Property Hub - Investment Insights & Inspiration - Realty Talk: Over 200,000 rentals lost last year

Episode Date: September 23, 2023

A staggering number of investors (73%) who sold one or more of their rental properties in the last year say they were sold to owner occupiers. That could equate to 217,072 dwellings having been stripped from rental markets across Australia. NEW – Join the Property Hub community on Substack! Sign up to get Australian property news, opinion, and episodes in your inbox: https://propertyhubau.substack.com/ Subscribe to RealtyTalk on the Property Hub channel: Apple Podcasts | Spotify | Google Podcasts | Email Property Hub is a collaboration between Bushy Martin from KnowHow Property, Kevin Turner from Realty, Andrew Montesi from Apiro Marketing and Apiro Media, and Australia’s largest independent podcast network DM Media. Business and partnership enquiries: [e-mail] omnystudio.com/listener for privacy information.

But it's clear from these results that investors are selling in big numbers in those in Victoria and in Queensland. And they're also the two states that have had the most punitive rental policies over the same period of time. That's Nicola McDougall, who is the chair of the Property Investment Professionals of Australia. And there Nicola is talking about what they now know about property investors in Australia. Hello, I'm Kevin Turner and welcome to this week's Realty Talk show. PIPA, an easier way of saying Property Investment Professionals of Australia, have just conducted their 9th Annual Sentiment Survey, so as to check the

health and the sentiment of the thousands of mum and dad investors who make up the vast majority of the property investment community. There is so much that's changed and the insights are quite revealing, so we're devoting the entire show this week to going over the most important points with Nicola. If this is your first time with us, welcome. You'll find us on all podcast players and through the Southern Cross Oz Serio Network. If you like the show, I certainly hope you do, hit the subscribe button and help us continue to bring you the best guests.

We'll be back in just a moment as Bushy kicks off this week's show with Nicola McDougall. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by KnowHow Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while increasing your capacity for growth. Know How has helped over 1,900 homeowners and investors secure more than $800 million in property wealth. So get set to live more, work less and live your legacy. Want to know how to invest in your freedom? Visit knowhowproperty.com.au

This is Realty Talk, powered by realty.com.au Now, it's fair to say that the silent majority of mum and dad property investors like you and I have been under constant assault in recent times and wrongly painted as the greedy villains by the mainstream media, as well as the convenient donkey to pin the tail on by politicians, policymakers, and unfortunately, all levels of government. and we've been blamed for all of our housing woes and I use this as an excuse to deflect blame for their decades of supply neglect by introducing a continuous torrent of quite reactive and often half-baked draconian restrictions on the main suppliers of rental housing in Australia. So what effect is all this having and how are everyday investors feeling and thinking about property conditions both now and into the future? Well to answer this the results of the 9th Annual Property Investor Sentiment Survey have just been released by Peak Industry Body,

the Property Investment Professionals of Australia, or PIPA. And this survey is Australia's most comprehensive snapshot of the nation's property investment community. So for a special Realty Talk feature, PIPA's Chair, Nicola McDougall, joins us again to reveal the outcome. So welcome back to the Property Hub, Nicola. Thank you for having me, Bushy. It's always good to be here. Likewise. I love talking property with you because you've got your finger right on the pulse of what's happening around the nation. And I guess, you know, on the tip of everyone's lips and jumping straight into the survey outcomes, what's the sort of headline message that's

emerging from this year's survey? Yeah, this year's survey found that about 12% of investors had sold at least one of their properties in the 12 months to August this year. We had a record number of survey respondents this year as well. And drilling down into that, it was certainly investors selling off in great numbers in Victoria and Queensland over that period as well. I'm assuming that's going to be stripping potentially thousands of rental properties out of the market, is it? Oh, certainly. This is the second year. I mean, obviously, it's our ninth annual survey, but it's the second year in a row where we've actually drilled down into sort of what investors have been doing with their properties, meaning selling and

why they're selling and where they're selling. So last year, we had around about, I think it was 16.7 percent of investors last year who said that they'd sold in the previous two years now i don't now i'm sitting here a year later going why did we ask in the previous two years but anyway so about that sold in the previous two years so last year we you know our analysis showed that that was probably a couple of hundred thousand properties that have been removed from the rental market and we say removed because the majority of people that are buying these properties are not other investors they are existing homeowners or you know first home buyers um and so therefore if we look at the results again this year they're kind of worse i suppose in that respect because we just

asked what have you done in the last 12 months and in the last 12 months 12 percent 12.1 percent said that they'd sold at least one property um and when we're doing the analysis we always actually use like the biggest data set we all have which is the census data but we actually also strip out any social housing that might be in any government housing in there um so and so it gives you a baseline of around about 2.4 something million uh rental properties in the nation so you know if you sort of what's 12 what's 12 percent of 2.4 million um that's another couple of hundred thousand properties so you know we've estimated um that over the last three years that we've been asking this question in the survey it's highly likely that we've seen hundreds of thousands of

rental properties just been stripped from markets around the nation at a time when we can at least afford to do that and you know doing the maths on what you said there about 200 just under 220,000 dwellings potentially stripped out and 73 percent of survey respondents indicating that they've actually sold to homeowners rather than investors which is which is pretty scary but I'd love to sort of dig into what are some of the reasons investors are giving for selling or intending to sell so many of their properties Nicola. I think what was really interesting and then you know obviously as our survey becomes um more extensive uh but also you know roles year to year to year we're starting to get some really good metrics there um and certainly now that

we're actually asking investors you know what they're doing and why they're doing it it was quite profound the difference to last year because last year the survey results the number one reason why investors nationally said that they'd sold a property was to make the most of marketing market of rising market conditions yeah let's be honest 2021 good year for all of us um and at the time last year when we looked at the results and we went okay well that you know that would explain why people have done it but certainly why a lot of people have sold in queensland because that was the number one state by a long way last year uh because as someone who owns a number of properties in queensland things hadn't been great before covid you know um so that was so that was last

year. Now, the big difference with this year was that the number one reason why investors said that they had sold in the previous 12 months was because of increasing or even the threat of increases of government taxes and levies. The new Victorian land tax was one reason given for that. So that was the number one reason, which is quite different to last year. Number two was actually changing tenancy legislation. So, you know, investors feeling that they've lost control of their asset, rental reforms increasing holding costs. When we're talking about something like that, it might be the implementation of the new rental cap here in Queensland that was implemented retrospectively and caught many investors, myself included, on the hop when

at the same time as our mortgage repayments were going through the roof, but we were unable to even put our rent up um so they were the top two then the top the number three which i probably thought this year might have been higher up the list uh was rising interest rates um it was like the top three were all sitting in that 40 something bracket um but yeah rising interest rates was the you know was a reason for 40 of investors uh for selling their property in the last 12 months so you know those results are in stark contrast because we asked the same questions last year right so we're not we're not you know we're asking similar things all the time and you can actually see the sentiment there right that you know this time last year investors uploaded because

they wanted to make the most of the rising market i don't can't even i don't even know where the rising market was in the result i think it was like quite low down because let's be honest for half of the last 12 months the market hasn't actually been that great um so that's been you know really you know those metrics because i'm a data nerd those metrics are really quite profound and even having that one-year comparison that we have now really showing that shift in investor sentiment that's happened in just a one-year period. Well, that sort of lack of control we talk about

due to government intervention, you know, with just under 50% doing it because of governments increasing their taxes and then 43% from my read due to the changing legislation and outranking rising interest rates when the mainstream media, that's all they talk about, you would have expected that to be top of mind. But the fact that it's not is pretty telling.

And I think there's, again, digging into the details, there's just under 30% because of the rental increase limits or caps that are being talked about. So pretty scary numbers there based on those punitive and quite restrictive exercises, Nicola. Sort of moving from there then, And did the survey results indicate in a bit more detail who the properties were actually sold to? Yes, I mean, because we do ask that, you know, and I think it was around about 40% of properties were sold to existing homeowners and around about 33% sold to first home buyers.

What was really interesting compared to last year was the fact that last year, the number of investors who bought those previous investment properties was around about the 33% mark. This year, though, it had dropped to about 24%. So you can actually see an action there, the fact that this time last year, you know, investors were more active in the market than they had been during this period. One argument that I often get with this, Bushy, and no doubt will be happening when I'm, you know, representing the industry at various government forums, is people go, you know, isn't it good that first-time buyers are buying these properties? And, of course, we would say, hell, yeah. We believe in property investment, you know, as a strategy to improve your financial future, your financial health. So we say, hell, yeah. However, then we often get the argument that, well, if a first-home buyer bought it, well, then that means that their rental property is now available for another person.

And look, again, sometimes it's the paucity of data that really makes it difficult to argue against some of these statements because we don't know, right? We don't know where those first-home buyers have come from. Highly unlikely one would think that most of them would be living in a rental property just by themselves or their partner. probably more likely they're in a share house probably just as likely they're still living at home um so this is this is what you know we kind of as i'm just kind of explaining that that i often get i get this pushback on that data and um and i don't know how we will ever overcome that apart from the fact of understanding um hopefully where those first-time buyers if they're saving a deposit which as we know has always been difficult and continues to be difficult um that often means

you know that they probably have to live at home for a short period of time i did that myself in 2006 yeah do you know what i mean i could this is 2006 and i bought my first property in early 2007 and it was 350 000 which seemed extraordinarily expensive at the time but i went home to live with my mom for six months yeah you know and i was in my early 30s you know so um anyway i just thought i'd say that that um you know we always support it's great to see first-time buyers buying But then what we're actually seeing is it's almost like a game of home is where it's those existing homeowners, whether they're upgrading, downgrading, that sort of thing.

They are the ones that are predominantly the number one volume of people that are buying these investment properties, which means that they are removed from the rental market. Well, exactly. What it's telling in really simple terms is there's, you know, in excess of nearly 75% have gone to under-occupied or first-home buyers. And there's been almost a third drop in the number of properties that have been sold to investors.

So it's really the big leakage in terms of, again, reducing that rental stock at a time when it's most needed. So very interesting. And again, I guess drawing a line around some of the commentary that you've made on the survey that sort of suggests that there's potentially about 265,000 rental properties been removed as a result of last year's survey. So if you put them together, that's a massive exodus

that's happening from... And I think, yeah, 100%, and I think, you know, those numbers can seem quite ridiculous in a way, or, you know, it's certainly scary, but everyone's trying to understand why we're in this rental crisis, and no doubt we'll talk a bit more about it on the show. but this has to be certainly one of the reasons you know there are a number of factors we didn't get here overnight it won't be fixed overnight um but there are a number of factors that are

happening concurrently and this is certainly one of them so from those comments about just how many investors are selling up in some of the states for various reasons the question is how many say they will come back and buy another property somewhere else or will they in fact seek another form of investment bushy and nicola discuss that when we return this is realty talk 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 seven 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 1-300-728-726 today for an obligation-free quote. Realty Talk and your host, Bushy Martin. I guess of big interest, really, of those who have sold a property, i'd be interested in your thoughts around what proportion have vindicated that they'll no longer invest in property that was a fair you caught me on the hop there bushy i don't know what that number is is it around about 12 percent yeah it's about just under 13 percent oh good i'm glad because obviously there's so much data in the in the survey that i i know i know much of it but

not all of it and i and that was a new question actually that we asked this year um so we haven't got a comparison to last year but we thought it was important to understand that you know if you've sold a property are you ever got an investment property are you ever going to buy one ever again and nearly 13 have said well no you know and that and that flows into as we were chatting before the show the the you know the vast reduction in the normal uh inflow of investors um that's happened since 2015 and it's and clearly look you know as we get more data on this um we'll not we'll have a better understanding of it, but that's part of the problem as well. We haven't had those normal inflows of investors adding to stock

that we normally would, you know, prior to 2015. Exactly, and if the perception out there is it's just too hard to invest in property when our mum and dad investors like you and I are doing the heavy lifting in this space and will continue to do in reality despite, you know, the recent government initiatives, we'll still be carrying the majority of the load. So pretty interesting on that front. and now something i wouldn't mind giving a bit of a feel from is that any major differences in the

percentage of properties being sold between and across the states and territories do you know what was interesting this year um and again you know we do uh the survey does adapt and involve so last year we just we kind of just asked them you know for the state that they sold and whereas this year we actually drilled down into whether it was a capital city or regional area um so So, you know, in regards to the state-based results, you know, compared to last year, Queensland was still number one, just a smidge under 40% of investors said that they'd sold at least one investment property in the previous 12 months. And then we had Victoria as well. I think that was in the early 30% mark and quite a big sort of gap between Victoria and Queensland over here. And then it dropped down.

I think New South Wales was number three. But what's interesting, you know, and you'd think, well, New South Wales, it's our biggest state, has the most people. You would think that, you know, if we're talking about, you know, what's the volume of investment properties that are normally sold? Well, we're creating a data set to understand that as we speak. But you would think that just because of population and things that New South Wales would be, you know, higher up the list. But it's clear from these results that investors are selling in big numbers in those in Victoria and in Queensland. and they're also the two states that have had the most punitive rental policies over the same period of time bearing in mind that this time last year bush year when we were talking um we still

had the queensland interstate land tax uh um which was what had been implemented when we did the survey however was axed six days after the survey was released um so you know perhaps another another indicator that investors are voting with their feet um in these states where they feel that they are being penalized um god forbid for owning one investment property so they don't have to rely on the pension in retirement when it came to capital city and this is new data um it was actually melbourne um was the number one location city location where investors had sold in the previous 12 months and brisbane was number two uh number three was regional queensland so again you know we've got these bookends there of you know this is where people are selling and

we've already spoken about in the show the reasons why they're selling and then when you look at the fact that you know the number one place where people have sold is a capital city is melbourne number two is brisbane and then the number one reason why people are selling number one and two reasons are increasing government taxes or threatening of increasing taxes and also changing tenancy legislation well it's fairly simple to work out what's what's happening there Absolutely. I think what really reinforces that in very stark terms is that nearly a quarter of investors are sold in Melbourne and nearly a quarter in Brisbane. But if you then look at the other capital cities, just under 9% in Sydney, just under 6% in Adelaide, a bit over 6% in Perth and only a bit over 3% in Canberra. Well, that's really reinforcing your conclusions there around the restrictive measures.

and potential cost increases that are being imposed by those state governments. So some pretty clear messages there. Sort of shifting to a more positive note now, Nicola, given that sort of some of the exercise is coming out of there, which states are investors feeling most welcome on the ranking basis that came out of the survey? Do you know?

Yeah, so this was a new question that we asked as well. And, you know, you can interpret the data a few different ways, which made the analysis a little tricky. um however you know uh with with our survey respondents um it was ranked from one being the most accommodating state to eight being the least accommodating and if we're looking at the results um the highest percentage of uh survey respondents that gave a location of one was actually for south i think it was for south australia um but from from from this um uh so we you know we it was a bit difficult to actually you know extrapolate the data but uh we certainly

are starting to sort of see those you know those states where things haven't changed a lot probably also when we think about the least accommodating the most accommodating clearly this is a sentiment survey um but often it's a it's a reflection of perhaps if the market's been really good there over the time you know and certainly South Australia is is that way um New South Wales obviously featured very well in this in these results too uh ACT was fairly down the list though uh from memory of um the one of the least accommodating um states um and i know this is supposed to be optimistic and positive and it is um but a lot of the results certainly reflect the fact that these you know the markets that are seen as the most accommodating other markets that

are probably performing quite well at the moment there haven't been massive policy shifts um investors clearly feel welcome there um by far and away the least accommodating state um was victoria uh with about i think it was about 57 percent of respondents giving that an eight with eight being the least accommodating um interestingly nearly a quarter of survey respondents uh gave uh queensland a seven so um yeah so we could you know again you know it is a queensland if we're talking about the tales of woe or you know the fact that investors are selling in great numbers in these states um every single metric that came out of the survey are pinpointing that time and time again and clearly also investors are saying you know we're selling

in these places because we don't feel welcome absolutely and i think the the big message for state governments there is you know the intentions are indications of future action and let's face it the land tax exercise is a big part of state government budgets so there's a big message there for Victoria in particular and ACT as well and to some degree Queensland that they need to wake up to themselves because one thing that is really clear in the work that we do across the industry is that investors are much more borderless than they've ever been in the past due to the technology increases and the ability

to get much more information about areas beyond your local backyard. So I think there's a pretty clear flow of message that's going impact on those states if they don't wake up to those trends that are clearly emerging. And speaking about trends, what are some of the challenges or concerns that came out of the survey that investors are facing right now, Nicola? Do you know what was interesting?

Well, in a way, it's kind of a little scary. We really need to talk about more positive stuff, I suppose. But last year we asked investors about their intentions to sell in the 12 months ahead um and 19 about 19 said that they were considering selling as we talked about at the start of the show um 12 actually went up went ahead and did that okay so the 19 last year who said they were thinking of selling 12 did um this year the survey showed that 38 of investors were thinking of selling um in the year ahead you know and that's mind-boggling that's double like literally double of last year and then if we're sort of saying well two-thirds

of the people that said they were going to sell last year did we look at two-thirds you're like we're talking that would be i would i hate to think the impact of of that you know and again uh we asked we asked the investors um what are the reasons that you would be selling and it's the same reasons as they've already sold which is just you know the change the changing policy levers um the increases of taxes um you know in the last 12 months clearly we've had the new victorian land tax instigated um which would make many investors have to pay land tax for the first time in their lives and that might be the shore that breaks the camel's back or already has been um and look we do we saw that last year with the with the queensland interstate land tax yes there

was an industry campaign against it because it was appalling policy um but you you know um the the consequences of that that policy could have been catastrophic i mean obviously things in queensland are still pretty bad um but at least they saw the good sense um to repeal that um not a lot you know legislation doesn't get repealed very often um they don't like to admit that they might have made a mistake um but you know queensland at least you know to give credit where it's due um the government did listen to the industry uh did respect a variety of data sources that were coming out here in queensland and acted in the best interest of the property of the rental market which is investors and tenants the one can't exist without the other it's so geez you

know it would be nice it would be nice to think that the victorian government uh might consider you know adapting or i don't know we clearly they're trying to fill the the bucket that was you know spent during covid but um it would be really nice if they recognized the same as the queensland government did last year which is a punitive tax a punitive additional cost when investors are already struggling with you know significantly higher uh holding costs um passing on a very small percentage of those holding costs to investors our survey to tenants our survey found so yeah so unfortunately um as we sit here it's not looking good if you know 38 of investors are thinking about selling still um wow i don't good lord knows what our conversation will be next time

this time next year bushy absolutely i think some of the standout concerns that i've picked up from the rate of the survey myself were you know nearly 70 percent uh concerned about uh the threat of rental caps or freezers there was the other number that sort of stuck out to me just under 70 expressing concern about the growing negative public perception of the role that investors are playing now that that's a a big concern i think moving forward and the other thing too what stood out for me was that the nearly half of respondents indicating that if governments further increase or introduce new taxes they'll be forced to increase the rents so you know you can't penalize one end without having a flow on effect so i i think there needs to be a much more

holistic view by governments at all levels around this to see and to look at the inconsequential or unforeseen impacts that some of these measures are having so that's all good now sort of still focusing on the trends piece and the shifts in settlement have there been any in in relation to the the good old preference between city versus regional investment locations that came out of this year's survey? Yeah definitely and I will have to refer a little bit to my notes because as I say I don't even know how many stats we have in this report but you know we over the years you know we always ask investors where they think you know have the best you know the best investment prospects for the year ahead and we did start to see that shift um to regional locations during

during covid um physically uh and and investment dollars as well but um uh the last year survey found 56 percent of respondents felt that metro markets offered the biggest uh the best investment prospect prospects which is really unusual 56 is quite low right but that's obviously a you know a reflection of the hangover from covert and the regional migration uh this year though a staggering 74 percent uh said one of the capitals offered the most appealing prospects so you know look we are moving back into probably more long-term um data that's that's reflective of what normally happens uh because during covert there was a lot of things that happened that don't normally happen and we're unlikely to see them again in our lifetimes or god willing unless there's something

really bad that's happening uh so we are starting to see investors sort of recognizing um that you know metro markets uh they're feeling that that's the best investment prospects what was really interesting though and i'm not too sure if this is another question i'll just throw it in here oh you know you've got you've got it there i'll just go to that um in a sick way of myself that was about the change in the locations where investors yes thinking were the best prospects yeah um do know what i was doing some research on this the other day for a journalist um i have a feeling so we've been running the survey since 2015 um i have a feeling it's the first time that brisbane hasn't been number one i think you're right because i was going back through all of the

every time we've asked this question since 2015 and brisbane's always up the top man it's always up the top um probably affordability uh lifestyle we have a lot of interstate migration we should probably have you know a large percentage of interstate investors as well so but this year it was perth um and and brisbane was 20 it was at number one with perth 25 percent and brisbane at 21 percent um 12 percent tip to adelaide yeah what was what's really interesting though is that um brisbane was 58 in 2021 so around about that in 2021 about 58 percent of respondents said that they thought brisbane by far and away it actually got from a from a media point of view we were always kind of like well we always sound the same thing about this that you know um so so you can

see how the mighty have fallen right went from 58 and now it's 21.8 but also in this other research that i was doing yeah only four percent of respondents picked melbourne as having this year as having the best investment prospects four percent this is our second biggest capital city and then i when i was doing this research the other day it's actually fallen i think that its peak was around about 27 percent in about 2017 and as 27 uh 20 2017 survey the peak was about 27 percent and now it's four percent i mean it's almost as bad as darwin um so that was just mind-boggling man that again i mean brisbane's still in favor because you know look and do we agree with that with that that sentiment right this is what people believe when i look back over

the data over the last nine years hardly any investors had any sentiment for hobart the whole time and you know what they really should have um so this is about how investors are thinking and feeling about a place um doesn't necessarily mean it marries up with what would be sound investment strategy because do we really believe that melbourne doesn't have sound investment prospects no but because that they don't feel that they're welcome there they are that is an indication that they're not going to bloody buy there and they're borderless like you've said and a lot of people as we already know have been buying in perth for a while now you know brisbane is hard you know state government oh well brisbane is still very popular you know well it is but it's half as

popular as it used to be spot on and and this is the important message i think is is the impact that sentiment is having on people's actions and decisions now and a lot of that is fed feeding through the mainstream media obviously uh but to see such dramatic changes that you've just illustrated there it's pretty telling for for state governments in in relation to the messages they're sending out there and the likely flow-on effect that that's going to have. When we come back, Bushy asks Nicola about the impact an investor's sentiment has on the type of property he or she feels will give them the best result. New, established, house or unit? After this short break, we'll find out what Nicola McDougall from PIPA believes. And that's based on

the results of Pippa's investment sentiment survey released earlier this month. This is Realty Talk. We'll see you 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. Can you give us a bit of a feel for what properties investors and what types of properties they're looking to buy in the next year? Look, every survey we have, we have similar type of metrics

that come out of it And, you know, about two thirds of survey respondents have indicated that they'd be looking at buying a house. So that continues to be, you know, the preferred investment dwelling, I guess, look, becoming increasingly difficult to be able to afford one of those things. So, you know, and we are starting to see investors, you know, in greater numbers purchase, you know, attached dwellings, whether it's a townhouse or an apartment. um and thankfully you know it does because you know some investors they really you know they

like to buy established property some investors you know smart investors um buy good new dwellings as well um we don't have a preference you know whatever suits you versus what suits you um but what i have noticed over recent years which is good um is that developers seem to be responding um you know this whole investor stock stuff i mean yawn talk about you know um so and whilst there might be a very very small percentage of investors who might be keen on you know something that's quite crap and cheap the majority of investors if they're smart and working with members um are wanting to invest in something that's going to have capital growth over the years and um and that can happen you know um for any dwelling um whether it's existing or it's new

um as long as you've you know purchased one that you know is ticking all the boxes that it needs to tick for that for that location now and into the future um so i have noticed that developers seem to be a little bit more responsive to that and and what i really also am seeing is people choosing um well more for homeowners i guess people choosing to live in apartments as a first choice and not a second choice i've lived in apartments my whole ownership um i do have i do i don't just own apartments but i i live in them um uh it's small and it's a small block but um because i actually i don't like gardening i don't like doing the lawn uh but also i travel a lot and i you know have a busy life and i like the lock up and leave and so we are starting to see i think

you know that um evolution of sentiment as well sentiment in regards to where people want to live and why they want to live there instead of like just oh well i need to buy a house well if you can buy a house that's great but for many people um it won't be affordable either as their home or as an investment until many late many years later when they've hopefully you know been in the market for a while yeah i'll be very interested there's been a lot of hullabaloo being made in the press about the whole build to rent that the institutional investors are starting to leap into i i i've sort of got mixed feelings around that in the in the context of whether it's actually going to assist the uh the rental situation because my understanding is that

those sorts of uh developments are focused more at higher end uh it'll be interesting to see what price point that they can offer them at because they're not doing it uh for free uh they need to make a profit however i did actually watch a really good show about this recently and it explained it very well and i suppose in a way when we think about the fact that if a whole building is uh leased to tenants and it's um and i think some modeling is that it's like that way for 10 years right um so tenants aren't going to have to move because the owner wants to renovate it because they want to sell it which is their right you know so in that respect that stability of supply will be created i was i was the same as you bushy but i did watch this show about it

and i feel much um that i understand it a lot more and even if we think about it like that as long as it's good product obviously um how affordable it's going to be we don't know but there will be that stability there for tenants that that don't exist in the private market because that building will always be for renters for 10 years and they won't have to move because the owner, rightly so, wants to do something with their property because there's only the one owner for that whole complex. So I don't know if that's a complete segue or if that's helpful,

but it was kind of like when I was watching the show, I had this little, oh, I kind of understood it a bit better now because it's very new here. It's not so new in other countries around the world. Yeah, absolutely. And thanks for sharing those thoughts. Well, sort of coming back to the, you know, the sentiment in overall terms that's emerging from the survey, if you were to sort of sum it up, what's it indicating generally, Nicola?

This year's survey showed about 55% of respondents believe now is a good time to invest in property. You know, 55%, that sounds pretty good, right? It is down slightly from last year and is down from 62% in 2021. so we are starting to see you know that declining sentiment among investors next year will be interesting to see where that is I think it'll jump up again I think that is a reflection of market conditions at the time and clearly we've you know in the last the 12 months to August we had you know the record increases in interest rates in 18 months but also fairly fairly benign market conditions or falling market conditions in many places that only really started to uptick

over recent months so that's probably a reflection of the fact that all of our expenses have gone up and our prices have gone sideways um that doesn't make you you know jump around and with joy does it it just kind of goes oh well and those of us who've been doing a long time just kind of go oh well we'll carry on um so yeah so the sentiment there is much cooler than it was in 2021 but if we think about 2021 markets were booming obviously and 62 of survey respondents um you know said it was a good time to buy you know those of us who've been doing this a long time bushy when when um things are booming like that i would suggest that it's not a good time to buy uh because you should have bought the year before when things were not very good yes i'm a closet contrarian in that

regard really good thoughts well it's sort of bringing it all to a head then sort of summarizing the whole exercise what what are some of the key messages and implications that are emerging from the survey that our police policymakers governments and and the mainstream media need to be paying attention to do you think i mean here we have you know a data set now that didn't exist before uh so and we've tracked over the last three years and clearly it's showing that investors have you know offloaded their properties in in record numbers and not only that um they've actually been stripped from rental markets because it's been home buyers and homeowners that have that have bought them um i think as we said during the show this is you know we believe

one of the reasons why we have the current rental crisis the rental crisis though it actually started you know the the warning bells started in 2015 when apra made those lending restrictions and investors weren't able to access finance. And we can certainly see from ABS data, the investor lending just fall off a cliff, like free fall, free fall from 2015. And it kept on going, you know, and this is when we had, you know, before COVID,

we still had really low interest rates, but even with low interest rates, no one could get any money if you're an investor. And that wasn't free fall until 2020. And it's only just started to sort of get back to those historical averages. So it's clear that investors, look, and I don't think that investors should be selling if they can hold. I always believe in a long-term mindset.

Don't react to something that's happening in the short term. Politicians come and go. You know, the threat of policies come and go. The key is to hold for the long term and ride out the peaks and the troughs. However, that's easier said than done. And for many investors who generally only own one property, that's not possible for them. or they get spooked you know it doesn't take much to spook them and this is clearly what's been happening over the last 12 months with all of those policy changes as well as increasing

taxes you know I would like we're thinking about this over the last few days it would be lovely to see fewer punitive policies you know attacking investors who let's be honest supply the vast majority of rental accommodation in this nation I would like to see proactive policies that respect the vital role that investors play and as you probably know I was in Canberra last week and I was meeting with the shadow housing minister and had a really good chats actually but you know what I sort of suggested to him it would be really nice to you know have proactive policies that encouraged investors to come back into the market but also motivated them to stay for the long term and we had a bit of a chat off camera about that what that might look like we

don't know yet but that's vital right instead of these you know instead of this always these financial attacks on investors how about actually going well like while while governments around this country have reduced their funding of social housing from 10 percent of housing supply to less than two percent um while they've been doing that and investors have been picking up the slack whilst at the same time getting taxes increased taxes levied on us left right and central i'm sure i've said to you before bushy i still cannot get my head around why investors pay more stamp duty stuff like that higher council rates everything why what what higher interest rates all of these things why is that why is that so i would like that to change it's obviously utopian

get an idea but we need to incentivize investors to get back into the market because they haven't been and and obviously a lot of them are leaving so how do we incentivize people to become investors and importantly how do we invest incentivize them to stay for the long term and when i say long term i'm meaning decades so that we can create that stable supply of rental accommodation in this country because we don't have that at the moment beautifully said and i really want to thank for this very revealing and brilliant cycle run through the survey, Nicola. And as you've just said, it further reinforces the need

for our policies, policy makers and governments to actually reframe and reverse their thinking by stopping treating investors as the enemy and the problem by penalising and then hamstringing them to the detriment of the housing supply and rental affordability. And instead, as you well have just said, to start embracing them as their best friends and actually the solution by re-incentivising to continue to invest

as the only meaningful way that the rental crisis can be sustainably addressed. So I just want to point to anyone listening to this, if you want to learn more and to get the details of the survey, just jump on www.pipa.asn.au and check out the PIPA Annual Property Investor Sentiment Survey 2023. And Nicola, I just really want to thank you again for sharing these very important would have been very timely insights here on the show oh thank you

bushy thanks for the opportunity 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 in first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. Subscribe now to Realty Talk.

It's out every week. Well, that brings us to the end of this week's show. A big thanks to Nicola McDougall and the PIPA team, as well as Bushy, for helping us understand more about the outcome of the most comprehensive snapshot of the nation's property investment community. Make sure you don't miss a single episode of Realty Talk or Bushy's Get Invested podcast

delivered to you each and every week. You'll do that by subscribing to the Property Hub now on your favourite podcast player or wherever you're listening to or watching this show. Thanks to our supporters and content partners, Realty.com.au, BMT Tax Depreciation, Know How Property Finance, Get Rare Property and Apiro Marketing. I'm Kevin Turner and on behalf of Bushy and the Property Hub team, we look forward to seeing you again next week.