Property Hub - Investment Insights & Inspiration - Get Invested: Summer Series: The year that will be in Real Estate Talk

Episode Date: January 3, 2021

Continuing our summer series with insights from Real Estate Talk, we now look to the future with three of Australia's leading property researchers: - Josh Masters from Buyside buyers agents - Louis Christopher from SQM Research - Terry Ryder from the Ryder Report and hotspotting.com.au fame, who you’ve had the pleasure of listening to on past episodes of Get Invested So if you want to be in the box seat to take advantage of all of the property opportunities that 2021 is likely to bring, you’re in the perfect place right now. To further peak your interest on the great insights we share with these property thought leaders, today's show will inform you on: How property is adapting and changing post-pandemic The level of optimism in relation to property growth in the upcoming year The impact that lending law relaxation and changes to stamp duty in NSW and Victoria are likely to have on property movements A look around the country at the where the major growth opportunities are likely to occur and why A discussion on the main drivers of demand and supply moving forward A look at the longer term impacts of current housing policies A chat about what current policy settings mean to the sustainability of property markets  A review of why real estate prices didn’t collapse We cover the reasons why economists always get it so wrong in their forecasts about residential property And conclude on confirmation of the major new trend that will impact on property in 2021 As you can hear, we’re going to cover a lot of ground again this week on what is about to happen in property across the nation in the short to medium term. And the reason I continue to focus on this now is because of my awareness of how important the next few months is going to be to any of you who are serious about securing your financial future by getting invested.  And I know that I’m starting to sound like a broken record on this, but if you’re still sitting on your hands while your hard earned savings and buying power are going backwards sitting in a bank account where your savings interest rate is well below the inflation rate, then now is the time you need to be investing in growth assets.  I don’t care what you invest in, but you need to be investing now before you miss the boat – because you’re really going to kick yourself in a couple of years if you don’t take advantage of the rare opportunity that presents itself to you now. And again, I say this as a very conservative investor who doesn’t like taking risks,and I don’t get excited like this very often – so feel free to reach out to us at www.knowhowproperty.com.au or email me at [e-mail] if you want to explore your position more, without any obligation.  And once again, before we get into it, I want to re-ask you a personal favour. In order to help improving the Get Invested podcasts, I’m looking for your feedback on which episode you have enjoyed the most so far, and why, along with what I need to be doing more and less of. Any suggestions on topics of interest that you’d like me to explore, along with guests you’d love me to interview. Hit me up at [e-mail]  - I’d really appreciate your feedback. So Thanks again in advance. Get Invested is the podcast dedicated to time poor professionals who want to work less and live more. Join Bushy Martin, one of Australia’s top 10 property specialists, as he and his influential guests share know-how on the ways investing in property can unlock the life you always dreamed about and secure your financial future. Remember to subscribe on your favourite podcast player, and if you're enjoying the show please leave us a review. Find out more about Get Invested here https://bushymartin.com.au/get-invested-podcast/  Want to connect with Bushy? Get in touch here https://bushymartin.com.au/contact/  This show is produced by Apiro Media - http://apiropodcasts.comSee omnystudio.com/listener for privacy information.

Yeah, building on the trends that we've already identified, the exodus to affordable lifestyle, the activity of first-time buyers, the very low vacancies, I think the big one, the big game-changer next year is going to be what I call the infrastructure-led economic recovery. It's clear that federal and state governments intend to bring us out of recession and to regenerate economies and create jobs is by fast-tracking wherever possible major infrastructure.

and we're already seeing that being rolled out it's going to be a huge factor for real estate markets in 2021 in all sorts of ways nothing pumps up residential real estate like new infrastructure does creates economic activity it creates jobs that creates demand for real estate but also improves the amenity of places that you know locations getting a new rail link or an upgraded motorway or a new hospital that's going to increase the desirability of those locations so So I think building on everything that's happened this year, I think the infrastructure boom that's coming, which is going to precipitate a resources boom as a consequence, I think that's going to guarantee a national property boom in 2021.

Welcome to the Get Invested podcast, where we share great conversations with experts from all walks of life to uncover their secret know-how on where they invest their time, their skills, and their money, and the benefits that this has created. you see the truth is that everyone invests every minute every day we're investing our time our skills our energy and our money in something some of us are investing consciously some unconsciously sometimes for good sometimes for bad sometimes for no impact get invested will help you to start living by design not by default i'm going to help you to make it happen not let it happen. You'll hear the top tips on how you can live with conscious intent so that you can

live more, work less, and leave a living legacy by investing now. Listen to the show to discover the top tips on how to get started, make the most of your investment journey, and ultimately to be living your dream, not someone else's. More episodes can be found on iTunes or at bushimartin.com.au forward slash getinvested. Thanks for listening, and now let's get invested. Hi Freedom Fighters, what does the future hold? What does the year ahead have in store for you and your world? As we shrug off the burden of what has been a gruelling and challenging year filled with radical uncertainty and rapid change for almost everyone on the planet, it's time to wipe

the fatigue out of our eyes, to rest a while and start lifting our sights to what lies ahead. Last week we reflected on the year that was, so this week we take a peek at the year that will be. Now given the level of heightened uncertainty and disruption we've experienced this year, how are you feeling about the future? Are you approaching it more with fear and trepidation and a feeling of dread, or with open optimism on the opportunities it emerging. Before we get into the guts of today's discussion, let me set the scene with some appropriate quotes that I love. The reason people find it so hard to be happy is that they always see the past better than it was, the present worse than it is, and

the future less resolved than it will be. Great words by Marcel Pagnol. John Allen Paula says that uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security. And Bernard Beckett famously said that human spirit is the ability to face the uncertainty of their future with curiosity and optimism. It's a belief that problems can be solved, differences resolved. It's a type of confidence, and it's fragile. It can be blackened by fear. Steve Jobs prophetically summed it up when he said that you can't connect the dots looking forward.

You can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something. Your gut, destiny, life, karma, whatever. This approach has never let me down and it has made all the difference in my life. and Jeff Foster's wisdom rings true leave everything undefined

including yourself befriend uncertainty fall in love with mystery kneel at the altar of not knowing give your questions time to breathe and the answers will find you if you believe it will work out you'll see opportunities

if you believe it won't you'll see obstacles Another great Wayne Dyer insight. Mandy Hale encouraged us to embrace uncertainty. Enjoy the beauty of becoming. When nothing is certain, anything is possible. And Penn Chondron nailed it when he said that if you're invested in security and certainty,

you're on the wrong planet. I love these next two quotes that sum up our current situation beautifully. Margaret Drabble insightfully mused that when nothing is certain, everything is possible. And Thomas Carlyle said that doubt of whatever kind can be ended by action alone. When nothing is certain, everything is possible. And doubt of whatever kind can be ended by action alone.

Folks, it's time to turn your worry into wonder According to Zora Neale Hurston There are years that ask questions And years that answer I think some answers are starting to appear as the light at the end of the tunnel So in the continued spirit of getting invested Over the current run of episodes We're checking in with more expert views from a number of angles

to assist you in understanding what's likely to happen in the short to medium-term future so you can decide what, if anything, you want to do about it and make better informed, adaptive decisions about the opportunities that are emerging. Remember that the future belongs to adaptive, courageous, creative catalysts and I want you to be amongst them. Now to continue this week with our Reflective and Projective Summer Series and given the upcoming rare alignment of all the property planet growth drivers, we'll replay another recent episode of the Real Estate Talk Show

that you can also enjoy in full video format at channels.realty.com.au forward slash realestatetalk. To set the scene for our great conversations today and to open your eyes and whet your appetite to the possibilities and opportunities that are likely to emerge in the year ahead, I'm going to draw on an adapted extract from SQM Research's recently released Housing Boom and Bust Report for 2021. It's worth noting before we start that the author of the report, Louis Christopher,

has an enviable record of reliable accuracy in his forecasts for many years. So you'll enjoy his commentary as a special guest to discuss the findings of the report on this week's show. The Boom and Bust Report canvases a series of different scenario options with different variables for what's likely to happen next year, with their base case being predicted on current interest rates remaining unchanged, the RBA expanding qualitative easing, or QE, which is just code for printing more money, a third wave of COVID-19 being contained by more lockdowns,

JobKeeper being extended, and a progressive rollout of a virus vaccine. So as you can hear, These are actually realistic rather than optimistic assumptions, which adds to the weight of their legitimacy. So enjoy this excerpt. The Federal Government and the Reserve Bank are using nearly all the tools at their disposal to ensure a post-COVID-19 economic recovery in 2021. And as we draw closer to the end of 2020, it appears the housing market has avoided a feared crash and has entered into a recovery. Housing prices are now forecast to rise around the country in 2021 by between 5% to 9%,

driven by ultra-low interest rates, a loosening of credit standards and record government spending. Our modelling has always indicated that interest rate changes and access to credit are significant influences on the national housing market. And given the rate cuts, the probabilities are now very high that dwelling prices across the country are going to rise in the immediate future. Our prime peaks are Perth, Sydney and regional Australia. Melbourne is expected to be an underperformer, but all areas will likely rise in 2021.

For most of us, 2020 will go down as a year to forget, though I suspect it will be the world's history books that talk about it for many years to come. The housing market responded in the way that we thought it might, given the rather aggressive government stimulus as well as the rate cuts. Nevertheless, the bullish outcome wasn't so clear-cut to begin with, and the price falls of about 2% could have easily turned into an outright crash when the second wave of the virus arrived.

Never mind housing prices, the economic damage has been widespread. many small businesses that closed up shop will not be returning. In ways we are not fully yet aware there will be permanent change to the way we conduct our lives. One of the likely changes related to the housing market is a shift towards more remote regional living. This shift first came up in our rental vacancy rates

as early as March. Inner city rental vacancies shot up to above 12% while regional vacancy rates right across Australia plummeted. Watch out for a reversal of this shift. Indeed, the reversal is already starting to show up in our numbers with Sydney CBD rental listings falling from 1250 dwellings at its peak in May to 825 in November. And keep in mind that average rental listings in the Sydney CBD

prior to COVID-19 were about 400. We believe there will not be a full reversal as our on-the-ground surveys tell us that at least 60% of the population that did this move in 2020 used COVID-19 as the catalyst. In other words, many had it in the back of their minds that they wanted to do the move to regional living and COVID-19 was the final trigger. once considered radical and experimental quantitative easing has become increasingly the norm these days and let's call it for what it is electronic money printing nearly every central bank around the developed world is doing it yet no one knows for sure what the end game will be but for now it means asset prices of nearly all shapes and varieties are likely to rise in 2021. When you cut interest rates to near zero and tell the world that

rising asset prices are the goal, there's a good chance that this is exactly what will happen. That said, history has given us a warning, and that is the Japanese housing bubble and bust of the 1990s. No matter how hard rates were cut, or how much buying of government securities occurred by the Japanese central bank, asset prices fell for a very extended period of time, especially housing prices. This happened in part due to delays in wheeling in the 1980s asset bubble and an ageing population slowing down underlying economic growth. For now, we may be seeing the start of a bubble where there is a scramble for income returning tangible assets. And right now, all capital cities are offering

positive cash flow properties after taking into account interest expense, which I've never seen in my career now spanning 24 years. In times like these, quality assets remain important. If you're going to buy in this market, buy quality. For when the tide does turn, you'll be in much trouble if you don't hold quality. As you can tell already, this report sheds a well-founded view on the opportunities that emerging in property across the country over the next 12 months, and this is just a taste of the opening summary. The full report, which you can pick up for just $59.95 from www.sqmresearch.com.au forward slash boom bus report, runs through all of the likely scenarios and gives a detailed

take on the markets. It gives you capital city forecasts. It details the main drivers of demand and supply going forward it runs through all of the leading indicators and nearly every city and regional postcode across the country is covered in relation to property stats plus a ratings outlook and capital growth indicators so if you're serious about property then you can't afford to miss this report the report is accurate impartial and detailed and best of all it's priced so that everyone can access it at just $59.95. So jump on sqmresearch.com.au forward slash boombusreport to get a copy.

So to further develop you making better property decisions in the exciting year ahead, we're going to be talking today to three of the countries that are leading property researchers. Josh Masters from BuySide Buyers Agents for a hands-on view, Louis Christopher from SQM Research that we've already mentioned and Terry Ryder from the Ryder Report and Hotspotting.com.au fame who you've had the pleasure of listening to on past episodes of Get Invested.

So if you want to be in the box seat to take advantage of all the property opportunities that 2021 is likely to bring, then you're in the perfect place to have a listen. And to further pique your interest on the great insights we share with these property thought leaders today's show is going to inform you on how property is adapting and changing post-pandemic the level of optimism in relation to property growth in the upcoming year the impact that lending law relaxation and changes to stamp duty particularly in new south wales and victoria are likely to have on property movements we take a look around the country at where the major growth opportunities are likely to occur and why we have a discussion on the main drivers of demand and

supply moving forward. We have a look at the longer-term impacts of current housing policies. We have a chat about what current policy settings mean to the sustainability of property markets. We do a review of why real estate prices didn't collapse this year. We cover the reasons why economists always get it so wrong in their forecasts about residential property. And we conclude on confirmation of the major new trend that will impact on property in the year ahead. As you can hear, we're going to cover a lot of ground again this week on what is about to happen in property across the nation in the short to medium term. And the reason I continue to focus on this now is because of my awareness of how important the next few

months is going to be to any of you who are serious about securing your financial future and get invested. And I know that I'm starting to sound like a broken record on this, but if you're still sitting on your hands while your hard-earned savings and buying power are going backwards sitting in a bank account where your savings interest rate is well below the inflation rate then now's the time you need to be investing

in growth assets now I don't care what you invest in but you need to be investing now before you miss the boat because you're really going to kick yourself in a couple of years time if you don't take advantage of the rare opportunity that presents itself to you right now

and again, I say this as a very conservative investor who doesn't like taking risks and I don't get excited like this very often, believe me. So feel free to reach out to us at knowhowproperty.com.au or email me personally at bushey at knowhowproperty.com.au if you want to explore your position more without any obligation whatsoever. And once again, before we get into it,

I want to re-ask you a personal favour. In order to help improve in the Get Invested podcast, I'm looking for your constructive feedback on which episode you've enjoyed the most so far and why, along with what I need to be doing more and less of. Any suggestions on topics of interest that you'd like me to explore, along with guests you'd love me to interview. So hit me up at butchie at knowhowproperty.com.au

because I'd really appreciate your feedback. So thanks again in advance. Remember, it's time to turn your worry into wonder. When nothing is certain, everything is possible. And doubt of whatever kind can be ended by action alone. And the best time is always now. So, please enjoy these great ear-opening conversations with Josh Masters, Louis Christopher and Terry Ryder. Hello and welcome to Real Estate Talk, Australia's most popular show, and where you're going to get the latest and the greatest on all things property and finance.

Now, I'm Bushy Martin from KnowHow Property Finance and the host of the Get Invested podcast, and it's great to see you all again. now today's focus is going to be on the year that was and more importantly the year that's going to be in 2021 because we want to help you to make better property decisions and to do this we're going to be talking to three of the leading property researchers in the country we're going to start with josh masters from buy side we're going to have a chat to louis christopher from sqn research we're going to round it out with a great chat with terry rider from hotspotting So if you want to be in the box seat to know what the property market's going to be doing and how you can take advantage of that, then you're in the absolute perfect place.

So we've got a lot of really exciting info to share. So let's get on with the show. And we're going to start off with a real hands-on professional view from one of the East Coast leading buyers agents, Josh Masters. So welcome aboard, Josh. Thanks for having me, Bushy. Always good to see you on the show, mate. Now, you've just returned from a bit of a holiday in Byron, I understand.

that right i have i got up there before the storm hit had a bit of a time in the sun no one's going away for christmas this year so we had to jump in while we could yeah good on you mate well you're looking pretty relaxed and probably a good chance to reflect on on what's going to be happening next year and the perfect topic for us to be talking about and i know you've been you've actually been spending some time studying the growth drivers that are pushing the markets and the areas that are likely to benefit from that so can you sort of start off by giving us a bit bit of a rundown on how you're seeing property adapt and change post the pandemic yeah i think look everybody's uh in the same boat we all really understood how uh such a crazy year it was for

2020 uh this pandemic has really affected us but we really want to know how it's changed uh the markets and i think no one would be uh safe from saying that their workplace hadn't be affected hadn't been affected. And we're seeing actually a real push towards lifestyle areas. They include coastal areas, regional suburbs, even the outer suburbs where you can get a little bit more space now. People have really sort of moved away from these inner city living and are looking for a place that they can relax, a place that they can spend a little bit more time. They don't want to be sort of boxed in into these little, you know, workplaces. And they're thinking, okay, well, Well, if I don't have to come into work anymore as much as I used to, or even, you know, some companies are even saying, look, don't come back, you know, work from home permanently.

They're actually thinking, OK, where can I take my family now that's going to be a better living quality of life for everybody involved, but I can still continue to do work. So we're seeing a lot of demand coming for areas where, for example, you can live on the coast in a smaller town, a lot more affordable than Sydney, but you can still do sort of almost a fly in, fly out of arrangement. So we're seeing places like going up the coast, you know, places like Foster, Port Macquarie, up towards Ballina, and even the Gold Coast and Brisbane are getting a bit of a look in now because, you know, they tend to get a little bit more sun up there and they're a little bit more of a relaxed environment, but very close to Sydney in terms of being able to get to and from the airports. Yeah, really interesting move. It's this sort of decentralisation is certainly something that I think the pandemic has accelerated, if anything. I think there's sort of tendencies moving in that direction, but it's really sort of trying to petrol on the fire as far as that's concerned. Now, I know you're sort of quite bullish around what's likely to be happening with property next year, and you're in good company with a lot of other informed researchers suggesting the same thing. But we're still seeing headlines in the mainstream media that are still using the R word and trying recession around, and they're still feeling nervous about what's happening.

Do you think we're being a bit too optimistic to think that we are going to enjoy solid growth next year? Yeah, look, that's a good question. And, you know, coming through this pandemic, a lot of banks were predicting 5% to 10% falls in the marketplace. And that simply hasn't happened. We've seen or we need to understand that there are different markets here. We're talking about, you know, investor markets that have medium to high rise residentials. they're going to have their own issues especially with the lack of overseas migration coming in now they're really being battered there's suffering on the rental vacancy side you know we're seeing

almost double digit vacancy rates for the inner city living apartments so anyone who's holding property there is not getting a return from an investment perspective they're thinking okay well you know there's only so long I can hold on here so we're probably expecting to see some price softening there um but i think where we're um probably seeing uh some changes is uh people coming through for um uh sorry we were saying um around uh factors affecting the the changes coming into 2021 um interest rates uh you know rock bottom prices now so i think people are really gaining confidence uh the low levels of supply that happened this year where people were thinking okay i'm not sure i'm going to get the price i want i can't even get people through my home

buyers are now crowding into the marketplace getting their finances in place and we're just seeing a storm of buyers coming through we're also seeing um an increase in first home buyers they've got a massive amount of grants coming through and they've extended that deposit where They allow 10,000 people to come in. They don't have any LMI that they have to pay. So that bottom end of the market is really being bolstered as it's coming into as well. But I think just the general lack, the general building in confidence from buyers coming through into 2021, I mean, I work on the ground with buyers, you know, as a buyer's agent,

and I'm just seeing a load more people coming in and really lining up, ready to go for 2021 ones that pull the trigger. Now, my estimate here is that we're probably going to see five to 10, even possibly more in markets like owner-occupier stock, especially at the affordable entry points of those owner-occupier markets, where we're going to see double digits. And I think if you look at places in Sydney, like, you know, the parts of the Lower North Shore and even Upper North Shore, parts like Northern Beaches, Inner West. And when I say, you know, affordable entry points you know some of those entry points could be 1.6 1.8 million dollars but you know with the interest rates right now uh people moving from the rental market it's actually cheaper for them

if they can get their money together to go out and get a mortgage and pay for a mortgage on a place like that instead of renting it's actually cheaper to do that now so we're seeing a great level of competition coming in at those entry points within those owner-occupied markets that I think we're going to see double digits for moving forward and spreading into the outer suburbs as well. Yeah, it's pretty exciting. And I think that's going to be further accelerated, really, by the ongoing changes that they're talking about,

particularly in New South Wales and Victoria around stamp duty, because, as you and I know, stamp duty is one of the big hurdles to people getting into the market. They can get the borrowing capacity and the money's cheap, but getting the deposit forget it's always been the challenge and you know stamp duty depending on where your hours anywhere up to four to five percent of the on top of the purchase value so i'd love you to sort of talk about your thoughts on the proposed discussion around changes to stamp duty what are they and what impact do you think they're likely to have yeah it's funny you say

that because i did a quick video series recently which outlined these you know the factors that that are impacting potential growth moving forward next year you know low interest rates spending in infrastructure etc etc and then a couple of days later i mean the government's not silly they released this statement from the new south wales state government saying you know we're potentially looking to reconfigure stamp duty so instead of having to pay up front we're potentially going to give you the option and i say potentially because it's not drafted yet we're potentially going to give you the option possibly as soon as mid next year to pay over a longer period similar to land tax so rather than paying a big lump sum when you purchase the property you'll pay

incremental amounts at the end of each year and you can spread that or amortize it over you know maybe 20 or 30 years it hasn't been decided yet but that effectively allows people to put more money out of their pockets into the deposit, provided they can handle the finance, and that will effectively boost the market. It's a very simple fact. From an economic standpoint, I think Victoria is doing it slightly differently, and they're only allowing it between now and the end of this financial year coming into June 30, where they're allowing 50% reduction on new residential property and 25% reduction on the stamp duty for established property. Now, look, that's attractive, especially for Victorian buyers. People from New South Wales and Queensland are probably looking

at that and going, look, it's good, but quite frankly, Victoria has high stamp duty levels anyway. But the implications for New South Wales state government to put those changes into stamp duty in this state alone, I think it's going to rocket the market. And look, as I said, the government's not silly they're looking to put um drive as much wealth into property as possible because when when people have um growing property prices there's this wealth effect that takes place psychologically they feel they have more money they go out into the marketplace they spend it it stimulates the economy and that's how we're going to get out of this pandemic era yeah very exciting times ahead mate uh always enjoy your very hands-on insights because you're on the

working with people who are actually putting their hand up to buy property. So really enjoy your time today, mate, and we're looking forward to catching up with you again soon. Thanks, Bushy. Good speaking to you. Now, stay with us because after the break, we're going to delve into the latest housing boom and bust report from SQM Research. So we'll see you in a minute.

You're watching Real Estate Talk. need to work with the most experienced quantity surveyor in the country. BMT Tax Depreciation is the leading specialist in the industry. They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote welcome back to the show now if you're a follower of property news like i am you've probably seen a couple of interesting recent headlines and the one that really caught my eye was that the the government will never let housing crash happen now this

really caught my attention and it's just one of the many revelations that have emerged in the latest annual sqm research report on their housing boom and bus report for 2021 so to discuss these very timely insights, I'm joined by their author and the very highly respected and very reliable researcher, Louis Christopher. Welcome back again, Louis. G'day there, Bushy. How have you been? Very good, thanks, mate. Coming into what has been a very interesting year and your report is extremely timely. I know you've had quite an in-depth discussion already with Kevin Turner looking at the ins and outs of the report that was released through Real Estate Talk on the 11th

of december but for those that missed it and of those that are really focusing on making some plans over the christmas break i would love you just to start by giving us a bit of a reader's digest version on and a summary of both the worst and best case scenarios for the nationals and the capitals to start with and then we'll dig in a little bit from there no problem so yes each year we release our forecast normally towards the end of the year for the up and coming year and we normally run some scenarios because obviously we we cannot predict all world events and if we started doing that i think it's time to call us a witch and uh for me at the state people are able to do that but um the the base case scenario that we've run for 2021 is that

dwelling prices uh for the capital cities will rise somewhere between five to nine percent So that is our base case forecast. There are some key assumptions behind that. Firstly, we're assuming that the cash rate currently standing at 0.1% will stay unchanged. So importantly, rates are not going to rise next year. Second, quantitative easing, which is effectively electronic money printing, will actually expand at the moment. The Reserve Bank of Australia got a hundred billion dollar cap on it we think they're likely to expand it further yeah thirdly we believe that we could see a third wave of coronavirus which may involve lockdowns in some states this is an important thing to note it is important because it affects the fourth point

being that we think JobKeeper is going to be extended above and beyond. It's due to finish in the March quarter, so fairly soon we think they will extend it in some way. We think lifting or taking away JobKeeper is just a little bit too premature if they were to take it away in March. And finally, we see a progressive rollout of the vaccine. In other words, we don't see it all happening the first half of the year it's probably going to take the greater part of the year before it's it's rolled out to uh most of the population yeah okay yeah that's interesting well the uh because it's been enormous stimulus it's active as a safety net for the whole property market up until this point how how much impact does the maintenance of job keeper and the release of

the virus have if those two don't happen and what sort of an impact do you think that's likely to have well if we if we don't see an extension of job keeper uh and that's been one of the central themes in our forecast this year is what happens with job key we think it's been a critical stimulus uh a tool that's been used the reserve bank of australia recently estimated that it it had actually saved 700 000 jobs and with that that means that you know many many businesses have also survived as a result of it as well as other stimulus packages aimed at small business but if we were to see as the scaling back of JobKeeper as per the government's current schedule it'll likely mean that dwelling prices could end up the year being flat to maybe slightly rising

with Perth driving that market predominantly but we could potentially see in such a scenario where Melbourne and Sydney might record some price falls next year. So in other words, we need to be cautious here. Our view is that if JobKeeper is scaled back too prematurely, we could see the economy softened again and confidence starting to go down the gurgler, which would hurt the housing market. Now, based on the commentary from the Reserve Bank of Australia, from the federal government from the various state governments i think they still take the view that they will do whatever it takes to keep the economy going the last thing they want to see in 2021 is the economy stall so i bet that if they uh do see that job creation is

not quite that strong they'll extend it for a little bit longer so this is the reason why uh The government's current schedule for scaling back JobKeeper is not our central scenario. Yeah, got it. Okay, now that's good. And let's face it, with the electronic printing of money, as you so aptly described it, and our lows from the RBA saying that they will do whatever it takes, with a fair bit of horsepower

behind them to do that, then there's every likelihood that that's going to occur. So that's a good call. Well, Laurie, Louis, I wouldn't mind doing a quick run around the grounds then just to summarise your base case scenario view of what's going to happen with each of the capitals, if you don't mind. And I know you pinpointed Perth as the sort of best performer. Let's start there and then work our way backwards, if you don't mind. No problem. Would you like me to share a screen of the forecast?

Would that be useful for your audience? That would be terrific. So, our most bullish scenario, or the city that we're most bullish on is Perth. So, we believe dwelling prices are likely to rise between 8% to 12% in 2021. And indeed, all the various scenarios we've got, we've got Perth outperforming effectively. Those are the four scenarios, and we'll talk about a fifth scenario surrounding China at a later point in July. But we are bullish on Perth because we're noticing now in the market that the rental marketing Perth has really taken off. Rents over the past 12 months, obviously including

the coronavirus period, these are market rents, have risen by some 9%. This is huge. It's massive rise. Now the last time we saw such a rise was back in basically 2003-2004 in the market, which there was a great rental shortage in the Perth market because there was a lot of sudden job creation surrounding mining projects. The fly-in fly-out workers started up and there was there was an economic boom in Perth and one thing we've also noticed over a long period of time it seems that the rental market heralds either an upturn for the greater property market or a downturn for the greater property market so we skip forward to say 2013 when the commodities downturn started predominantly true due to the end of projects and some falls in

commodity prices, it was a Perth rental market that went south first. Then the foresale market went south at a later point, some about nine months later. So at the moment, as mentioned, rents really took off in 2020 in Perth. And when we look at the leading indicators, such as stock on market asking prices we're starting to see that there is a bit of a turnaround occurring in the actual greater housing market so and on top of that i'd like to point out that perf is actually offering a lot of fair value right now a lot of fair value so the median house price as it currently stands is still lower than where it was in 2008 2008. So there's a lot of value to be had. But to be absolutely fair, there are risks here as well.

We all know the big risk. It's China. We can talk about that later. But assuming things don't completely blow up on, say, iron ore, we think Perth is going to have a very strong year in 2021. How reliant is it on the iron ore and the resourcing sector then? Because Perth traditionally has everything sort of stemmed from there. If things do go pear-shaped with China and that does affect the demand for our iron ore, what sort of flow-on effect will that have? Perth and of course many Western Australian regional mining towns are highly susceptible

if we were to see, for example, an outright embargo or a block on Australia's iron ore. It would be bad use indeed and we would end up being wrong on our forecast, our base case forecast for next year if that scenario played out. Now we've spent a fair bit of time considering what are the probabilities of China actually blocking iron ore. Now I'll tell you if they did that they would be seriously shooting themselves in the foot

the issue is trying to find an alternative source of iron ore at this point in time now they may find one in the medium to long-term future through africa and south america particularly brazil but right now we've kind of got them we've got them for now at least they can nail us on coal they can nail us on iron and perhaps cotton they can nail some other things but it's very hard for them to nail us on iron ore very very hard for them to do that and so we think the odds are relatively low um that that would happen now that all said there is a darker scenario that could play out next year and that is a scenario more military scenario where china does the unthinkable and invades taiwan

now we haven't run this as one of our likely four scenarios but if i were to put five scenarios up there comes in at number five unlikely because they risk outright war if they do it but potentially there is another play here where they do do it and the world responds by trade sanctions and embargoes and we would then be forced to put an embargo of on iron or on on sales to china and so that scenario of course would be just as bad as China blocking our iron ore of course

so very interesting times you know you do get concerned about some of the war talk that the premier comes out with Chinese premier comes out with he's come out and he said to his military

be prepared for war we're going to war stuff like that You know, real aggressive talk and, you know, all their posturing has been extremely aggressive. Sitting in under Perth, are you seeing Adelaide and Sydney performing pretty well? Give us a brief commentary on both of those. Yes. So for Adelaide, the forecast is for dwelling price rises of 6% to 10%.

Adelaide for 2020 actually recorded a rise in dwelling prices. it looks like the numbers are going to come in at about 5%. Adelaide actually did remarkably well given COVID. They handled the COVID situation quite well in the scheme of things. They were one of the first states to open their borders. They had, of course, a very brief shutdown, as we know, but then they opened up again very quickly. I think JobKeeper has been one of those, It's helped one of those cities tremendously. But I also think it's benefited from a bit of an exodus of people moving out of Victoria, looking for more remote locations.

Not that Adelaide itself is remote, but it is, of course, a smaller town and it is easier to get away from people, particularly if you live in, say, the Adelaide Hills, et cetera. Exactly. That's exactly where I hail from. And so you're sort of talking my territory. And Adelaide has always been a bit of a sort of Stephen Bradbury of the property market.

It just chugs along quietly. It's a small big town or a big small town, whichever way you want to look at it. That's exactly right. And the relatively new state government, of course, has been making right moves economically in the lead up to COVID. And so far, we think they've handled the situation reasonably well. Of course, I still think South Australia has some economic challenges.

But nevertheless, there is a state government in there that has been making the right moves to address those as best as possible. And I think that has been bearing some fruit. We have been a little bit more bullish next year because, once again, similar to Perth, we've been noticing a fall in rental vacancy rates and a bit of an acceleration in rents. and like Perth, the Adelaide rental market seems to lead the rest of the housing market.

Yeah, good read. Very good read. Okay, that's excellent. If we talk briefly about Sydney, I'd love to then have a bit of a chat about Brisbane because Brisbane's been the potential that has been talked about for some time and it's performing okay but it still hasn't risen to the heights of some people's expectations. So I wouldn't mind drilling into that one a bit too if we can.

No problem. I'll run through Sydney and then run through Brisbane. So the forecast for Sydney is that dwelling prices will rise between 7% to 11%, which is pretty bullish given where Sydney was earlier this year. So as a recap, auction clearance rates in Sydney when we go back to April fell to below 30%. And whenever that's happened in the past, that has spelt a big housing downturn yeah but the housing downturn was averted and it was averted in part because of all the stimulus driven by the federal government namely job keeper

the interest rate cuts quantitative easing importantly the financial services sector which is a huge part of the sydney economy had a recovery it recovered because the equities market which was on the canvas if you recall back in april it was down 40 it was a crash exactly it made up all that ground um and that means many fund managers financial advisors got to got to hold their jobs and their businesses of course there's still being bloodshed in sydney if you walk up and down the streets you'll still see many shutting down many small businesses have not made it through in sydney that is the reality indeed our offices are here in north sydney and when i walk up and down walker street if anyone knows walker street in north sydney there the

shutters are closed for many small businesses it reminds me of 1990 in many respects but nevertheless there has been a recovery in the housing market from what we can see it effectively started in about august or really from the time when the auction ban was lifted and i think the market has responded to once again job keeper the fact that financial services sector did hold the buyers have been out in force at increasing numbers at increasing rates as the year has progressed and so when i consider the leading indicators we're now currently getting option clearance rates in the 60s which is generally a sign in the clearance rates have been rising it's a sign of a rising market we're starting to see some falling listings

and we are also aware that it's been big demand for houses and this is the thing that's been a a huge demographic shift australia-wide yeah and that has been people wishing to look for larger properties and ideally out of neither out of suburbia or in regional australia yeah and sydney's middle and outer ring has benefited the most from that and continues to benefit the most while of course the sydney apartment market the cbd market in particular has been smashed of course it's been hollowed out and i'm sort of mindful of uh of time here today so I might just move into Brisbane if we can, Louis, just to concentrate on that because that's been the area

that's had a lot of potential that hasn't really flowed through yet. I'd be interested in your thoughts around Brisbane in the short to medium term. Yeah, Brisbane's really been strange. I mean, I remember calls back in 2013 that the Brisbane market was about to boom. It didn't boom. Of course, then we had the oversupply years in the Brisbane area,

South Bank, where we were getting rental vacancy rates It's effectively over 5%, particularly in the CBD. Brisbane's overdue for a pickup. There's no doubt about it. But funnily enough, Brisbane houses, at least, have been creeping along in recent years, particularly in Brisbane's east. Wynnum Manly has always been an area I keep an eye on,

and that just keeps on creeping up. It's quite interesting. Yes. From what we can see, dwelling prices did actually rise in Brisbane over the last 12 months. They have risen by about 3.5%, and most of those rises have been on houses, for the same reasons I mentioned before with the other cities. Our forecast for 2021 is that we'll see a bit of an acceleration.

Dwelling prices are expected to rise between 4% to 8%, and once again, we think it's going to be houses and we think it's going to be the east side, but we're also noticing some real strength in the Brisbane Corridor, Brisbane Gold Coast Corridor around Bingley. My goodness, there's been some real strength there in an area where historically it's been a bit patchy, for lack of better words. Yes. But in recent times, it has been seriously strong. Excellent. Look, we're only just scratching the surface and what's really interesting about this, I think you're really winning the appetite of the uh the viewers to your report it's uh i've had a good read of it myself it goes

postcode by postcode right around the country and i've turned some very interesting uh projections uh it's only just under sixty dollars i think uh louis uh yes that's right very thorough run through uh if the listeners want to grab their hands on on a copy uh what's the best way for for them to do that, Louie? Oh, they just have to come to the front page of our website. That's sqmresearch.com.au, and they'll see the link there plus a whole bunch of other reports and free data, which is available for them.

Fantastic. Look, always fascinating having a chat to you, Louie. I really do. For those who want a little bit more around the rest of the country, go and have a look at the discussion Louie had with Kevin Turner on real estate talk that was released on December 11. Go and grab yourself a copy of the report.

and I'll catch up with you separately at another time to talk in more detail, Louis, but thanks again for sharing your insights. Thanks, Bushy. It's been nice to be with you and your audience. Excellent. Now, stay tuned because after the break, we're going to get a complimentary reinforcing discussion

with another independent property researcher, Terry Ryder from Holtzboring. So we'll see you after the break. This is Real Estate Talk. To make sure you get the most from your investment property, you need to claim depreciation. BMT tax depreciation ensures that depreciation claims are maximised and compliance is maintained through their physical site inspections. During a site inspection, a specialist BMT site inspector measures the building and identifies

every depreciable asset possible. Call BMT on 1300 728 726 for a free estimate of the likely deductions. welcome back now to continue and also to conclude our focus on the year that was and the year that's going to be i'm joined by a real estate talk regular and renowned independent property researcher terry rider of hotspotting now terry's just released his xmas and christmas edition of the rider report and it suggests that our infrastructure led recovery makes a property boom next year, more certain. So very interested to dig into some of that. Terry, great to see you again here on the show. Always happy to come in and talk about real estate pushing. Yeah,

love doing it with you too, mate. You've got some great insights. So let's start with a quick reflection on 2020. Why didn't real estate prices collapse as predicted by many of the so-called commentators? Yes, it's done quite the opposite, hasn't it? Not only has it failed to collapse, has actually shown growth pretty much everywhere in the country, not quite everywhere, but most locations around the country have shown pretty good growth this year in defiance of everything that's happened. I tend to say to people that 2020 has been the best possible

advertisement for residential real estate as an asset class because it was predicted to drop 15%, 20%, some said 30%, and it actually grew, and that's remarkable. and there's lots of reasons why the economists tend to always attribute everything to the level of interest rates and I think that's been not terribly consequential. As always with real estate, the answer to the question isn't simple.

There's a combination of many factors. The economy has been much better than predicted. It didn't drop as much. Unemployment didn't go into double digits, nothing remotely like it. So the economy has held up pretty well. the virus with the exception of Melbourne was got under control pretty quickly and emphatically and in most parts of Australia it's kind of been business as usual except for the state border

closures so that factor has certainly helped it's helped with that consumer confidence government stimulus measures have been a big factor and also the support of banks for people who needed the mortgage holidays and that's continued or is predicted we're going to have September clip but of course governments and major banks didn't turn off support at the end of September we're never going to of course but economists like to predict dire outcomes and often proven wrong of course first-time buyers are being highly active they've been the most active cohort in the markets pumped up by levels of government support greater than we've ever seen before great time to be a first-time buyer vacancy rates have been ultra low in most parts

of the country that's that's been a big factor in putting upward pressure on rents and also prices with the exception of the you know the cbd areas of our biggest cities most parts of the country have got vacancy rates the lowest ever you know it's a it's actually a crisis i think a rental crisis across the country yeah and then we had this this huge trend this um which i think is the biggest trend uh in real estate in the 21st century and that's the exodus to affordable lifestyle we've had people moving in droves to smaller cities to the fringes of the big cities and in particular the regional areas and that's made many of our markets incredibly competitive for property selling very quickly so all of those factors combined have resulted in real estate

being not only resilient but actually strongly growing in most parts of the country in 2020. Yeah, I guess it tends to just reinforce what we've seen in similar recessions in the past. Property does tend to be very resilient. It's not really linked to as strongly to population or correlated so strongly to the economy that some people like to think. Yeah, and I think that's another factor. It's a good point that in times of stress,

and we've certainly had a stressful year in many ways, people do tend to retreat to the solidity of bricks and mortar. I think it's a bit of a cliche, but it's probably been a factor this year. The other one I forgot to mention, Bushy, is that expats returning to Australia, getting the hell out of Asia and Europe and the United States and coming back to Australia, which is one of the safe havens in the world virus-wise, those numbers have actually more than compensated for the lack of overseas migrants coming to Australia because the border's been closed to that. but the numbers of expats returning has actually exceeded the normal numbers you get from overseas migrations. That's been a big factor as well. They've all been buying real estate, by the way,

including before they've come back, buying Sight Unseen and the Gold Coast and Sydney and Melbourne and elsewhere. Absolutely spot on. You're right. There's over 200,000 that have returned, which sort of equalises the newcomers. And the good indicator there is what you picked up on is that Australia is seen as the safe haven. We perform better on the virus, better on the economy than most parts of the world.

So when we do open the international borders, the influx of skilled labour back into the country is going to put continued pressure on property as well. So I always love your thoughts around that. The difference here is that we've had the recession that we've decided to have, not the one that we had to have, but the one we've decided to have. and all of that stimulus and support that we put underneath it, which the federal government has acted very quickly to do so, has certainly alleviated some of that. But why do you think economists always get it wrong in their residential property forecasts, Terry?

Because they're not real estate experts. That's not their forte. It's not their specialty. They turn their attention to the real estate market only occasionally and they do it by having a look at graphs on the screen. They don't get out in the cold face. that they're not really talking to people who really know what's going on.

They tend to think of Australia as a single market, which is a clue they're talking through their hat. And also they're, by nature, supremely negative individuals. You know, they're always predicting dire consequences. And we saw that, you know, back in March, April, when every economist in the land virtually was predicting that prices were going to collapse in Australia, which showed, again, that they don't really understand

the dynamics of real estate markets. Sometimes I think they don't even believe what they're saying. They're actually seeking to generate publicity for themselves or their organisations, and they know they're saying something sensationally negative about the housing market will guarantee them free publicity. It sounds a bit cynical, but I really do believe that's what a lot of them do, and the media always obliges, of course. and their lack of track record in successfully and accurately predicting anything real estate doesn't seem to matter because some of them have got an appalling track record going back, you know,

years and decades with getting it wrong on real estate and they've done it again this year. Yeah, no, absolutely right. Just sort of bringing it to a close because I'm sort of mindful of your time today, Terry, and you may have mentioned already, but the major new trend that you think is going to impact on property in 2021?

one yeah building on the trends that we've already identified the exodus to affordable lifestyle the activity of first-time buyers the very low vacancies i think the big one the big game changer next year is going to be what i call the infrastructure-led economic recovery it's clear that federal and state governments intend to bring us out of recession and to regenerate economies and create jobs is by fast tracking wherever possible major infrastructure and we're already seeing that being rolled out it's going to be a huge factor for real estate markets in 2021 in all sorts of ways nothing pumps up residential real estate like new infrastructure does creates economic activity it creates jobs that creates demand for real estate but also improves the

amenity of places that you know locations getting a new rail link or an upgraded motorway or a new hospital that's going to increase the desirability of those locations so i think building on everything that's happened this year i think the the infrastructure boom that's coming which is going to precipitate a resources boom as a consequence i think that's going to guarantee a national property boom in 2021 yeah very exciting times ahead that it looks like the the planets are aligning and they don't do do very often in in that sense with all of those factors coming together but i always love your insights on it uh your your latest writer report What gives the, you know, sort of a comprehensive what and why

and really essential reading for anyone who has an interest in what's going to be happening in property moving forward? Where can they get their hands on a copy, Terry? Sorry. Yeah, well, you know, we publish that bimonthly and I think, you know, it's very hard for real estate consumers to get good analysis of property markets. If you go to mainstream media, you're just going to be misled, I think.

So there's bimonthly magazine, which you can get tree the hotspotting.com.au website gives an independent and comprehensive analysis of what's happening right across the country it's a 26 page report it's lots of detail and we're in this edition we're talking about what to expect in 2021 yeah must read for anyone in property yeah and the important word there is independence terry you're one of the few that is completely independent and is basing it on valid research but uh thanks for coming on board again terry and compliments of the season um well that's it for this week's show you guys we'll be back again next week with more leading edge property insights from industry leaders

so on behalf of kevin turner and the entire team here at realty and real estate talk along with all of our special guests today josh masters louis christopher and the infamous terry rider thanks for joining us and we really enjoy your ongoing support i'm butchie mountain from know our property finance and the host of the Get Invested podcast. So feel free to come and join me for more long-term chat with today's guests and others on all things investment. Have a great week and we'll see you here again soon where your trusted property partners in property,

you've been watching Real Estate Talk. Well, Freedom Fighters, how good was that? To get a summary of all this investment gold in the show notes, just email me on hello at khgroup.com.au. It's H-E-L-L-O at khgroup.com.au. Or check us out at www.bushymartin.com.au forward slash GetInvested. I look forward to joining you next week for another episode of the GetInvested podcast. So thanks for listening.

And as always, dream as if you live forever and live as if you die tomorrow. Thanks for watching!