Property Hub - Investment Insights & Inspiration - Realty Talk - Property has too many hurdles and egos

Episode Date: September 5, 2024

According to Todd Hadley PRD Managing Director, each property market across Australia is currently moving at various speeds and directions regardless of whether an area is located closer to a capital city or is regional.   This is pointed out in PRD’s latest  Australian Economic and Property Report.  Todd says…“we are seeing different markets recording varying levels of price growth, while simultaneously, in other areas, prices are declining. A prime example of this can be seen in Brisbane where property prices continue to grow, whereas Hobart prices are shrinking.” Bushy talks to the editor of the report, Dr Asti - PRD’s Chief Economist.   Then he catches up with Real Estate Institute of Australia President and CEO of the Laing & Simmons Group, Leanne Pilkington who says "there are too many hurdles and egos in property to ever simplify home buying and selling”. 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, well according to Todd Hadley, PRD's Managing Director, each property market across Australia is currently moving at various speeds and in different directions, regardless of whether an area is located closer to a capital city or if it's in a region. This is pointed out in PRD's latest Australian Economic and Property Report. Todd says, and I quote, we're seeing different markets recording varying levels of price growth, while simultaneously in other areas, prices are declining. A prime example of this can be seen in Brisbane, where property prices continue to grow, whereas in Hobart, prices are shrinking. Bushy talks to the editor of the report, Dr Asti, PRD's chief economist. That's later in

the show. And then he catches up with Real Estate Institute of Australia president and CEO of the Lang & Simmons Group, Leanne Pilkington. Leanne says there are too many hurdles and egos in the property industry to ever simplify home buying and selling. So frustrating, isn't it? It makes perfect sense for us to all be, you know, with the same regulations and the same rules and the same systems, but it's just not the way it is.

And I think it's going to be a real challenge to actually make any significant progress. There are too many hurdles and too many egos in the way. So does she have a suggestion? Well, we'll find out today. Before we start, I want to thank our supporters and content partners, Realty.com.au, BMT Tax Depreciation, Know How Property Finance, Get Rare Property, and Apiro Marketing.

You'll find us on all podcast players as The Property Hub, also on the Southern Cross Austerio Network, Hot Copper, and on all social media platforms. Property deductions can save you thousands of dollars each year. To make sure you maximise deductions, you need to work with the most experienced quantity surveyor in the country. BMT Tax Depreciation is the leading specialist in the industry.

They've completed over 700,000 tax deduction schedules for residential investment and commercial properties Australia-wide. BMT guarantee to find double your fee in the first full financial year deductions. Call BMT on 1300 728 726 today for an obligation free quote. Realty Talk and your host, Bushy Martin. Now during the pandemic, the petrol thrown on the fire of property pretty much artificially floated all property ships. But since then, there appears to be a steady return to the normal variations in performance between locations and property types right across the country

that we've all come to know and love. So, how is your property performing and how fast, if any, is it growing and what and where are the future property opportunities? Well, to help you uncover this, PRD has recently released its latest Australian Economic Property Report for 2024 and PRD Chief Economist, Dr. Deswati Martiasmo or Dr. Asi, as I like to call her, joins us again to unpack the insights and implications. So welcome back to Realty Talk, Essie. Hello, hello, how are you? Very good.

Always good to see you and always enjoy your insights given the clear, in-depth research you do on what's happening in the property sphere. So I guess... Oh, thank you. Yeah, I decided to sort of kick in, and a great report, by the way. Can you sort of start things off

by just walking us through what you're seeing with Australia's property cycles and prices generally ad right around the country if you could please so you were right you know i was listening to your introduction about now that we are returning kind of like you know towards that back to that strong property market but right now at the moment we are definitely seeing different markets and different gears so yes we are returning back into that strong property market but in terms of to what extent or how each place around Australia whether it's a capital city or whether it's a regional area like how fast they are returning back to that strong market that's the part that

is really really interesting because it feels like we've had two cycles in the space of two to three years right um you know we have had that massive boom post covid like you've said um we all went through the sort of like period of higher interest rates and cash rate hikes since May, mid-May 2022. And now we are trying to get back into that strong property market. But the pace in which every single market does it is different at the moment. We're seeing the markets like Brisbane, Perth, Adelaide, you know, pretty much knocking the race when it comes to median price road we've got melbourne that is still trailing a little bit behind and then we've got hobart that is becoming more affordable for people so basically you know we do have different areas and different

places doing different things and and i've got to say that uh that's i've been in property a long time probably as you have as well that's exactly what i expect in property yeah every area every location right down to the suburb level goes through its s curve of growth at different times and out of sync with with others so it really is a much more return to what we've seen traditionally and and that creates its own opportunities because for those that are able to interpret the data and look for the opportunity areas where they can get in where the others aren't fishing at the moment then there's plenty of opportunity that emerges from that I guess just in in that context if we go around the the the globe in terms of the around the grounds from state to state

you've touched on those a little bit but if we look at where each state is at that sort of aggregated level can you just sort of summarize for us where each of the states are on the property clock as you see it? Yeah, definitely. So like I said, we've got different markets in different gears. So for example, Greater Perth and Greater Sydney, they're leading the pack, as well as Greater Brisbane. It's eclipsing Melbourne at the moment. So for them, their property clock is at around 9 or 10, which means that it is a growing market. It hasn't reached its peak yet. There's still more to come so that's around that nine to ten for those certain areas melbourne at the moment and the rest of victoria is either on a seven or an eight which means that they're just

coming out of that market recovery phase um some places are still seeing declining growth which is why it's at seven um but then you then have also melbourne that is at eight because it's coming out and it's growing slightly and then like I said when it comes to other places like Hobart it is currently still at six and five if you go to regional Hobart and that's because prices down there have become a little bit more affordable and that creates an opportunity for first-time buyers so as you can see we literally have different markets in different places within the property we've got some markets that are still in five and six so we have markets in seven and eight and then we've got markets in nine and ten yeah now there's something i'd love your thoughts on a bit of

crystal balling here which i know is always dangerous and uh crystal balls uh have a habit of not not being on the money as the dynamics involving in the economy in their property work through but there's there's been a number of calls by uh property commentators in recent times that uh earth is just about reaching its peak and and south australia the same what what's your read uh from what the data is telling you so it's a little bit of both there when it comes to whether it has peaked or not so um and the reason why i say this is because the way that we look at it is we look at the interplay between supply and demand and we look at um from the demand perspective we look at whether or not the buyers in that particular market are sticky, or if the buyers

are, you know, really going gung-ho and really wanting to buy property and really competitive in the market. So overall, at the moment, because of the stable cash rate, we are definitely seeing more sticky buyers. So we're seeing buyers taking their time a little bit more. We're seeing average market in terms of sales increasing in most places. I know that in certain areas around the country, it has even doubled. So we are definitely seeing sticky buyers. And when it comes to Perth, when it comes to Adelaide, we have definitely seen a decline in the time to buy dwelling index in these areas, which means that we are seeing a much more sticky sort of like buyer market in these places. And at the same time, we're also seeing some more construction

happening in these places. Like South Australia, for example, they're the ones who is knocking the ballpark when it comes to construction. Well, to leave you on from that, Dr. Astley, I'd love to dive in a bit deeper in terms of what you're seeing as driving these locational variations in performance. You've touched on a couple of them, but can you sort of to jump into that a bit more detail for us for sure um so in terms of each location like i said it really depends on the play of customer demand and supply and when it comes to demand we are definitely seeing that consumers are more sticky but different places have different i don't this might sound a little bit weird they have like a different stickiness to them you know like there

are certain markets like in regional Victoria, for example, where the market is a little bit faster paced, but then you have regional Western Australia where buyers are actually much more stickier than buyers in regional Victoria. And that's because the buyers in regional Victoria knows that at the moment it's the time to get into the market because prices are still more affordable whereas buyers in wa know that okay so prices have gone up slightly so i'm going to take my time and so we have those differences between buyer stickiness um and right now we have a lot of governments whether it's federal state or local pouring in so much money into the housing supply side of things but then the devil is in the detail um we have states like queensland that

has a really good plan for housing supply. And then we have states like Northern Territory that has very little housing supply. Yeah, well said. Now, one of the things that I'm seeing with data generally is that, and there's been a bit of reporting on this, that the actual listing levels in quite a few areas are well below what the long-term averages are. Is that having an influence on that stickiness that you're talking about? Because there just aren't the number of properties and therefore demand for a limited opportunity to purchase properties is driving price variations as a result. What's your thoughts on that? That is definitely one of the factors. In a lot of places, there is less properties available, but then there's also some places

where there's more and more properties that are available. So in Melbourne, for example, we have seen more listings than 12 months prior. In Brisbane, we're seeing less listings. In the goalposts, we're seeing more listings. And so the number of listings in different areas around the country is actually quite different as well. And that does drive how sticky the buyers are. Because if they see that there's less listings, then that hunter instinct, you know, of like, actually, I need to secure this now. And one of the reasons why they feel that they need to secure it now is the latest data from the RBA or the Reserve Bank of Australia is showing that there's not going to be a cash rate cut until 2025. And that there might even be a cash rate increase towards

the end of 2024. And so now is definitely the time to get into the market. And so when buyers and investors know that you know if they know that there isn't enough listing in that particular area that hunter instinct then comes in and that's when they really want to compete and be able to secure the property yeah well said now i'd love to turn to where the prd time to buy dwelling index that you touched on earlier can you talk us through what that's indicating from the research you're doing you know what i love about this particular index um so the time to buy a dwelling index we work with the melbourne institute and the university of melbourne with this and when it comes to time to buy a dwelling index it has turned so much in the past 12 months 12 months

prior so this is in june 2023 the common saying was that buyers are back right and we're seeing so many more buyers in the market, the time to buy a dwelling index was showing the graphs going up, whether it's in WA, whether it's in Queensland or Victoria, everyone was wanting to buy in. Whereas now, 12 months later, the time to buy a dwelling index is actually showing that low states are reporting a declining trend. And that really goes well, it pairs well with that consumer sentiment that is a little bit lower at the moment at about 85%. It should be around 90%, 100%. But at the moment, it's about 85%. And so you've got cautious consumers and you've got sticky buyers. So there's been a massive change in that time to buy a dwelling index, even just

in the past 12 months. And believe it or not, out of all of the states, only Tasmania have gone above the 100 index points which means a very positive consumer sentiment base so they're the ones that are going gangbusters so to speak going gung-ho um wanting to be in the market wanting to be super active in the market and they're the only one that is above 100 index points whereas a lot of the other states are showing a decline in their time to buy a dwelling index which is interesting because prices are actually falling in Tasmania. So there's almost an inverse correlation between price variations

and the index in terms of the time to buy. So that's quite interesting. Love you sharing that. Again, pulling out the old crystal ball, Dr. Asty, what can we expect for the rest of 2024 and early 2025 and beyond in light of your traffic light indicators and other potential influences

that your research has uncovered. You know what's really interesting about doing a crystal ball? Because previously I've been able to kind of glee from the report, like you said, using the traffic light where we're heading. Because out of all the indicators,

whether it's property prices, rental prices, consumer sentiment, time to buy dwelling index, every single indicator in there in the past two versions so that's 2023 and 2022 have all had like a major traffic light color whether it's orange or whether it's red um you know where is it or whether it's green but this time around in 2024 it's a really mixed bag i've got some indicators that are on green um and then i like housing finance for example residential construction is another one. I still have quite a lot that are on yellow or on orange. And then you've got

the time to buy dwelling index, which is on red. And so, you know, it's a very sort of like traffic colourful report at the moment. And the only thing that I can say when it comes to crystal balling is that if we look at what is happening in terms of the cash rate and the RBA's predictions on the cash rate and also inflation rate it has really changed a lot in the three months that they have or the three times this year that they have published their statement of monetary policy and when i say that back in february they were still thinking that inflation rate will keep on going down down down and there's a possibility of a cash rate cut towards the end of 2024 in bay that all changed to a more stable inflation rate and then a more stable cash rate throughout

the whole of 2024 and 2025 and not a cash rate cut until 2025 or mid 2025 yeah um in august and with this just literally came out i think around the 7th or 8th of august um you know their inflation rate prediction have changed again. Back in May, it was stable. And now that there might be fluctuations and slight bumps in inflation rate and even a higher inflation rate towards 2024 and early 2025. And so their cash rate prediction have changed again to possibly a cash rate increase towards the end of 2024 or a cash rate cut at the beginning of 2025, depending how inflation rates go and so trying to crystal ball at the moment is actually you know almost impossible because every three months it seems that the prediction for inflation rate and cash

rate just keeps on changing um and so it really does depend on your local market and what's happening in the local market and also your own financial situation um because regardless of whether the cash rate is at 4.35, which is what it is at the moment, or if it goes up by 25 basis points, or if it goes down by 25 basis points. If your financial situation doesn't allow you to be a purchaser in the market,

then you won't be a purchaser in the market. Very well said. And I think what that highlights is a couple of things. One, that the economy and property has always been extremely dynamic and conditions vary in terms of time, in terms of the location. I've often said that there's more moving parts

in the property dynamics than there are combinations on a Rubik's cube, Dr. Astley. Yes, you're absolutely right. And I guess the good part of that though is change means opportunity. So for the savvy property purchasers and buyers who are able to interpret the data and identify the opportunities

that are going to perform regardless of the sort of seasonal variations that occur and the growth drivers are supporting what's going to happen, then there's always opportunity if you know where to look and what to buy.

So we'd love your insights on that. I'd really appreciate you bringing us up to speed with these very informative property insights as always, Dr. Asty, which really does clearly reinforce those dynamics and the opportunities that are before us

and the need to be borderless and long-term property approach, which I think is the underlying message. So I really want to thank you for all of this and joining us on the show again today. Thank you so much for having me. Always a pleasure to talk property with you, Bushy. Thank you, Dr. Asti.

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 property and real estate is Australia's biggest asset class and depending on who you talk to

there's somewhere between 10.9 to 12 million residential properties in Australia worth around 10.4 trillion dollars at last count which completely dwarfs the total asset values of both shares and superannuation by about three and a half times. So with around 130 odd thousand Australians employed in the real estate industry helping something like 6.9 million Australians into new homes and rentals every year it also contributes around 30 percent of our gross domestic product. As technology continues to dissolve the friction and pay points in the industry, why does it actually feel like things keep getting harder instead of easier, and what does the future of the Australian property industry look like? Well, to explore this,

we're joined by the President of the Real Estate Institute of Australia, Leanne Pilkington, one of the industry's most respected and sought-after commentators, who's been an active thought leader in the industry for almost three decades, and is also the CEO of boutique real estate group Lang & Simmons. So welcome to Realty Talk, Leanne. Hey, thanks so much for having me. I appreciate it. I'm looking forward to having a chat. What I love about the work you do, you're sort of in the weeds at the boutique and agency level, but also have a very good holistic overview at the national level, given your

role as the president of the Real Estate Institute of Australia. So I guess, given that full breadth and to set the tone, wearing that Real Estate Institute hat, what are some of the biggest issues and challenges that you see facing the real estate industry across Australia at the moment? Yeah, there are lots. I mean, we went through a period of obviously really high growth during COVID and it was the first time in my career that I can remember every market seemed to be travelling at the same speed. We're certainly not in that space now. We've got markets like South Australia and Western Australia that are really, really strong. we have got investors exiting in droves out of places like victoria and new south wales heading towards those other states for a variety of reasons but it's um yeah it's a it's a very interesting time and then when you put on on top of that you've got um changes to legislation we've

got the anti-money laundering we've got um know your customer uh we've got privacy coming in or change to privacy coming in so there's just a lot of different things happening all at once yeah i guess that's the uh interesting uh challenge and opportunity of property yeah because of so many dynamics and constant changes in terms of location property type and and more rest of it uh but uh i guess as technology continues to shrink the tyranny of distance that's always sort of classified australia and property transactions are now shifting from sort of the backyard local to a borderless national approach what are the real estate institutes views on creating or improving nationwide consistency in practices and process

particularly in the face of our age-old state-based legislation silos so frustrating isn't it that makes perfect sense for us to all be um you know with the same regulations and the same rules and the same systems but it's just not the way it is and i think it's going to be a real challenge to actually make any um any significant progress there are too many too many hurdles and too many egos in the way and probably too many entrenched systems that have got such a momentum that they become golden handcuffs i guess in one sip yeah it's very true right sometimes we're all so deep in the weeds of getting the job done that we don't take a um a bigger view and we don't do the work that we need to do for a long-term improvement in the future we're just sort of busy doing our job

today very good call now uh there's been sort of massive growth in the buyers agents industry in recent times so what's your read on the growth and the impact of this on the industry well firstly i think it makes perfect sense for there to be more buyers agents around i think it um you know selling agents are representing the the um the needs of the of the vendor of the homeowner and it makes sense for somebody to be negotiating um on behalf of the buyers so yeah i'm very supportive of buyers agents um i think though um there's a lot of failed selling agents that think being a buyer's agent is an easier road and it's in fact not um buyers agents have very different skills in a lot of instances and they are selling across the country or buying

more correctly across the country so you know the way that they analyze um the purchases and you know decide on the pricing it's that it's a lot more technical than um a selling agent who's typically focused in one um demographic um or geographic location yeah i totally agree and i guess the i think the challenge for the industry it's like any new burgeoning industry that the the hurdles to access are pretty low at the moment and I guess there's a wide variety of skills that are being expressed in the buyer's agent sphere from pretty damn average to exceptional which I guess some of them are absolutely fantastic but not all of them are and so yes they need to be licensed real estate agents but my view is that they need to have

some specialized modules um in their licensing you know they typically don't need trust accounts for example so is it essential that they have that training you know i i'm not convinced that it is but there's a lot of other stuff that they should be learning and some of the um will i say independent buyers um agents courses are not necessarily um to be recommended can i say that very nicely said i think i've jokingly said in the past liam that uh it's like cutting the coupon off a cornflakes packet with some of the courses that i've seen around there and about as useful too by the way and some of the some of the things that they're being taught really um yeah bother me a lot but yeah yes i guess uh while i think at times we're over compliant in

this country in instances like this where there are very low barriers to entry. Yeah, and unfortunately, you know, markets and businesses move so quickly and the government can't always keep up with the changes. So to anybody who's looking to employ a buyer's agent, I would definitely do my research and I would be getting recommendations from people that have used that buyer's agent before, looking at case studies and all that sort of stuff. I think it's really important to do your research. I totally agree. Now, I guess on the subject of compliance going from probably under-compliant to potentially over-compliant in some areas, I'd love your thoughts on the sort of rippling waves of rental reforms that we're seeing in moving from state to

state around the country, particularly in relation to concerns around no grounds eviction and some of the other issues that are arising. But what's your read on all of that? Well, the more the government um the more the government play with these regulations the less attractive um investment becomes for property investors and so we've got to be so careful we're in the middle of a housing crisis we need our private investors it should not be up to mum and dad investors and i'm one of them um to be providing um housing for the country but it it is right the government is not playing their part unfortunately even though every government around the country we're in election cycles everywhere every single government has recognized housing affordability lack of housing

supply as critical issues it doesn't matter where we are yet nothing is being done to remedy this in the short term they've got long-term lovely plans that they're not meet their targets they're not meeting so i certainly wouldn't let my team continually set kpis that they have no hope in achieving but that's what we allow for our government unfortunately sadly we've got uh political horizons there are only a few years and therefore the long-term stuff doesn't really matter problem right yeah i know it's very difficult and and i think the the other thing there too leanne is that we're in a situation where the very people are the mums and dads that you just mentioned that that are predominantly the providers of rental housing stock in particular

in this country are being victimised as the donkey to pin the tail on rather than embracing them, incentivising them with the opportunity to expand the provision. What's your thoughts on all of that? Oh, look, I totally agree. And you've got to be really careful when you come out and say you need to incentivise investment because, you know, you're a real estate agent and that just looks bad, right? But the reality is, for example, first home buyers, it's really hard to buy your first home. But what about the first home buyer incentives? Why not have them for first home buyers, whether they're own occupiers or investors? There's plenty of baby boomer parents that would help their 20-something-year-old kids buy their first property while still living at

home with mum and dad. So why not access that? We need those people to get into the home market. we need the investment stock for our um for our renters so where's the harm in it other than a government who doesn't want to be seen to be incentivizing investment yes uh spot on there now it's something that's a bit close at home for you uh and probably something near and dear to your heart the real estate institute of new south wales has recently appointed an a8 ai bought boarded by alice in yeah i'd love your thoughts on this and what impact do you see this and other prop tech innovations having on the future of the real estate industry moving forward?

I was really pleased to see that Tim McGibbon, the CEO at REINSW, went down that road. He's very excited about technology. And the thing I would say, I remember back in 1997, before realestate.com was a thing, I presented to a group of our business owners on the internet and I was told afterwards, oh, Leanne, that's a lot of fun, but it's just a fad and of course we know that it's not it wasn't just a fad it has changed

everything and i believe that ai will do exactly the same so for those of you who are avoiding ai um get in and play with it you'd be surprised at what it can actually do we've just built for example at lang and simmons we've just built um a series of gpts that will answer questions for our property managers. So it's got access to all of the NCAT regular rulings. It's got all of the legislation. So you can just ask it a question like you would your manager and it will give you all the information you need. There's so much we can do with it. We shouldn't be afraid of it. We just need to get in and play and we'll be surprised at what it can do. Absolutely. I think the opportunity to improve the efficiency and the effectiveness of the industry and take up some

of those very laborious tasks that free up time to put into high high value uh service opportunities like relationships right spot on and and better communication at all levels so uh look uh we've only just scratched the surface but uh i really want to thank you for your very insightful words of wisdom and optimism on the future of the australian property industry and for taking the time out of your very busy schedule to share this with us on the show today so thanks absolutely absolute pleasure finding the perfect investment property shouldn't be stressful at realty.com.au we connect you with expert buyers agents who do all the hard work for you whether you're buying your first property or adding to your portfolio our trusted buyers agents will guide you every

step of the way realty.com.au your gateway to the investment property of your dreams find your perfect buyers agent today visit realty.com.au now to get started unlock bonus content now as a premium subscriber well that's it for this week make sure you join us for more property news each week with realty talk and get invested you can do that by subscribing to the property hub on all podcast players join the conversation on facebook too just search the property hub collective and give us a like and follow Thanks to our supporters and content partners, realty.com.au, BMT Tax Depreciation, Know How Property Finance, Get Rare Property and Apiro Marketing. Until next week, all the best.