03 Jan The big headlines of 2018 – Stephen Sharry
Stephen Sharry from PropertyTV shares his thoughts on what made headlines in 2018 – good and bad.
Kevin: And with his thoughts and reflections on 2018, looking ahead to 2019, I’m joined by Stephen Sharry, who is the Editor in Chief at Switch Media, or Property TV. Stephen, thank you very much for your time.
Stephen: Lovely to be here, Kevin.
Kevin: I noticed … Well I know … I know you personally. I know that you’re a student of the industry, and you watch it very carefully. That’s why I’m keen to get your take on the events of 2018. What were the highs and lows that you noticed?
Stephen: Look, I think the big issue, Kevin was the growth in regional markets. We’ve seen some drop off, and some people are saying it’s the end of the boom, which is probably true in Melbourne and Sydney. But, on the other side of the coin, we’ve seen growth in regional markets, say Hobart, which is the third year running now, and double digit growth at 60 and 30 percent returns. We’re seeing specific niche markets that are continuing to grow. Brisbane has stayed relatively stable, and the smaller regional markets are just sitting there waiting to fly.
Kevin: Yeah. We’ve seen a tightening in lending as well, which has really impacted both consumer confidence, and from what I’m hearing, investor’s confidence as well, Stephen.
Stephen: Yeah, it has. But, what’s interesting is that the Royal Commission in the banking has created a very toxic environment around the major banks, more than the smaller banks, so we’re actually seeing a growth in mutuals. You know, the credit unions, etc. are all starting to pick up their gain, they’re becoming more customer focused, and brokers are really on the ball as far as those lending sources are concerned. Even though we’ve seen a tightening, it’s still possible, Kevin. There’s still money out there.
Kevin: The banking inquiry, Stephen, do you think there’ll be a flow on, or a backlash towards brokers?
Stephen: Look. I hope not. When you say a backlash towards brokers, I think the whole broking industry is changing, in particularly the commission side of it, which in some respects is a little bit of a shame, but I think that brokers are going to become more important in the environment as we move into 2019. Yes, there’ll be some changes within the industry, but I don’t think they’ll impact on the importance that they’re going to play within the industry in coming years.
Kevin: Can I just ask you about affordability? What’s your take on that? I mean, there’s been a lot of talk about how unaffordable property is in Australia … That’s largely on the back of the costs that we’ve seen out of Sydney and Melbourne. Are we doing much about affordability, or is there much we can do?
Stephen: Yeah, look. It’s interesting. We just saw the Victorian election results, with labor winning again. What they’ve … as part of their election pitch, they pushed infrastructure funding, and a lot of their infrastructure funding is around what they term connectivity. What they’re talking about is improved rail, buses and roads connecting regional centres. Now, part of that plan, say in Victoria, is going to have the potential to release up to 270,000 house blocks. I think different areas in Australia are attacking affordability in different ways. Some states aren’t doing anything, like I can’t see much happening in Queensland, and little in New South Wales. But Victoria really seems to be being proactive at moving towards improving affordability over time.
Kevin: Yeah, there seems to be some fairly creative ways that people are now building with increased infill into some of the city areas. Maybe that could be an attack on future housing, not an attack … But, an attempt to lower affordability, because short of a crash, I can’t really see property becoming more affordable, Stephen. Especially established homes.
Stephen: It’s difficult to accept that within established areas, Kevin, you’re right. The issue with infill developments are … But, developers have an expectation of return. That expectation on return is really fundamentally tied to the value of the properties around the infill. You’ll see an infill development in an area where you’ve got $800,000 homes. Well, they don’t want to produce product that sells at 400 or 500, you know they’re looking at product that sells for 7, 8, 9 hundred thousand. So, it doesn’t really impact on affordability. It just gives people a greater choice in living in that particular area, which is where you get upgraders, etc. But it doesn’t impact on affordability.
Kevin: We’ve seen some attempts by governments to make housing more affordable through housing affordability schemes, trying to incentivize developers, and even investors to invest in properties that will be rented out at below market value. Those schemes don’t seem to work, Stephen.
Stephen: Oh, I don’t know, Kevin. You’re talking about the government’s scheme NRAS.
Kevin: Yes, I am.
Stephen: I can’t remember the exact figures, but I thought something like 30,000 properties were actually created in Australia that would not have been created if it weren’t for that scheme. By forcing an investor into renting at below market, but then providing a subsidy every year, I thought it was incredibly appealing. It was to a lot of investors. I don’t think we should just ignore those types of strategies, because I think if they’re done well, they can work.
Kevin: Interesting insights. Stephen Sharry, who is the Editor in Chief at PTV, Property TV. Check it out, there is a link on our website that’ll take you straight to it. Stephen, thank you. I’ll get you back next week, and I want to talk about going forward. Your views on 2019, because that in fact will be the first week of the first show into 2019. I’ll talk to you then, Stephen. Thanks for your time.
Stephen: Thanks, Kevin. Look forward to it.