Property Hub - Investment Insights & Inspiration - Realty Talk: Property Professors Masterclass

Episode Date: October 13, 2023

A few weeks ago property investors from around Australia and New Zealand gathered to swap ideas, network, and listen to some very knowledgeable speakers share their experiences at the inaugural PIPA Conference.  One of those keynote speakers was the previous Property Investment Professionals of Australia or PIPA Chair and continuing board member Peter Koulizos - also known as the Property Professor - who took everyone on a property and location masterclass. Our own Bushy Martin was the emcee at the event and was so impressed with the information Peter went through that he invited Peter to join him in a full Realty Talk show and today is the day.  So get your note paper and pen out because you are about to hear some very powerful insights. 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.

Hello once again I'm Kevin Turner and welcome to this week's Realty Talk Show. A few weeks ago property investors from around Australia and New Zealand gathered to swap ideas to network and to listen to some very knowledgeable speakers as they shared their experiences at the inaugural PIPA conference. One of those keynote speakers was previous property investment professionals of Australia or as it's commonly known PIPA hit their chair and he's also continuing board member Peter Kaloutsos. He's also known as the property professor. And Peter took everyone at the conference on a property and location masterclass. Basically I'm looking

at houses rather than units. And the plan was that the median price of these houses would outperform the median price of their respective capital city. And I used quantitative data that's the numbers and the number crunching. And I also did a lot of quantitative of research, which is really subjective or based on opinion. And I reckon the best research I did was actually being in the suburbs. Well, our very own Bushy Martin was the MC at that event and was so impressed with the information Peter went through that he invited Peter to join him in a full Realty Talk show. And today is the day. So get your notepaper out and get your pen out

because you're going to hear some very powerful insights from Peter. Hey, if this is your first time with us, a big welcome. You're going to find us on all podcast players and through the Southern Cross Oz Stereo Network. Now, if you like the show, and we certainly hope that you do, make sure you hit the subscribe button. We will be back in just a moment as Bushy kicks off this week's 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 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, we all know the old saying that you don't wait to buy real estate, you buy real estate and wait. But how do you determine the best suburb to invest in? And what's the best type of property to buy? So who can give you the best independent, impartial and educated guidance on suburb selection?

There's no one better than the previous PIPA Property Investment Professionals of Australia Chair and Continuing Board Member, Peter Kolesos, to show you how to do this. I guess to sort of start off, I just want to revisit your very highly acclaimed book, Top Australian Suburbs, as a basis to actually check the outcome of some of your previous forecasts versus the reality of what happened in those areas that you actually identified as up-and-coming suburbs. So to get things underway, can you tell us a bit more about your great book? Yeah, sure. So it was published 15 years ago, back in 2008. I picked 107 suburbs, 20 in the major capital cities, two suburbs in Canberra and Darwin because they're quite small. and three suburbs in Hobart so my starting point when I look at the performance of the capital growth is all based on March 2008 that's where we start from and I made comparisons from

March 2008 to December 2022 which is just three months short of 15 years which is quite a long period of time I would imagine you know many property investors would have held property for that long probably most would have got rid of it by then but I think it's important one thing that i'm willing to do bushes all right you know i've been forecasting up and coming suburbs even before i wrote this book even when i was teaching and before i wrote the book so for 20 years but i think it's important especially as an educator to make sure that i'm still on the right track so i'm going back to see how good or bad those forecasts were and you know i'm going to share that with you here and some of the story is not so good especially for those people that live in

birth but we'll get to that soon um but you know because you know i don't profess to know everything about property and things change things change over time so you know what worked well in my father's day may not work so well now so we need to keep on top of things so we can keep educating people as to uh how to go forward so far as investing in property is concerned yeah very well said and and as you would know better than i uh property predictions a dime a dozen uh but very few of them end up being accurate and a lot of them a lot of people who make them uh show no accountability or responsibility as they just conveniently forget the past and then have another go but i love the way you you stand by what you do and the and the the art and the science as

you're about to reveal to us behind those it provides really good uh reinforcement of why you've been so successful in that regard so so just to sort of dive into that then how were the top australian suburbs selected uh peter so basically i'm looking at houses rather than units and the plan was that the the median price of these houses would outperform the median price of their respective capital city and i used quantitative data that's the numbers and the number crunching mainly from abs and court logic and i also did a lot of quantitative research which is really subjective or based on opinion and i reckon the best research i did was actually being in the suburbs so it took me one year and one day to write that uh write that book

because i i traveled around the country what to the mate to the capital cities all the capital cities and went to the suburbs that i wrote about and even though for example they look really good on paper or on the computer on the desktop when i got there i saw now i can see why it's so cheap because cheap is not necessarily undervalued so that was really good you know because in the book it also says areas to focus on and areas to avoid and so to do that you need to be able to walk the streets and and talk with people uh because the local knowledge is so critical that's that's where the word location comes from it's local so you really need to know not just the macro location but the micro location not just the the city and the state but the suburb and the street as well

so true matt i uh i i see a lot of people in the industry now who rely very heavily on the desktop data but unless you've mixed it with the locals uh because it's the it's the perception of an area and and the changes that are happening uh that you just don't get to pick up on when you're doing a snapshot on the on the computer so uh no brilliantly said uh now peter what do you consider to be the key capital growth drivers and why then sure so it's easy to remember as the three l's location as you said before is really important the most important factor land and look so if i can just quickly explain so far as location is concerned yeah you want to be close to the city or really close to the sea now really close to the sea means like esplanade or one or two streets back

um proximity to neighboring prime suburbs so often people want to move into that prime expensive suburb can't afford to they look next door and providing it has similar housing style and streetscape there is good potential for it to benefit from that ripple effect other redeeming features so far as location is concerned include being in the zone of a highly sought after high school that's becoming more and more important all around the country yep uh land so that's the second l but you need to remember that land appreciates in value and buildings depreciate value therefore houses generally generate better capital growth because they sit on more land than units yeah and looks it's two things the look of the property generally means character

or period style homes and the outlook of you so ideally water is number one a view of the cbd or views of open space in general so location land and looks and in that order as well but uh your insights are pretty timeless i remember sitting in the audience at a steve mcknight conference back in the uh early uh noughties uh when you were presented exactly those things and they hold true as much today as they as they did then right so where i think like location and land has held true for ages but i remember in my father's year and i mentioned my father from time to time because he was into property as well which is how i got into property yeah nobody really wanted what they called back then old houses but now we call them character

houses and back then nobody really was interested in being close to the beach because generally close to the beach was away from the city they always wanted to be close to the city but you know we had the sea change in the early noughties right that started the sea change the covid has accelerated that i think being close to the sea is going to become even more important as time goes on yeah that exits the lifestyle is given that we're now technology enabled and can pretty much operate from anywhere without having to be in a office tower in the city that that's certainly helping to change that complexion a bit but sort of moving on from there how have capital city house performed compared to units around

the nation in terms of growth over the last 20 odd years then peter right so those people who are fortunate enough to be watching and listening to this, you'll see the slides. So I won't go through all the numbers, but basically in every capital city except one, houses outperformed units over the last 19 years. And I reckon if you were to go back 99 years, you'd probably find the same thing. The only place where units outperformed was Darwin. And when I delve deeper into the research, that was because there were a lot of new units built in Darwin. And the new units include developers profit and you're only going to get that once and so and often what you find is when those what used to be new units are sold the first time it's pretty hard to sell them for at least

what you paid for them generally you sell them for less so again you know it just reinforces that so far as capital growth is concerned land is important which therefore means houses should have generally better capital growth than units yeah perfectly said we'll learn to sort of whet our appetites a little bit what are some of the highest performing suburbs within the capitals that you looked at yeah look so we start with our hometown adelaide and again we're looking at close to the city so we've got kensington so adelaide in that uh almost 15 year period it increased 90 percent and so for my predictions to be right the suburbs had to do better than 90 what kensington did 160 percent uh we've got court no longer south right on the beach at 127

torrensville at 140 percent so again that theme close to the city close to the sea uh brisbane was actually my that's where my methodology worked best because in that Almost 15-year time period, Brisbane median house price increased 76%, but the suburbs that I selected did 120%. And, you know, that's huge. And we got, again, you know, for those of you that know Brisbane, I'm sure you know these suburbs. So Norman Park, close to the city, 158%.

Brighton by the water, 150%. Sandgate by the water, 165%. Woolloongabba, just across the river from the city, 151%. So, again, you know, shining through. Canberra was only a couple of suburbs. Canberra did 113%. I picked two suburbs. Braddon, there wasn't enough houses to come up with reliable data.

Narrabunda was the other suburb, which did 111%. So, strictly speaking, didn't outperform like I said it would, but pretty close. Darwin had picked two suburbs, Milner and Rapid Creek. They both did above the 43% that Darwin did. Hobart had picked three suburbs, Glebe, North Hobart and South Hobart. Not enough house data in Glebe to come up with some reliable stats. So Hobart did 140% in that time, which is pretty good, more than doubled.

So just remember, 100% means it doubles, right? So it's much more than doubled. North Hobart did 207%, which is more than tripled. South Hobart did 130%, not the 140% that I was hoping for. Melbourne, some really good suburbs. So we're looking at Carrum by the sea, 157%. Brunswick and Brunswick East, 149% and 158% respectively. Braybrook, which is really going through that urban renewal gentrification,

187 percent almost tripled when melbourne did 127 percent incredible sydney there are some phenomenal results here bushy i mean sydney itself did 163 percent but if i can just cherry pick the ones that did over 200 which is tripled in value so just to put it in simple english if you would bought a house in these suburbs on average they tripled in value in less than 15 years so we've got Darlington at 222%, Coggera at 207%, Marrickville, that's where our Prime Minister lives, smart man, 233%. His property went up in value. And Sans Souci, a lovely little waterside suburb that I love, 195%. And Ultimae, really close to the city, 205%. So if you're in sydney at that time you did very well but along with the good news comes the bad news bushing

perth was disastrous so perth what is that i mean on both fronts perth only did 23 in that time period sydney 163 so significant difference but and on average my suburbs that i picked only did 19 so they did not outperform and for i can see that for a couple of reasons most of my suburbs in perth were by the sea so to me that reinforced yes being by the sea is important but being close to the city is even more important and and the and the suburbs that did outperform were close to the city so perth remember 23 east victoria park 37 percent carlisle close to the city 33 percent morley 27 percent and victoria park which was the best performer at 41 so again close to the city has shown that that's where you're going to

do some good capital growth um so yeah look i am sorry for those people in western australia who may have read my book and and bought in my suburbs i mean on average you didn't do too bad compared to perth but geez if i've written a book about which city to to invest in that's a big difference 163 percent to 23 mind you what i love about what you've just shared is that is again the the honesty with which you presented the information and and yes okay uh perth being a pretty much a one industry town with a very strong resources focus uh might not have performed over that particular 15 years but if we we jump forward to to now and in the last couple of years given it's coming off such a low base uh it's time in the sun is about to occur and as you probably know

better than either the WA government's done a great job at diversifying the industry base particularly around Perth and the in the southwest corridor uh so while it may not have had jumped to Sydney standard during that period. It's well on its way now to starting to perform very well. So it's the old saying, it's how long you're in the market that's going to juice the fruit. And that time period, 2008, doesn't include when Perth property prices were going nuts, 2005, 2006.

If you go back to the ABS, I'm not one of those blacks that can do two things at once. I can only talk to you, Bushy. I can't go and check the ABS in the meantime. But you check out the ABS stats and you see how, like, it would have been, it went close to 50% in one year. Yeah. So, yeah.

There are a lot of ups and downs, but, you know, and, you know, I've done some other research, which I talked about at the PIPA conference. It's time in the market, not timing. All right. You do your research, you have faith in what you, in your judgment and just buy by you know the right type of property in the right street in the right suburb in the right you just sit on it because if you're going to buy and sell buy and

sell a lot of your money goes in transaction costs and capital gains tax after this break peter returns with you to run through the quantitative science of suburb selection what key outperforming indicators does peter focus on find out after this break 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 exclusive to the property hub i want to turn now to the more the quantitative uh science of suburb selection and get you to give us a rundown on what you believe are the key outperforming indicators that you focus on yeah so as i said earlier in the intro we i did quantitative research based on numbers and qualitative research so quantitative research involved looking at the abs in particular demographic stats so basically the question i ask are the following indicators outperforming the state average so is median weekly household income in that particular suburb increasing at a faster rate than the state average what about the people that have bachelor degrees or above which

is very highly correlated to income yes as is the next one which is occupations professionals and managers is the percentage of professionals and managers increasing at a faster rate. So those three are all related to income because it's really the people with the money that drive property prices. Tenure type, ideally we want more owner-occupiers, whether they've got a mortgage or whether they've paid it off, rather than renters.

And to me, one of the most important demographic factors, is place of usual residence five years ago. So if we are having wealthier people moving into an area, that's where property prices go up. It's not like the people that live in the area suddenly got richer and now, you know, they're spending more money on upgrading their houses so they're worth more. It doesn't work like that.

You're looking for the wealthier demographic moving in, and the ABS has two stats there. One is people that lived at a different address one year ago and then people that have lived at a different address five years ago. I tend to look at five years ago because one year ago could be renters moving because they often move year by year

and they're not really going to push property prices up, but owner-occupiers do. And the other one that's not demographic-based is median house price. I like to see that prices are already going up, which lessens the risk rather than try and guess, oh, is this suburb going to do well or not? If you tick those boxes plus prices are going up,

all right, let's get in. And it's not too late because, in particular, if I picked it due to gentrification, gentrification takes 20 to 30 years. So if you got in year two or year three, mate, you've still got 27 or 28 years to go. Exactly. And I think you've focused in on one that very few people would even be aware of and that place of usual residence five years ago,

looking at the changes and the shift of income that's going to put price pressure on on properties in the area that's a yeah that's one that i haven't heard anyone else talk about peter so i love the way you've sort of niched into that but let's switch now across to the other side and look at some of the additional qualitative data that you consider as early indicators of gentrification that you've touched on yeah so so the title of my presentation at the paper conference was the art it's both an art and a science so that the quantitative stuff is the science like it's all numbers based and formula and stuff like that yeah but the qualitative stuff is more subjective more opinion and one thing that i'm really keen on is having a look at

gentrification so gentrification is the process where a blue collar suburb turns into a blue ribbon suburb so it's like you know in brisbane west end in adelaide norwood and unley and saint Peters and Henley Beach in Sydney Paddington and Balmain in Melbourne uh suburbs like Richmond and St Kilda is also going through that almost finished that gentrification process yeah so um that's not to say that all of my suburbs are based on gentrification but that's like another kicker like if that's happening as well but it's pretty hard to go wrong if all these other demographic factors you've ticked the box and this is happening so basically gentrification um was first observed at 60 years ago in london where the more affluent and educated class were

buying and renovating georgian and victorian terraces in the west end of london which wasn't so flash back then yep and two of the key property people and place elements that are globally common not just Australia, I include a high proportion of character, as we call them in South Australia, or period style, as they call them in the Eastern States, buildings and homes, a wealthier demographic moves into the area, and the suburbs need to be close to the city or close to water. So maybe a river is okay, but generally close to the sea.

And so when you factor those sorts of things in, i look at property you know it is in the area are the gardens neat and tidy is housing well kept and owners are willing to spend money on major renovations yeah or are the the front yards of houses full of car wrecks and old lounges you know i probably wouldn't be buying in an area where there's lots of car wrecks and old lounges in the front yard um the people are there many young children and newly built child care centers which again shows a younger wealthier demographic moving in with well-dressed parents pushing prams or is it an area with graffiti vandalized bus shelters big you know uh burnout tire marks on the road

um are there hipster residents sorry for all the hipsters reading this i'm not having a go at you but this is just something that i've observed are there hipster residents riding around on vintage bikes if it's a still frame bike you are probably in a gentrifying suburb if it's a fixie which means it's only got one gear, then you are definitely in a gentrifying suburb. And the other place indicators that I look at like cars are a reflection of the people that live in the area. What sort of cars are people driving? Big black BMWs and Mercs and Audis, it's already a wealthy area. But the smaller black

BMWs and Audis and Lexus, then we've got some aspiring people moving in. So that gives us hope that that area is going to improve in value uh sounds you don't want to be too close to a factories or a main road other little quirky things is there art appearing on electricity poles and public buildings gin distilleries craft breweries hot yoga studios these are classic signs of an up-and-coming suburb and in particular an area uh gentrifying because you can imagine like gin is quite expensive craft beer is quite expensive as is going to yoga so you know they're not going to succeed really well in a blue collar area but as the blue collar area changes and wealthier

people move in then yes they're happy to pay 15 bucks for a shot of gin or you know 12 bucks for a glass of craft beer or 25 bucks for a yoga session so these are the sorts of things that help me uh select the top suburbs that people should be investing in and and beautifully said because you're only going to be able to pick those things up if you're getting down and dirty in the actual locations to be able to to see those uh little bitty details that are giving you a really good indication of where things are going what about other qualitative indicators that you take notice of then peter yeah so um we look so if we're looking at uh property uh we're looking at not just the homes being upgraded but the commercial buildings yeah uh if we're looking

at place there's public seating available the roads are being fixed up the footpaths are being fixed up uh generally i mean if you walk into an area and if you know what you're looking for you know you can spot it communal gardens like often we'll have a strip of lawn out the front of our house right so there'll be the footpath strip of lawn and the road but often in these up-and-coming areas where there's a great sense of community you'll have a garden not just a flower garden but maybe even a veggie garden you know these are the sorts of things to be looking at and there's no guarantees here like i said at the conference you know is my methodology a sure bet you're going to make money? No, because I didn't get 100%. But is it a pretty

safe bet? I think it is. Absolutely. I remember you talking at length about you look at cafes. Give us a bit of a rundown on that one. Yeah, sure. So you all get at the cafe. Is the coffee served in an area up and coming? So do they have um coconut milk oat milk rice milk whoever thought you'd get milk out of rice but there you go and their tea offerings are they green jasmine chamomile um and when you go and and and uh have

a coffee there no two tables or two chairs are alike and the cup and the saucer are not alike and the chair you swear that you used to sit on that chair at your grandmother's house or you go to the pub and on a sunday afternoon like there's no sport on the tv uh there's no you can't hear the ting ting ting of pokies but you can hear a jazz band in the courtyard and the only beers that you can buy that are on tap are craft beers um and also walking in the main street you know if there's lots of for lease and for sale signs that's not the sign of a healthy economy but in a gentrifying area what you might find is older style buildings but new and up and coming businesses yes because once you get more and more of those new and up and coming businesses

then the money is spent on the building um so you might find in an old building there might be somebody selling really expensive clothes whereas before it used to be a two dollar shop yes but over time the building will also be um upgraded so look you know bushy there's lots of things to look for you just got to know what you are looking for yeah and what it means too when you do see it which you've described beautifully there so uh in terms of uh quantifying some of the exercise and again you've touched on this a little bit earlier where and how do you find the main data that supports your investigations, Peter? Right.

So generally it'll be the ABS stats. So those people that look at ABS, they probably go to the census and look up quick stats, which is fine. But some of the other what I call fine-grained data where you get more detail, then you have to look somewhere else, something called community profiles. And, again, for those people that are looking at the listing and watching this you'll see on the slides some of the tabs that i've highlighted where you can

find this information and and so basically you're looking at for example 2011 2016 and 2021 data so if you can get at least three sets of data that's 10 years worth that's pretty good yeah but you know you don't expect to find all the data in the same tab so for example place of use your residence five years ago in 2011 is in tab b39 don't go looking for it in b39 in 2016 i don't know why they don't make it easier the abs so that's in it that's in g42 then you're looking for it in 2021 it's in g45 but anyway if you if you can have a look at the abs data um and have a poke around you'll be able to find it um and and it's and some people may think oh that's too hard you're investing hundreds of thousands of dollars here i mean either you pay

somebody else to do the research for you that you trust or at least do some of it yourself um and yeah all right and and so you know you may not you may not like stats because a lot of people that did stats is probably their worst subject at uni which is my worst subject at uni even though i mean i don't teach stats yeah um but uh i mean to do some of the qualitative stuff you know go and have a look at the suburb yeah speak well one thing I did when I was writing the book was I would ring up the police and say I'm looking to buy a property in the area can you let me know which areas that I should be avoiding uh and you know walking around you may not see that there are probably some signs but you've got to be really astute but you know talking to police talking to

the local shop owners is just so valuable to give you an idea of what's happening in the area absolutely i remember years ago peter read after the gfc uh we jumped on a plane and went to the states and one of the key things we look for when we're looking at area we'd make sure we're in the area uh just as it got dark oh yes good one because that's when you really saw uh what the area is like because an area could look quite good during the day yeah because everyone's at work or out and about but come home at night different story absolutely right so you know and again i I think you touched on a really good point there. If you're investing hundreds of thousands of dollars

with an intention of making hundreds of thousands of dollars, but you have to look under different tabs to find the information across the years, that's going to separate the sheep from the goats in relation to those that are really serious about informing themselves before they put their hard-earned cash down. So with this more to come,

when we return, Bushy asks Peter for his step-by-step approach to selecting the top up-and-coming suburbs. He does that by using a case study. Back in a moment with Peter and Bushy. Hi, just before we go back to the show, I want to spend a few seconds and tell you about a book that was sent to me that's now become my go-to reference

when I'm looking for inspiration about property investment. You know, sometimes it's not about knowing all the answers. It's certainly more important to know what questions to ask. This book by Rasti is called The Property Wealth Blueprint. And it's one that you don't read just once and then put it away. It stays out as a reference. It's a book that you go back to time and time again, as I do, because it's packed with personal experience and with great examples of how to get property investment right.

It's very frank. It's to the point. And as you can see here, I've needed to bookmark several points. And I can tell you that it's a constant companion on my desk here. The remarkable thing is that it's absolutely free on Rasty's website, getrare.com.au. Get Rare. It's a gateway to a richer life. The website there for you again, getrare.com.au.

So get this book, get it for yourself. So to bring all this together then, Peter, can you sort of take us through a case study to demonstrate your step-by-step approach to selecting the top up-and-coming suburbs then? Yeah. So there were seven steps that I used. And people can do this themselves because, remember, I wrote the book 15 years ago.

I'm not planning on writing another one. So if you want to update it, you'll have to do your own research. So you look for suburbs close to the city and on the coast. Then you find the cheaper suburbs within that selection, keeping in mind cheaper doesn't necessarily mean undervalued yeah are the cheaper suburbs adjacent the more expensive suburbs are the cheaper suburbs similar in nature to the more expensive suburbs in particular streetscape and housing style so you can't say well here's an expensive suburb and here's a cheap suburb which is full of factories next door well unless the factories are

going to move it's always going to be cheap so that that's one illustration are the same types of houses cheaper in the prospective up and coming suburb does the other quantitative data support this price and property data and does the qualitative data support your price property and quantitative data so seven i wouldn't say simple steps but seven straightforward steps that do require a bit of work especially if you're looking at the quantitative data that can help you and i put that together and use it as a case study and i and i selected a suburb in Adelaide called Underdale. Now Underdale is in the western suburbs of Adelaide. So it's between the city

and the sea. It's sandwiched in between so if we look at the steps here so I looked at the suburbs close to the city and Underdale was one of them. Underdale step number two find the cheaper suburb Underdale was one of those. Are the cheaper suburbs adjacent to the more expensive suburbs yes because uh under dollar sandwiched in between torrensville and lockley so under dollars median house price 835 000 torrensville 962 000 not a lot more but lockley's 1.11 mil so there you've got a cheaper suburb sandwich in between two more expensive suburbs yeah

um are the same types of houses cheaper in the prospective up-and-coming suburb and again those people are lucky enough to view it and look if you're not viewing it i've said it enough times you should get on the youtube channel or on the website and check out these slides because i picked three comparable properties so three in torrensville and three very similar properties in underdale and uh you could see that the the houses the same house was cheaper in underdale than torrensville so what's happening is people would love to live in lockleys but they can't afford the 1.1 mil they can't afford torrensville at 962 but maybe they can afford underdale at 835 which is about 250 000 cheaper than lockleys and you're basically because it's

next door you're basically the same distance to the city and the same distance to the sea and then I also looked at the quantitative data, so the ABS data. So, you know, was the median weekly household income in Underdale growing at a faster rate than the state? Yes. Was the number of people with bachelor degrees or more growing faster than the state? Yes. Professionals and managers percentage was increasing faster than the state. The percentage of people that own their own house outright with a mortgage was increasing faster than the state. Very importantly, the place of usual residents five years ago, there were more, there were different,

there was a higher percentage of different people living in Underdale than the state, and the median price was already increasing. Just a couple of, not disclaimers, but a couple of things to watch out for. Because Underdale is so close to the city, i had a look at uh the educational institute that were people were attending because if you've got a high proportion of students as we tend to have in our suburbs that are close to the city

that can skew the data yes we've got a high proportion of students and a high and a high number of people with bachelor degrees because they're doing masters but it doesn't earn it doesn't mean that they earn a ton of money because they're only students so that's something to watch out for so basically look you know in a nutshell i looked at the quantitative data on the computer i looked at the qualitative data you know drove around the streets and picked uh houses that were alike in the more expensive suburb torrential and compared to the the undervalued suburb underdale and you know in my opinion you know underdale is a great suburb to invest in you You know, we're talking long-term here.

You leave your money there for 5, 10, 15 years ideally, and you should do better than the Adelaide average. Based on my research, and don't forget, Bushy, I think we forgot to mention, I'm a man that puts his money where his mouth is. So I actually invest in property as well, and I do take my own advice, and I own investment properties in Port Nalunga and Port Nalunga South.

I own a property in Torrensville. So, you know, I do take my own advice. So, again, you know, it's not a sure bet, but please find me a sure bet, and I'll be happy to bet on it on Saturday at the races. But I don't think you're going to do that. But I think, you know, the more research you do, the more risk you take out of it, which is really important because you may only buy one investment property,

And it's going to be the most money you spend on any one occasion. Please, please do some research. Absolutely, Key. And I think you picked a really good example with Underdale. Being a fellow Adelaidean, you know, I used to play field hockey down at the Adelaide CAE. Well, I used to go to Underdale High School. Well, there you go.

There you go. Very well. And, I mean, if you look at what's happened there with the closure of the Adelaide Sea. And, you know, developers have got in there and they've seized the opportunity with residential to redevelop some of those areas, particularly along the Torrens Park.

Yeah, the Linear Park here is fantastic. Just a beautiful amenity. So I think that's sort of a really great, shiny example of bringing together all of that, the art and the science, as you've managed to tease that together and get a number of different points reinforcing the same message really that there's plenty of opportunity in that space so for those

that are listening and watching take heed of those seven steps and all of the other data that Peter's shared with us and if you combine those then as well said Peter you're de-risking the exercise and giving yourself the best possible chance so bring that all to a head then what are your final words in relation to selecting top growth suburbs then Peter? So I spent a good portion of my career as an educator focusing on suburbs maybe I should have spent it on cities instead because remember that comparison Perth 23% Sydney 163% but if you if you want to select if you want to try and select which city you should be investing in you need to be looking at macroeconomic data not property economic data so some of the macroeconomic one of my students

did a wonderful paper on uh factors to look for if uh for selecting cities for investing in property um so money supply was particularly important to sydney household consumption uh for brisbane and in adelaide perth and melbourne it was state final demand so basically what what my students said was that these factors were correlated so one goes up so does the other does so it doesn't mean that one causes the other you could probably imply that but dangerous but you could imply that but certainly they are not leading indicators because ideally we're looking for leading indicators and the quantitative stats that i gave you especially that those that relate to gentrification are leading indicators so you can if it's happening excellent you know go by there

and all right might be one or two or three or five years into it but you still got you know 25 or more years to go of that um upswing in prices so look there's a look you know you don't need to be a rocket science to invest in property but you do need some science all right you you do need to do some research yeah it's reinforced time and time again and as you as you've said if you're not prepared or don't have the time to do the research yourself find someone that you trust that's got a proven track record of doing the research on the key key data points and the qualitative walk the neighborhood data boots on the ground stuff that's that's going to bring it all together so look uh thanks again for all these really informative and timely insights uh peter

you're you know the book might have been written uh 15 odd years ago but the principles that you've applied are i think more applicable now given that we've gone through a major growth curve that's sort of uh you know the tides floated all property ships uh those leading indicators that you're talking about are going to be more important than ever in terms of determining ongoing growth given that a lot of areas that have had capital growth brought forward may well flatline for an extended period of time without those ongoing drivers to get behind it. So I really want to thank you for giving that perfect balance

between that intuitive art and the data science of superior location and property selection, which is like no other, Peter. And you provide yet another really good example of the benefits of working with like-minded independent professionals that PIPA or the Property Investment Professionals of Australia represents. So for those listening, if you want to engage someone or work with someone who takes Peter's approach to property from that independent professional perspective, jump on pippa.asn.au. And in closing, Peter, I really want to thank you again and let's keep the conversation going.

Thank you, Bushy. Always a pleasure to do a podcast with a fellow Adelaidean because there's not many of us. The property industry is generally over in the eastern states. So it's wonderful to do stuff with you. And I didn't give Adelaide a plug. I'll ask you this question, Bushy, you can probably guess. Out of the last 20 years, Hobart was the best-performing capital city. We're talking about cities rather than suburbs.

You know which was after Hobart? Adelaide, mate. We did all right, didn't we? We did. All the stuff in the newspapers and on the net, it's all about Sydney house prices and Melbourne house prices. Nobody really cares about us, but we're doing all right. Well, I tell you what, I used to refer to us as the Stephen Bradbury of property.

Peter, but I tell you what, in the last couple of years, we've shot to the front of the line. We've gone outperformed. Since COVID, since June 2020, we have far outperformed anybody. Absolutely. No, we're always great to rub shoulders, mate. We should be catching up for coffee ourselves and checking in. I think we should. You need to come into the city.

I know you live down there in Coromandel Valley. Is that right? In Clarendon. Clarendon, sorry. next time you're in town give us here i'll shout you a coffee at the uni they make really good coffee they're even better they're lemon muffins there you go and i don't know if you're a sweet tooth but i'll shout you a lemon i am mate and let's make sure they've got plenty of those different milks on the on the show okay thanks again we'll catch up with you soon mate bye for

now 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 $9,000 in first full financial year deductions. Call BMT on 1-300-728-726 today for an obligation free quote. every week. And that brings us to the end of this week's show. A big thanks to Peter and Bushy for a really great show full of a lot of information. Make sure you don't miss a single episode of Realty Talk or Bushy's Get Invested podcast, both delivered to you each

and every week. And you can 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.