23 Feb The death of brokers + Labor to stimulate overseas buyers + Google dominates property search
Highlights from this week:
- A world without mortgage brokers
- The world of Google property
- Chinese investors love our property
- Labor policy opens the door to foreign investment
- Weekday space and time saver
A world without mortgage brokers – Anna Porter
Kevin: Well, the Royal Commission into the banking industry has certainly caused a bit of a stir. And now that the final reports are out, I wonder what the wash up is going to be. What’s going to happen in the end? We’re already hearing about the impact on the brokerage market. Joining me to talk more about this, Anna Porter. And Anna is from Suburbanite. Anna, welcome to the show and thanks for your time.
Anna: You’re welcome. Thanks for having me.
Kevin: Yeah, there’s a lot to talk about in this subject, but take me through briefly what you see as being some of the fallout here from this. How’s it going to impact the industry overall?
Anna: Yeah, so I think the thing that’s really important to remember is the banking Royal Commission is not actually about property. It is about banking. Property would be seen as potentially collateral damage in this. So it will change how people fundamentally interact with property. In most cases, people need to borrow money to secure property, in a lot of instances. So that is going to change a bit. But I want to give some context on this to what happened in the history of property. We’ve had governments playing with different incentives, and fiddling with different schemes around property for decades and decades. The first home buyers scheme, international investors, a number of things where will give and take money off the table, to the tune of tens of thousands of dollars. When the stamp duty incentives and concessions came about, this was tens of thousands of dollars that first home buyers can save when buying a property. And then on the other side of it, they lost it at certain times, and it’d come and go state by state. Even new building in new estates.
Anna: Developers offer $50,000 on Amex cards, or a free car, or free holiday with house and land packages. So, it’s not a new thing to have the property market having incentives taken and removed. And when they see … Even the GFC when that happened, the property market was very quick to forget. And very forgiving. There’s a little bit of an uproar about it for a few months where people say, oh, this is changing, or the market is going to be hit. At the end of the day, the broader market does forget and forgive really quickly. So, there are going to be some fundamental changes to the banking and broking industry well into the future. And it is very, very significant. But the property market, I think will be very quick to forgive what’s happening now, and in five years time be very quick to forget.
Kevin: Yeah. Whether it forgives or forgets, it’s really a matter of adapting, isn’t it? I mean, we adapt, we still need property, we still need places to live. But I guess the ramifications for some of the aligned industries, like brokers as an example.
Kevin: Taking away, or removing the trial commission is, I would think, going to take a lot of brokers out of the market. Well, what impact do you think that will have where obviously consumers will have to go more directly with the banks?
Anna: Yeah. And look, I completely agree with you there. We’re already seeing brokers leaving the industry. Now, the last six months we’ve already had a number of brokers approach us as a business and say, can I do what you do, because our industry is really, really challenging at the moment, and will continue to be. So, that’s only going to be a bigger problem. Who’s going to win and who’s going to lose out of this? So, I think the rich are going to get richer. And the moms and dads, the everyday mums and dads are really going to struggle with these changes. So what will-
Kevin: Can I stop you there just for a moment?
Kevin: Can you explain to me why you think the rich will get richer?
Anna: Yeah. So, what’s looking at changing is the trail commissions are going to potentially disappear, and potentially even down the track, the up front commissions are going to becoming a user pay system is where this is heading. Like the Netherlands system, which was referenced a lot through these findings. So what that means is that mums and dads, when they go to get a loan, traditionally have gone to a broker who shops around their choices, their options, and they haven’t had to pay that broker for any advice, it comes from the bank. And they’ll get a lot of choice. And they’ll structure up better deals with better repayment structures and lower interest rates. What will happen is if there is a lack of brokers in the industry, or it becomes a user pay system. Mums and dads will then have to go into their bank, and they’ll walk into say a Westpac, or a Commbank, or whichever one of the big banks cities. They won’t have the ability to shop around and get as much choice in a quick, easy, accessible time frame. So they won’t be able to do as much research.
Anna: And they’ll be paying higher rates, or higher repayments, or not as quality structures, because they won’t get to play banks against each other. And now on top of that, if it’s a user pay system, fewer and fewer of the average Australians will get the advice because they won’t want to pay for it. So the wealthy people in the market at the moment, the higher end sort of capacity buyers will have the financial planners, will have the mortgage brokers, will have all those advisors on their team because they can afford it. They can access it. And they don’t mind paying for the advice because they’ve got capacity. But the everyday Australians won’t pay for that advice, and won’t have as good access to it. They will be the ones that will lose out here. And they will be the ones that won’t get the quality advice that they really need.
Kevin: Because we’re talking here about brokers. But what about the comparison sites? Where you can go on and compare interest rates across banks. I mean, they work in the same way off referrals. I would imagine that they’re also going to have to struggle, or we’ll have to start paying for that advice.
Anna: Yes. And there’s a few other ways those platforms could potentially evolve and use advertising and things like that to sort of support their subscription base and things like that to still give the advice. But get renumerated in a different way. And there are some DIY loan platforms. They’re an emerging trend. You go online and you do the whole loan process on your own online. Our experience working with the buyers through that journey is typically they’re not done very well. And mums and dads don’t really understand the process. So when they go DIY with it, there’s usually a lot of stumbling blocks, a lot of milestones that don’t get met in the timeframe they need to, and it becomes a real disaster in a lot of instances that we’ve experienced. So that’s a big problem.
Kevin: What will happen with the companies like Aussie Home Loans, as an example? I know they are a lender as well, but they’ve really built their business on the back of these referrals from banks.
Anna: Yeah. Look, the broker industry is a huge part of the industry, and there is talk that that will cease to exist if we do fully transition into the Netherlands type arrangement where there is an upfront fee at the bank, and an up front fee at the broker broker end. Even worse than that would be an upfront fee at the broker end for the consumer, and no upfront fee at the bank. So you can imagine, I go to a broker and I pay two or three or $4,000, or I go to the bank and I pay nothing. A lot of people will go to the bank. So it really does make it a very hard industry to be renumerated and renumerated well. Look, it does … There’s two sides of this argument. There is the side of the argument that if the upfront fees are kept, or a fee for service, whichever that looks like when the trails are gone, that will bring mortgage brokers in line with most other business models.
Anna: Most other businesses, the mechanic, or the restaurant, or the glass company, they don’t get paid a trail for the life of the product. They get paid an upfront fee, and is transactional, and they have to do a really good job to get the next client through the door. So, that’s one argument. The other argument is that for the industry that’s been renumerated this way so long, consumers won’t adapt to that quickly, and the transition’s going to be the problem. And will the brokers make it through the transition as an industry? It’s a really big question mark. And I think we’ll start to see a number of brokers already starting to look for roles inside banks. And the banks will have to look at putting their mobile teams together, and making that a really strong offering.
Anna: Because at the moment the unfortunate thing with a lot of the big banks is the service is not good enough. The mums and dads will lose that service that they get with the brokers, where brokers have to provide great service to get clients. Whereas a big bank, unfortunately the service when it comes to the lending side of things is a bit below par.
Kevin: Wow. Yeah. Interesting, Anna. Thank you very much for your insight there. I know you’ve looked at that in some depth. Anna is from suburbanite.com.au. One thing that’s constant, and that is change, Anna. So, I’ll leave you with that thought. And thanks very much for your time.
Anna: You’re welcome.
The world of Google property – Dan Siegler
Kevin: I recently had the pleasure of attending the Inman Connect conference, one of the biggest real estate conferences in the world was held in New York just a matter of a couple of weeks ago. During the time we were there we had a studio set up, we recorded about 60 odd interviews with brokers, with movers and shakers in the property industry. I caught up with Dan Siegler, Dan is from Google, a household name when it comes to the internet, but in particular what they’re doing with property and search. I thought you might enjoy my talk with Dan Siegler.
Kevin: Dan Siegler is the Head of Real Estate at Google, and joins me to talk about mobile. Dan, thanks and welcome to the show.
Dan: Yeah, thanks for having me.
Kevin: More and more users are using mobile. Do you expect that to increase, ’cause it’s going at a phenomenal rate now?
Dan: It is. We do, we think it will increase. Even specific to the real estate space, we did a study last year analysing query behaviour, and also surveying in market home buyers, and we found 72% of home buyers now use a mobile device as part of their journey. Just in the last two years we’ve seen home buying, home shopping related queries on mobile devices more than double, and when I say that, we’re talking about from a pretty big base to begin with. But we do think it will continue, and really fueled by, now the emergency of voice search. Voice search is really the most quickly adopted technology by consumers since the Smartphone, and it makes it so much easier to use mobile devices because it’s so hard to type on them.
Dan: And so, as voice becomes more and more ubiquitous, right now we’ve got about 91 million people using voice actively, we think that will continue to fuel more and more mobile query behaviour.
Kevin: Of course, with Google Home now too, is that considered mobile?
Dan: It’s not really considered mobile, very limited sort of advertising opportunities for now, but you’re absolutely right to make that connection between voice now starting on mobile devices and then coming to the home.
Kevin: Because we talk about searching for real estate agents, Google Home, you ask it to tell me about the local real estate agent, the best real estate agent, that potential is there isn’t it?
Dan: It is, yeah, absolutely. Not hard to imagine a world where voice is the main way you’re interacting with the internet.
Kevin: I guess acting with everything, because you know, voice activation in cars, it’s just becoming more and more, that we’re just looking for devices. So, the mobiles fear is more than just mobile phones and iPads isn’t it? I mean, mobile is just getting away from the desk.
Dan: It is, sure. Yeah, I think different folks define mobile different ways. I mean, at Google on the advertising side we think of mobile as Smartphones specifically, we even break out tablets separately for now.
Kevin: Yeah. Yeah, yeah.
Dan: We actually started grouping desktop and tablet together, and then grouping the mobile separately.
Kevin: So, when you talk about mobile you’re only talking there about phones?
Dan: About Smartphones, that’s right.
Kevin: About Smartphones. That’s phenomenal. Is that the biggest growth sector in mobile? I mean, you’re looking at, is the phone taking over from the pad?
Dan: It has long since taken over from desktop and the iPad. We are years beyond the point where, we used to call the mobile moment.
Dan: Which, is when query volume on mobile exceeded that of the other two types of devices combined. You know, your mobile device which you have on you all the time really, and desktop and tablets tend to be more stationary devices, using them in home.
Kevin: We’re talking here about real estate, of course, and real estate agents, but I’m just curious to know if there is one industry that’s taking up mobile more than any other?
Dan: It’s becoming ubiquitous, and even some of the industries that you might have thought a few years ago would never be disrupted my mobile absolutely has them. I mean, who would have thought a few years ago, outside of real estate, that 50% of people would be banking through their mobile devices now. Right now we’re seeing 60% of job searches being conducted through mobile devices, things that you just wouldn’t have thought of, now it is really becoming a mobile first world.
Kevin: Yeah. Do you think the real estate industry, real estate agents and brokers understand the importance of mobile, or being seen on mobile, not just the internet?
Dan: I think the real estate industry is waking up to that, I think collectively could probably stand, act with a little bit more urgency. I think there is a risk of only looking at competition within your space, and looking at what other real estate companies and brands are doing. But, I think you have to understand through the lens and perspective of the consumer, every time they have a fantastic, super assistive and helpful experience through mobile device, regardless of the industry, they see what’s possible with that technology, and they come to expect that every time. And so, real estate companies, you know, with regard to consumer expectations, you’re competing with Ubers of the world, Airbnbs of the world, Amazons of the world. Those that are at the vanguard are providing these amazing and helpful mobile experiences.
Kevin: What does Google see as the future real estate agent? I mean, how will they be working with mobile, and with voice technology?
Dan: I still think there’s more technology coming that will make mobile even more helpful and more ubiquitous. What we’re thinking about now at Google, two areas that we’ve called [Visual In 00:05:12] and [Visual Out 00:05:12]. And Vision, in general, we think is the next phase of search to begin with. If you think about search starting with text inputs and outputs, and typing, now we’re talking about voice, and how much easier that gets. We think Visual is the next, and so Visual In for us is about Google Lens, which essentially is a camera function, it helps you scan and recognise objects in your home, and to get more information about them.
Dan: So we’ll consider home décor items for example, right? Scanning that, and then getting information about that item, getting recommendations for similar items that you might like, et cetera. Google Lens right now can identify over a billion items, and that’s only going to grow exponentially. The other piece of that, what we call Visual Out, also really exciting. That’s essentially augmented reality, or AR. And AR, we really think is just about to enter the mainstream, it’s available on millions of devices now, but will really hit the mainstream. And so, we still, today, probably associate AR with entertainment, and those types of experiences, but ultimately, the killer apps in AR will probably be ones that make life just a little bit easier.
Dan: Some early examples we’re seeing outside of the real estate space, the cosmetics company, L’Oreal, you’re familiar with them? So they acquired a company now that lets people virtually try on makeup to see how it would look before, not only before purchasing it, but they don’t even have to really try it on, put it on their face and wash it off, they can just see.
Dan: Mercedes-Benz, the car manufacturer, they’re testing now using AR, the user manual overlay. So, now you’re in your car scanning the different features of the car, and the user manual and information just comes up through your phone, you don’t have to open up the manual. So, little things like that, that make a big difference in the real life of consumers.
Kevin: Let’s talk about augmented reality in real estate for a moment. Where do you see that going? What are some of the developments happening there?
Dan: I think we’re still waiting for the industry to get in front of that technology, and innovate, and show us how it could be used. I think it’s not hard to extrapolate off of some of the home décor and fashion uses we’re seeing now, and see how that can be impactful at home, and looking at different features, and understanding what you might want and not want at home. But I think, right now, a lot of what we talk about in the real estate space, mobiles specifically, video also, a lot of folks are playing catch up. They’re trying to catch up to existing consumer expectations.
Dan: AR is a really great chance now to get in front of that, right, because it hasn’t gone mainstream yet. So, testing those tools and features, and figuring out, as you’re saying, what will be those killer apps that we can provide, so that we can get in front of consumer expectations and set the bar for others to catch up.
Kevin: Do you find that consumers are really pushing this technology, they’re looking for it before it’s even there? I mean, are we adopting these sorts of new technologies much faster?
Dan: I think the younger the demographic is, the quicker they are to adopt new technologies, and as millennials now are getting pretty close to the average first-time home buyer age of 32 you’ll see that technology becoming that much more important and influential, and then moving upstream into the older demographics as well. Consumers don’t necessarily know what they don’t know, and so it’s up to brands to experiment, and get in front of that, and show them what’s possible.
Kevin: That was just one of the 60 interviews we did when we were at Inman Connect in New York. Now, you can see those, we recorded them in video, and you can see them all right now at propertytv.io. Check it out for yourself, we compiled them into shows, and we’ll also be featuring them individually. That website again is propertytv.io.
Chinese investors love our property – Michael Yang
Kevin: Well, we do know, don’t we, the importance of overseas buyers, and how important they are to our property prices and the impact. But how do they get to find out about us? How do they get to find out about the property in this part of the world, particularly Chinese investors?
Kevin: I’m going to tell you about a website that’s called GiFang, the GiFang Group. They are opening doors for Chinese investors, and are finding that more and more, they need to work very closely with our real estate agents here. Joining me now, the CEO for that company, Michael Yang. Michael, thank you very much for your time. Welcome to the show.
Michael: Great, thank you, Kevin. Thank you.
Kevin: I’ll ask you firstly about the name, GiFang, gifang.com, the website. What does GiFang mean? Does that have a meaning in Chinese?
Michael: It does. In Mandarin, “gi” means to collect or collecting, and “fang” means houses or property, so together GiFang means collecting houses or collecting properties.
Kevin: How important is that to a Chinese person, that they are seen as collecting property? Is this their way of showing wealth?
Michael: Probably not. We started the name, Kevin, by hoping to introduce the concept of investing or buying real estate outside China, and to make it as easy and simple as possible to the Chinese. Rather than saying buy properties or we invest into properties, we just say collect properties. A lot of the Chinese buyers in China previously didn’t have a good understanding of how to buy into Australia, or into US and other markets outside China. In China, it is actually quite hard to buy into real estate, you often need to put up a lot of deposits and banks make it tough, so we want to make sure that their experience in buying into Australia is simple and smooth and seamless.
Kevin: How do they see that? If it is difficult to buy property in China, and they can see how easy it is to buy it here, obviously the barriers that were put in place recently to make it more difficult for foreign buyers really isn’t much of an obstacle for them then, if it’s difficult where they are now?
Michael: Yeah. Well, at the moment, the exchange rate is working in favour to the Chinese, compared to where we were probably 12 months ago. The Aussie dollar’s worth around 6-8% lower than what it used to be, so that’s working in favour. But the other thing I suppose, Kevin, is in China, the Chinese investors, they don’t actually have a lot of choices when it comes to investments. They generally do not want to invest into the share market in China, because of its volatility, high volatility, and when it comes to investing in property in China, there is no residential property in China that can be offered at freehold. They’re all leasehold for 70 years, and all commercial and industrial properties is up for freehold for 40 to 50 years, if not less. So even that we have certain obstacles here in Australia, the fact that people can own property outright, freehold, is a big attractive factor to them.
Kevin: In China, if they can only lease property, who is the lessor? Is it the government?
Michael: The government, yes.
Kevin: Okay, so they would obviously see this as a very attractive entry into building property. There are obviously cultural differences. Do you find that Chinese people like to deal with other Chinese, or are they happy to deal with Australians, in terms of when they buy property?
Michael: Do you mean buying, in terms of dealing with Chinese agents or Chinese …
Kevin: Yes. How important is it for them to deal with someone who is also Chinese, is really what I’m asking.
Michael: In China, when we’re dealing with the Chinese citizens that are buying into Australian property, it is important that we have the Chinese speaking agents on the ground to answer their questions, to provide personalised services, but when it comes to dealing with Chinese buyers here in Australia, they’re quite comfortable dealing with Australian agents.
Michael: Now, I guess one of the reasons is that there seems to be, funny how I say that, there seems to be more trust from Chinese buyers to Australian agents because we do have certain regulations that pertain to govern the behaviour of agents, whereas in China that’s quite absent, actually. I was dealing with one of the top real estate networks in China and he made the comment that maybe out of 100 China-based real estate agents, probably only one or two are actually accredited. So that trust is quite important and that makes the Chinese buyers, investors, quite comfortable dealing with Australian agents.
Kevin: Yeah, well, you came across my desk because of a release that announced that you would be working closely with First National Real Estate. That’s not the only group that you deal with, is it? Those relationships to you, are they very important?
Michael: Absolutely. So, First National Group, we’ve been dealing with them since 2014, starting off with a number of offices, and then the relationship grew, and their CEO, Ray Ellis, and also Jonathon Walls, their National Commercial Director, we sat down and we talked about the possibility of having the opportunity to open up, I suppose in this case, open up doors to Chinese investors, not to only a few First National offices, but also to the national level, where it can be Brisbane, or Gold Coast, or New South Wales, or Melbourne.
Michael: The demand of Chinese buyers coming to Australia doesn’t tend to focus on particular parts heavily, so it’s really in the major cities, but it can be nationwide. So with First National and ourselves, we got together, and this partnership is very important for both groups. We’re also at points where we’re delivering extra values to not only the buyers but also the agents across the whole First National Group.
Kevin: Typically, what are Chinese buyers are looking for in Australia, is it residential or is it commercial property?
Michael: Kevin, it’s interesting you ask that. Where we see in the last three or four years, people are investing into residential, but now people are looking at commercial on a regular basis because of the fixed returns and possibilities of development on certain commercial property. But when it comes to residential, the typical Chinese middle class families, for example, they always have considerations for the kids, so properties close to stations, within school zones, close to shopping centres would always be popular.
Kevin: Michael, great talking to you. Thank you so much for your time. Michael is from gifang.com. It’s Australia’s number one real estate platform for Chinese investors. Michael, thanks for your time, and look forward to catching up with you again soon.
Michael: Great, thank you. Thank you, Kevin. Thank you for having me.
Labor policy opens the door to foreign investment – Doug Driscoll
Kevin: Well, with the federal election heading our way in a matter of months, likely to lead to a change of government, Labors negative gearing policies may not actually boost the volume of first home buyers in the market. But instead lead to a possible influx of overseas investors. This is the view of Doug Driscoll who is the CEO of Starr Partners.
Kevin: He joins me, Doug, thanks very much for your time.
Doug: Alright, Kevin. How are you?
Kevin: Yeah, got an interesting view that you’ve taken on this. Because obviously the labor side of politics are looking to try and soften the market for first home buyers but you’re saying it’s probably not gonna do that.
Doug: I think certainly the numbers of first home buyers have increased over the last, probably year, maybe even 18 months. And that’s a direct consequence, of course, of APRA’s macro prudential measures. Where they’ve limited investor activity. My concern around the proposals from the labour is that they could end up inadvertently shooting themselves in the foot and welcoming more foreign investments.
Doug: Certainly in a softer market.
Kevin: Yeah, well of course, they’re riding on the back of some pretty emotional views that they’ve put out about foreign buyers. And we hear these stories all the time about foreign buyers bidding at auction, driving prices up. I know that’s not your standpoint, but just explain to me how you feel about that.
Doug: Well, you have to be very careful and I think a lot of people are actually scared to express their views on this subject. But for me, it’s the elephant in the room, now what I will do first and foremost is clarify my position. I don’t see this as xenophobic, not being an Australian myself, I certainly can’t be accused of jingoism. This is basically about non residents who reside permanently in a different country owning Australian property.
Doug: It just so happens that the vast majority of these overseas investors are from China. But it doesn’t really matter where they’re from, they can come from China, India, the UK, from the moon for all I care. This is really about protecting Australian residents and Australian citizens interest. The other thing I need to clarify and be very clear on is a lot of people, they get muddled in terms of what actually an overseas buyer is.
Doug: Again, overseas buyer is somebody that resides in another country and they are not to be confused with someone who is a potential first or second generation Australian who is of Chinese descent. So the typical person you would see competing in auction on a Saturday as you alluded to is not the kind of people I’m talking about. Because they live, reside, and probably have done for a couple of generations in Australia, they are Australians. They just so happen to be of Chinese descent.
Doug: Or Indian descent or British descent or wherever it may be from. I’m talking about people who live overseas and are coming into Australia, sensing a bargain, and acquiring property. And for me, this isn’t a gut feel, numbers don’t lie. The appetite is there, it’s very real. It’s bigger and greater than ever before, not my words, if you speak to again a lot of people who are on that side of water. They’ll tell you that even people like Juwai, Juwai is the largest Chinese property portal.
Doug: They’ve said in a recent study earlier this year, in fact, that the appetite and hunger is greater than ever. And they expect Chinese citizens to be buying Australian property in unprecedented numbers this year.
Kevin: Yeah, well Michael Yang earlier in our show from G Fang said exactly the same thing.
Doug: Well and look, all we need to do to put some context around this is actually look at the numbers. As I said, numbers for me don’t lie. This isn’t facts, this isn’t feeling, this isn’t fiction … This is fact, it isn’t feeling or fiction. So if you look at some of the numbers around foreign investment at the moment, it’s difficult to know who to believe here. But the reliable sources are the large organisations.
Doug: ANZ’s recent study, they’ve said that foreign buyers now own an excess of 400,000 Australian homes. They also said in that same study they’ve estimated that foreign investors purchase between 40 and 50,000 Australian dwellings every year. Foreign buyers currently are acquiring 25% of all newly constructed dwellings in Australia. And according to Knight Frank’s market Insight study of only last week, Chinese developers acquire 1/3rd of all development sites in Australia in 2018.
Doug: And that figure is expected to be even higher this year. So those numbers are undeniable and my worry I guess is that with a large population, whether it be China and India, their middle classes are burgeoning. and if there is a genuine appetite, we’ll be dwarfed. We’re minnow by comparison.
Doug: In fact, we’re not even a minnow, we’re a tadpole by comparison and if those numbers continue on that trajectory, how long until overseas buyers own a million plus Australia properties? And the issue then becomes around Australian residents or citizens then obviously not being able to get into the market themselves. There’s further ramifications, a lot of in particular Chinese buyers, tend to leave these properties vacant as well.
Doug: So that has impact on the rental markets, so it’s a real difficult balancing act because as I said you can’t turn the sign on the door to close a business. Because I understand that obviously we do need our trading partners but there’s gotta be a line in the sand. And I think that ultimately, this stance from my viewpoint comes out of protecting Australian residents interests.
Kevin: Yeah, well of course, we are hearing already from operations like Juwai, you’ve mentioned, and also G Fang that it is very desirable for foreign investors to buy into Australia now. And anything that we do to soften the market is going to make it even more attractive for them.
Doug: And there lies the issue, that’s why, politics is a very difficult game clearly. I mean we’ll sit on the sidelines and we chastise or lambast these politicians but that is not a job that I would want. They’ve got a very difficult balancing act ahead of them because obviously they need to look at the here and now, they need to look at the economy, they need to make sure there’s money flushing into that economy and flowing around.
Doug: And obviously if there’s a short fall with owner occupiers or investors, properties still need to sell. But it’s about having some foresight and I think that insight provides that foresight. And you’ve gotta look, well if we continue this trajectory, what does happen in two years time? Five years time? Ten years time?
Doug: So sometimes it’s worth putting up with some short term pain for some long term gain in my opinion.
Kevin: So what’s your view then, Doug, about whether or not we can or whether we even should make property more affordable?
Doug: Well I think property is becoming more affordable, there’s no question bout that. Obviously that intervention by Apra certainly served its purpose, the market was far too hot. Certainly across places like Sydney and Melbourne and credit where credit is due, it did have the desired impact and effect. But market’s are cyclical, they go up and they come down. You and I, in our lifetimes, we’ve seen it numerous times.
Doug: And I think we just gotta maintain perspective and we’ve gotta realise that obviously we’ve just encountered a once in a lifetime, once in a generational market. So it was always bound to come back. The key here is maintaining that balance and maintaining the best interests of the Australian population as far as I’m concerned.
Doug: And obviously selling off the family silver, I don’t believe is maintaining the best interest of the Australian population quite frankly. I mean you would have heard the common term that’s used in popular culture around Australia being the 51st state of the US. Well, I certainly think in economic terms, it’s almost become the 24th provence of China.
Doug: And I think we’ve gotta be really, really careful of that. But maintain that all important balancing act of continuing trade with as I said, our biggest partners overseas.
Kevin: Well said, Doug. Thank you very much for your time. Doug Driscoll, CEO for Starr Partners. Thanks for your time, Doug.
Doug: My pleasure, thanks Kevin.
Weekday space and time saver – Jessica Lai
Kevin: Imagine dramatically cutting back your travel time to work each day and not having to move to do it. Enter Weekday Space, a website that brings together people with a vacant room and workers not wanting to travel. One of the founders of the website, Jessica Lai, joins me. Jessica, welcome to the show. Thanks for your time.
Jessica: Thanks very much for having me.
Kevin: Okay, so the website, tell me the premise. What’s behind this? How does it work?
Jessica: So, it’s a listing site that brings together landlords who have a spare room that they’re willing to rent out during the week, and it pairs them together with commuters, people, largely professionals, who are over their long commute to work and would like to stay during the week somewhere closer to work.
Kevin: I could imagine this would be hugely popular in cities like Sydney and Melbourne and some of the other cap cities as well. Is there much of a need for it some of the smaller capitals, do you think?
Jessica: At this stage, we’ve seen the most interest in Sydney and Brisbane. Obviously you’ve got, in both of those capital cities, you have people commuting from the coast, so Sunshine and Gold Coast into Brisbane, and the Central Coast and Wollongong into Sydney, and really doing it tough with those long commutes. But we do see great opportunity to take Weekday space through Australia. I mean, we’ve heard so many great stories of the long commute, we all know someone with it. A friend of mine, for example, her husband commutes from Brisbane up to Townsville every week. There is certainly, we see the opportunity for it to go to the regions and, actually, this concept’s been parading in the UK for quite a few years now and is certainly a successful model throughout the UK.
Kevin: You mentioned there that you see the user being young professionals. Is there an opportunity there for people maybe on shift work or even part-time work?
Jessica: Absolutely. I mean, with the increase of contract and freelance work, that allows people to have that more flexible accommodation option without having to resort to nightly stays, which can be quite costly. We also see potential, maybe down the track, for even students or people coming for courses or what not, further education, and needing a slightly longer than usual accommodation option, which is not currently being provided for.
Kevin: What’s the business model here, Jessica? How do you make your money?
Jessica: We’re purely a listing site at this point. Landlords can pay to list their property. We’re actually also now taking listings for lodgers who have unique needs. They can list a profile about themselves and landlords can search for them.
Kevin: What sort of security do you offer to someone? I mean, effectively, they’re bringing a stranger into their home, aren’t they?
Jessica: Yes, absolutely. We’ve got tips on the website regarding safety. So, all the usual tips apply in terms of if you were taking on a flatmate or a lodger. Certainly having someone present during inspection. Doing your due diligence in terms of reference checks and so forth as you would a conventional lodger or flatmate still apply. Also have recommendations on the site in terms of just making sure you’re covered in terms of your insurance as well.
Kevin: Yeah, that’s another key consideration too. The website is called Weekday Space. So, it’s designed for people who’ve got a room and they may just want to let it out casually or by the night or even during the week. How are you gonna stop it from being used or will you stop it from being used from people who are looking for full-time tenants who might want to be there for months?
Jessica: We see the sweet spot here being people who … That might be shorter that it’s probably people who they’re looking for a home away from home. So, it might be an ongoing lodger, but it’s just someone who wants to look for weekday accommodations. So, it’s ideal for landlords who wouldn’t mind the company and the extra income, but don’t want to really give up their freedom and their space, particular on weekends. So, it will certainly be a shorter-term lease, so just a couple weeks, for example. But we see the opportunity in long-term leasing here so that people who have been exhausted with the cleaning up of rooms if they’ve gone to the Air BnB model in the past, and wouldn’t mind that continuity of the same person, but still want a bit more freedom than they’ve had. We see that really being the sweet spot for Weekday Space.
Kevin: Yeah, well it’s certainly going to be catering for a need, so check it out for yourself, WeekdaySpace.com.au. Jessica, thanks for your time.
Jessica: Thank you very much.