Property Hub - Investment Insights & Inspiration - Realty Talk - Borderless Property Buying Surge

Episode Date: June 22, 2024

The number of buyer enquiries to purchase property interstate has jumped significantly but where they are looking to buy has also changed dramatically.  Just under a quarter of all enquiries are coming from buyers based in a different state to the one they were looking to buy in over the last 12 months.  That figure has jumped by 35% year on year.  In this week's show, Emma Slape, Real Estate Institute of South Australia Director and CEO of Turner Real Estate, tells us that 1 in 3 of those enquiries are being channeled into one capital - Adelaide.  So what is happening - what has changed?   We will find out today as Emma is Bushy’s guest first up in a moment.   Then in the second part of the show, Bushy is joined by Brett Wheatland, an award winning property management consultant with over 23 years experience who sets about unmasking the rental crisis.  He gives a different perspective. Subscribe for free to Realty Talk on the Property Hub channel, join our community and get more insights here: https://linktr.ee/propertyhubau 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.See omnystudio.com/listener for privacy information.

Hello once again and welcome to this week's Realty Talk show. The number of buyer inquiries to purchase property interstate has jumped significantly, but where they're looking to buy has also changed dramatically. Just under a quarter of all inquiries is coming from buyers based in a different state to the one that they were looking to buy in over the last 12 months. That figure has jumped by 35% year-on-year. In this week's show, Emma Slate, Real Estate Institute of South Australia Director

and CEO of Turner Real Estate, no relation, tells us that one in three of those inquiries are being channeled into one capital city, Adelaide. So what's happening? What's changed? Well, we're going to find out today as Emma is Bushy's guest first up in just a moment. And then in the second part of the show, Bushy is joined by Brett Wheatland, an award-winning property management consultant with over 23 years experience, who sets about unmasking

the rental crisis. He gives us a different perspective. before we start i want to say a thanks to our supporters and content partners realty.com.au bmt tax depreciation know how property finance get rare property and apiro marketing if this is your first time with us a big welcome you're going to find us on all podcast players and through the southern cross aus syria network if you like the show hit that subscribe button help us to continue to bring you the best guests every week. And don't forget too, you can join the conversation anytime on Facebook. Simply search for the Property Hub Collective.

We'll be back in just a moment. 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 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. Realty Talk and your host, Bushy Martin. The share of inquiries from buyers to purchase residential property in the state has jumped

significantly in recent times. And my good old hometown of Adelaide in South Australia has been the most popular state with interstate buyers over the last year. Well, to reveal what's really happening in relation to interstate interest and the impacts, if any, that it's having, we're joined by Emma Slate. Welcome back to Realty Talk, Emma. Sarah. Now, Emma, interesting exercise and there has been a bit of a change in appetite in this regard. So what's your local take on the changes to the level of interstate interest by buyers and buyers agents in recent times? We've definitely seen a real uptake in that probably in the last three

to four years I'd say we're probably starting to see a little bit of it leading into COVID and often it's driven by someone who might have grown up here still got family here know Adelaide I mean certainly for a lot of property investors knowing the area is important to them and they just can't afford, particularly Sydney or somewhere like that. So they say, look, one day I might come back to Adelaide or I love the security of Adelaide. I know that it's a really dependable market and so they're turning to it there.

We're also seeing now that property prices have increased so much in Adelaide and we're still seeing a very tight rental market that investors with a budget will come along and say, I'd love to buy two properties in Adelaide. I really think that's going to be a better investment for me, both capital-wise as well as yield-wise, rather than buying in Sydney or Melbourne. And I think the Melbourne market definitely has people

a little more spooked at the moment. So they're definitely turning to Adelaide and, dare I say, Perth as well because that demand is there, the economy is fairly strong and long-term projections show that we are going to have strong demand for rental properties for quite some time with both net migration and also a lot of industries investing a lot of infrastructure in and around Adelaide. Well said.

That sort of relative affordability piece is certainly holding. But digging into the details a bit, what sort of property types, locations and price points are interstate buyers and their advocates focusing on? Yeah, and we're definitely seeing a lot of people sort of come around and say, what could I buy for $500,000 to $600,000? And that's probably just the cost of where we would recommend investing. If we have the capacity with the investor to look at something

around the $700,000, we're starting to look at more of a family home in the outer suburbs. So we might be 20 kilometres out of the CBD, but we'd be looking at a probably three-bedroom home perhaps built in about the 1970s it's going to be in a decent area with strong home occupiers around the area schools facilities all those types of things so it's going to be a well-performing rental long term if the budget is five to six hundred thousand absolutely we can still make that work but we might be looking at something on a smaller parcel of land and we might be a little closer to the city we're not going to get

as much capital growth but certainly there's still a lot of good quality units or small houses that we could get perhaps within 10 to 15 kilometers of the city in that price bracket as well so again it depends how long people are looking to hold and where their yield in the short term is more important or whether they want to see that capital growth longer term being the number one priority Awesome. Now, I'd love your thoughts on what impact, if any, is the increased level of interstate interest having on local property conditions? And if so, where and what type, I guess? yeah what we're starting to see often with interstate investors is they are really keen to get into the market at a certain price point they're very unemotional about their buying so often they might be in the hunt for a property but they might not be the successful purchaser

every time so turning to the sales and aside and what we see in that type of business we'll see at those offers but it tends to be where they're really really keen to secure something sooner rather than later in the financial year sometimes has a bit of bear in there if they're looking to reduce their tax but not just interstate investors a lot of investors full stop in our circle at the moment sort of waiting for prices to abate a little bit waiting for bargains I'm not sure if going to happen but and they seem to be investment ready and so what that tells us is now and in the next sort of 12 to 18 months we will see those people into the market one way or another so some are looking for more of development sites longer term those larger blocks of land that were perhaps

built in the 60s and 70s particularly in those sort of outer areas looking to perhaps subdivide them into two or three properties. So we've also got that dynamic of an investor in certain pockets of the market too, particularly when you're talking about relatively flat land that makes it an easy subdivision project. Yeah, absolutely. Now, I guess, given that you're on the ground and know the local conditions intimately, what's your guidance and advice for interstate interests that are relying primarily pretty heavily on desktop data and other people's opinions and looking to secure properties that are sight unseen in South Australia. What's your thoughts on that one? I think understanding the demographic of the area

is really, really important. Some of the properties that may fall below the sort of five, six hundred thousand may be an area that attracts a different tenant demographic than would be ideal. Perhaps a much higher concentration of tenants in the area rather than owner occupiers and that will have an impact long-term on capital investment. You may also find a little more troublesome tenancy. So we would definitely say get to know what's going on in the area, talk to agents about where they see the pockets of different suburbs. And school zones are becoming more and more important.

There's a couple of key schools in Adelaide, as it would be in every state. And so to come April, May, when the schools are asking for those leases and two years in advance, we find those properties very hotly in demand. So if you were one of those, there's a price premium attached to that, which these days could be between $50 and $70 a week, which of course adds up over the longer term. So getting to know those subtleties is really important to make sure that you're absolutely maximising your investment and return on what is a pretty big commitment long-term with property. Thanks again, as always, for taking the time to join us here on Southern Crosshouse Stereo's National Property Hub platform.

Thanks, Emma. No worries. My pleasure. 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. KnowHow 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 now if you're purely getting all your information from news headlines in the mainstream media you believe that there's no end in sight for our national rental crisis, with things only going to get worse. But is this really the case? Well, to dig below the state and regional mediums and averages that are often misleading, it's actually better to hear it straight from the horse's mouth, so to speak, from active professionals that are in the industry or actually in the trenches with their sleeves rolled up dealing with the actual reality. So to shed some light on this really important subject,

we're joined by Brett Wheatland, an award-winning property management consultant with over 23 years of experience, who's actually leased over 2,200 properties in his time. And he's also the general manager of a specialised property management agency, Renting Adelaide. So welcome to Realty Talk, Brett. Thanks, mate. Thanks for having me. Looking forward to this chat. We've known each other for a number of years, but I guess to jump straight into the exercise, can you talk to us about what market rental trends you're actually seeing on the ground at the moment? Well, we've probably just seen a very recent shift changing now

and we haven't seen that since, I guess, pre-COVID where we are looking at a change in the number of inquiries across the board. There's been a significant drop, funny enough. It doesn't indicate the demand has changed. It just probably means there's maybe less people out in the market but there are also less properties, as we know. So, yeah, we are seeing that slowly shift.

It could be somewhat seasonal. Pre-COVID, we used to flow into winter and things slowed down. Over the last four years, that hasn't happened, but I think maybe this year we're going back into that seasonal change, which is interesting, yeah. Yeah, and lastly, sir, well, sort of flowing on from that, Ben, is there any variation in the demand for different types of property profile and if so, why, mate?

Yeah, we're definitely seeing a huge demand at the bottom end of the more affordable stuff. So obviously we've seen prices go up significantly, especially in the last 12 months. So we are seeing that affordability factor for most people. The average income hasn't changed a lot. So the demand in that lower end of, you know,

less than $500 a week is really, really strong. The top end of the market, a little bit slower now and we've seen a ton of tenants buy properties, which has been great. We've seen loads and loads of tenants breaking leases to move into their own property, their own investment, because they've realized, hang on, why am I paying five, 600 bucks a week when I could just go and get a mortgage effectively? Not that simple, but obviously they're being more realistic about what they can afford. So they're buying smaller properties, maybe units. They're looking to the more regional based areas and therefore we're seeing them shift out of their fixed term rentals yeah and from a

locational perspective we if we look at what's happening in in around metro adelaide uh any variation in in trends in in the locational piece uh yeah we have seen some shifts we've definitely seen the demand go up in the outer suburbs um and it's always forever going up in those outer suburbs simply because the affordability uh we are seeing stock coming to market though with these developments um you know down into places like hackamonka bringer heights and hills that have seen these new subdivisions opening up and they're just growing by uh huge rates we're seeing rent prices in that area go through the roof um simply because the demand is there um we've seen the the apartment market and the city market pick up as well i think obviously a lot of that is uh

migration into into the state that are seeing that as an opportunity to get their selves better down So that apartment market, which in previous years has been really badly flooded with that COVID issues, that's now starting to clean out. Yeah, and we're finding the older properties are getting harder to rent. So the subs, I won't call them substandard because that puts them into a category that probably tells us they shouldn't be on the market. But the properties that haven't had the TLC from their investors, new kitchen, new bathroom, all that sort of stuff, those properties are getting harder and harder to rent because tenants' expectations for their dollars are getting higher and higher and higher. Yeah, awesome. We're hearing a lot more about share housing interests. What's your read on what's happening in that area?

Yeah, 100%. So another consequence of that, city market and those marketplaces where we have students coming into the country to rent an apartment service, they are looking at their now and making decisions to move into share house scenarios because they're paying we're seeing prices in uni lodges hit four or five hundred bucks a week which is crazy obviously opportunistic probably from some of those providers equally the demand is there but we are now seeing tenants shift into the big properties the four or five bedroom homes we've we've got clients that have built properties specifically for those needs they are always rented always rented getting premium rent there's no headaches in that respect um but we are going to be seeing that shift into

the rooming house market change as well with the need to be um you know a provider as such picked off by the government so that will be an interesting space to watch i think yeah very good point uh the legislation will certainly have some ripple effects so on the flip side of that then brett are there any types of property that are now actually proving difficult to rent and and again would love your read on why yeah i think i think those those dated properties properties that are just a little bit i'll call them ancient they could be 70s 80s builds they haven't had any love or attention they're probably still in great nick um but i think tenants are expecting a higher quality of dwelling um that's come through education pieces that's come through

social media that's through government um policy and processes coming to play that tenants now are expecting a better quality property newer property and therefore those older dwellings big blocks of land with big pieces of lawn that they have to cut trees they have to trim and all that becoming much harder to rent simply because I think landlords are expecting the same sort of price sitting on 800 square meters of useless land tiny little house whereas obviously from investment point of view we could put two properties on that block and generate twice income. So those properties that are being snapped up by developers and investors obviously have to be rented out for a period of time until such time they get their approval. The building process

takes a while as well. And we are finding them harder to rent simply because of that. Yeah, well said. So if we sort of join the dots between everything you shared with us, what does this all mean for investor landlords both now and moving forward? then bro well i think the the good thing is that we absolutely have seen a shift in tenant expectations um some property managers probably tell you that's a bad thing because they're getting more demanding um but equally from an investor point of view um you have that uh i guess peace of mind if you've got a well-sized property it's well presented and when i say well you know i'll say i'll call it modern let's use the word modern um that it's going to be a rentable

dwelling regardless you draw a circle around our city push it 20k's out you can now push that probably 30k's out and three bedroom two bathroom anything built in the last 10 years is going to rent and it will always be rented um it's that simple yeah not that very well concluded uh the the penultimate question then uh which you know again as i said in the entry uh the intro the news would like us to think that there's a never-ending rental crisis. What's your read on that? Do we still have one? And if so, in what sections of the market? Yeah, we do. And I think it's something that we don't talk about because there are sections of that market that are absolutely struggling like never before. And it's that lower end of the

social economic market that are very, very hard situations for those people that fit into that, I'll say a price bracket to some extent under $500, those tenants are really struggling because that is the most competitive part of the market. Housing affordability really falls into play there. And we're not seeing properties coming to market that can cater for that area, if that makes sense. Because really, we're talking now about a medium rent of, let's say, their budget's $450,000.

that's only it's only going to get you a two-bedroom unit yeah and if you you need three bedrooms you've got a child or two children um that's going to be really hard um so i think that market is becoming ultra ultra competitive and unfortunately in some of that space those people may not have the best references or have any references at all uh they may be coming from abroad and have zero history so it's making it hard for those people to find properties property managers and landlords probably being more scrupulous with their fact checking their application processing because it's a higher risk market as well so it is super super competitive and that's the space where there is a crisis and there will be i think that's an area where the

government probably need to step in and start providing us with some public housing that cater for those people that can earn you for to pay up to $450 a week for a three-bedroom house, if that's even possible. Yeah, very well said and hit the nail on the head there. So look, I really want to thank you for these really hands-on insights, Brett, which, as always, does paint a bit of a different picture to the fear-fuelled stories that we keep hearing in the news. So if you really want to find out what's happening on the ground

in residential investment, reach out to a long-term local property manager like Brett who have their fingers truly on the property pulse. So thanks again for joining us on The Property Hub today, Brett. Thanks, mate. And that brings us to the end of this week's show. Make sure you don't miss a single episode of Realty Talk or Bushy's Get Invested podcast delivered to you each week by subscribing to The Property Hub now on your favourite podcast player

or wherever you are listening to or watching this show. Also, join the conversation anytime on Facebook at The Property Hub Collective. A big thanks to our supporters and content partners, Realty.com.au, BMT Tax Appreciation, Know How Property Finance, Get Rare Property and Apiro Marketing. I'm Kevin Turner and on behalf of Bushy Martin and the Property Hub team, we look forward to seeing you again next year.