site. but um you know the yimby nimby thing is a bit of a side show it's a bit of a culture war yeah that doesn't have tangible you know useful information in there so for example the melbourne

yimby's very interested in better urban design in melbourne great i actually really like the the interest in urban design and what should the public realm should look like and i think that's great yeah but what they've proposed is sort of looks like the regulations that already exist they just basically restated oh we need planning rules that allow for this but then do this and then i'm like have you have you read the planning rules this is exactly what all the planners have wanted for 20 years um you know this soft intensification the transit oriented development the complementary infrastructure like this is exactly what we're trying to get and it needs a lot of rules to help coordinate that right like just like the road needs lots of rules to

coordinate traffic and you know in high dense places we need lots of rules to coordinate this so i i do feel like it's a little bit of an import from the california sort of culture war you know we have very different planning systems to them the rights of locals are not as high as many parts of the united states yeah and um so i just don't really um see it and i think in in terms of the economics the yinvis are always missing the absorption equilibrium that i talked about yes idea that the market doesn't have its own decision making it's only the regulator that does something and therefore if you up zone you get you know up zone for 10 000 hours you get 10 000 ignoring that the market has its own decision making and optimizing process so i

think there's a bit of a blind spot there but i do like the attention to better cities and urban design and multiple types of transport and all that that's great i love it um count me in but in terms of using planning policy to make houses cheap that connection i don't think exists and If we got the beautiful cities they want, people would pay more to live there, right? Yeah, absolutely. And let's be honest, again, relativity in the equation here, if we compare Australian cities to most cities I've travelled

and spent around the world, my God, you can always improve, there's no question, but we're sitting pretty well in that context. Something before I want to return to your book, but it's something that a lot of people less than you get invested have an interest in what's likely to happen to property and housing moving forward given a lot of them are either investors or looking to invest in the context of your economic read what do you think is likely to happen to property value movements both a short medium and long term well if we are interested in nominal

movements so ignoring inflation so benchmarks against your for example mortgage nominal value yeah uh i i think there's going to be a surprise surprise boost i don't know if we live where we're in the middle of it right now i think a lot of people have been surprised at the 2023 after the interest rate rises last year i wrote an article last year that uh was it earlier this year in maybe march and i said i'd read this book called the the land boom it's about the 1880s victorian land boom yeah and i said one of the most interesting things there was in the second part of that boom all the banks got nervous and put their interest rates up thinking oh okay we gotta don't want to add more risk here yeah and they doubled the interest rate essentially from

three percent to six percent when the yields were three percent still or two point something percent on housing in victoria in the 1880s and they still had a second price boom uh in the face of these higher interest rates and i actually remember that in the 2000s boom as well yeah we put interest rates up from 2003 all the way to 2009 i think i was paying 9.7 percent of something just before the financial crisis um where it was like 5.5 percent at the start it was and so and we still have this final stage cycle so this year i've been telling people hey yeah interest rates have gone up but we you know no one's panic selling right so we still might have a final blow-off stage where there's few trades but higher prices yeah and now the question for me is how long is

that going to last are we done with it because i think in some parts of the world they are done with the second phase cycle some parts of canada and the united states or are we going to have another 12 months or 18 months of it um and then the question is are we going to have a big correction or is it going to be small with a lot of monetary policy response just like australia after the financial crisis didn't have the huge panic like the united states did because we're not as leveraged as they were then uh they're not as leveraged as they were then yeah so they're not going to have a similar crash they might have one of these more orderly shallow recession type situations yeah um so uh look it's all about the timing yeah i don't really know but my suspicion

is we're going to have a little rise now and a bit of a correction and then relatively flat for a few years until the next uptick and i don't know how big the correction will be or how long it will be and i don't know how when this current little surge in prices will finish either but if you look at the patterns that's the pattern yeah yeah exactly and i think that within the pattern and again this is i'm talking a personal philosophy here because of my belief that because in real terms we're not talking a property market we're talking a collection of properties the ability to influence the value of that property and you know i'm putting my architect's on now, to create your own economy around that particular property.

If you're really satisfying to buyers' needs, you can insulate yourself to a certain degree from the overarching that's occurring. So I always say, look, listen to the news and take it on board. That's useful, but don't make it a self-fulfilling prophecy because you have the ability to control the value of a property asset if you're clever about what you do in that context.

I totally agree. That's the beauty. And that's why I think a lot of people in property are attracted to it because they can go, oh, the granny flat rules have changed. Oh, okay. And then a few years later they're like, oh, this tenant's moved out, we're renovating, we're fixing. Oh, we'll put the granny flat in and we'll manage it differently.

And now it's even more income, less of an issue next cycle. So you can really, you know, be much more hands-on or, you know, maybe you know the local real estate agent says, oh, air conditioning is going to get you a lot more rent. Oh, okay, well, I'll put air conditioning in, right? You get better tenants. So you can definitely be more hands-on and you can definitely, you know, build trust with reliable tenants over the long term.

So if they're under market, you know, they're not going to be under stress either in the downturn. uh one of my tenants i had when i bought my first place stayed for 10 years and then left to buy his own house and um i just the value of having that relationship and that reliability was was much higher to me than the cost of active management and the turnover yeah and it worked well for both of us right so that's that is one of the good things about property is um being able to add value build those relationships make your own choices and and smartly insulate yourself from the broader market there are always deals in the downturn as well totally 100 exactly right no

beautifully said now i i just want to transition back to your upcoming book the great housing hijack and and thanks for sharing those sort of five uh underlying principles of the economic principles that we can apply to understand what's happening and where we are in the context of thing but uh again i'm really looking forward to to reading a copy and and i'll i'll get you back on uh once it is released a little bit deeper but uh i'd love for you to beyond those principles you shared with us you know why have you written the book what are the key messages that have come out of it and uh what are the relevant takeaways that particularly property players and investors can gain from it so why did i write the book for starters is because uh it's called the great

housing hijack because i think the debate is being hijacked no one actually wants to talk straight anymore in the debate yeah and this is my attempt to bring the debate on course by just talking straight this is you know these are my five economic equilibria that apply to property um you cannot escape these forces property is an asset um that's one of the big points and the debate is perverse because the politicians have incentives the media likes clicks uh you know all these reasons and then a little historical look as well as you know these aren't new debates right and we've we've solved most of these issues in other areas you know we had similar debates about health care in the 1970s oh people can't afford health care okay well we'll build public

hospitals and if you need something you get it just like we could build public houses and have a a buffer stock of hospital rooms just in case we can have a buffer stock of of housing just in case totally um it's not it's not that hard and so i just wanted to sort of talk people through you know why what you hear in the press and in the political debate is not concrete economics um where the blind spots are and and if you really wanted housing to be cheap um you would have public options because not everyone does want it to be cheap and the private market works for a lot of people and i and that's a message too about picking fights yeah that's a political dead end right yeah it's a political dead end to pick fights with the most wealthy

influential people in your electorate and the majority so why don't we focus on the things that win and and in fact i'm thinking of next year writing a report called the doing state which is all about we try and regulate but we don't do but if to regulate you have to be so competent that you could do it better than the people you're regulating right so so when i worked in the queensland government we regulated the rail network that we had sold off to we privatized the central queensland rail line i'm like well now we have to regulate them to get the outcome we just got when we owned it why don't why did like we had more money than them totally sell it we don't need money we're the state government right we have way more money than the guy that

paid us it was making us money because it's an asset that's why they paid us i don't understand and now you sort of regulate them don't don't start me on the privatization debate jumping in there camera i spent some time with the commonwealth government it was my last phase as an architect, actually, and I took on board what's called Australian Construction Services back in the day. And I remember John Howard just came into power not long after I took the role because they were looking to privatise the department by bringing in private players, which I was one of them,

to manage the operation more as a business rather than a department because it had to make money in that context. And I remember I sat down in front of one of the politicians at the time and said, look, I really don't think you should be selling the farm, particularly in relation to housing, in relation to education, in relation to health, because they are the fundamentals that have built this country. Yes, let the private sector settle everything.

But those key fundamental human rights, basically, is what made this country great. By providing those things, why wouldn't government continue to underpin the economy by looking after those essentials and allowing the private sector to then drive the rest of the economy. And the response was, well, if there's more than five people on the yellow pages, and that shows you how long ago that was,

the government's no longer interested in doing it. We're going to – so that was pretty much the blanket response. So I think, sadly, this would be a rethink on all of this. Yeah. yeah good well i want to sort of encourage that rethink because um we are missing the fact that what we're trying to do with some of these regulations like regulating the electricity market that we just created from scratch right is actually more difficult than just doing it yourself yeah and nobody appreciates this fact that writing the rules for a bunch of smart people

trying to rip everyone off is actually harder to make writing rules to get the exact outcome you want is actually harder than just owning the assets and doing the outcome you want yeah and so i you know i'm going to write a report next year just putting that out there so you'll appreciate the book this is this is what i say and let me give you a couple of things two things one on homelessness we go oh this homeless person they you know they need to pull themselves up by their bootstraps whatever you know you can't just do whatever oh you've got the sniffles oh come to a public hospital $5,000 a night bed and we'll look after you I'm like hang on a minute so they get a $5,000 a night bed if they get the sniffles and we all think that's great but if

they're just out in the street and cold or hot or just need a shower or someone to help them get their life in order no sorry you're on your own I just don't understand how we drew that line so clearly and of course there are lots of good organizations doing homelessness outreach I'm not going to say yeah um that that everyone's being left alone i even know i'm in brisbane and the council does a really good job and and often in terms of that privatization question sorry yes i often tell people would you rather call the brisbane city council or telstra get some service and i tell you brisbane city council is very good telstra is very bad one is public and one is not one's even a government with their own political sensitivities

and the last thing on this privatization and this gets to the heart of the conundrum because we sell assets right things that are worth money that make money that when we hosted the 2018 commonwealth games in the gold coast this queensland government smartly said oh we don't have to build the athletes village we're going to have the private sector do it so the private sector built a bunch of 1,200 dwellings on former public land. Of course, they gave them discounts on the land and whatnot. And then afterwards, it's become a build-to-rent housing project, which is great.

But the private sector funder of that is the Abu Dhabi government through the Southern Wealth Fund. So one of the emirates thought, you know what's a good investment? Building houses in the Gold Coast. You know what our government said? oh building houses the gold coast bad investment how can those two things be true i wonder they can't be true right it's just all politics mixed with ideology mixed with whatever i don't know yeah i and i think it's a win on both sides of politics people like it when the government does

stuff we just like it we hate it when they interfere with our business so if you want to do something you do it directly and let the private sector what do whatever they're doing to fulfil their markets, right? Regulating them to get a social outcome is super, super hard. It's like the hardest problem in economics. Yeah. And yet we think it's easy. Yeah, well, and you know this as well.

Having travelled extensively, I think we're the most over-regulated, over-compliance-based country in the world to the point where it's almost ridiculous, actually, whereas, as you say, if some of those fundamentals were run and managed by government, then a lot of that stuff would go away. So very interesting. Look, I could talk for hours with you, Cameron. The more I talk to you, the more I realise we've got very similar outlooks.

But I want to jump in, and we will get you back because there's a lot of subjects we've only just touched the surface of. But I want to switch into the second round of the ambush where I'm going to give you the cigarette and the blindfold and ask you another couple of quick questions. First of those is what's your favourite quote and why? Look, I think if we're sticking to investment, I think it's accumulate appreciating assets.

That's it, three words. If you digest that idea, you are going to be able to manage your money and invest yeah that's and that's from my old man i don't know where he got it from probably read it in a book the day before he told me but it stuck with me well it's a good one and i love the simplicity of it and the power of it uh on the literary field apart from reading your books what's the top book that you'd recommend we read and why look i mostly read really dense academic papers and reports these days uh i tell you what i as a more general response there's a lot of great um archives of historical government reports

in the national library and in trove and online that you can find so you can go and find the 1939 report into the land rents in new south wales or the housing rents you can go and find these things one of my favorites was the slum clearance investigation in victoria in 1932 you go and find these old reports and listen and all the same economic arguments are the same same as now 100 years later uh it's super interesting to read um that the debate is essentially unmoved and on that report it's one of the one of the lines is oh the private sector is not going to make cheap housing for people who previously lived in slums because they're in the business of making money not providing cheap housing and i just thought hey wow isn't that

interesting we should add that to some 2023 reports uh and just motivate a more extensive public housing option well it just just reinforces that the more things appear to change the more they remain the same and once people get their head around those those cycles that you've you know shared with us today and that framework uh that you've shared with us today then things are going to like make a lot more sense uh next quick question around back in the investment space what's both the worst and the best piece of investment advice that you've ever received well i'll just use my first answer for the best piece but the worst one i think is about minimizing tax yeah there is a lot of attention in australia to minimizing your tax ignoring the fact that the

more money you make the more tax you pay right so to minimize your tax you have to lose money somewhere and yes it's okay to negatively gear and what you're sort of doing is hoping that the losses you you um turn cash flow losses into capital gains and they're taxed differently but at the end of the day if you still make more rent you still make more money so you shouldn't be in the business of minimizing tax you should be in the business of maximizing appreciation total total return right and sometimes that means you pay tax and sometimes you pay less because it's a capital gain but i have noticed a weird focus on this as a first step and not just an incidental part of a bigger total return maximizing problem totally agree

100 agree yeah no very well read there final one of these is uh what's a personal happy habit or daily discipline that you employ that's contributed most to your success today uh the word to be honest i'm gonna tell you about twitter twitter's been a terrible habit but it has introduced me to a lot of good people opened a lot of doors built my reputation i think we got introduced he got introduced by someone as well and i'm gonna so it's a double-edged sword it's it's a bad habit if you when you start it takes a while to learn to use it well and block and mute people but it's a good habit if you want to be following directly academics good analysts journalists and getting the news sort of unfiltered

from the people who create the news and you can just reach out to anyone and ask them a question and it's a really interesting space so that the habit is neither good nor bad it can be good and I think what I've done now is tried to refine it into a better tool and not a time waster unless I really want to just veg out and waste time. Yeah, that's a good point. And I think the clarity there is who you actually follow because if you make it too broad, you can swim in a cesspool

in Twitter or exit your own. But if you're very focused around what you're wanting to get and the people that you respect and following them, then you're right. You're getting very short, sharp insights without having to plough through thousands of bits of information to get a sense of what's going on. So, yeah, beautifully said there.

To summarize our great conversations in the previous episode and today, what would be your key takeaways, Cameron? uh i think that well the big thing i've noticed is how you and i through different journeys in property have come to very similar views on quite a range of topics and and so that's the obvious takeaway and then the question that raises is why hasn't everybody else or why hasn't the political class or why you know it's funny i often think the political class we go even inside existing public housing departments they go we don't have any money we can't invest we can't do that and then they go home and go oh let's leverage into a two million dollar house

in Sydney what a great asset to have I'd love to invest in that and then they go back to work tomorrow and go oh we're too poor we've got all these inner city city houses in there on the balance sheet we don't know what to do and there's this real weird mental shift and so that's so so So why people don't sort of get the basics, like when they've got their investor hat on, they sort of get the basics and there's a big incentive to understand the market. And then when they've got their public policy or work hat on,

there's a big incentive to forget all that. And I think both of us have been able to sort of try and see, bridge that and see it for what it is. So that's probably the big takeaway. Yeah, beautifully said. I think at the public level, there needs to be a big shift in accountability and responsibility. That's where I think there's almost been a baked-in approach

where the thing is always pointed in the private direction. We're in the position we're in, I think, because of the neglect of taking action by governments in key essential spheres. So I'm hoping that anyone listening in those areas might take out the gambit on that because there's an obvious opportunity sitting there right here right now for all of us so word it is it's not easy though uh quickly uh the kiwis did this they had kiwi build and they gave it these ambitious targets as a public housing builder and they struggled for years right because um they were trying to build below market right and without losing money yeah

and they couldn't do it and so they had all these political pressures on them and it turned it took them a few years before they realized oh we have to subsidize this oh if we can schedule better and get all our tradies on board we can actually do things more efficiently so so that i think they someone listening correct me but i think they fired a couple of the senior people in these teething stages right because of this political pressure was too much um and it was unrealistic so i think that has to be acknowledged that you can't just turn around like the private sector is bad at building houses too right they they go broke all the time and if we expect to expect us to turn around switch on the tap to beautifully made system is is wrong we're going to have a

five-year teething period the five to ten year period is where things are going to click in and start operating um but who's got the political um ability to withstand that pressure and push through those years i don't i don't know but what i have proposed to fast track that um lend lease is selling their residential communities group 1.3 billion they got offered for 40 000 undeveloped housing lots and i have proposed why doesn't the government buy that in the housing future fund they created and then just accelerate they don't have to start the institution all the hard bit is done and of course no one everyone ignored that as well except for my twitter followers um well what can you do uh that's the reality of implementing these things right i wasn't aware

of that and that that's a very obvious uh it's a lay down mosaic staring them in the face but that that's the the issue that that i find a lot of the time the the solutions are right underneath our nose but they're almost too easy and too simple but that there seems to be a perception now or there's got to be a better way and you're right that that happens in housing a lot sorry just one more story a friend who's working for state government they're trying to get a bit more housing in some regional areas and they i said well why don't you just go and build buy houses or build them like what there's nothing stopping you and he's like oh everybody wants something different and someone wants to do this and the council wants to do this and who's going to choose

if it's below market which tenants can live i'm like oh okay so you don't even know what you want yet right but if you knew what you want you could just do it the rest is i think just navigating the politics that's right exactly right final question uh cameron if i ask you to get invested what does that mean to you yeah i guess it just means um i think we'll circle back to maybe what i said in the last conversation what i'd tell my kids about don't do nothing be be working towards something uh whether it's a new job whether it's training for something just be invested in your life like get in but don't play computer

games and hang with your mates do something that's investing career building you can always change it but don't don't not be working towards something um professionally yeah don't you don't retire just keep working towards things right um because opportunities come when you're invested when you're attempting things totally yep extremely well said so uh for those like myself who really resonated with what you've shared with us uh over the last two episodes cameron how can listeners find out more and get more involved with you the best place to keep track of me is fresh economic thinking.com uh you it's a subscriber newsletter you can sign up for free or you're welcome to become a member a paid member i'm trying to evolve this into a think tank

independent public intellectual type outlet for myself and you'll find out about the books and if you're on twitter at dr cameron murray so dr cameron murray or one word and you'll see me there every morning asking a question or posting a chart just checking in on on the economic news of the day i love it we'll make sure we have all of that in the show notes so it's easy for people to just click on the link but i just want to take this opportunity to really thank you for sharing your time and wealth of wisdom with us cameron and for those that are listening in and would like to keep the conversation going on property and housing economics i just suggest that you join and jump into the Property Hub Collective

interactive Facebook community by clicking on the links also in the show notes where you can share your questions and comments with other like-minded people in the property and investment game that can do that in a circle of safety without ever feeling like you're going to be sold to.

Thanks again for enlightening us, Cameron and I'm really looking forward to continuing the conversation here on Get Invested and Realty Talk and other forums whenever the opportunity is there. Thanks Bushy. I had a lot of fun. See you next time. Thank you. Thanks for tuning in to Get Invested on the Property Hub podcast channel,

your home for property investment insights and inspiration. And don't leave yet until you've taken the next step towards living by design by getting my award-winning book, Get Invested, absolutely free when you sign up at knowhowproperty.com.au or bushymartin.com.au. And finally, make sure you subscribe to property hub to get your weekly dose of get invested inspiration along with every episode of realty talk australia's leading property show for red hot property investing news and insights direct from industry leaders and influencers remember to always get invested in your knowledge

and I look forward to seeing you next time