Property Hub - Investment Insights & Inspiration - Realty Talk: Where to get the best value for $700k

Episode Date: August 19, 2022

Given the incredible changes that have occurred with property values in recent times, alongside the current deluge of misleading hysterical headlines peddling property gloom and doom, it’s hard to know what is really happening. Kevin Brogan from Herron Todd White joins Bushy to pull apart the latest HTW property report called ‘What a lazy $700k will now buy you, where?’  RealtyTalk is your trusted voice in property investment and Australia’s most popular online property show.  RealtyTalk is brought to you by Realty, Australia’s leading search and social property distribution platform that helps investors like you beat the crowd, giving you the earliest access to property opportunities, listings, and insights. Check out Realty. RealtyTalk is hosted by top property investment expert, author, and founder of KnowHow Property, Bushy Martin. Find out how Bushy’s KnowHow team helps investors unlock freedom with finance and property here, and check out Bushy’s podcast Get Invested.  RealtyTalk is supported by BMT, a company that helps property investors save thousands of dollars each year by maximizing tax deductions from investment properties. Find out more. See omnystudio.com/listener for privacy information.

Welcome to Realty Talk, the show that brings together the country's most authoritative and respected property experts. Follow us on all the socials and subscribe for updates and exclusive offers. Realty Talk is powered by realty.com.au, connecting buyers, sellers and agents differently. Hi and welcome to Realty Talk, Australia's longest running and most popular property show. I'm Bushy Martin from Know How Property Finance and given the incredible changes that have occurred with property values in recent times alongside the current deluge of misleading hysterical headlines peddling property gloom and doom, it's hard to know what's really happening

where as we return to normal varying property conditions around the country. So to shed some light on the true property picture across the nation, reputable property valuers have always had their fingers on the pulse in relation to what's actually happening on the ground. So Kevin Brogan from leading national valuation house, Heron Todd White, joins me for a very special feature show that deep dives into their latest property report and annual update on what a lazy $700,000 will now buy you where. If you're a serious property player, you're really going to enjoy this enlightening episode.

And before we get into it, make sure that you stay on top of this and other ongoing property opportunities by jumping on channels.realty.com.au forward slash Realty Talk and hit the subscribe now button so that you don't miss another episode by getting every show in your inbox every week. And for taking the time, I'll even throw in a

free copy of my award-winning book, Get Invested. We've got an absolute wealth of wisdom to share, so let's get underway. Greetings and welcome. Now, given the crazy machinations of property price movements across the nation over the last 12 to 18 months, many Australians find it challenging to understand the differences in what and how much property your money will buy depending on your location. For example the same amount of your hard-earned may only buy you a small studio apartment in Bondi while it'll afford you a beautiful four-bedroom home in Bendigo or perhaps even 50 acres plus in Biloela and of course this changes over time and considering that property values generally have just finished enjoying the second highest property boom in the

230-year history of the country, it's increasingly difficult to understand what your dollars will buy around the country, particularly if you're a borderless investor looking to optimize your opportunity. So to help you shed some light on this, every year, leading national valuers, Heron Todd-White, complete an in-depth study of what a buyer without boundaries can secure with a lazy $700,000 and how it's changed over the last year. And to reveal the latest results, We're joined by Kevin Brogan, Heron Todd-White's National Director of Group Risk and Compliance. So welcome back to Realty Talk, Kevin. Thanks very much, Bushy.

Very pleased to receive the invitation. Well, always like having you, Tatu, mate. You always give us some great insights and some real factual information on what's actually happening on the ground. So to kick things off, Kevin, what's your summary of what's happened with property segments over the last 12 months? well like almost all of the uh residential market segments have seen a a significant growth growth over the last 12 months i mean we we talk about the fact that um you know there isn't just one residential property market in australia although we quite often uh bundle uh bundle all the market segments together so sort of within that um generalization that there's been growth

there's definitely been some different um speeds of increase so obviously the capital cities in in the eastern states have seen very significant increases over uh over the last sort of 18 months or more um but the other the other thing that's really notable um which which there's been a lot of discussion about is the sort of regional and fringe markets uh where we've seen people you know the the sort of um proximity to commuting uh opportunities isn't uh isn't the main driver anymore so we've seen some of these fringe markets lifestyle uh advantages uh really sort of taking the four on the list of people's attributes so um you know those sorts of markets have really picked up very strongly as as well yeah no way spot on it's it's really increased

the opportunity base in that that capacity so what's your overall read of changing property conditions and trends around the country then well so yeah we've spoken about the last 12 months and and clearly you know if if you take that as as a year period the story really has been about growth But obviously, we're now entering a phase where we're seeing a slowing down in some markets. And we're even seeing in sort of Sydney and Melbourne a drop in property values. But, you know, particularly market activity is dropping off. And the main factors, obviously, fuel prices, the sort of consequent inflation in other goods and services, you know, those and increasing interest rates. those are all things which are sort of slowing down market activity but you know we've got to

balance the the discussion around that because you know we've we've got the situation where we've uh you know we've got a huge amount of fixed um fixed rate mortgage lending occurred over the last sort of 18 months or so those those mortgages aren't going to wait sorry those fixed terms aren't going to expire um for the next 18 months or so so those people are to some degree they're sort of insulated they're still going to face inflation and you know increased costs of living but they're not going to be in the position where they need to engage with increased interest rates for a while but you know the other factor is there's been a period of enforced savings I mean all through COVID those states which were impacted by travel restrictions you know the money that

would have been spent on travel entertainment hospitality and sorts of those sorts of things have you know there's been that enforced savings to give people a bit of a buffer um a couple of pressure points i think which which we may pick up on as we go through the discussion is around the the purchase and construction of new dwellings yeah um you know the the increase in construction cost is actually quite a significant consideration and you know we probably talk about the impact on builders of having committed to fixed price construction contracts um at a time when uh you know construction costs are escalating quite significantly um i think the main story is is you know we we've got a bit of a dent in confidence

and that's leading i'm going to call the market participants but actually one of the characteristics is that they may choose not to participate in the market um for the time being um and you know that that may be an appropriate strategy as you know many market commentators are talking about increased interest rates being something which is a short to medium term phenomenon so waiting and seeing what happens may be an appropriate strategy for a large number of people who might other choose otherwise choose to participate in the market yeah it's uh very good thoughts as you and i know i've been in the industry for a long time uh it's not just interest rates that impact on on property values there's a there's a whole uh world of uh changeable

dynamics that that impact on what's happening at different times in different places so in that context what combination of value lifting and dragging drivers are contributing to what's happening currently well i think one one of the things is i mean we we've discussed some of the factors and and people's knowledge of those factors at a superficial level often comes from sort of media reporting and such like and um you know a lot a lot of the facts behind the media reporting are correct but there's a lot of emphasis on uh increasing interest rates causing a dramatic decline in property values um and look we are in some markets seeing property values dropping um as a result of of uh you know as i said those people perhaps postponing activity in

market it's meaning that there's less market activity so there's less immediate demand at a time when there is a supply of property on the market and that exerts a downward pressure on property prices but there are plenty of markets where the rate of increase has slowed down the rate of market activity has slowed down but there hasn't been a drop yet in in prices and I think something else that sort of impacts on confidence perhaps is I think there's an estimate of about 1.1 million households that haven't until just in the last couple of months ever experienced an increase in mortgage repayments yeah um and i guess that's that's something that people you know they would exercise a deal of caution there's you know the the uh the bank lenders obviously

have a serviceability test they need to stress test borrowers at a point in time how much of an increase in interest rates could they bear but that's very much a point in time test um when when you've actually then become accustomed to a level of income and you've got to accommodate an increase in interest rates it does probably mean people are being a little bit cautious and of course the the other thing is that the employment market still is really strong so um as as long as that remains the case um then that's going to act as a mitigating impact Yeah, totally agree. And again, as you and I know, property values in a particular area go through a bit of an S-curve cycle over time. So the fact that we've had such meteoric increases over the last couple of years is not unusual to see the extended spring come back to equilibrium and then plateau for a period. So, you know, rather than the hysterical property busts or crashes that they're talking about, from where I sit, I'm just seeing things come back to a more normal type situation from, you know, moving from the radical to the regular, if you like.

So how is all this manifesting in Herentob White's property valuations around the nation as you were seeing it then, Kevin? Yes. So, as you mentioned, my job title means monitoring risk. And clearly, if we see market conditions changing such that values may drop, that obviously represents a risk to, you know, we do a lot of valuations for mortgage purposes. so our clients are lenders so we need to be advising them about the the conditions in the market. I think what what's really important is is sort of well it's important to me hopefully to others as well the the role of the valuer is to determine the market value of a property and if I I may I just say that that is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing and where both parties have acted knowledgeably prudently and without compulsion

and so whenever we look at actual transactions in the market they may or may not meet that criteria so when when we're valuing a property that is subject to a contract we're not actually valuing that contract we're valuing well if the property sold in a hypothetical transaction that meets that definition on the same day what would that sale price be now in a lot of instances you know if you've marketed the property for a real estate agent the actual transaction meets that definition but not always so what what we've got to do in providing our advice for which we're accountable we've got to look at settled sales but obviously those settled sales may represent different market conditions so it's really important that our valuers are reading the market they're understanding

from their real estate agent contacts the level of buyer inquiry the number of active bidders at an auction you know understanding the transaction i mean who is selling at the moment um you know i mentioned about market participants perhaps sitting on the sidelines to see what happens next um people selling properties at the moment may feel that they have to so do they then meet the definition of of uh you know somebody selling a property without compulsion good point um so the the challenge for us is to make sure that our valuers are um following their normal process frankly which is the due diligence understanding the market in places i'm sitting in adelaide so we don't seem to have seen a drop in values yet but our valuers need to be vigilant to see

when that is likely to occur um i've mentioned already construction valuations they're particularly challenging because the cost of construction is increasing and potentially in some markets the value of the finished product is declining at the same time something yeah interesting on that point we're actually seeing uh where because of the construction costs are going up so high and people are looking at that and going okay well i'd rather buy an existing property It's actually boosting the potential values of those existing properties as an indirect result. Absolutely. So recently refurbished properties have the benefit of kind of saving you all of the time and trouble that's required to do it. So long as they meet your requirements, there's a very strong desire in Australia to build precisely what you want.

And that's what sort of drives the new build. But if somebody else has done all the hard work, you're absolutely right. That is a very attractive proposition at the moment. Yeah, very interesting, Kevin. Well, we'll now take a quick short break before we start jumping into the details of your lazy $700,000 property port. So stay tuned and stay with us for more.

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. Welcome back to Realty Talk where we're talking with Kevin Brogan from Heron Todd White on their latest report on what you can buy with a lazy $700,000 around the country. So before we start Kevin can you kick us off by sort of giving us a bit more detail on why you've chosen $700,000 as the purchase price figure to compare what it'll buy

around the country. Yeah look we actually selected $700,000 a couple of years ago and the idea was that you know in in most markets you could probably find something as as you mentioned in your uh your introduction you know i mean it's going to vary a fair bit um what 700 000 will uh will buy you um so you know it might be a a studio apartment or um you know it could be 50 hectares in uh you know in in outback uh you know queensland um but most markets you can find something now i have to be honest it's been a challenge after the last year there are some localities where now it's just kind of bumped out of that and i'll give you a couple of examples as we go through um you know the areas where we've uh where we've researched this um but you know we

we can still find uh something at that price point and we do acknowledge that you know in some in some markets $700,000 is kind of towards the lower end of what you can get but $700,000 for a lot of people is a lot of money and so we acknowledge that in picking you know in picking this price point it means different things to different people but it has a broad application. Yeah and that's a good measure and it'll certainly been put under the test in the last 12 months hopefully that'll settle down a bit in the next 12 but yeah let's sort of get into the the guts of this year's report proper then and start that off at the overall level has there been much change in what you can actually get for $700,000 over the last

year Kevin? Yeah so as we said before I mean some markets have experienced some almost meteoric increases of sort of over 20 percent over the um five percent over the over the last year other other locations have seen more modest growth um so there definitely has been uh been a bit of a shift and some uh you know some suburbs that we actually recommended as as being uh you know a good suburb to get a property for around seven hundred thousand dollars last year um you look at the median price now and it's uh it's you're just not going to find anything um in in those locations so yeah look as as we said we we talk about the australian residential market as a totality and and that does serve a purpose and it is relevant but it really does disguise uh some

fairly significant variations yeah i totally agree and i guess they while there's there's no choice median prices in particular can hide a lot of evils because when you get down to the individual property that's that can be very different to other properties in the area you can sort of get outliers that that occur in that but in the absence of anything else at least gives us a flavor what for what's going so in that context then have the changes and outcomes that you've been seeing and this is a bit of a rhetorical question really been uniformed by property type and location? And if not, in your view, why not? Yeah, look, we've seen some variations. I'll maybe just concentrate on the ones that you can sort of attribute to, you know, our response to

COVID. Because, you know, we've clearly seen, you know, people tending towards properties that give them a little bit more flexibility with their accommodation. If you're going to be working from home uh you know people who've perhaps been working off the dining table in a house that they're sharing with other people have struggled a lot more than people who've got a spare bedroom that they can just you know keep for for working from home so you know we we've seen demand for slightly more flexible accommodation slightly larger houses really sort of pick up um and also um you know in we don't need to commute i'm in the office today um actually i'm spending quite a few days in the office this week but you know that hasn't for the last few months been

something that i've done i've been quite happy to work from home coming into the office occasionally and that really does shape the way uh you know that demand has has um you know manifested across the market so um you know if if we look at um investor stock type units they they've perhaps struggled a bit more particularly where um supply of new units has come on at a time where you just haven't really had the rental demand for those uh units and and that's particularly sort of cbd locations yeah yeah no that very interesting well kevin that there's been a lot of talk as we touched on earlier particularly over the last couple of years about the rise of the regions compared to our capital cities how has this played out with this year's $700,000 spend over the course of

the last year? Yeah so I mean to be honest in a lot of the regional locations there's still plenty of options at the $700,000 mark but we have seen very strong price growth here and I think one of the reasons is that that people who are looking to move to the regions if they're moving from a capital city environment even if it's only a small percentage of potential buyers from those uh you know capital city metropolitan areas uh compared to the amount of local stock that's available that is quite a significant demand so yeah um you know as as you see that sustained demand from a really big population base looking to move into smaller communities that's what's really exerted upward pressure on uh on those values um but you know you've you've still got

plenty of options around that 700 000 mark in a lot of those regional um markets and i what i'm going to say next may offend people in my home city of adelaide but to some degree and i don't want to i don't want to promote the stereotype of adelaide being a big country town because we are so much more than that but we've we've actually seen you know over many years what's known as the brain drain where where the young highly educated skilled professional folk from adelaide moved to the eastern states well through covid an awful lot of them have come back because you know their families are here they're you know free child care is here um and they've they've looked to adelaide from an eastern capital city vantage point and they've seen really good value buying

house prices in adelaide look relatively affordable so you know whilst i don't want to sort of promote the stereotype of adelaide being a regional center the the fact is that we've seen a lot of interstate purchasers very active in the adelaide market and part of the reason is we we are quite affordable by comparison to the the place they're coming from yeah totally agree and and i still say the country's best kept secret uh kevin although that it's not not quite so in the last 12 months but uh we won't try and talk it up too much mate uh so that we get to continue to enjoy it yeah on a sort of related note uh how have residential rental markets been performing as you say yeah again i mean this this has been pretty variable there's been a lot of recent

um coverage and justifiably so about the strength of the rental markets um but it was really interesting that during the early phase of covid um purpose-built investment grade units really did struggle and no international students um migration almost completely halted and and you know with with 100 000 people a year having been moving into somewhere like melbourne um a lot of those people would rent before they purchased and of course migration dropped to almost zero um the other thing that hit it hit it really hard is you know younger people working in hospitality and entertainment would typically be renters and of course you know a number of those people would moved back to the family home because their employment was so badly affected um and also

airbnb properties with the lack of tourism a lot of airbnb properties kind of moved back into the general long-term residential rental course so you you've got this demand dropping off supply increasing um and whilst now we've moved past that you've actually now got to make up that ground before you then start you know moving into significant rental growth but you know they i mean again i'll just talk about adelaide for a moment i mean uh and this is typical of many markets uh vacancies at a record low um rents moving up um you know pretty um significantly and that's partly because of the employment market being so strong um and uh you know some of those Airbnb properties moving back

into the short-term accommodations. Particularly, we've seen a resurgence in domestic travel. Regional markets have fared much better. Domestic travel, obviously, with people not being able to go overseas, we've seen a fair bit of

domestic tourism. I don't like the term, but it's been used quite a lot, workcations. I could quite easily just pack my lap into a bag and go and stay on the coast um and you know work pretty productively from there um and so we've actually seen that sort of thing happening um as well um and so you know in many markets we've actually seen rents increasing quite sharply and vacancy rates have really

you know record low um vacancy rates in some markets well it's a good term workations because That's exactly what I'm doing as we speak. So I'm going to use that now. I hadn't actually heard that thrown around, but I'll definitely be using it moving forward. We've touched on this earlier as well, but just to dive into it in a little bit more detail, at the sort of general level,

how's the new construction space been affected and what overall impact is this having? Yeah, so this is a very difficult area. And again, there's been plenty of media coverage of builders who've um succumbed to uh to the pressure so it's a really tough environment for for builders um obviously through um you know various stimulus measures as well as just the general strength of the market through covid we actually saw a record demand for um construction of new homes and many builders have been have committed to a fixed price or lump sum construction

contract um and at the time they did so that possibly didn't seem unreasonable but with supply chain issues um but also skilled labor shortages we've seen those construction costs increase we've seen delays increase um and the real challenge well there's a number of challenges but a really big one for builders is is that they're only able to claim payment um when they reach generally a fixed stage um now if a builder has done 90 of the stage but they can't get the materials or they can't get the labor to finish that stage they're not actually able to claim payment for the work that they've done and the money that they've outlaid and that's a really challenging cash flow environment of course um so you know we there there are plenty of builders

who are really struggling with that and many builders are looking at contract structures now that allow them, at least in part, to recover some of their cost escalations from clients. But that in itself is quite a difficult challenge for people who are seeking to obtain a mortgage to fund their construction. Absolutely.

I've been involved in that in the past, that you only get one really bite of the cherry with the banks and that's at the start of the process, not the end of the process so where that that's really going to work create some challenges uh yeah look it is and i think the the further challenge we've touched on this when we talk talked about valuations is if you've um if you've bought a block of land and you're looking to build a house on it you're hoping that the value will be at least as much as you paid for the land and the price that you paid for the construction however if um if values in your location do fall

you're actually faced with the double whammy of the cost of the construction increasing at the same time that the value of the finished product decreases and that can obviously make funding via a mortgage really quite a um a tricky proposition absolutely yeah it's a very good point well Well, thanks, Kevin. We'll now take another very short break before we dive back into what's happening around the grounds on a state-by-state basis. So stay with us for more here on Realty Talk. 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. Hi and welcome back. Now in continuing our deep dive into Heron Todd White's latest property report with Kevin Brogan, let's now dig into the meat and potatoes of the what you can buy where with a lazy $700,000 by going around the grounds on a state-by-state basis to reveal your findings. So, Kevin, with a focus on what you can buy where around the state and how this differs

to what you could secure 12 months ago, let's kick off with New South Wales. Yeah, look, I think if we have a look in Sydney, I mean, historically, that's obviously been the most expensive capital city for residential property. But there are pockets that we've identified so in southwest sydney uh we found it's it's a relatively affordable um area compared to the rest of sydney and i think it's it's interesting because it is more affordable the the rate of value growth has perhaps been a little bit more modest than uh what's been reported for the uh the sort of sydney metro area as a whole okay and so far the area hasn't sort of ventured into that negative growth territory we haven't seen values fall yet now that's you know it's

probably a timing thing um but you know a budget of seven hundred thousand dollars i said this this is a budget that could buy you something almost anywhere in the country but of course uh it's going to limit what you can buy and it particularly sort of limits us to sort of units and townhouses in many areas um but we've identified uh suburbs like busby miller sadly ashcroft and cartwright which are all just west of liverpool uh they still offer opportunities for a detached dwelling within our budget and we've got an example of a 1960s pretty good condition four bedroom one bath renovated home on a 630 square meter block and it sold for 620,000 fairly recent so those sorts of things are still available and we've identified also that you can

get some detached houses within our budget of 700 000 in western sydney um but you'd probably be limited to strata properties that's units and townhouses in paramatta canterbury bankstown um now i have to say within the time allotted here we we've sort of compressed it and we've given sort of edited highlights and um you know there there are lots more examples in our monthly review report. Yeah totally great I might just touch on one area that a lot of people are talking about that's the Hunter Valley in the central coast how is that shaping? Yeah look again 700,000 is is enough to actually give you a fair bit of choice in in that sort of locality but again we we have seen some fairly significant growth in those areas precisely for the reasons that

we've discussed i mean it is commutable to um to sydney probably wouldn't want to do it every day but nowadays you don't have to um we've seen a lot of growth there and uh so there there are areas there which are now sort of you know last year they would have been on our list but now they're sort of outside the list but 700 000 is still a a decent budget to find uh properties in that area um and we've you know we've also in the regions i mean picked out sort of lismore casino coyote you can actually get rural residential property um around the um you know the outskirts of those areas for sort of with four thousand square meters to five hectares um within budget uh but i mentioned we can't find something everywhere so the byron shire seems now to be out of reach

well and truly i can imagine as you may expect yeah of course well let's now shift to victoria what will 700 000 buyers wear in the garden state kevin yeah so i mean around melbourne sort of close into the city you're you're really only going to find sort of one and two bedroom um units but capital growth has been pretty modest we mentioned before um some of the drivers for growth have been sort of accommodation flexibility to facilitate working from home etc so there's there's been more demand for slightly larger properties and some of these units as well perhaps aimed at the rental market and investors in sort of southeast Melbourne places like Pakenham and Clyde have offered plenty of dwelling opportunities but for detached houses within budget that's about 50

kilometers from the cbd in melbourne yeah we've got an example of a 1993 bedroom two bath house on 785 square meters just sold for 675 000 in packenham and there's also opportunities um in mount evelyn in the outer east donnybrook in the north and tiny in the in the western suburbs um and then in the regions you know you can get a new three bedroom two bath from home in one of the developing areas of Warrnambool um or you know if you head out to the Murray Riverina Riverina or Macedon Ranges uh if if you want a bit more land again there's plenty of opportunities within budget in in those areas yeah okay well let's now sort of head north to Queensland uh what changes have you seen and and what will 700,000 get you in the Sunshine State from top

to bottom yeah well look I mean we'll start with um uh with Brisbane it's still an incredibly popular place to buy residential property particularly as you mentioned for buyers without borders it's going to open you know our budget's going to open fewer doors in fewer locations than than last year so in the inner suburbs the budget's really only likely to get you a unit or a townhouse but we've got for example a three bed two bath townhouse um slightly older but in good condition uh in bowen hills recently sold for 640 000 um a bit further north in strathpine you can still get a detached dwelling within budget but you're likely to need to sort of roll up your sleeves and renovate

um in the mid to outer suburbs you can get a house on about 400 square meters so modest size blocking cooper's plain salisbury acacia ridge okay um and then looking at the rest of the state prices are holding sort of pretty firm in the gold coast at the moment um we've still got fairly good buyer activity there and and you know compared to last year again there are probably fewer locations that you can uh you can find but the tip is probably um you know the older style units just make sure there's no deferred maintenance issues um they'll still be in budget and we've got a 1970s two bed one bath unit in Koolangatta for uh 700,000 sold recently um then up on the sunshine coast you can still get properties in beachside suburbs obviously not

beachside location um between mount coulomb and caloundra um they're still an option um and then if you go up to cairns you can you can still get a decent home in a uh in the suburbs of cairns and 700k still goes a long way in the atherton table and it's beautiful country out there yeah um bundaberg you should be able to get a large modern family home with a pool and sheds in some pretty good locations in bundaberg um and in mckay 700 000 will get you an older style dwelling um classic queenslander in in traditional established suburbs yeah okay well it's still still uh pretty good territory in the queensland let's now flick to your home state of south Australia and it appears to have been a bit of an outlier nationally in recent times. What and

where will 700 grand buy us in the home of the Croatas and how is this different to last year? Well South Australia and Adelaide have historically had a reputation and justifiably for a sort of slower and steadier market but the last couple of years we've seen some really significant capital growth um and uh you know some of that has been we've attracted a fair bit of um overseas business investment and i think it's because of our isolation from uh you know from the worst impact of the coronavirus lockdowns yeah um so we we still may be able to live up to that reputation for being steady because we're yet to see a downturn in in prices that we've seen in eastern states market activity has uh dropped a little but um you know as i've heard you

comment before you know good quality properties are still attracting um you know a good deal of interest um in adelaide 700 000 still goes a pretty long way and you're going to have options in most suburbs but i've got an example here of a um a 1930s um single level bungalow quite a lot of character it's been renovated three bedrooms one bathroom almost 600 square meters in pennington about 12 kilometers northwest of adelaide and that sold for about 675 000 yep if we look to the uh to the regions again i mean we've got quite a few um outer regions where 700 000 is still a very generous um budget um if i just pick on mount gambier you know the median house price in mount gambia is about 350 000 still so there's still plenty of options within budget um i'd suggest

you buy two and a nice place i came through mount gambia only about a week ago where i haven't been there for a while and it's got a really good feel to the town so good suggestions there all right look at very revealing uh again as always kevin so we'll take another quick break and then we'll continue unpacking what's happened in the remaining states so keep watching australia's most popular property show here on Realty Talk. Successful property investment is a game of finance. Do you have the right team and the right game plan? Realty Talk is brought to you by Know How Property. More than mortgage brokers, Bushy Martin and his team of investment architects set you up with a sustainable strategy structured to lower your costs, tax, risk and stress while

increasing your capacity for growth. 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. Welcome back to Realty Talk. We're Kevin Brogan from Heron Todd White and I. I'm packing the latest national property report on what you can secure with a lazy $700,000. In the last segment, we covered off in New South Wales, Victoria, Queensland and South Australia. And now we continue with the remaining states. So Kevin, Western Australia appears to be enjoying a welcome resurgence. How is the largest state in the country fared at the $700,000 spend level?

Yeah, look, I think, as you mentioned earlier, I mean, the WA residential property has experienced significant value growth and and um if we just look backwards for a little while i mean uh we we saw value growth in the eastern states and we just didn't see it for a long time in wa so it's now their time to uh to shine um so although we've seen that really good value growth and we saw a tremendous amount of new um construction it's not quite at the same rate as uh as the eastern states yeah um but nonetheless i mean even though we've seen that increase there are still opportunities within that 700 000 budget and um there's uh there's an example that we've uh found in walaji it's 15 kilometers southwest of perth so not really that far um south um it's

a 732 square meter lot with a 1950s built dwelling okay it's sold for 675 000 now one of the drivers in in uh in perth and wa would be that the lot is actually zoned r40 slash 60. yeah um and it will actually offer good development opportunities once perhaps construction costs uh normalize um so obviously it's got a perfectly habitable dwelling uh on the site so either live in it until the opportunity arises or you get a holding income until the opportunity arises to to subdivide and develop. Looking at some of the regions, I mean Margaret River, we found an example of a $700,000 sale. It was a new property or near new property, pretty good quality and four bedrooms, two bathroom home on a 500 square meter lot, sold for just under $700,000.

thousand um so look the story is fairly similar um but you know there are areas where perhaps last year we might have suggested 700 000 would get you in um and that's now no longer the case but the you know the opportunities are bound yeah just uh focusing in on the southwest uh area sort of between Bunbury and uh Rockingham uh any comments on what's happening there uh yeah look we've we've certainly seen um i mean that's that's an area obviously where the domestic tourism has uh has sort of kicked off in a big way and we've actually seen the local economy performing really very strongly um down there i mean once again you're you're probably going to be priced out um you know perhaps if you wanted to be uh you know close to the coast you're probably

going to have to move in a little bit but nonetheless 700 000 is still something uh you know it's still a budget that's going to be able to get you um you know a decent a decent property in a pretty good location yeah awesome okay well let's now uh turn to the good old northern territory yeah what's changed at the seven hundred thousand dollar spend uh anywhere from down to alice springs yeah well look i mean uh northern territory is is one of those territories uh uh you know where we we really saw um you know from the peak in 2014 we actually uh you know actually saw um some reductions in values but you know this time around we've we've seen some increases so um over the last 12 months once again we've seen some areas that probably we

might have mentioned last year that have snuck out of the area but some of the um the inner darwin suburbs if you're crafty are still within uh within reach like miller parrot stewart park bayview and woolner um even some of the northern beaches suburbs like nightcliff rapid creek coconut grove they they could still be in in reach but properties at this price point will become fewer and fewer yeah if we look at alice springs um we've actually got a couple of properties just sold for just a fraction under 700 000 around desert springs and mount johns uh surrounding the golf course nice areas yep absolutely now they're again they're becoming harder to find um these properties are on the uh the freeway they're they're not direct access to the golf

Of course, they're sort of mid-1980s built brick homes, three bedrooms, two bathrooms, but nonetheless quite well located and fitting within that $700,000 budget. Yeah, okay, interesting. Well, let's now turn to the ACT, which has always been a bit of a property black sheep. What's changed at the $700,000 level in our nation's capital? well i mean this this is one i just use this as an example for where uh somewhere that we recognize last year as being a good uh a good place to spend seven hundred thousand dollars is actually sort of out of reach so we we suggested monash which is at the southern end of the district of uh tagarimong um we thought that would be the place to be to be looking um

The median house price there has jumped by over 25% since we made that recommendation. And, you know, typically 660,000 would buy you a three bedroom house, but a 25% on increase, increase on that, understanding that median there'll be houses above and below, but I mean that level of increase has sort of taken that, that area Monash off the, off the, off the table. But, you know, we, We found some houses which were within budget

within Casey, Taylor and McGregor, and they're sort of in the north to northwestern suburbs. And we've also identified some townhouse opportunities in the Western Creek region, which is southwest of Canberra. And it looks like there's a reasonable prospect of continued growth in that sort of area. Yeah, interesting. Okay, well, lastly, but far from leastly,

good old Tassie and Hobart in particular have been enjoying a really stellar rise in property values in the recent past. So how's the API all faring at the $700,000 mark and does this very much around the state? Yeah, look, I think, as you say, Tasmania has had a terrific reputation. I mean, a lot of people have chosen to retire to Tasmania or, you know, other tree change motives to move down there. so we've seen a sustained period of growth um and obviously particularly within the last couple of

years um there are still plenty of options uh within the seven hundred thousand dollar budget so you know a purchaser from the mainland will see tasmania still as as being um you know relatively good value buying um so we we've found within seven hundred thousand dollars a renovated two bedroom, one bathroom, a freestanding villa in Glenorchy. We found some freestanding detached dwellings in a fringe area like Brighton or near Norfolk. And then if we look, you know, to other northern suburbs, we've seen, you know, plenty of upgraders sort of moving out and family buyers looking for sort of bigger and better homes, you know, for growing families, but also, as we said, for, you know, that sort of flexibility of accommodation so that they can

uh work from home without interrupting the residential utility of the home so you know we've got suburbs like brighton austin's ferry claremont uh they're becoming increasingly popular but 700 000 will uh will get you in there um and just something a little bit different um you know regional tasmania has seen significant price growth and we've mentioned the interstate purchases um but there's still plenty of opportunities and one in particular um look like an interesting proposition about 700 000 uh it's a 1970s three bedroom uh one bath dwelling it's on almost 14 hectares um and uh is in baghdad which is about 40 kilometers north of hobart so if you're after that um lifestyle change plenty of room around you

but still commutable if you needed to, to Hobart. That seemed like a particularly good proposition. Absolutely. Any thoughts on the northwest coast from sort of Launceston right through to Stanley? What are you seeing there? Yeah, a really similar story. I mean, we've seen this strength of growth in the regions

all across the country, and it's been true in Tasmania as well. We've seen the volume of transactions in the market really, really take off over the last 18 months. There's been a little bit of a slowdown in market activity, but it's not yet manifested in declining prices. But once again, even though pockets of particularly desirable areas may have moved out, if you've got $700,000 to spend, you will find a good property that will take your fancy. Kevin, that's rounded out a really great look at how properties fare differently in each state across the nation over the last 12 months. So after another quick break, we'll get your summary on your latest report together with your thoughts on the future. So stay with us. here on Realty Talk. for an obligation-free quote. Hi and welcome.

Now, Kevin Brogan from Heron Todd White has given us a very detailed run through the latest annual property report on where and what you can buy for a lazy $700,000. So now we're going to bring this all together with a quick summary and conclusions, as well as thoughts on what's likely to happen moving forward. So Kevin, at the magic $700,000 price point,

which property types, areas and locations have been most affected over the last 12 months? yeah so i i think um you know as we've discussed some of some of the uh the areas that have experienced the highest growth have been those areas perhaps where covid is has made a lasting change to the attributes that people are looking for in a property so um you know the property types that have really um prospered have been the ones that offer that extra accommodation that give you a bit of flexibility to work without impinging on the residential utility of the property.

I think, obviously, the last 12 months includes a period where in some markets for the last couple of months, we've seen a bit of a downturn in market activity and possibly values. And I think one of the things to look out for is the fact that really good quality properties are going to fare better than properties which have some negative attributes typically a property with one or more negative attributes

people you know people will buy them when the market's really strong because there's not so much choice there's more demand than there is supply but yes once it tips over to the um you know to the fact that there's a bit more supply than there is demand any property with a negative attribute is going to sort of be left on the shelf now you may you may get lucky in the next upturn that that sort of property comes back into demand but um you know it if if uh if it's been on the market for a little while and you've got other properties turning over you'd maybe want to look at the ones that are or the type of property that's selling more quickly um as as we've mentioned before some of some of the areas uh which we've identified and perhaps even recommended

previously for a 700 000 budget um are now out of reach and so i suppose you know on the plus side if um if you read our report a year ago and you uh and you bought into those areas you'd be laughing um yeah but um yeah look those those are the things sort of to uh to to look out for um and uh you know the good news is that that 700 000 budget in in many many markets will still get you um you know a decent property either for owner occupation or for investment or as i mentioned with wa perhaps with an upside uh development down the track yeah absolutely now where this is a bit of a difficult question but uh where do you think are the current best value locations around the country to secure a quality property for seven hundred thousand dollars and your thoughts on why

Well, look, I think, you know, this is obviously sort of broadly based market advice rather than individual advice about particular areas. But, you know, I'll wave the flag a bit for Adelaide. I mean, I just have a look at the fact that through COVID, we've actually seen some sort of economic development. We've been sought out by, you know, various international companies. we've we've developed um it's been a longer burn than just through covid but you know we've developed some uh innovation hubs technology hubs and then they've got a bit of a gravitational pull um to broaden the economic base and this this is obviously part of a recovery from uh you know a significant reliance on motor vehicle manufacture obviously with mitsubishi

going back a few years and holding um so you know the thing to look out for is that broad economic base at the moment um and long may it continue the the um the labor market has been really strong and the broad economic base gives you the maximum opportunity for that to continue and be sustainable in the longer term yeah um i think it's also really interesting looking at regional centers that have seen a longer term resurgence but i think this is one of the things that covid will have changed perhaps um maybe forever um those attributes you know being able to benefit from lifestyle advantages of living a little bit out of town um you know you you hear reports of uh of employers um you know seeing um you know where it's appropriate for for office workers you know

seeing um productivity gains from people working from home i don't know how you go but i always seem to work work from earlier until later yes when i'm working from home yeah um and you know those those sorts of issues are probably here to stay they may tail off a bit as people come back into the office but nonetheless uh i think those fringe and regional centers are going to see a longer term uh benefit and of course domestic travel um you know i my own personal experience was not being able to travel overseas i did travel a bit um seeing our own wonderful country and i think i'm hooked um don't get me wrong i'll probably go overseas as well but i i would love to see more of of uh of australia and i think domestic travel and and people having

work patients is something that will probably stay yeah yeah the other thing about regional markets of course i mentioned just the the weight of numbers you know i mean the demand for property in in um you know in regional markets is coming from people who live in the metropolitan areas and you know the base of that demand the demand base is still going to exceed local supply because a lot of these regional markets have got a finite amount of supply some of them have got some new build activity um but you know the the rural residential the lifestyle type properties um you know there's not going to be a a significant new supply coming on so so long as demand remains steady that's you know that's going to be okay and then then you answered about yeah i'm sorry

you asked about some of the uh the more difficult areas and i think you know we did mention them going through some of the unit markets have struggled because you know pre-covid restrictions additional supply was coming onto the market already um you know the rental market stagnated for a while um and whilst things have turned around we've actually got to pick up the slack um you know that those vacancy rates um you know migration is still not kicking off the way that it did um sort of pre-covid so it's just going to take a little bit of time for the existing supply to get taken up um and uh you know it will probably reach equilibrium but it will take a little while to get there whereas um you know some of the other markets we've discussed look as if

there's uh you know even if we have a little bit of a correction as we've discussed uh in the current environment it looks as if the demand for that type of thing will continue yeah awesome great thoughts there well let's jump into the present for a minute uh and just get a really quick rundown on your current national property clock and what it's telling us about which areas are peaking, declining, bottoming and rising? Yeah look the property clock is intended to be a good visual representation of where we see different markets and effectively 12 o'clock is sort of peak of market, three o'clock is declining market, six o'clock is the bottom of the market and nine o'clock is the rising market um one one of the things that i would love to do is to animate

this so that you can actually see the the markets moving around the clock so that you can see where they were six months ago and where they've moved to now yes um but you know what what we've uh you know what we've seen um uh over the last two or three months is is you know a number of markets have moved from the peak of the market into the sort of starting to decline um area and that obviously include um you know sydney and and melbourne again we've we've aggregated these markets we've already discussed how you know sydney and melbourne are made up of all sorts of sub markets but in in aggregate we've seen values coming back in in sydney and melbourne we've we've seen the start of it in gold coastal but not to the same extent as sydney and melbourne

and we've seen a bit in some of the regional markets like Ballina and Cobb's Harbour but then then we look at you know places like Brisbane, Canberra, Geelong you know they've they've performed really very strongly we're sort of saying well they're at the peak of the of the market at the moment I'd say you know we we've still got Adelaide perhaps approaching the peak of the market because we we've yet to see um you know significant um reduction in in market activity and values um if you've been following auction clearance rates um you know i've been doing a bit of adelaide flag waving because the auction clearance rates in uh in adelaide have actually remained fairly robust they've softened a bit but they've remained fairly robust yes so

all of that's for houses but we do a separate clock um for units it's you know for units the market conditions are slightly different and and you know i think they're not um they're not completely dissimilar but some of the drivers so for example um you know melbourne has probably been showing up as being a weaker market for uh cpd and dockland uh investment quality units and i make the distinction because units constructed for uh for for renting generally don't have you know that extra storage cage that extra little bit of room for owner occupied living yes um so some some of the more generously proportioned units in in melbourne have probably still been doing uh reasonably well but some of those that were built with the intention

of renting them out have probably just found that to be a bit of a struggle. And again, Adelaide, we do have a number of sort of unit buildings within the Adelaide CBD, but we've not reached the point where there's an oversupply. So we're still seeing a reduced level of increase or reduced rate of increase, but we're still seeing increases. So we're suggesting that, you know, that Adelaide is sort of approaching the peak of market, whereas Gold Coast for units is probably sort of at the peak. Yeah, no, really good sort of calibration of where we're at. And finally, sort of turning to the future, and we won't hold you to this, obviously, because there's so many dynamics impacting on what's happening with values in different types of properties in different locations at different times.

But what's your read on what the Herr and Todd White team are saying is what's likely to happen with property values, particularly at the $700,000 price point over the next 12 months? Yeah, so I think, as we said, there's a really wide variety of markets. And I think in some areas where $700,000 is sort of at the lower end of the market, the price point hasn't experienced such rapid growth. It's considered fairly affordable. And so, you know, as as perhaps people are being a little bit more cautious, they they may be looking more to those more affordable markets. So, you know, they're probably going to see more sustained demand in other markets where we see 700,000 sort of being right at the peak of the of the market. it um you know that's that's something that you may see a more significant softening um you know as as people move into this more cautious phase and just you know to reiterate what we said at

the at the beginning you know there's a lot of talk about um values uh dropping significantly um it's fairly clear that we have seen values come down in some markets like sydney and Melbourne, but we've spoken about the mitigating factors, you know, the employment market is still strong. If the RBA stance on increasing interest rates, you know, does help in, you know, mitigating inflationary pressure. You know, most commentators are talking about that being a short medium-term issue um i think market activity may drop off because people who don't need to sell may may decide to postpone just to see what what happens next yeah yeah i think that's a a very good read and of course as we always know there's always diamonds in the rough in the locations

because medium prices give us a flavor but the the devil's in the detail when it comes to property as as you well know. So look, Kevin, I really want to thank you for these quite eye-opening insights as always. And thanks again for your very generous time on the show today. Oh, no problem at all. It's always a pleasure, Rishi. Thank you, Kevin. Well, it's clear that there continues to be a significant shift on how far and where your $700,000 will buy you in property, which is why property creates so many opportunities, particularly if you're adopting a borderless approach that considers the 11 million odd property spread across the 15 odd thousand suburbs and locations around Australia

because as I've always said it's never a question of when to buy property but it's always a question of where you need to be buying so to check out the nitty-gritty details of every state and region that talked about and touched on today but a lot more detail make sure you grab yourself a copy of Heron Todd White's National Property Clock July 2022 Residential Property Report in particular, which you can find for free at htw.com.au. You're watching Realty Talk, your go-to place for all things property. 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. Well, that brings us to the end of this week's Action Pack show. Another big thanks to Kevin Brogan and the entire Heron Todd White team for so generously sharing your valuable insights. And before we go, make sure that you don't miss another episode

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