Property Hub - Investment Insights & Inspiration - Realty Talk: 3 reasons properties don’t sell

Episode Date: March 9, 2024

We share expert opinion on this year's market conditions from analysts featured in the Bricks & Mortar Media Annual Property Market Forecast Report.  This time Bushy speaks with buyers' agent, economist, property investor and the CEO of award winning buyers agency Property Buyer - Rich Harvey.  NEW – join our Facebook group, The Property Hub Collective: https://www.facebook.com/groups/1857513011165686 Join the Property Hub community on Substack! Sign up to get Australian property news, opinion, and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail]  See omnystudio.com/listener for privacy information.

Hi, I'm Kevin Turner and welcome to this week's Realty Talk show. We share expert opinion on this year's market conditions from an analyst featured in the Bricks and Mortar Media Annual Property Market Forecast Report. Now, this time, Bushy speaks with buyers agent, economist, property investor and CEO of award-winning buyers agency, Property Buyer. He speaks to Rich Harvey. That'll be first up in today's show. But before we start, I want to thank our supporters and content Partners, Realty, CMT Tax Depreciation, Know How Property Finance, Get Rare Property and Acero Marketing. And if this is your first time with us, welcome. You're going to find us on all podcast players and through the Southern Cross Austereo Network. And if you like the show,

please hit the subscribe button and help us to continue to bring you the best guests every week. Don't forget too, you can join the conversation anytime on Facebook. You'll find us at the property hub collective back in just a moment to kick off this week's show property deductions can save you thousands of dollars each year to make sure you maximize deductions you 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 guaranteed to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote.

Realty Talk and your host Bushy Martin. Now as the post-pandemic hangover starts to fade into the distance and property conditions continue to return to semi-normal ad hoc and out of sync fluctuations across the country, property movements have continued to vary considerably up and down the east coast of Australia. So to get a first-hand view from the front line and what's happened and what's likely to happen with property on the eastern seaboard we're joined by rich harvey a leading buyers agent economist property investor and the ceo of award-winning buyers agency property buyer so welcome back to the show rich great to be on the show again with you bushy always mate love having a chat to you now rich before we sort of delve into the future

i'd love for you to just recount how you felt property performed against your expectations last year and what, if anything, varied and why? Yeah, 2023 was a pretty challenging year in the property market. I think the biggest factor we saw was interest rates peaking. And we saw a number of interest rate rises every month that come by and we get another letter, love letter in the post from our bank saying your interest rate has now risen 0.25% and here's your new repayment. So, you know, the word cost of living kept getting overused a bit like COVID did. And that really put breaks on the property market. So it really was a challenging year in that regard, but we really saw the cash rate, you know, top out in sort of around May after 13 interest rate rises, where it's

sitting at 4.35%. And, you know, there's still speculation arise, but there's no way, you know, absolutely hand on heart, there's no way it's going to rise any further because inflation is going in the right direction now. So the impact on the property market, as I said, we saw the end of price corrections. And in fact, we actually saw price growth. And what was really interesting was an interesting economic phenomenon that we had rising rates and rising property prices which only happens a couple of times every few decades it's not a normal sort of economic scenario that that comes in that regard but i think one of the reasons bushy had happened was simply because of the massive migration wave we had 510 000 migrants come to our shores the biggest influx since world

war ii so we're really sure that that was just going to boost demand for property both rentals and for buying and as we know we're in a rental crisis right around the country at the moment not building enough stock so you know big supply constrictions and construction costs are still high and they're up up there so it's tougher to build we're not building enough properties but we'll touch on that as well in a moment but i guess the key thing that we should be looking at too you asked about what what the performance was last year around the capital cities and i think just to recap on that we saw perth really laid the stakes out of the blocks at 16.7 last 12 months we saw brisbane rise 14.8 percent and then came in sydney 11.4 percent adelaide 10.3

and melbourne surprisingly 3.9 and canberra down at 1.2 darwin and hobart both went back just marginally so pretty mixed bag of results but again i would say to any investor out there don't go and pick your capital city or area regional area to buy in purely on the basis of last year's results you know you've got to look over a 10 if not 20 year period i've been doing this for 25 years and i've learned a lot of things along the way made some mistakes and uh it's really important to not just follow the herd uh use the data intelligently but particularly you learn to use some local drivers and we'll talk more about those in a minute yeah beautifully said mate i just think what we saw last year is just a further reinforcement of the fact that property isn't

a one-trick pony when it comes to the types of dynamics that impact on it. There was a media link between interest rates and property values, which has yet again proven to be wrong. And as you quite rightly say, it's the long-term that people need to be looking at when it comes to property, not just what's happened in the last 12 months. And it's those key growth drivers that are going to continue to put pressure from a scarcity perspective on locations. And as you very well evidenced there, the variability in performance over that 12-month period from state to state, which has its dangers as well when you aggregate at that

level, certainly tells a story in terms of the fact that there is no one property market, which the media would love you to believe there is. And that's the very opportunity that presents itself for investors and property buyers who are... Well, I think you can look at the market generally, but you've also got to then drill down on the granular to a suburb and even within the streets. But I think, so just to recap on last year,

I think the word is resilience. We saw a very resilient property market and we're going to continue to see very strong resilience and further growth as we go through into 2024. And I think a lot of people sort of want these perfect conditions before they buy, before they'll invest. They want this, you know, absolute smooth waters for sailing. But at the end of the day, if you're going to become an experienced sailor,

you've got to go out in the storms, right? You've got to leave the shore and take a bit of a risk, right? But we know with property, it's a good calculated risk that you're going to do well if you hold and buy well at the long term. Extremely well said. You've touched on some of this already, but projecting forward now over what's likely to happen in 2024, what's your read on the likely performance along the eastern seaboard?

Yeah, well, particularly on the east coast, We're seeing it's a strong momentum already building. I mean, coming out of the blocks in early February is when the agents return to work and we're seeing listing volumes significantly spike. I think we're going to see some strong momentum and steady growth this year. I don't think it's going to be crazy like, you know, the FOMO that we saw during COVID, but there's definitely going to be a building of momentum. And rates are going to start to fall in the back half of 2024.

I'm predicting the first rate cut will be either August or September. I think it's fully priced in by financial markets for September, but I'm tipping if inflation gets down under control, they will do one drop in August. And we've still got consumer sentiment sitting around 80 basis points. So we consume a sentiment low, you know, that's a drag on the economy. So not a lot of people have got spare cash to spend. So I think the next six months is pretty amazing opportunities. If you're a savvy investor or savvy homebuyer and you want to get ahead of the wave, ahead of the curve, I'd be buying while interest rates are still high, but there's opportunity to buy in. And we're actually seeing reports of a bit more motivated slash distressed selling.

Not majorly distressed, but certainly people going, you know, I actually can't afford to hold on to my property. I'm going to sell it. And you also got a lot of investors that are sick of the taxes that the government keeps imposing on them, particularly in Melbourne, where the stupid land tax has been introduced. So we're seeing some good opportunities coming up to buy well. But I think overall, I think Sydney's going to be a really solid performer. And I think Melbourne's going to be good. And Brisbane, definitely very strong performer longer term. Yeah, brilliant.

As a born and bred contrarian, Rich, it's windows of opportunities like we're sitting in right now that often produce the best fruit. Because if you're getting before the herd, you can just ride the wave. So there's some very good opportunities for those that are in a position to take advantage of it. What are some of the key drivers that we need to be watching out for that are likely to influence, particularly the eastern states, given your expertise in that area over the next 12 months? Yeah, I guess I've got seven to actually share with your audience today, if I may. And I think the number one, I've already touched on migration and the impact on that, but that's going to outstrip housing supply.

So the government set this very ambitious target of 240,000 homes per year, 1.2 million homes. I personally handle half. They won't achieve it. So that has massive implications for the eastern states in the sense that there will be continued rental shortages, vacancy rates sub 2%. I mean, they're sitting at like 0.7, 0.8 in Brisbane at the moment, really, really low.

It's around 1% in Sydney and Melbourne. Really tough to get a rental. I mean, my son just tried to get one, unfortunately got one, but really tough at the moment. So we're going to see undersupply continue to fluctuate. We're going to see, secondly, interest rates are going to reignite demand. As I said, as soon as the rate cuts are more sort of locked in, you watch consumer sentiment start to rise.

Even though it's still costing more money to borrow money, you just see the confidence factor really coming back into the market. Thirdly, I think we're going to see affordable locations see very, very strong demand. So affordability is going to be one of those key drivers of demand for people deciding where to live, where to locate and having their lifestyle. What are you, just jumping, sorry to interrupt the flow there, what do you consider to be affordable, Rich? Well, I guess it all depends on your income. I mean, Sydney's median house price just hit $1.6 million. Melbourne's just over a million.

Brisbane's about $870,000. So it's all relative. I mean, if you're on an income of $70,000 a year, you probably can't afford to live in Sydney when you've got three kids. It's pretty tough, right? So it's all relative to income. So I think, you know, we're seeing to live in Sydney, you need 11 or time sorry 10 or 11 times income to just get an average mortgage so what i'm saying

that dynamic is going to push people into the more into the the sort of outskirts of the cities and into the bigger regional towns like geelong or newcastle or sunny coast so that's going to have an impact on demand in what i call more affordable locations yes yeah that's that one i think um number four i think the total other end of the scale of the prestige market is going to remain very buoyant very resilient um you know we help clients who've got budgets of 350 grand right through to people 30 40 million we help quite a spectrum but we're seeing at that top end of the market very strong demand from expats local buyers chinese and asian buyers wanting to get their slice of paradise um whether it's a mansion in turac or a waterfront beachfront in

sydney or or riverfront in brisbane we're seeing that's very very strong demand because there's very limited supply of that stock the uh the cashed up boomers uh are having a a sort of increasing impact as they as they switch into that phase of life are you seeing that have any impacts at that end of the market at all or others absolutely that was going to be my next point you just read my mind the baby boomers absolutely that you know baby boomers and gen x that are looking to downsize the kids might have just left home or been out a couple years they want a sense of community but their house is too big so they're definitely going to see them really be a cashed up force and difficult to compete against if you're a you know first or

second home buyer that's trying to get up the ladder and you've got these cashed up downsizers selling those for multi-millions and you know so that's going to be a real dynamic in the market and I guess my last two points in terms of things to watch is is rents are going to continue to increase but they'll stabilize i mean rents went up you know around 10 11 last year i think they'll probably do on average eight percent but that high is a lot of averages you know you might see in some areas rents go 13 15 so the trick to be a smart investor is not to go too hard on the on the yield but to get you know the right sort of capital base as well um and i think lastly i think you're going to find that the savvy investors are going to really start to cherry pick the best

areas more quickly um they're gonna the investors will be in a little bit sort of shy but i think they're really going to come back as interest rates decline and therefore they can borrow more they'll be a force to be reckoned with as well yeah beautifully said uh now you've touched on some of this already but as a flow on from that what are some of the important areas and sectors both good and bad that we need to be watching out for in 2024 then rich well start with the bad um let's let's again uh hobby horse stay away from spruikers and stay away from mining towns you know one trick ponies um you know i get used to get so many emails let's speak of these expos and all these people say rich you've got to buy in karatha right you've got to buy there or port

headland and you know you can get a 15 yield right and they're selling these little dongles for like 1.2 million dollars anyway three years later they've dropped in value by half to 600 grand and i can't sell them for level money right yeah so stay away from what i call very poor um opportunities um we have very limited economic opportunities in far-flung regional areas having said that there are some really good regional areas to buy in um and some of the towns that we're targeting are places like townsville mckay bundaberg or bunbury um i mean particularly like townsville it's got five pillars to its economy very well supported you can still buy a house there for under 500k um great lifestyle great for bringing up families so

So just on that, sorry to keep interrupting you, but you've just sparking some thoughts because I've seen a number of people who have sort of growing concerns over the potential impact of extreme weather events, particularly in far North Queensland. And yes, economically, those areas are booming, but the insurance companies are starting to get a little bit tentative now about some locations within that vicinity. What's your thoughts around that and how much does that need to influence decisions if someone's buying a property for 15 years or more do you think yeah great question well i guess i wouldn't be buying 10 properties in one of those towns i guess i mean you've got to spread your risk around

right so i mean i've got a property in north queensland up near early beach and it costs me about two and a half three grand for for insurance it's a bit more than obviously my other properties probably a grand more um but i'm getting a great rental return so i know that that extra little bit i've got to pay for insurance more than covers it but i make sure i've got cyclone and flood and all the other types of insurances to manage that so i think just the key point there is don't put all your ease in one basket you know don't go and buy six properties in maroomba which one idiot investor did many years ago and end up going bankrupt when the whole thing the whole town turned you know so just be careful who you get advice from make sure you buy the right quality

property in those towns but um to your point about other areas to buy in i think melbourne has definitely got some really strong legs it's it's been a real underperformer in my view um and and not just saying it that because it's underperformed but there's often a reversion to the mean so what i mean by that is it's been an underperformer if you look at sydney melbourne particularly it's averaged around seven and a half percent over the last 20 years right now if melbourne did 3.1 last year it's going to grow and there's a lot of migrants continuing to to flood into melbourne great cultural communities there a lot of old money also looking for a home so and melbourne's got a great eclectic mix of housing you know from the bayside suburbs right through the inner city

trendy areas fitzroy carlton you know right through to the sort of more affordable areas in the northwest so again there's definite opportunities there to buy another pick would definitely be brisbane rapid interstate migration a lot of people move into the sunny sunny coast and the Sunshine State, I should say, to get a better lifestyle. And the Olympics coming in 2032, the bit of an icing on the cake. But every time I visit there, I live in Sydney myself, but every time I visit Brizio, I go, wow, it's a real patterning, hip city, it's really coming alive, so it's great.

Also, equally, the Gold Coast, right? You know, we love the Gold Coast. You go there for holidays, you live there, you feel like you're on holidays every day. The only challenge is infrastructure, keeping up with population growth, right? Because the M2 becomes a bit of a car park, sometimes when you're trying to get home from work right um but yeah we're seeing very strong

infrastructure growth you got the light rail going through um and the extra train lines going through so i think that's definitely a definite pick um and yeah i still look absolutely sydney central coast and newcastle we're seeing you know there's good a lot of people sort of rubbish sydney as an investment but you know i've got a number of properties in sydney all exceeded my expectations on price growth and getting great rental returns as well equally as prices move up you get the central coast buyers and the newcastle buyers again only an hour and a half in sydney really strong capital growth for those areas over time so that'd be my opportunity areas i pick yeah some pretty good opportunities and as you mentioned earlier it's all about price points so where it's

a matter of defining what your affordable price point is and then with the assistance of someone like yourself and the property buyer team then finding the highest growth and best yield opportunity within that purchase price power so switching now rich love your thoughts on any sort of surprising or potentially wild card elements that may have a an impact on property in the eastern states this year yeah i think uh probably the biggest one would be the continuing impact of work from home and remote working I think that's a lasting legacy of COVID and every business owner is having to grapple with this and you know do I insist my staff come back in five days a week you know or do I have a working from home policy and how does that impact on the

property market so I think a couple of things I'd say is that people are now thinking more broadly about where they can live, how they can keep their jobs and contribute positively within a company. And that has an impact on the property market. So people will go, you know what, I can actually raise my family in this location when I thought I'd be here all my life. Secondly, the type of property people are buying requires more functionality. So it's not only just a place to sleep and have recreation,

but it's a place to work. So now we need studies. We need extra working rooms. And it might be husband and wife or partners need separate stays. You might need two extra rooms, right? So we're seeing a lot of conversions of garages or building of granny flats or that sort of thing, particularly on people's wishlists going forward as another impact on a lot of these markets.

So again, that also builds in opportunity. If you can find a property where you can add a granny flat, do an extension, convert a garage, put a carport, all those things can add value to the way you do your investing. Yeah, I'd love to jump in on that point because there's sort of almost conflicting opinions from a lot of players in the property space at the moment because I hear one side of the camp saying, well, family sizes are getting smaller,

therefore smaller properties are going to be high demand. On the flip side, I hear about, well, look, more work from home. We actually need more flexibility and adaptability in spaces that we can use to work and other things. And maybe there's a locational factor to this, but I'd love your commentary around those two, given that they appear to be conflicting in some degree. What are your thoughts, Rich?

Yeah, well, okay, I'll start with our developer clients. We're seeing some of our high-end developer clients that we find sites for building four-bedroom apartments, right? They're building beachfront apartments with four bedrooms or big penthouses because they want that sense of having their kids potentially stay, friends stay over, and they want to replicate living on a block in an apartment. and they're a massive premium for those properties so as much as we might say oh people want smaller

properties to be honest the reality is no people want as much bang for their buck as possible so it just comes down to construction cost at the end of the day and what people can afford so i think there's scope for everything um but don't believe everything you read in the papers or the media right and we know that so you look at the reality of what the demand is and how it's going to perform um so i think you know people want to they want space you know we've got too much we've always got too much stuff we always need bigger storage cupboards right uh you know you need to do a marie condé course every day every year get rid of stuff right um but look yeah i think to your point um i think the demand for all of those properties will continue um definitely be still

demand for the smaller size properties again driven by affordability um and we're seeing some pretty clever use of space now um people are building multi-functional rooms that's both the guest room and a study or pull down beds or drop down desks or slide out cupboards all sorts of things can be done to maximize space and again they're in good demand as well so yeah again it is very location specific as well yeah and i think you make a point it's it's knowing what's the right property profile for that particular location and that particular demographic and if you're an investor uh doing the homework with the assistance of you know very experienced property buyers like yourself you can actually put some shape around that right so rather than

take this blanket approach which which some of the the players in the game and the media like to talk about it's looking at okay well what's right here and now in this location and how's that going to perform over the long term so beautifully said rich um does some some things up then uh what one word do you think best describes and captures what property conditions are likely to be in the year ahead oh that's putting the hard word on me one word mate i'm going to give two words opportunity and growth okay but yeah if i had to be one word to be opportunity but opportunity and growth i think both of those factors will occur in 2024 um as i've said i've outlined all the reasons what's driving the market but at the end of the day

for anyone out there watching this i think buy when you can afford like we all feel this pressure i've got to buy now i've got to buy now well look you don't want to back yourself in a corner and regret buying you've got to buy when you've got your pre-approval know what your numbers are then you know what you've got to play with um but i think a lot of it comes down to mentality a lot of people are afraid to pull the trigger because they've got fear um they're worried or their relatives said oh be careful not to over leverage and you know or the market's going to crash and oh it's all a big ponzi scheme and like all this rubbish that goes on so my advice to everyone is do your research don't follow the herd get in an independent advice and and find someone you can

trust and work with that person longer term but i think also don't consider the market as one market as you've alluded to there's multiple markets within markets and very different results for properties depending on where they're located within a suburb as well yeah beautifully said i yeah 100% agree rich i've always said it's never about when you should buy because you should buy every time you can afford to do so if you're serious. Well, I'll tell you, I mean, just a quick anecdote. I mean, year before last, I got some good borrowing capacity and I went and bought three properties that year, you know,

and one of them was building a granny flat and I was able to build actually a three-bedroom granny flat, which you may not have heard of. Wow. 94 square metres under roof. So I've got a third bedroom, which is giving me about a 6.2% yield on the overall property and the house in front.

So what I'm saying is I got that approval, I used it. the following year may not have had such a good building uh finance approval so when you get that approval as you know it's last 90 days you can recycle it but use it because that's one of the key things that i think people don't appreciate how quickly time moves on you know you'd be having your 40th 50th 60th birthday before you know it and meanwhile all that capital growth in the past right so why not enjoy the ride 100% agree and it's it's always about what you buy and where you buy not when you buy i believe if you're serious about protecting your future long term so as always rich really love the insights you've shared with us and i want to thank you for the

very hands-on projections that you've shared with us today yeah and i guess before we close it's very clear from what you've shared and having a good read of your bmm forecast for this year that clearly upgraders downsizes and expats are likely continue to impact property conditions along the east coast this year and it's also very clear that this chronic shortage of rental properties in many areas is likely to persist for quite some time yet but there's very fertile turf for smart investors in that so uh so look rich i want to thank you for that and for those that are listening in if you want to talk more with rich and his property buyer team on how they can help you in new south wales victoria and queensland i think beyond that now with

parts of wa and far north queensland as well rich i encourage you to reach out to rich and his team at propertybuyer.com.au. In addition, if you want to grab a full copy of Richard's forecast, along with all of the other industry-related predictions on what's likely to happen with property right across the country this year, then make sure you grab yourself a copy

of Brickson Mortar Media 2024 Property Market Forecast Report by clicking the link in the show notes so you can make much better informed decisions. And finally, if you've got any further questions, queries and comments on property direction this year, let's keep the conversation going by joining us on the Property Hub Collective Facebook community,

where you're going to be able to rub shoulders in a circle of safety with a very rapidly growing tribe of like-minded property players and proven property professionals. So just click on the link below. Keep watching and listening to the Property Hub tomorrow, and thanks again for your time on the show today, Rich. My pleasure. Thanks, Bushy. Hi. Just before we go back to the show,

I want to spend a few seconds and tell you about a book that was sent to me that's now become my go-to reference when I'm looking for inspiration about property investment. You know, sometimes it's not about knowing all the answers. It's certainly more important to know what questions to ask. This book by Rasti is called The Property Wealth Blueprint. And it's one that you don't read just once and then put it away. It stays out as a reference. It's a book that you go back to time and time again, as I do, because it's packed with personal experience and with great examples of how to get property investment right. It's very frank. It's to the point. And as you can

see here, I've needed to bookmark several points. And I can tell you that it's a constant companion on my desk here. The remarkable thing is that it's absolutely free on Rasty's website, getrare.com.au. Get Rare. It's a gateway to a richer life. The website there for you again, getrare.com.au. So get this book, get it for yourself. Realty Talk exclusive to The Property Hub. You know, when properties are failing to sell, serious sellers start to ask the question, why isn't my place selling? At the end of the day, it comes down to three basic reasons, Price, presentation and marketing.

So let's deal with all three of these. The first one is price. A young agent once said to me, who I used to work with, everything sells, it just comes down to price. There's a buyer for every property. You know, he was right. In fact, there is a buyer for every property, even properties on main roads. But at the end of the day, it comes down to price.

And you've got to make sure that your price is right. So make sure that your agent's given you good information so that you can set a realistic price. The second point is presentation. Good presentation will sometimes help a moderately overpriced property sell, but a well-presented property, priced and marketed well, is going to create a lot of competition in the marketplace and possibly may even get you a premium price.

And the third point is marketing. You know, there's a saying in the industry, you can't sell a secret. You need to accept the responsibility to pay for some marketing in your property. It gives you control over where the marketing is done and what it sounds like and what it looks like. So take responsibility, sit down with your agent and go through these three points, price, presentation and marketing and ask your agent to be as frank as they possibly can. Make sure your price is right. My experience is that the presentation will always be right.

These good sellers always take good pride in their property and it is presented well and make sure you're doing marketing. Take some responsibility for the sale of your property and you'll soon see that it will turn around itself all the better. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by KnowHow Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while increasing your capacity for growth. Know How has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less and live your legacy.

Want to know how to invest in your freedom? Visit knowhowproperty.com.au This is Realty Talk, powered by realty.com.au Well, that brings us to the end of this week's show. a big thanks to our very special guest, Rich Harvey. Make sure that you don't miss a single episode of Realty Talk or Bushy's Get Invested podcast. They are both delivered to you each and every week, and you'll do that by subscribing to The Property Hub now on your favourite podcast plan or wherever you are listening to or watching the show. Also, join the conversation anytime on

Facebook at The Property Hub Collective. Very easy to find. Thanks to our supporters and content Partners Realty, BMT Tax Depreciation, Know How Property Finance, Get Rare Property and the Piro Marketing. I'm Kevin Turner, and on behalf of Bushy and the Property Hub team, we look forward to seeing you again next week.