Property Hub - Investment Insights & Inspiration - Realty Talk: A bunch of reason not to buy now + The cap city surprising everyone

Episode Date: October 2, 2021

If you’re looking for an excuse not to buy property at the moment, you've never had more reasons to procrastinate.   With stories every day fueling fear, the confusion becomes frustrating when we see prices continue to climb.  This week Bushy Martin and Goose McGrath separate the fear from the facts.  According to the latest Core Logic figures, Adelaide has recorded one of the highest monthly and quarterly growth rates amongst the capitals. Clearly, Adelaide continues to outperform so we check in with Adelaide local Scott McPharlin to read between the lines. RealtyTalk is your trusted voice in property investment and Australia’s most popular online property show.  Founded by Kevin Turner and hosted by property expert Bushy Martin, RealtyTalk brings you exclusive interviews with Australia’s property industry leaders who deliver the latest, red hot property investing news and insights.  Subscribe now to get the latest episodes delivered to your inbox three times a week. RealtyTalk is brought to you by Realty, Australia’s leading search and social property distribution platform that helps investors like you beat the crowd, giving you the earliest access to property opportunities, listings, and insights. Check out Realty. RealtyTalk is hosted by top property investment expert, author, and founder of KnowHow Property, Bushy Martin. Find out how Bushy’s KnowHow team helps investors unlock freedom with finance and property here, and check out Bushy’s podcast Get Invested.  RealtyTalk is supported by BMT helping property investors save thousands of dollars each year by maximizing tax deductions from investment properties. Find out more.See omnystudio.com/listener for privacy information.

Welcome to Realty Talk, the show that brings together the country's most authoritative and respected property experts. Follow us on all the socials and subscribe for updates and exclusive offers. Realty Talk is powered by realty.com.au, connecting buyers, sellers and agents differently. Hi and welcome to Realty Talk, your trusted voice for property investing. I'm Bushy Martin from KnowHow Property Finance and we've got some great guests and some very informative insights to share with you again in this week's show. As Australia's in the grip of an unprecedented property boom, Goose McGrath from Dash Top Buyers Agents joins us again to give you

seven reasons why you shouldn't buy property now, together with a bunch of reasons why you should. Leading sales agent Scott McFarlane from McGain's Real Estate then joins us to unveil Australia's best-kept secret in property by revealing what's happening in my hometown of Adelaide. And to round out the show, in our current fiercely contested seller's market, I continue our special series on the art of negotiation, where I show you how you can level the playing field as a buyer in successfully negotiating your next property purchase.

We've got some great info to share, so let's get into it. Welcome. Now, if you're looking for an excuse not to buy a property at the moment, you've never had more reason to procrastinate we've seen a flood of media negativity from all ends of the spectrum we've got the gloomers at one end and we've got the boom busters at the other on one hand we've got the mainstream media amping up the fear factory with constant stories of economic gloom given the ongoing threat and the uncertainty surrounding the current covid saga on the other hand we're seeing property prices go through the roof and we haven't seen price growth like this for nearly 20 years with average growth in the last 12 months of about 16%

compared to the long-term average of about 6%. Put this together and we've got the perfect storm for treading water on property. The result, you've never had better excuses not to buy property now. So to balance the books and to separate the fear from the facts, we're joined by the co-founder of Dash.Buyers agents, Goose McGrath. Welcome back to the show, Goose. G'day, Bushy. Good to see you again. Always, mate. Now, jumping straight in here, what are the major reasons that you're hearing from investors on why they don't want to buy properties at the moment? Yeah, it's an interesting one. So it's a funny paradox, isn't it? That the property market is

performing well and therefore it is creating more indecision and more doubt than ever before. But it's quite normal. You kind of see that generally speaking across all asset classes whenever there's a bit of a boom. So there's a number of reasons. And in fact, you and I recently did a bit of an expose on seven reasons. We'll get to that a little later, but just some of the key ones that people are concerned that the market is booming too quickly and therefore they're just going to sit it out and wait until it drops. Or perhaps they're concerned that properties are too expensive or overvalued and you can't buy effectively in the current market. A lot of this comes down to things like location misinformation. When you look at places like

Sydney I recently I actually recently read an article of a property just up the road from where I am which sold for almost double what it was bought for in 2019 when you read stories like that it's natural to think that this is kind of going on everywhere and it's just we're in this state of frenzy and everything is overvalued and you can't buy effectively when in fact it's just not true and in fact there's 15,264 suburbs in Australia they all operate independently from each other, even when they're right next to each other. And so therefore, it really comes down to identifying the right place and the right time, which is something that most people don't get right. But in order to do that, you need to be able to step outside your comfort zone, which is

another one of the big things that is holding people back. This idea of actually investing outside of your own backyard. And that takes a little bit of grit and determination to push yourself outside the comfort zone. And the other thing that's really getting where people are really getting in their own ways is what we call the DIY dilemma, where they're too busy caught up trying to do it for themselves and they don't want to reach out and get professional help. Now, that's all well and good, but the evidence suggests that that is probably not a very good way of doing things. It's evidenced by the fact that just over 90% of property investors never make it past two properties. So that speaks volumes in itself that in the majority of cases,

most people actually don't know what they're doing and it makes more sense to get help. So they're kind of some top headline reasons where people are getting stuck and getting in their own way at the moment yeah no absolutely spot on so uh you've covered a little bit of this already but what's your response to these and i'm going to call them excuses rather than reasons but but what's your uh advice and um insights that you'd you'd like to change people's paradigms around that yeah so i think look first things first don't pay attention to the news right for a few for a few reasons right because if you're reading about if you're reading about a or hearing about a a hot spot in inverted commas in the in the media you're already way too late so understanding how

to buy the right property in the right place at the right time is really the key to all of this you know if you can identify that then you're you're able to cut through the you're able to cut through the noise and cut through the fog and actually make intelligent investment decisions and that comes down to understanding it's super simple i couldn't make it any more simple we've got we often talk about the holy trinity formula of cash flow growth and value ads you sort of got the same thing when it comes to location selection particularly right now it's jobs lifestyle and affordability so some markets at the moment have one or maybe two of those elements you know maybe they've got a really strong lifestyle factor and maybe because of you know recent covid and stuff

people are moving there for a lifestyle benefit and they can work from home but unless it's underpinned by also jobs uh and and affordability as well you're probably it's probably not going to be a sustainable market so you can start to cut through the noise and sort the wheat from the chaff so that's the that's the first bit if you can get get to understand those fundamentals that's going to set you up really really well um and a lot of people also are concerned that hey property price is already booming too quickly and maybe i'm just going to sit it out and wait well the fact of the matter is we're really at the really at the start of you know we're in the we're still in the first quarter, maybe even the first quarter of the first quarter of a national

property boom. And what I would kind of say to that is if you could rewind just 12 months, not even five years or 10 years, but just 12 months, if you could go back to this time last year, how many properties would you buy? Now, all you need to do is have a little think about that and then overlay that where are you going to be in 12 months time? We're still in the, as I say, right at the birth of this property boom. And right now, it's the best time that I've ever seen to be able to get into the market, which is super exciting.

So more than ever, I'd say that people need to have a bias towards action. So, and the other final point is that I would say is that in order to really capitalize on this, you're going to have to think a little differently. You're going to have to get outside your comfort zone. Now, everything you want in life is on the other side of your comfort zone.

Whether that be asking your sweetheart out on a date for the first time, you're going to have to really oh my god you're going to have all the nerves going on or maybe it's applying for that job or promotion or anything that you want to achieve more have more be more do more see more feel more and experience more is on the other side of discomfort you've got to go through that growth and the same thing is going to happen for investors that really want to capitalize in this market they're going to need to think differently act differently and they're also going to need to reach out and get professionals to support them in that process and

to level up from being an amateur investor to a professional investor so they're my tips yeah beautifully said so to wrap all this up and sort of bring it to a head if if you had the ability to buy a let's say a 500 000 property right now what would you do and why that's a great question um i would do exactly the same thing today as i would have done 12 months ago or in 12 months time you know for me it's not it's not about um you know fundamentally you've got to have a good strategy and a good idea of what works in the market and you know we've pinned it down to three simple tenants, cashflow positive, high growth areas, value add potential. So I would do exactly now as I would have done 12 months ago and 12 months before that.

And I would buy a good property at the right price in the right location that's cashflow positive. And I would enjoy all the benefits and the acceleration that that gives me. And whether that configuration was a duplex or a single family home, or if it was under market value or whatever, all of these factors can come into it. But really, it's underpinned about buying the right property in the right place at the right time and making sure it's cash flow positive so you've got affordable growth yeah i think that the key thing there to reinforce from the insights that you've shared with us is is becoming

borderless because if you're just looking in your backyard uh given depending on what's happening in the market in your particular location that may not be achievable but if you're suddenly widening the scope so you're looking at those 15 odd thousand suburbs right across the country then all of a sudden uh there are going to be those sorts of opportunities available if you've got the right people and the independent professionals hunting them down for you. Absolutely. It's not impossible that you happen to live in the right location for it to be the perfect time to buy in that location. It's really not impossible, but it's very statistically improbable. You have a greater chance of walking out your front door and speaking to the first

person you meet and them having the same birthday as you. You have a way higher statistical probability of that happening than you being in the right place at the right time to buy in your own backyard so absolutely yeah you've got it you've got to stretch yourself and you've got to look a little bit further totally agree and i think the other other exercise that people are nervous of is you know this so-called downturn or the bubble bursting if we look back through history the the one thing that really does uh tend to have an impact on property values is availability of credit so the one indicator that i think listeners need to be focusing in on is when an interest rate rise starts to emerge.

Now, that is clearly not on the agenda for quite some time. They may play around with macro potential, but the chances of rates increasing are very, very limited. So I will be very confident about diving in as long as you're following all those parameters that you've spoken about, Goose,

to find the right property in the right location at the right time. Yeah, absolutely, absolutely. It all comes down to the fundamentals though, because you've got to make decisions for the long-term, not the short-term. And so as long as it's underpinned by good fundamentals and you're buying good quality assets,

it's going to serve you well in the long run. Thanks, Goose. Well, there you have it. So if you want to hear a deeper dive on the excuses why you shouldn't buy a property right now versus the reasons why you should, join Goose and I on a recent episode that we did on both Get Invested

and the Investor Lab podcast where we go into all of the details. Stay with us. You're here on Realty Talk. Property deductions can save you thousands of dollars each year to make sure you maximise 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 guarantee to find double your fee in the first full financial year deductions. Call B&T on 1300 728 726 today for an obligation free quote. Hi and welcome. Now Adelaide's housing market has been considered quite an affordable option when compared to the eastern states but post-COVID buyers are becoming bewildered at the increasing price of property and the high level of competition and according to latest CoreLogic figures Adelaide has recorded one of the highest monthly and quarterly growth rates amongst the capitals with housing values at 1.9% in August to be 5.3% higher over the past three months. And over the last year, house values have risen at more than double the rate of units,

rising by 19.8% on average, while unit values are up 6.4%. Now, this is well above the 16.1% left in national housing values over the past year, which is actually the fastest pace of annual growth since February 2004. Now, clearly, Adelaide continues to outperform. So to read between the lines and to find out what's really happening on the ground and to find out what's happening with property in my hometown of South Australia, we're joined by leading selling agent, Scott McFarlane from McGain's Real Estate. Welcome back to the show, Scott.

Thanks, Bushy. Nice to be here. Always good to have a chat to you, mate. And I love your insights on what really is happening in the trenches of property. So just to kick things off, mate, what's your read on what's really happening and why with the local SA property market? Okay, it's very interesting. We're really excited, obviously, with what's happening, like, you know, Adelaide has been a bit slow with capital growth over the last 10 to 15 years, really since 2006 was our last major push up. So it's been really interesting. There's been a lot

of, I guess, pressure on Adelaide's market to do with jobs and retention of talent and all those sorts of things so COVID has provided this environment where South Australia is obviously a desirable place to live because it's been so COVID safe I guess you know we've had a lot of freedoms that you know fortunately for us but unfortunately for other states that they haven't had and you know through good management I feel like everyone in South Australia is now really positive about you know all the great things that South Australia has to offer you know we've got great lifestyle we've got great wine regions we've got great beaches you know we're not that far from Sydney and Melbourne so COVID has provided this opportunity where a lot of people

are moving back to Adelaide because they can live here work remotely and you know still buy property at a reasonable price and have great lifestyle options it's it's pretty exciting for us here in SA. Yeah totally agree and both you and I are pretty biased on that but it's still the country's best kept secret mate but uh tell me what type of properties at what sort of price points and locations are experiencing the highest demand that you're seeing well that's that's a really interesting question because obviously supply and demand has been the biggest issue in south australia like there's been um definitely more properties sold um this year in the last 12 months than the previous couple of years but a lot of those actually haven't come to market so

when you look at the listings data from realestate.com for instance it still looks like listings are lower than they have been in previous years in South Australia but what's happening is a lot of those deals are actually being done off market because the market is so buoyant there's so many buyers around there's a lot of pressure from buyers to go where's the next listing coming from it's a really interesting situation but some of the areas that have you know had the most amount of growth we're seeing in the eastern suburbs there's been an amazing amount of growth because it's been quite stifled over the last 10 years. So suburbs like Dulwich and Unley and Rose Park

are all up around the 30% growth in the last 12 months, which is amazing. Then when you have a look at the bottom end of the market through, if we go south, for instance, which is my core area, you know, the Hackams, the Morford Vales, those sort of entry-level suburbs, they're up around 27% to 35% depending on which suburb.

And I feel like that is a lot of competition between investors and first-time buyers trying to get in the market, which obviously is pushing that price. Yeah. The really interesting fact is there is a couple of markets that haven't had the same amount of growth. If you look at the middle through the Woodcrofts or the Halicose or the Flagstaff Hills,

they're in the 16% to 20% growth in the last two months, which kind of shocks me a bit because they're the popular suburbs, but it almost feels like the bottom has grown at a faster rate than those, and therefore there's probably still a lot of upside to those middle suburbs that investors can capitalize on or people that are looking to upgrade from a lower or need to upsize that could actually capitalize from selling at a really high price with 30 or 35 growth in the bottom suburbs and buying into somewhere that's only had 20 growth there's still room to grow it's it's actually really interesting when you

sit down and analyze the numbers yeah it's interesting so the the sweet spot from what i'm hearing is in that that sort of mid mid-range price level absolutely i feel like that and i feel like in our sales meetings i think one of the important things with our businesses we've got a lot of sales reps over 22 sales staff and so we get to you know talk about this on a weekly basis to go what's happening in the market what's the buyer numbers like what's the offer numbers like and we get a constant feeling at the moment that the bottom end is raced pretty much out of control and the middle hasn't caught up yet and i feel like um you know even a lot of our buyers agents are actually seeing that and uh shying away from the bottom end at the moment and looking more to

the mid-range because i feel like there's still capital growth to go there which you know when there's smoke there's fire there's there's always a story to be told when you know people are analyzing the same stuff and coming up with the same sort of results yeah very very interesting I mean, it's relatively, there's still very strong growth, which is great news. So putting that back in the perspective of buyers and sellers, what's your advice to them in the current market? Well, I guess what we're seeing in the market, like we were concerned, obviously, with so much growth that when is this going to stop?

What's going to hold it back? And at the moment, with the Reserve Bank commenting in the last couple of weeks that they're not going to you know influence the interest rates based on the housing market i feel that's a really important step because we're worried obviously with inflation if the reserve bank steps in increases interest rates that's going to obviously put a stop to growth but if that's not going to happen then with the buyer demand that we're getting and the numbers we're getting it opens the number of offers we're getting we can't see this stopping so i guess when you translate that back to buyers and investors if the market is still going to be going because the reserve

banks are not going to curb interest rates then that means there's still growth to go if there's still growth to go my advice is do what you can to buy now because you'll get the benefit of some growth it won't be the same as what someone got when they bought 12 months ago but you can't look backwards on that you need to look forwards and go there's still demand I need to get in if I don't get in now then I'm going to be missing out every month that I miss out on so it's going to be extra benefits if they bite the bullet and it's hard because you see the market racing you you want to try and buy it last week's prices but you just got to buy the bullet and do it spot on what about on the uh sell side on the sell side i mean ultimately um i feel like you know there has

been great benefit in holding things up until now um i'm obviously a real estate agent i want to be to sell your property you know it's a vested interest but i feel like there is still a little bit of growth to go but you've got to buy very well in the end good properties don't change location frontage size land size they will never go out of fashion yeah as more and more development happens through adelaide because our infrastructure determines that they want to develop older areas to take advantage of infrastructure that exists then anything you buy with those sorts of things are definitely going to be sought after in the future no matter what and if capital growth was going to stop today it still doesn't matter because in five or ten years time when this

happens again you still own a good property and you're going to get the benefit of that so if it's the right time for you to invest it's time to invest and the longer you put it off the more you miss out. Yeah. Yeah. Some very sage advice there. Thanks, Scott. And thanks again for sharing those thoughts with us on the show today. No problem, mate. Anytime and good to catch up with you. Absolutely. Well, it's very clear that Adelaide continues to be the best kept secret on Australian property. And if you're looking for a very affordable, steady, incremental, long-term growth opportunity without the rollercoaster rides that you see in the eastern states, South Australia is a great place to look. And if you're looking to sell a property in the

current market, reach out to Scott and the Beganes team. Keep watching Australia's most popular property show here on Realty Talk. Hi and welcome. In this week's Bushpile, we continue our special series on the art and science of negotiation. Given the critical importance of your ability to negotiate, especially in the current high demand property market. Now, over the last two weeks, we've discussed the need to change your outlook and build good rapport along with building your negotiation toolkit by helping you with mirroring and labelling along with the impact of perceived power. This week we start getting into the nuts and bolts of a property purchase and we look at how to start levelling the playing field

by getting your finance in order and revisiting the old adage that cash is king. So let's turn to the specific negotiation of buying a home and for the purpose of this discussion we're going to focus on the situation of when you're buying a home that's advertised by a real estate agent. Generally in these situations, the perceived power is slanted in the direction of the seller depending on prevailing demand and supply conditions. Why do I say this? Well, because this is a situation where you're potentially only one of many competing buyers of which you know absolutely nothing about. You're all dealing with a selling agent who's effectively a professional negotiator that's negotiating all day every day and generally you don't even know who the seller

is. This situation is a bit like you being the small shepherd David up against the giant heavily armored ogre Goliath and his army. You really need to be able to craft the negotiations in a clever way that allows your slingshot offer to hit the real estate sales agent Goliath between the eyes in a way that your offer looks better and more appealing to both the agent and the seller. And generally, you only get one shot. This is especially true in a hot market such as we're experiencing right now. You're trying to make your offer more appealing than all of the other competing buyers to the professional selling agent and the unknown invisible property owner, seller or vendor.

So the playing field and perceived power are well and truly slanted towards the seller. This is a very challenging and difficult competitive environment to negotiate in. And according to a reputable survey in Australia, the average home purchase takes over seven months, soaks up over 90 hours of your after hours time, involves looking at an average of 12 properties, the results in over six offers before you finally secure your property. Now that's a lot of time, stress and headache. I'm sure this is why buying a home is considered one of the major stressors alongside death, divorce and public speaking. So how stressful is buying property? Well according to surveys conducted by Allianz and home.com, 42% of buyers feel overwhelmed, 51% of buyers feel

very stressed when buying a home, 13% feel that they paid too much for their property and 28% are heartbroken that they didn't get the property that they wanted. So let's be clear, buying a property is hard, costly, time-consuming and stressful and this all comes to a head in the final price offer negotiation. The time when you're making an offer signals to the selling agent and the property seller that you have a clear interest in the property and the point when they hold all of the cards. You're likely been negotiating on a property only a few times in your life in a situation when you're dealing with a professional full-time independent negotiating and the selling agent who's doing this all day every day and he knows where you sit relative

to other buyers that you're not even aware of. So in the property negotiation perceived power is clearly with the seller and as the buyer you're wearing most of the uncertainty. The seller hasn't even met you so there's no basis for trust and all of your future hopes and dreams for you and your family's lifestyle become focused on this property. This is a highly emotionally charged position. So how can you level a playing field in this situation particularly in a seller's market like we're experiencing at the moment? Well fortunately I've been involved in a huge number of high price negotiations over the years both as an architect and a project manager. In these, I was trying to win massive multi-million dollar design and building tenders

for up to $300 million against international competitors. I've also been personally involved in over a dozen property purchases and have assisted thousands of our clients to secure property as homeowners investors. So here are some of the buying negotiation tactics and approaches that I employ or I've seen employed to give you the best chance of securing the property that you're interested in. And this coincides with some suggestions that I borrowed from industry stalwart Bryce Holdaway. The first tip to reduce uncertainty and give the seller confidence in your offer is to remember the old adage that cash is still king. The key here is that if you're borrowing money to complete the purchase, make sure that you've already obtained

finance pre-approval from a lender via your savvy mortgage breaker. And it's really important to make sure that it's a full finance pre-approval based on a complete loan application including all of your financial information and that all the bank needs is to complete evaluation to formally and unconditionally approve your loan. But don't fall for the trap of the quick and dirty finance approval letters that many banks offer based on a quick cursory and often verbal look or chat about your finances. These letters aren't worth the paper they're written on and given the increased bank scrutiny, along with continuous and often daily policy changes that banks are currently making. You can find yourself in the dangerous position of not being able to complete the

purchase if the finance approval then ends up being declined once you've provided all of your detailed financial information. However, assuming that you've taken the one to two weeks to achieve a full finance pre-approval at or above your property price offer, and that your deposit funds are readily available, then you can actually evidence this to the real estate sales agent. This provides increased certainty of your offer without the concerns that are usually attached with offers that are subject to finance. What you're doing is giving the vendor certainty and security, which is something that most sellers, vendors and agents value enormously. If you make your offer unconditional, meaning it's not subject to finance,

this strengthens your offer even further. However, if you're lending money from a bank to complete the purchase, I wouldn't suggest taking this risk in the current dynamically changing lending environment. So to summarise the key points from today's session on levelling the playing field and cash is king, the real estate agent negotiates professionally, whereas you as a buyer probably don't. You also don't get to talk to the seller, so that puts you at a disadvantage. The playing field is therefore very clearly tipped against the buyer. So as a property buyer, you may feel that the odds are stacked against you but you can tip things back in your favor if you give an unconditional cash offer and in the very least have a full finance pre-approval based on a complete

loan application. In next week's negotiation special bush bite we'll reveal the two numbers that buyers need to know before negotiating and you'll hear how negotiation starts at hello along with the benefits of being smart by acting dumb when it comes to successful negotiation. That's more food for thought. I'm Bushy Martin from the Get Invested podcast. Stay tuned for more. Well, that brings us to the close of another great show.

A special thanks to our guests, Goose McGrath and Scott McFarlane. And a reminder that you can see all of our shows at realty.com.au. And while you're there, check out one of Australia's most extensive range of properties for sale from over 7,000 agencies nationally. Thanks again to realty.com.au and BMT Tax Depreciation for their ongoing support. I'm Bushy Martin from Know How Property Finance

and I look forward to seeing you again next week. Miss something in this week's show or want to catch up on past shows? Do it anytime at realty.com.au where we connect buyers, sellers and agents differently.