Property Hub - Investment Insights & Inspiration - Realty Talk: Mortgage Challenges + Green Shoot Locations

Episode Date: April 21, 2023

This week we’re giving you a balanced property diet spread across finance, skills, prices, and negotiation tips. If you have - or want to get - a mortgage at the moment then you face considerable challenges.  Bushy talks to Ryan Gair from Rate Money about how you can overcome them. Nicole Davidson from Growth to Success tells Bushy how to harness untapped potential so you can survive and thrive. Terry Ryder says there are green shoots appearing around Australia and he tells us where and how to find them.   Buyer’s Agent Cate Bakos joins Kevin with the good oil on Best & Highest Offers and Closed Tender Bids. RealtyTalk is part of the Property Hub podcast channel, your home for property investment insights, inspiration, and stories from Australia’s top property experts, investors, leaders, and analysts. Subscribe now to get every RealtyTalk episode delivered to you each week for free, and also get full access to Get Invested, the leading podcast for Australians who want to unlock their full ‘self, health, and wealth’ potential and get inspired by the stories of investors, founders, and entrepreneurs. 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] 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 property hub's go-to home for property investment insights, inspirational stories from Australia's top property experts, leaders and analysts. I'm Bushy Martin from KnowHow Property Finance and this week we're giving you a balanced property diet spread across finance, skills, prices and negotiation tips. If you have or want to get a

mortgage at the moment then you face considerable potential challenges. So Ryan Gare from Rate Money joins us to show you how that you can overcome them. If you're wondering how you can unleash untapped potential so that you can continue to survive and thrive, Nicole Davidson from Growth to Success shows you how you can bring out your best. Despite nightly news to the contrary, Terry Ryder from Hotspotting joins us to reveal that new green shoots are showing signs of property growth in many parts of the country and he even unpacks what your opportunities are. So this is a must-watch interview for anyone looking to buy property this year. And to continue Kevin Turner's special series on the art of negotiation, buyers agent Kate Bakos joins us again to give you the

gold on best and highest offers and close tender tips. And before we get underway, if you're enjoying the show, we want to thank you for tuning in. And I need to ask you a special favour, because we really need your help in order to continue to attract industry leading guests to share their insights and innovations. So can I please ask you to take just a couple of seconds to hit the like button and the subscribe button wherever you're watching or listening to the show. because we're on a mission to get to 1 million subscribers. And by helping me to help you together, we're going to help those that are less fortunate,

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We'll also get a free copy of my award-winning book, Get Invested, just for making the effort. We've got lots of property gold to unfold, so let's get on with the show. 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 Know How 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. With inflation at a three-decade high and unemployment at a five-decade low, according to recent RBA figures, the record-breaking rapid rise in interest rates to their highest level in over 10 years is creating a number of challenges for both existing and new home loan borrowers. So what, if anything, can you do about it? Well, to outline the challenges and how you can best overcome them,

we're joined by Ryan Gare, the CEO and co-founder of Rate Money, an award-winning mortgage management franchise who specialise in servicing self-employed Australians. So welcome back to Realty Talk, Ryan. Thanks for having me back again, Bushy. Great to see you again, mate. Now, interest rate rises and increases are affecting pretty much everyone at the moment.

So can you start by bullet pointing the sort of five major challenges that you've identified that both current and new home loaners are experiencing? Yeah, I think the five main points is the pressure of repayments now. Obviously, for a lot of borrowers, their mortgage repayment has doubled. I think as well with interest rates and mortgage imprisonment as well is another one where people are feeling like they're trapped and they can't refinance. I think as well, moving forward for when they come out of this time is affecting their CRA as well is another main bullet point. And my fifth one, I wish you were going to have to stop because I only wrote down four.

What was that fifth one? I'll jump straight in there, mate, because you've got a lot on your plate. It's really the cash flow issues that self-employeds are currently facing as a result of what's happening in the market currently. So, mate, let's take the opportunity now to deep dive into each of these and break these down. And I'm going to separate my question on borrowing power into two parts.

Firstly, what impact is rapidly rising interest rates having on borrowing power? And can you give us a bit of an example of that? Yeah, so obviously back when fixed rates were sitting around about 2% on fixed rates and the all-time low, The buffering rate for a lot of people, if you're not quite sure what a buffering rate is, is the lender needs to ensure that if interest rates go up, obviously from your current variable rate, that you can still make your mortgage repayments. The problem that we've had is the buffering rate was sitting at around about 5.5% 12 months ago. Now that is your current interest rate that you're getting, 5.5%.

So now the buffering rate has now needed to increase to roughly around about 8.5%, which means if you're going to seek new finance or refinance, purchase a new property or refinance, you have to be able to service a loan at 8.5%. Yeah. A lot of people. Yeah, I think the hidden exercise there as well as this total focus on the rate rises, what people aren't getting their head around is that every time there's a rate rise, there's a consequent drop in borrowing capacity. And I've talked on the show recently where on an average $500,000 or $600,000 home loan, for every 1% increase in interest rates, your borrowing capacity drops by an average of about 100,000. So if we've gone up over 3% for the average home loan, and there's $300,000 or more

that they can't borrow in the current exercise. So given that exercise, Ryan, what can borrowers still do to actually increase their buying capacity and their resulting property purchase power? Yeah, so again, similar with home loan interest rates, obviously last year and the last couple of years through that COVID period with everyone being so aggressive and the cheap funding available, you had your business loans, you had your personal loans, car loans, all of those sorts of consumer debt loans as well at very low rates

as well. So a lot of people were just going and taking out a personal loan or a business loan or whatever that might be. But now with having your mortgage going up and your business loans potentially going up and personal loans and everything else is consolidating those debts into your mortgage. Now, a lot of people get worried about consolidating that debt into their mortgage as well because they're saying well i'm paying this back over a 30-year loan term i want to be able to pay that debt off so that's where structuring your loan is key and making a separate split so you know that's your car loan you're paying it off at five and a half percent or whatever it might be and you can still pay it off as quickly as you wish

and that frees up cash flow as well yeah very well said i guess the other thing that is you know pretty much commonplace for you and I to know but probably a lot of the listeners aren't aware of is that there is a massive variation across the lenders in terms of how much you can borrow based on exactly the same income and liabilities position so don't just assume that if your current bank isn't able to give you the borrowing capacity you need canvas the range of other lenders out there either through you know what you offer through rate money with the lenders that are sitting behind you or others because there is, you know, we've done some homework on it,

there's up to a 55% variation across the banks in relation to buying capacity. So don't take your bank's no as a no, I guess, is the thought there. Now, mate, I want to shift now across to property values and get your thoughts on what impact is softening and falling property values in some areas having and what, if anything, can borrowers do about that? Yeah. So the biggest tip that I can give is a lot of people are waiting for their fixed period to

end. Then they go, oh no, goodness me, is that how much is going to start coming out of our bank account each month? Now we better look at refinancing. So generally then that's, you know, you start to think about it three or four months prior to that fixed rate ending. Then you actually start doing something once your first repayment has come out and you've past four or five months now if you think that your property is going to soften in value don't wait evaluation generally lasts 90 to 120 days with a lender once your loan is unconditionally approved you have another 90 to 120 days to return your mortgage documents and settle as well so my biggest point would be is act now don't wait so you're giving the best opportunity for

your property to be valued as of today not in three four or five months time which could really make or break your home loan refinancing now so if you are coming off that fixed rate and we know there is a lot of people coming off fixed rate or if you need to consolidate your debt if you My point is if you're looking to work out how you can get better cash flow or a better interest rate, don't wait to the last minute. Prepare now. Yeah, very good advice. Now, that's a great segue into the old looming fixed rate mortgage cliff

that we're hearing everything about. What's your read on its impact as far as that goes? Well, as we saw, we've seen inflation. I think inflation was peaking at 7.8, I think it was from memory, and it has dropped down to 6.4%. So obviously the impact of people coming off fixed rates is really beginning to hit home. Arrears are beginning to creep up and hardship

and those sorts of things as well. Now, there are ways that you don't have to go into hardship for some customers or go into arrears, and obviously that will affect your credit rating as well. And your credit rating is extremely important because when things turn for your business or interest rates drop again and you're ready to go and buy another property or whatever that might be and you're in a better position,

it can actually hinder you then from borrowing when you're ready as well. So I go back to it's interest only, which a lot of people see as a dirty word. It's certainly not. It's a great way to increase your cash flow, make sure you make your mortgage repayment as well. so if you're on principal and interest on your owner-occupied property there are lenders that will facilitate interest only against your property and when you're back in a better position you can always flip back to P&I at no cost in majority of the cases. Yeah extremely well said

what about the implications for those homeowners who you know have seen their repayments jump up so high and they they're starting to get to a point where they're potentially missing repayments So have you got any thoughts on that aspect? I think if they're potentially looking and could be missing their repayments, as I said, before they get to that point, they need to go back and have a look at what they can consolidate. The other big thing for small business owners as well is tax debt seems to be a big issue at the moment.

Obviously, the governments were giving a lot of tax relief throughout that COVID period. that pressure is now coming back on to small business owners to pay their tax debt back and again there's a lot of people who aren't aware because their mainstream lender being the banks wouldn't pay out tax debt there are many options out there which lenders will consolidate debt pay out your tax debt and free up that cash flow for you yeah beautifully said now as rate money are self-employed lending specialists in addition to that tax debt are there any other issues and options that self-employed borrowers have that you can assist them with? Yeah I think being

self-employed there's a lot of choppy years there's ups there's downs and those sorts of years where banks are looking for more of your PAYG customer consistent income you get paid your wages and don't really understand the self-employed customer or on the other side of things as well is that you're having a bump a year but of course the tax year hasn't finished so you can't provide those financials as well there's what we call is a load-up option where you don't have to supply your tax returns and your financial income it's a simplified process and that's through BAS or what we call an accountant declaration and these days the rates aren't a huge difference to what some people think that they were back GFC times and those sorts of things the rate really

disparities only roughly around about one percent difference as well and then of course that gives you the flexibility to also consolidate your debts if you do have some tax debt pay that out and actually puts you in a better position at the end of each month than what you might be now as well. Brilliantly said, Dan. I really want to thank you for putting some perspective and providing some really good response options

to controlling costs around these property and finance challenges, Ryan. And thanks again for your time on the show today. Thanks, Bushy. Appreciate it. Thanks, Ryan. Well, as you've clearly heard, there's no such thing as a problem, only a challenge to be overcome.

So if you'd like to know more about what you can do, reach out to a Savage Mortgage Broker or contact Ryan and his considerable team at ratemoney.com.au. Keep watching and listening to your property health premier place for all things property here on Realty Talk. Property deductions can save you

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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. Do you have untapped potential that's not being utilised? And how can you unleash the underutilised energy of yourself, your team and your business to greatly increase your sustainable success and your enjoyment? Well, these are important questions that we all need to get our heads around quickly in our current hyper-competitive environment, where the tidal wave of open AI or artificial intelligence is about to change the world of work forever overnight.

So to help you come to grips with how to best bring out the best in yourself and your people so that you can continue to survive and thrive in the days ahead, we're joined by self-leadership coach and author, Nicole Davidson from Growth to Success, who specializes in the real estate industry. So welcome to Realty Talk, Nicole. Thanks for having me. Great to be here, Bushy. Thanks, Nicole. That's a really topical and relevant subject given the times that we're now living in so to sort of kick things off when are we at our best? I believe we're at our best when we feel alive and there are so many things that can take us away from even noticing if that's happening and in this externally focused world that we're living in that throws things at us

left right and center when our energy is focused out there I always ask what's happening in here and so it's really really hard to know if we're at our best because we have to feel it you know it's something you can just sense and you just know it and you know you're on your game you're feeling really good and so when it comes to knowing that you're at the best you're at your best it's really about tuning in to what's going on inside for you because as I said in this externally focused world we've got you know we look outside ourselves for permission for validation for acceptance for love for kindness all those things and when our energy and our focus is going out there nothing's happening here so we're at our best when we can feel it because we have

when you think about it when you feel what's going on for you in your body that's your biggest that's your biggest take on how life's moving for you because when we're feeling fearful when we're feeling scared we're constricted and we're wobbly and we don't quite know where to go and yet when we're feeling expansive and powerful with our shoulders back we know we're on the right track so I think the most important thing is to feel within ourselves and just be aware of what's going on for us. Yeah now the female gender are far better at the feeling piece than we mere males are Nicole because we tend to be very externally focused and she'll be right mate as things go but how do we bring out the best in ourselves and in our people then Nicole? So I think the first

thing to do is to recognize that that's what you want to do. We have one shot at life on this planet and we're here to live it. And we talk about real estate, but I still believe that whatever industry we choose, it's really about using our gifts and our talents and bringing the essence of who we are to what we do so in order to bring out the best in people it's about being curious it's about you know noticing what's going on for both yourself and the people around you and when you think about it you go into the office first thing in the morning and there's no one there there's no energy so what we want to do is start feeling into you know noticing what's going on for people noticing what's going on for yourself paying attention asking questions don't take

things at face value become curious and know that there's always more below the surface because once we do that and we are curious we're not coming with our mind that always knows the answers because the the day that we're certain about things is the day that we stop growing and I think the purpose of being here is actually to grow and evolve and we need to pay attention to what actually lights us up, allow us ourselves to use our strength and come from that place every day. Yeah, 100% agree. That eternal curiosity, that childlike quality that we allow the world

to shrink and shrivel is an unfortunate exercise. But what prevents us and our people from operating at our best then, Nicole? I think getting bogged down in the day-to-day if we don't have a big picture that drives us then we're being driven and so when we do that that's when our focus really narrows we shut down we become immune to all the opportunities that are out there and paying attention to what can be and again that sensing of things and I totally appreciate your point that men and women kind of do that differently but the body still doesn't lie so if we pay attention to the fact that the body doesn't lie and so really paying attention

and knowing that there is this whole world out there that's operating beautifully and we're part of it and understanding that as human beings we want we want to we want to grow we want to experience things and I think quite often workplaces can shrink our world and it doesn't necessarily create environments in which we can use our natural way of being I mean you look at kids when they go to school they're encouraged to think about what they want what do they want you know when you ask a child what they want and they'll tell you I want this I want this I want this I want this as we get older we're taught to conform we're taught to make ourselves small how do we create environments in which we allow us all to be the people that we're meant to be

yeah that's extremely well said and that's a great segue into the next question I'll ask you and that is why does it make good business sense to create an environment in which everyone can actually bring the best of who they are well when you think about it if the people you hire in your whether it's in your business or whether it's it's whatever you're doing the people that you surround yourself with are really necessary for your success and vice versa so everything's interrelated so if I create an environment in which you're able to be the best of who you are I win there are no losers it's it's there's a no there's no losers in that thing where we lose is when we decide that we need to hunker down because we're feeling threatened or we're feeling

exposed or what have you but it does make business sense because as soon as you see your people grow and expand we are all working at such a fraction of our capacity so when you think about it if your people just increased their capacity and their performance this much what's that going to do for your business so it makes absolute sense and the cost of people being absent the cost of people being at work but not really being at work so the business sense is absolutely clear but it's also when we only make it about business i think we've missed the point right it's about people right so how do we grow people how do we grow people so that everything naturally follows on from that and it actually becomes a little bit effortless yeah 100% agree I unfortunately the

the property industry is really dogged with this sense of constant competition and when you've got internal competition within an organization people are too scared to be themselves for concerns about what that may mean and that that really crimps not only the individual but the success of the business so i would totally agree that by creating an environment where you're supporting your team to be able to be who they authentically are and then really bring that before and that becomes its own unique sense of attraction then you're creating a very supportive growing environment that everyone's going to prosper in so look i really want to thank you for these very timely insights, Nicole,

and thanks again for joining us on the show today. Thanks for having me, Bushy. Thanks, Nicole. Well, it's clear that if we want to bring out the best in ourselves and our teams, then we need to reconnect and re-energise the bigger untapped potential that lies within all of ourselves.

We need to align and connect with our tribe who believe what we believe. And we need to be intentional and we need to remember that it's not all about us. It's more about others and those that we're helping, supporting and sharing. And there's never been a better time nor a greater need to do this. So if you want to bring out the best in yourself and your people, reach out to Nicole at growthtosuccess.com.au.

Stay with us for more here on your Property Hub's go-to trusted voice for all things property on Realty Talk. 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 know how 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 1900 homeowners and investors secure more than 800 million dollars 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. Now, despite the nightly

news and headlines continuing to paint pictures of property gloom and doom around the country, on the back of fears generated about interest rate rises, inflation and the big R recession word, the true facts about property conditions appear to be telling a very different story. So to give you a balanced data driven view of what's really happening in the wonderful world of property and to help you identify the opportunities, we're joined by Realty Talk favourite, Terry Ryder, who's a leading property industry researcher and writer who's been studying residential property now for over 35 years, along with publishing four books and is the founder of well-respected property research house, hotspotting.com.au.

So welcome back to the show, Terry. Hello, Bush. Always a pleasure to be here. Always is, mate. to drawing your wealth of wisdom. So tell us, Terry, what's your read of current property conditions around the nation? Definitely not as bad as being portrayed in the media on a daily basis.

It never is as bad. It's never as extreme. It's never as good or as bad, depending on what part of the cycle we're in. Look, I'd say if I had to put it in one way, I'd say segmented. There are markets that have continued to thrive, and there are markets that are steady or not booming, and then there are some that are declining. I'll tell you about what we like to do is monitor sales activity

rather than being as obsessed with what's happening with median prices according to certain sources. And we like sales activity as a forward indicator of what might happen with prices, and we find it's a really good tool. And we've just done our most recent analysis for our autumn edition of the Price Predict Index, and that kind of indicates that about 45% of suburbs and towns around the country have what we might call solid to strong sales activity.

So we haven't seen a falling waste. Some markets are declining quite sharply. Melbourne happens to be one of those places where there are a number of suburbs that have dropped quite a lot. And so there are those locations around the country, but about 45% of locations, a little bit under half, have got solid to strong sales activity and that means that prices in those places

have stayed pretty strong and in some cases they've still been rising. Yeah, that's certainly a very different picture to what we're hearing in the mainstream. So can you sort of give us a bit of a rundown on what sort of positive forward indicators you are seeing emerging then? Well, I think we're really starting to see the tide turning overall.

As I said earlier, it's never been as bad as media has portrayed. Depending on whose price figures you look at, we haven't really seen many locations have significant drop in prices and some have continued to rise. But the latest price data has turned increasingly positive. You could go through some examples of those if you like. But also we're seeing clearance rates improve. We're seeing, in particular, rents rising really strongly.

You know, one of the key factors at the moment and why I think investors should be maintaining a very strong interest in property is that vacancy rates are so incredibly low almost everywhere and that means rents are rising. It's quite common to see locations where rents have risen 15%, 20% or more in the past 12 months with no end in sight really because there's no solution being put forward by our political leaders who really haven't got a clue.

And so all of those indicators are fairly positive. So, clearance rates, rents, vacancies, increasingly positive data on prices, and of course, the most recent interest rate decision, probably psychologically more than anything else, helps put a bit more confidence in the markets as well. Yeah, that's spot on. Are you able to sort of drill down on some of the data and what it's saying? Now, with prices, actually, the first really positive set of data was actually the domain figures for the December quarter, and that came out, I think, probably in February, and it showed that I think five of the eight capital Cs

actually had house price increases in the December quarter, which is a very different message to what we're getting earlier from media telling us prices were falling everywhere, which has never been the case, as you and I both know. But then as we got into January and February, sources like SQM Research were showing the majority of capital cities were having monthly price increases. And then as we got into March, CoreLogic,

which is always the most negative data out there amongst the various sources of property data, SQM Research domain and PropTrack are all more positive. But CoreLogic's data has turned positive. We saw the first signs of it in February. And then their data for March was really quite positive. They divide Australia into basically 15 market jurisdictions. We've got eight capital cities and then seven state and territory

regional markets. And of the 15 in March, according to the logic, eight had price rises for houses and nine had price rises for apartments. So the majority of locations are now, according to all those sources, producing price rises. and that's after 10 interest rate rises in rapid-fire consecutive interest rate rises. Pretty good performance and it just shows the strength

and solidity of real estate and also puts the lie to that simplistic kindergarten analysis we get from economists which says prices must fall because interest rates are rising. Prices have continued to rise in Perth. They've continued to rise in Adelaide. Darwin's done pretty well. Many of the regional markets have done very well with prices despite 10 consecutive monthly increases in interest rates.

Yeah. The performance, you know, I think it just – I always think that when we have times of economic disruption, economists always say, you know, property prices are going to crash. I think the record shows that the opposite happens. In times of economic disruption, property really comes into its own. And people like the solidity and safety of real estate, bricks and mortar, and they turn to that in times of economic disruption.

So we're seeing that yet again right now. Well, I've almost got to the point, having been in the industry a long time, that the only time I'm going to get worried about an economist if they start talking property up, that's probably when we need to start worrying. That's right. I'm a little bit the same. There's one – I won't name the poor, because I do tend to criticise him a lot,

but he's one of the senior, most quoted in media, senior economists in the country, and he just constantly gets it wrong. He's been doing it for the last 15 or 20 years. He just never gets it, because he doesn't understand real estate market dynamics. And I'm like, I'm sort of starting to get a little bit concerned if he ever predicts something positive for real estate, but fortunately, he almost never does.

It's always prices are going to crash, and he's always wrong. so um yeah well at least at least they're consistent i guess but but uh given this this whole exercise and and given you and i both know that uh property conditions has more combinations than a ruby's cube and the and the fundamentals of property of haven't really been this strong for a long long time and if we even put interest rates in context they're only just getting back to what the sort of long-term average of rates has been so all of the all the scare tactics that going around that sort of leave me a bit spare but for those

who are reading it right, where are the best opportunities for investors moving forward then, Terry? Well, small capital cities have continued to do well and are still good options. Perth, Adelaide, Darwin have continued to produce really strong sales

activity. Prices have held up very well in those places and talk to any investor or any buyers agent. Try to buy property in those places, particularly Perth at the moment. I'll tell you, it's incredibly competitive. Things are selling very quickly.

Everyone's, you know, Perth is kind of flavour of the year, but for good reasons. So those places are going to continue to perform, I think. Regional markets, Queensland, apart from the Sunshine Coast and the Gold Coast, which have been incredibly strong but have passed their peak, but other parts of regional Queensland have got great affordability, lifestyle prospects for growth in Toowoomba, Townsville and many others.

I like regional Victoria. Incredible consistency and resilience in markets like Geelong, Ballarat and Bendigo. And just when you think they've passed their peak and they're going to fall, they resurge. And then we've got the 2026 Commonwealth Games coming up. That's going to give a big boost to those places because it's the first time Commonwealth Games have ever been spread

across a series of regional cities. It's fantastic for Victoria. It's going to result in investment in infrastructure, transport links, a big focus on regional Victoria, which as you and I know is a fantastic place anyway. So, yeah, that's great. And there are specific locations in other regional markets like Western Australia, South Wales, South Australia,

which are presumed opportunities at the moment. I think Melbourne's an opportunity because in our view, Melbourne's the weakest market in the capital cities of Australia at the moment, but it represents an opportunity because I think now that international borders are open and we're starting to see migrants come back in and international students, it takes time for that to flow through to impact in real estate, but Melbourne probably more

than anywhere else in Australia, gets a big impact from that. That had been turned off for a couple of years because of the COVID situation. Now it's back on and eventually I think Melbourne is going to rise on the back of that. But right now there are many areas where activity and prices are down a bit in Melbourne, so there's opportunity there. The final opportunity, we see a trend where people,

for reasons of affordability and lifestyle, are targeting kind of inner-city suburbs where apartments less than half the price of houses. And, you know, in Melbourne, there's suburbs like Richmond and Hawthorne, the inner west of Sydney and some of the inner city suburbs of Brisbane where people can't afford houses because they're like maybe $2 million. But, you know, apartments, $600,000 or $700,000 starts

to look attractive and there's a trend of people buying apartments in those areas. So that's an opportunity. What's your read on the good old Apple Isle, Tasmania? Tasmania has been incredible it's been a market leader in the country for five years and it's

passed its peak undoubtedly and it's no longer, and one of the things that drove this incredible demand for Tasmanian real estate was it was so cheap, well it's not cheap anymore Hobart used to be the cheapest capital city, now it's more expensive than

Adelaide, Perth Darwin, it's So I'm almost on a par with Brisbane. So that attractive relative affordability is now gone. It's just really still a really great lifestyle option. So it's past its peak. Sales activity isn't that strong in Hobart or Tasmania, but prices are staying stubborn.

It's got a really good economy. The reason Tassie rose as strongly as it has is the Tasmanian economy used to be the basket case of Australia. And then through proactive action from the state government, it started to rise and rise and rise until it got to the point where it was ranked number one in ComSec's state and state report, quarter after quarter. And it's still, you know, in the top one or two,

which is incredible performance by Tasmania. And most people probably still don't know that, but that's why the property market has risen and why it stayed solid even though it's past its peak. Yeah, I totally agree. The sort of clean, green state has become the food bowl who are a fair part of the world, and most of them in Australia aren't even aware of that.

And even while the sort of number of listings I've seen creeping up fairly substantially, particularly in Hobart compared to other areas, that sort of economic demand sort of puts a bit of a safety net under it. So, mate, as always, I really want to thank you for these very fact-based insights, Terry, and thanks again for joining us on the show today. You're most welcome.

We'll see you again soon. Thanks, Terry. Well, as always, it's clear that there's a chasm between what's being portrayed and what's really happening on the ground when it comes to property conditions. So if you want to keep your finger on the property pulse so that you can separate the facts from the fantasy in order to make much better informed property decisions, reach out to Terry and the team at hotspotting.com.au. Stay with us for more on Southern Cross-Osterio's Property Hub flagship show here on Realty Talk. property depreciation is the natural wear and tear of a building and its assets property investors can claim depreciation as a tax deduction each financial year depreciation is a non-cash deduction this means you don't need to spend any money in order to claim it on average bmt tax

depreciation find residential investors almost nine thousand dollars in first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. As one of Australia's most outstanding buyers agents, Kate Bakos has a wealth of knowledge and experience when it comes to helping families secure their dream home or the perfect property to add into an investor's portfolio. So who better to talk to you about successful negotiation? This time, I talked to Kate about best and highest and closed tender bids.

That's coming up next. 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. So just how do best and final offers or best and highest offers work and something that's also called, you know, closed tender bids. Let's try and demystify this. Kate Bacos is my guest from Melbourne. Kate is a buyer's agent. Kate, help us with this.

What does it really mean? How do they work? Wow. This can terrify a lot of buyers, Kevin, but the way that they work is a vendor ideally gets a whole host of offers by a particular closeout date. So let's say it's a private sale and there's a few buyers that are interested in the property. The agent might say, tomorrow night, 5pm, we're calling for our best and final offers. And that really is what it means. Best and final, best and highest. It's not just about price. It's about terms, conditions, settlement date, the amount of deposit and that way the vendor can go through a series of offers and determine which

one is the best for them and it's interesting because buyers don't always know some of the terms and conditions that vendors are preferring or that they're sensitive to so asking questions about that is really important and a good agent who is genuinely hosting a closed tender process won't be giving tips on where other people's offers are it does occasionally happen but it's not considered good practice. What they'll do though is openly let you know what sorts of terms the vendors would like and what conditions that they might be sensitive to so that you can frame your offer in a light that's attractive to the vendor beyond price. So best and highest is handy because it lets all kinds of buyers and conditions participate in the process. With an option,

you can't be subject to finance or subject to other things. You've got to bid unconditionally. But with best and highest, you've got the option to bid with conditions if that's important to you. And it's not always down to price, but more often than not, that is the vendor's most keen motivation to get the highest price. Are you seeing many of those types of negotiations happening, Kate? Yes, we do. And it's a way for the agent to create a sense of competition.

Kevin, I've seen it done when there's only one buyer, which is not a particularly nice thing to do to a buyer but as we discussed in in one of our earlier discussions in this series you've really got to think about what your walkaway price is and what sort of price tag you'd be disappointed to lose it on as well and the more information you can get from the agent the better placed you are to to put forward that something you know something competitive occasionally they'll give you a hint you might say look I'm stinking of something around this what what do you think I've been told by agents before Kate if that's your offer you're going to out. I've already got something above that. If you can get a few hints, it will certainly

help you cause, but you can't assume that you'll get hints. And you've also got to be really clear on the agent's rules around the best and highest, because they have quirks. I've had agents before say, if you're the first person to make an offer, we'll give you the last right of refusal, which means they'll come back to you and say, look, we've got an offer that's higher than yours. Would you like to increase? But even that can end in tears if they're not being honest with you. if you're holding the strongest position or if you're the only buyer and then you get that phone call and you increase that's a huge win for the agent the vendor but it's not a win for you this sort of highlights the the topic i'm going to cover with you next time and that is you know

every agent they all seem to work differently so what are some of the methods they use and how do you sort of maintain to keep control over those so that'll be next time we come back kate give you some time to put some homework in thank you very much my guest is kate bakos kate is a buyer's agent out of melbourne and she's our guest in this special series on realty talk negotiation tips thank you kate see you next time see you next time kevin and that's another wrap for this week's show another big thanks to our guests ryan geard nicole davidson terry rider and kate bakos and before we go make sure you don't miss another episode of your trusted voice for all things property by subscribing to the Property Hub on

your favourite podcast player now, where you'll also enjoy the Get Invested podcast delivered to you each and every week. Thanks again to Realty.com.au, BMT Tax Depreciation, Apiro Marketing, DM Media and Southern Crosshouse Stereo, their ongoing support. I'm Bushy Martin from KnowHow Property Finance and along with Kevin Turner and the entire Property Hub Realty Talk team, we thank you for investing in yourself by investing in us and we 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