Agents and sellers change how they ‘act’ + The do’s and dont’s of property in SMSF + First look at what’s ahead for 2018

Agents and sellers change how they ‘act’ + The do’s and dont’s of property in SMSF + First look at what’s ahead for 2018

Highlights from this week:

  • What to do before you bid at an auction.
  • How buyers, sellers and agents act differently at this time of year.
  • How and when to put property in a SMSF.
  • The places no one wants to leave and why.
  • What are the lessons from 2017 and what’s ahead for 2018.

Transcript:

What to do before you bid at an auction – Bryce Holdaway

Kevin:  Auctions are growing in popularity all the time. You need to have a strategy. It’s very easy to get it wrong when you go to auction for the first time, both as a buyer and a seller. Let’s have a look at some of the pre-auction dos and don’ts, this time for buyers.

Joining me is Bryce Holdaway, a buyer’s agent. So, I guess by definition, you should know what a buyer’s agent or a buyer should do at auction. Bryce Holadaway from EmpowerWealth.com.au, and also the cohost of Property Couch.

Good day, mate. Good to have you on the show. Thanks for your time.

Bryce:  Thanks, Kevin. Auctions are a scary thing. Even for me as a professional, I’m human, I have a bit of ice running through my veins as the auctioneer gets into full swing.

Kevin:  Do you? I would have thought that someone like you who’s been in front of the camera – of course, you’ve done a lot of lifestyle shows and had your own show for many years – and also tuning up to a lot of auctions, nerves would be the last thing you’d have.

Bryce:  Yes. I actually use it as a positive. And you know yourself, Kevin, the time that you go to hit record and you have no nerves, sometimes you’re not performing at your best. For me, if I’m going to an auction, I really care about the outcome for my client. There’s no emotion in it for me, but I want to get the lowest price possible and I want to have a really good strategic play at the auction.

Kevin:  Bryce, what are some of the dos and don’ts for people? How can they prepare before they go to an auction?

Bryce:  My number one is before they even get to the auction they want to buy at, go to other auctions on the weekends prior. Most people would rather be in the casket than deliver the eulogy, so that public speaking environment that you are in in an auction, on public display, the auctioneer has very crafted skills to try and get you to pay as much as you can. That’s a daunting process for someone who’s never done it before.

So, what I’d say is go along to some auctions – ideally for the auctioneer that you’re about to work with, the one you’re looking at – and see how they roll. See how the process works, see what happens when they go inside, see the change in tone, see how they drop it down, because you’re going to learn a heap of intel. It’s like a mock auction before you get to the main event for your own one.

Kevin:  Is it a bit like a battle between the bidder and the auctioneer? The auctioneer sits in the middle, doesn’t he? Have you got to understand what he’s doing?

Bryce:  Yes, absolutely. You have to know that in any real estate transaction, whether it’s private sale or auction, the nirvana is two people fighting it out. It’s this big public display of competitiveness. But the thing is with an auction, it’s a public display of status, because you don’t want to lose in the money stakes to someone else because you really want to show.

It’s like when you’ve got a beautiful house and people drive up to it, it’s a representation of your status. It’s also the same in an auction environment. You don’t want to lose, particularly when there’s a crowd, particularly once the adrenaline is kicking in, so it’s important that you know what the process looks like.

Kevin:  How do you prepare for the structure of the auction? You obviously go in with a figure that you’re prepared to bid to, but is there a figure that you won’t pay? The figure you have in your mind, is it always less than what you would pay? That’s what I want to try to find out.

Bryce:  What I try to do is get a 50%, an 80%, and a 90%. A 50% chance of getting it at this price is when there’s not a lot of competition, but in Melbourne and Sydney, there’s been a lot lately. So you want to have really three prices, where there’s an 80% chance to get at this price, and then the highest price is there’s a 90%. There’s always someone who’s going to come along and no matter what, they’ll throw emotion and they’ll beat you through emotion. But in some markets, you need to have that little bit of stretch.

For me, I’m prepping my clients to have three prices and an indication of where we’re going to end up. I rarely see it being at the 50% prices in the markets of Melbourne and Sydney. It’s usually around that 80% or 90% in a lot of cases. In some cases, you just miss it altogether.

Kevin:  Yes, because the agent on the floor will try to put a lot of pressure on you to increase your bid, as well. How do you resist that?

Bryce:  Just knowing what they’re up to. I guess a lot of auctioneers know that buyer’s agents won’t fall prey to that, but I try to drive the increment of the bids down to the smallest increment as quickly as I can. The auctioneer loves to a $10,000 or a $20,000 bid; I want to get it to $1000 as quickly as I can. But a very good auctioneer won’t allow me to do that early in the piece; they’ll only allow me to do that more towards the pointy end.

In response, I’ll throw out, “I’ll give you $1000.” They’ll say, “No, I’m not accepting $1000 bids, but I’ll take $10,000.” I’ll say no. A lot of people don’t realize that they can just say no. Even if they want to keep bidding and want to keep staying in the game, just sit back and wait. So, really, it’s about letting the agent know, “I’m a professional, you’re a professional; let’s see where we get to in the end.”

But I’m not trying to outsmart the agent. I know what they’re doing and I know what strategy they’re employing. Most of my time and energy and effort is spent on my fellow bidders, because I want to look for signs that they’re getting close to their limit. I want to professionally intimidate them. I want to be in a way that they just say, “Oh, he’s going to buy it no matter what,” and they keep their hand in their pocket. That’s where I spend most of my time and energy focusing on when I’m bidding at an auction.

Kevin:  Yes. As a bidder, you have to look confident too, don’t you? That’s part of that bluff, bluffing other people out of bidding as well.

Bryce:  Yes. It’s two parts strategy, one part bluff. I’ve bought more properties than I care to list on my last bid where I have nothing left in the bank. The client and I have agreed on a predetermined price, and I’ve just thrown it out there. And if someone gave another $1000, I’m out. But it’s all about what I’ve done in the lead up to that last bid – as I said – to professionally intimidate them and read the body language and so on, so they give in to me.

Kevin:  Great stuff. Bryce Holdaway from EmpowerWealth.com.au buyer’s agents. Bryce, thank you for your time. Great talking to you.

Bryce:  Pleasure.

How buyers, sellers and agents act differently at this time of year – Cate Bakos

Kevin:  We do know is that this is one of the busiest times of year, so how does that all change? What happens around December, as we’re getting close to that month now, with agents, with sellers, and with buyers? Let’s find out. Cate Bakos is a buyer’s agent.

I guess you need to understand how this dynamic changes all the time, Cate. How are you?

Cate:  I’m well. Thanks, Kevin. I love this topic, so I’m really excited to chat to you about it.

Kevin:  Good. I’m looking forward to it as well. It’s a busy time as we go into the end of the year. It’s going to be a shorter December this year. How will that impact the market, do you think?

Cate:  We’re quite used to having a full slate of weekends available for our auction campaigns, and typically an auction campaign goes over two full weekends. We have a shorter December this year because the 23rd, which is a Saturday, is too close to Christmas day for any contracts to be executed.

So, we have a shorter December, which means that we’re putting together as many campaigns as we usually would but we have to squish them up a little bit. And that’s not just in Melbourne; it’s in any auction capital, so that does have an effect on how many auctions we can anticipate seeing each Saturday, particularly as we get closer to Christmas.

Kevin:  I know you can see both sides. You step back a little bit. You work with agents, you certainly work with buyers as well. How does the agent behavior change at this time of year?

Cate:  The agents are not only carrying potentially larger volumes of stocks and hosting more campaigns and dealing with more buyers and vendors; they’re also getting pressure from any vendors that are particularly nervous about having a sale sorted before Christmas.

There will be vendors who are comfortable with the auction campaign process, and then there will be vendors who would much prefer to just have the property sold for a fair price and have it all wrapped up and not carrying on until close to Christmas.

So, agents behave a little differently when they’re feeling that pressure, but also when they’re carrying so much stock or they have properties that might potentially compete with each other. They might think that it’s in the vendor’s favor to try to facilitate a sale so that one campaign is not crashing with another.

Kevin:  I guess we lead up to what just becomes a calendar deadline, doesn’t it? Christmas, a lot of sellers will go into hibernation over that period, as will some buyers, I guess.

What about the buyer opportunity at this point? When does that actually reach a peak, Cate?

Cate:  We’re just starting to feel that peak growing now, and buyer opportunity includes buying well but it also includes an agent on general willingness to sell a property outside of an auction process. We might see quite a few auctions coming up, but we can’t discount the opportunity to secure the properties prior to auction if the vendor is open to it, and that means that you have to ask some clever questions to find those opportunities .

Kevin:  And of course, it works in reverse, too. It works for sellers as well, because you’d find some buyers who’ve been probably looking for quite some time and they make that decision, “I have to get something before Christmas, even if I don’t move in until after Christmas.” So, it works on both sides doesn’t it?

Cate:  It certainly does. People who are on a mission to sell or buy really only regard that Christmas deadline as a critical one. There’s probably a bit of emotion to do with it, because they’d like to think that they can focus on Christmas and holidays and their family and not worry about property.

But they also understand that in many of the capital cities, the first half of January is a total shutdown, and the property season and full cycle starts again… Really in Melbourne and Sydney it doesn’t ramp up again until [3:42 inaudible], so people are considering that if they want to buy in 2017, it’s getting really critical.

Kevin:  I’ve seen, too, a number of agents go into an early Christmas almost at the start of Christmas, but I’ve actually seen properties sell on Christmas Eve. The smart agents don’t really stop, do they?

Cate:  Not at all. I’ve had seven Christmases in a row dealing with contracts and having to find an out-of-hours solicitor or conveyancer to help execute a purchase. So, it is a very real fact that deals are done all the way up to Christmas Eve and into the evening.

Kevin:  Of course, one of the difficulties would be that if the solicitors go on early leave, then finding someone to process that contract can be difficult, Cate.

Cate:  Yes, that’s right. A lot of solicitors will start their black-out dates, and buyers and sellers need to be completely aware of this, but a lot of firms will run on skeleton staff or they’ll be prepared to look at things out of hours. It just puts a lot of pressure on executing contracts and also dealing settlements, and people should really understand those critical dates and also talk to their lender.

Kevin:  Cate, just to close off, what are your tips for both buyers and sellers as we approach Christmas?

Cate:  I think for sellers, if they can avoid feeling panicked and avoid freaking if they don’t have their sale finalized before Christmas Day, they can look forward to having an opportunity in January with a quieter market but obviously fewer competing property out there as well. All is not lost to if your sale campaigns goes through into January.

And for buyers, I think asking all of the right questions when they do find a property that they’re interested in and establishing whether the agent and the vendor are open to offers prior.

Just because we have a lot of stock coming on doesn’t mean that everyone is happy to sell prior, and if it is going to auction, you really should keep your powder dry and work out your auction tactics.

Kevin:  Great advice. Cate Bakos is the buyer’s agent and joins us regularly on the show. Cate, thank you so much for your time.

Cate:  Thank you for having me, Kevin.

How and when to put property in a SMSF – Damian Collins

Kevin:  One of the features inside Your Investment Property magazine in the latest edition is a really interesting series of articles about self-managed superannuation funds. This could, in fact, be the perfect vehicle for you to grow your property wealth portfolio in a smart and profitable way, but there are many complexities to be aware of and costly pitfalls to avoid.

Sarah Megginson, who is the editor of Your Investment Property magazine, has done a series of articles and spoken to a number of experts, one of whom is my next guest, Damian Collins.

Damian, welcome to the show. You say in the article that buying in a super fund is not for everyone. Why is that, Damian?

Damian:  Kevin, super certainly does provide a lot of advantages for investing in property, but there are a lot of reasons why it isn’t for everyone. One of the most important ones for property investors to understand is that the super laws really limit what you can do with property in super. For example, we can only borrow to acquire an asset. If you want to develop that asset, you can’t do that through your super fund.

Certainly for most property investors, they get their equity from capital growth and that’s great, but in the super fund environment, you can’t really leverage against that growth. So, if the property grows from $500,000 to $1 million, that’s fantastic, but you can’t actually leverage against that growth to buy another property.

I find for most of our clients, they tend to be in their 50s or late 40s and buying one in their super with the goal to pay down the debt over time, and by the time they get to retirement, they have an asset that has no debt and hopefully giving them an income stream coming out of their super fund tax-free.

Kevin:  You’ve given us a couple of the great benefits there. What are the other benefits you see of investing in a super fund?

Damian:  There’s certainly the benefit that I mentioned, the fact that if you buy the property in super and you salary-sacrifice, effectively you’re getting a tax deduction for paying into your super fund, and that can be used to pay down the principal on the loan as well as the interest costs. And then, if you structure it correctly in your retirement phase, the sale of the asset or even the ongoing income from that asset can be tax-free. So, it certainly does provide a lot of powerful benefits for people who want to follow that strategy.

Another thing, too, is that the asset is protected in the super fund. For a lot of people, that may not be an issue, but if you’re a business owner, your asset in the super fund is protected.

It certainly does provide a lot of benefits, but generally most of the people looking at it are generally living in that 20-year time horizon towards retirement.

Kevin:  You mentioned there about if you’re an investor and you’re a business owner. There are possibilities to buy your own business premises in your super fund as well, aren’t there?

Damian:  There certainly are, and a lot of business owners do do that. I always recommend to the business owners that you want to make sure you’re going to be there for at least 10 to 15 years, because you still have an asset you have to deal with.

When you buy residential property, it’s called in-house property rules. You can’t use it for a beach house or a holiday home. You can’t use the asset at all for residential, but for commercial, there’s a special exemption for that, so you can buy your own commercial premises and rent it back.

It all has to be above board at market rents, but we find that for a lot of business owners, it’s a great way to pay rent to themselves effectively, and then it’s in that tax-free environment within superannuation. So, for the right business owner who’s going to be there for a long time, it certainly does make sense to have a look at it.

Kevin:  You’ve pointed out a couple of the great benefits there. There are obviously some risks involved in this as well, and I think you touched on one there: not being able to live in the property. I’ve heard of some people who’ve purchased properties in their super fund, and then either lived in them or rented them out to family members. That’s a bit of a no-no, isn’t it?

Damian:  It definitely is, Kevin. There’s the in-house asset rule, and you’re only allowed to have 5% of your total assets, and for most people, a property is going to be way more than 5% of their total assets in that fund. So, yes, you definitely cannot.

You can’t look at this as a way to get a beach house or a holiday home or “I think I’ll put my family in there.” You can’t do that. With residential, you have to have it completely at arm’s length. So, certainly that’s where there’s risk, and if you get penalized, you could be up for substantial penalties.

One of the bigger risks people want to think about is… Look, I love property and I’m sure the listeners love property and the readers love property, but you have to sometimes think about diversification. If you have your home and you have three or four investment properties outside super, maybe you want to think about diversification.

The big challenge with a property in a super fund is if you get to retirement phase, you have to have a minimum pension drawdown and often that asset is maybe not generating enough income. And it’s a fairly lumpy and concentrated asset within the super fund.

So, all those things need to be taken into account. And in terms of your overall retirement planning, I certainly think property is a great strategy, but I do have a little bit of assets in other classes just for that diversification. I think that’s something people need to be aware of for real.

Kevin:  Damian, thank you so much for your time, and I look forward to catching up again soon.

Damian:  Pleasure, Kevin.

The places no one wants to leave and why – Nicola McDougall

Kevin:  Have you ever wondered what it takes to get some people to move house? I’m interested to find out about an article that was written by Nicola McDougall, a good friend of ours. Nicola wrote an article for Brisbane Times, and it was called “Home For A Lifetime: The Brisbane Suburbs Where No One Leaves.” Nicola, thanks for joining us.

Nicola:  Hi, Kevin. Always good to see you.

Kevin:  Nicola, fascinating. This is based on a little bit of personal experience?

Nicola:  Yes, exactly. When I first shifted to Brisbane 17 years ago from Fremantle, I rented a little unit down by the river there in West End. I’d only spent time in Brisbane briefly over my life, and I absolutely loved it. Then over the course of years, I moved in a bit of a triangle from that location, and now 17 years later, I actually own a property 800 meters from where I first rented all those years ago.

West End is a suburb like that, where it attracts a certain type of demographic, I guess, and because it’s inner city and has a lot of really great things that you can do and cafés and bars, for me, there was never an option that I wouldn’t just stay there for the long term – possibly forever.

Kevin:  It’s a great story. Brisbane obviously isn’t the only city in the world where people simply don’t move, but there probably would be similar characteristics no matter where you go. What did you find in your research? We’ll talk about the suburbs in just a moment, but what did you find in your research that holds someone in a suburb, that locks them in?

Nicola:  I think there were key differences between the inner city suburbs and the more outer ring suburbs. The inner city, of course, were suburbs that had a great lifestyle amenity attached to it – good schools, obviously a lot of cultural types of things to do, bars and cafés and all those things, and clearly a close commute to the city.

The outer ring suburbs are more interesting. There were a lot of acreage suburbs – so Chandler and places like that – where I think it really showed the differences between people, and that some people really want to be in the city with all the hustle and bustle that comes with that, whereas other people want more of a quieter lifestyle and perhaps some acreage, but here in Brisbane, still only 15 or 20 kilometers from the city.

So, that’s what I really found. It really depended on who you are personally and, I guess, what floats your boat.

Kevin:  I wonder sometimes if it’s going to change, because you think back on the smaller types of houses where the family grew up, two or three kids in one bedroom, and then when the kids leave, the house is still not too big for the parents to stay in it. But nowadays, with the “McMansions” built around a large family, when all the family leave, they move on. I wonder if that’s going to change, Nicola.

Nicola:  I don’t think in many of the suburbs that came through in the research, probably weren’t a lot of suburbs with a lot of new builds in it, but some of the acreage suburbs, of course. But that’s not so much about the house but the location and wanting to have acreage, perhaps because they have animals, horses or something like that.

But certainly, what we found, and the experts that I spoke to for the story, one of the other reasons we think that people don’t move these suburbs is because of the high cost of moving. I’m not just talking about getting the removalists around and things like that, but there ar6e the selling costs, obviously, agent’s commission – rightly so – but also stamp duty.

And so a lot of families instead of moving even as the family changes and grows, they’re renovating or adding to their properties because they’re able to stay in the suburb that they love while also expanding the home to suit their current needs.

Kevin:  Tell me about the suburbs that you found in the research that hold people in.

Nicola:  The number one was Highgate Hill, and that’s no surprise. We were surprised that West End wasn’t in there, but Highgate Hill is right next door. And as I say, that’s no surprise at all. That’s the sort of suburb that attracts a certain type of person, and they generally stay there because of the community of artists and creative people who live in that location, and of course, it’s one kilometer from the city.

Other suburbs like Wilston, for example, Grange, Newmarket, these are all the inner north suburbs that are very popular. They’ve seen quite an extraordinary amount of gentrification over the last decade. Also beautiful old cottages that people are renovating and extending.

Those inner city suburbs, it’s quite easy to see why people are going to those locations and staying, but for some of the other suburbs in the outer ring as I’ve talked about, it’s more about acreage, or perhaps it’s more about the aspirational homebuyers and investors perhaps whose ideal would be to end up closer to the city, but to do that, they bunny hop out from the outer ring suburbs, perhaps into Carindale and try to upgrade from that point on.

But you’re talking about people who are probably staying in the suburbs anywhere from 15 years and above. I think the data is that most people stay about seven or eight years in their homes, so it’s certainly probably about double that.

Kevin:  The data for this was compiled by Dr. Andrew Wilson from The Domain Group. We thank him for allowing us to talk about this, as well.

You’re going to be able to see Nicola join Shannon Davis and me in a special episode of Buy in Brisbane where we talk to Nicola, so you can watch out for that. It’s coming out next Monday. That’s Buy in Brisbane, so watch out for that as Nicola McDougall joins us.

Nicola, thank you so much for your time.

Nicola:  Anytime, Kevin. You know that.

Our first look at 2018 – Simon Pressley

Kevin:  It is always around this time of the year that we start to look back at the year that’s just gone and look ahead towards what’s going to happen in 2018. I’m reminded of a conversation I had quite a long time ago with my next guest, who at that point tipped that Hobart was going to be the big winner. Everyone scoffed at him and said “You have to be kidding.” Well, now everyone is saying Hobart is the big winner, but they probably just missed the boat. That’s why I always enjoy talking to Simon Presley from Propertyology.

Good day, Simon.

Simon:  Good day, Kevin.

Kevin:  You were the first cab out of the rank, weren’t you?

Simon:  We were. It was this time last year when we made the bold prediction that Hobart would be the best performing capital city in 2017, but it was actually earlier than that we started investing there. It was 2014, when it was flat and it was described as a basket case market, but we backed our analysis of it’s an economy that’s improving, and it’s certainly done that well and truly – and continues to do that.

Kevin:  It’s been acknowledged in many sources that that’s probably been one of the big winners of the year. Were there any other winners? And also, what were the losers of 2017?

Simon:  Melbourne and Sydney, Kevin, had their fifth consecutive year of strong price growth – Melbourne 12% and Sydney 10%, so the tables were reversed there. There are still a few months of data left in this calendar year. Looks like Hobart is going to end the year with we’d estimate 16% or 17% price growth for the calendar year. If it does that, it’ll be the single best performing capital city market in 10 years.

Adelaide and Canberra both had solid years. I think that 4% to 8% growth per year, if it could be guaranteed that every year, we’re not going to be complaining. So, they were solid. Brisbane was underwhelming at about 3%, and Perth and Darwin both had their third year of – albeit small – price declines.

Kevin:  How did regional Australia perform?

Simon:  Every year, there are always various regional cities that perform well, and 2017 was no exception. New South Wales had the bulk of them, on the back of the New South Wales state economy, but Newcastle 12% growth, Wollongong 15% – that’s a fantastic year. Lower profile New South Wales locations: Maitland 6%, Bathurst 6%, Dubbo 5%, Orange, 4%. They’re good years; they’re better than four out of eight capital cities. Australia’s tomato capital, Guyra in the northern inland, 16% growth, would you mind?

Victoria: Colac really showing Australia’s agricultural and food processing economy doing well. Colac had 19.6% growth in the last 12 months.

Queensland: an underrated rural community called Goondiwindi had 20% price growth in the last 12 months. Of the bigger regional cities in Queensland, Gold Coast 7.8% and Sunshine Coast 5.7% beat the state’s capital.

South Australia: Port Augusta had 13.2%. That’s boom figures. Well done for Port Augusta in South Australia.

Nothing in WA had positive growth, but Broome and Busselton – both lifestyle markets – were neutral, which was better than Perth’s minus 4%.

And in Tasmania, Launceston, Burnie, and Devonport, as yet none of them have shown that they’re benefiting from the improved Tasmanian economy but maybe they’re locations to watch in future years.

Kevin:  That turns us into the conversation now about next year, 2018. How do you reckon Sydney and Melbourne are going to go?

Simon:  I think here and now, Kevin, Sydney is already dead flat, and I think data over the next few months will support that. I really think it’s just become out of reach. Property prices in Sydney combined with an increasing amount of negative press. All in all, I think Sydney will be flat in 2018, and it may well remain that way for several years, unless the Reserve Bank surprises us with some interest rate reductions.

Melbourne is solid at the minute, and we think it might remain that way for the first half of 2018, but it is showing signs of starting to cool on these APRA credit tightening policies. These APRA credit tightening policies are intended to really take the heat out of Sydney and Melbourne’s market. We definitely think that will happen in 2018.

Also in Melbourne, 2018 for us is always the year that will determine what sort of impacts the car manufacturing closures would have on that market. I reckon by the end of 2018, Melbourne will be flat.

But five out of eight capital cities, we feel that the outlook for the next three years is better than what it was for the last three years. Adelaide and Brisbane have the potential to commence their growth cycle, more so than the likes of Darwin and Perth.

Regional Australia is really something that doesn’t get spoken about, Kevin. I think people really need to cast their eyes on parts of regional Australia.

Kevin:  Yes, I tend to agree with you, mate. What about the capital cities? What do you reckon is going to be the best performing capital city in 2018?

Simon:  Great question. How could I overlook that? Hobart has the potential… It’s continuing to accelerate, the data we measure there. It has the potential to push through 20% price growth in the 2018 calendar year, but it’s going to be mid-teens at the lowest, I think. And I think it’s the only capital city that has the potential for double-digit price growth in 2018.

I think this time next year, Kevin, we’ll be sitting saying, “Wow, Hobart was out on its own, and then there’s a cluster of four or five cities that were potentially half the rate of growth of what Hobart has done.”

Kevin:  Take me back into the regions again. What do you think is going to happen in regional Australia in 2018?

Simon:  Regional Australia, the industries that really support the economy, mining has shown some sustained improvement, but that’s not to say people should rush out and buy into mining towns; we certainly wouldn’t. But there are a number of regional cities throughout Australia, Kevin, that play the role of a mini capital city that support more remote mining communities.

In Victoria, Ballarat is showing some green shoots there. Central Queensland: Rockhampton, Townsville, Mackay, they’re not going to boom immediately, but their outlook for the next three years is the best outlook it’s probably had in a good decade.

Kevin:  Yes, because those areas had a pretty rough 2017, didn’t they?

Simon:  A really rough time. But it’s not just mining. It’s agriculture. We keep hearing that term that Australia is Asia’s food bowl – Asia’s rising middle class. We’re very bullish about the outlook for Australia’s future for the agricultural sector.

And right throughout regional Australia where there are communities that have a combination of some specific agricultural products combined with factories that process the raw materials into some kind of packaged goods – whether it’s abattoirs or whether it’s wine – this is where the jobs are, in the food factories. And already throughout Australia, there are regional locations that are doing that.

And tourism: we are in the middle of a tourism boom. There were 20 million people who visited Australia last year, and just China alone, tourism analysts are saying that they believe that Chinese visitors are going to increase threefold over the next five, six years.

We’re talking $37 billion in infrastructure projects for regional Australia that are tourism-related. So, that’s regional airports expanding, that’s new hotels, theme parks, sports stadiums, dozens of them scattered right throughout Australia. They’re going to create jobs during construction, which is great for these regional cities, and when it’s finished, it’s going to attract more and more visitors, tourism trade. So, wonderful opportunities in regional Australia.

Kevin:  Simon, before I let you go, I’m keen to get your opinion on the impact of the moves to regulate the market with taxes and rates. Are they having any sort of an impact on the market conditions? And are they likely to next year, do you think?

Simon:  They’re definitely having an impact. We’ve seen that impact right throughout 2017. Just the talk of it in the media every day has served its purpose. Not that we thought it was a good purpose, but it served what APRA intended, which was to curb people borrowing money for property.

But it has not just affected fewer investment transactions; it has also dampened the mood of a lot of Australians, a lot of people who want to be first-home buyers or upsizers or downsizers who probably haven’t done it just because of the negativity.

APRA really missed the mark with that. It really should have been targeted at Sydney – that’s what they were concerned about – but it was the broad brush right across Australia. There is talk that they might loosen that in 2018, so let’s hope they do so.

Kevin:  Let’s hope so. Just before I let you go, just one more comment, if I may. I’m keen to hear from you about property prices, and we’re talking here about regional areas and cap city areas. Do you think property prices in some of the regional areas being more affordable is impacting how we live and where we choose to live?

Simon:  Absolutely, and will continue to do that. A combination of an aging population, so if, say for example, a baby boomer retires, they might have lived most of their life in a capital city but don’t have the investment capital that they’d like, a very tangible option is to sell the expensive family home in a capital city, move to a more affordable, regional location. Wonderful beaches up and down the coast and tree changes inland that people will move to.

The younger generation are making themselves more mobile. They’re more prepared to pay $350,000 for their first home and a nice lifestyle somewhere in regional Australia rather than end up with a one-bedroom cupboard in a capital city and not much of a lifestyle. I just think it’s a sign of things to come for the next generation, really.

Kevin:  Always good talking to you. Simon Pressley from Propertyology. You can visit their site, of course, Propertyology.com.au. Simon, thanks for your time.

Simon:  Thank you, Kevin. Have a great day, mate.

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Kevin Turner
kevin@realestatetalk.com.au
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