August 21, 2024 • 28 mins
Is the Australian property market on the brink of a major shift, or are we just seeing temporary hiccups? Join us on this episode of the Finance Show with Joe as we uncover the latest trends in housing values across major capital cities. CoreLogic’s recent data reveals a cooling off in housing values, presenting both opportunities and challenges. First-time buyers might find some relief in more affordable prices, while property investors could face a bumpy road ahead. We’ll break down how rising living costs and high interest rates are playing a pivotal role in shaping these trends.
We then zoom in on the dramatic shifts within Sydney and Melbourne's property markets. For example, a Blacktown couple who enjoyed a staggering 20% gain in just six months. However, this growth is not uniform citywide. Wealthier areas like Cronulla and Miranda are showing signs of stabilization or even potential dips. Plus, with broader economic issues like stagnant wages and construction company bankruptcies, we question the sustainability of these markets. We also touch on the seasonal nature of property trends and the possibility of a market boom later in the year.
Lastly, we tackle the critical question of whether current market trends are genuine shifts or just temporary fluctuations. With the end of the financial year in sight, the focus is shifting towards refinancing over new property purchases. We emphasize the strategic importance of accessing equity now to facilitate future investments. Balancing immediate financial prudence with long-term investment goals becomes paramount in these uncertain times. Tune in for a comprehensive analysis that offers invaluable insights for first-time buyers, seasoned investors, and everyone in between.
Follow us for more property news and mortgage advice!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Joe (00:00):
Is Australia's property market finally cooling?
A recent report by CoreLogichas shown that housing values
are actually starting to dropand steady off Across all the
major capital cities.
Who are the biggest winners andthe biggest losers?
Find out in today's episode.
Michael (00:18):
Welcome to the Finance Show with Joe.
He's Joe, I'm Jes chmo, andtoday we're going to talk about
housing affordability.
What else d we talk about?
It's cooling, isn't it?
It's coming with winter, it'sstarting to look good.
Joe (00:30):
It depends on who you are.
It depends if you are aninvestor or if you're looking to
just buy a property.
If you're a first home buyer Ifyou're looking to just tap into
the market.
But a recent report byCoreLogic came out and is
highlighting how property valuesare actually starting to drop.
Michael (00:45):
Yes, which I mean as a first-time buyer.
I imagine they would be excited, yeah, but as a property
investor, Not so much.
Joe (00:53):
I'd be how do the kids say it?
Shitting bricks.
There's actually some worryingdata in here.
We don't know if it's going tobe a trend.
We don't know if this is goingto be a continued process.
We don't know if it's justbecause of winter, but
thankfully, today we're going tobe able to break it down.
So CoreLogic came out with thisreport.
Sales aren't as high as whatthey were and demand isn't as
(01:16):
high as it was in previousmonths.
Michael (01:17):
I reckon I mean a big part of it's got to be like cost
of living and interest ratesand stuff like that.
Everyone's just stretched a bitfurther.
Joe (01:23):
We've seen Woolworths and Coles just absolutely decimate
the market by having theirduopoly and continue to increase
prices everywhere For no reason.
For absolutely no reasonoutside of profits and they
posted record profits last year,didn't they?
Michael (01:35):
Yeah absolutely they did.
And what was their reasoninginitially for raising prices?
It was like war in Ukraine andit's like what does that have to
do with Australia?
We grow our own food.
Joe (01:45):
It was absolutely ridiculous.
And then they tried to come upwith wages are up.
That was another one, but thenreports came out and said that
they were underpaying theiremployees at the same time.
Michael (01:58):
I used to work for Woolies.
Fun fact, even I gotreparations from them.
It wasn't much, but it was acouple hundred bucks.
That was after like eight yearsof working for them, though.
Joe (02:08):
This is major supermarkets, major duopoly that are taking
advantage of the everyday personand that cost of living the
interest rates as well, notcoming down, staying stubbornly
high, has finally hit theAustralian back pockets.
Michael (02:25):
Yeah, I think everyone's savings are kind of
dwindling away and now they'rereally trying to tighten the
purse strings.
Joe (02:31):
I've been discussing this on the podcast for the last
three months and I've beentelling people hey, cost of
living is up.
Hey, interest rates, they'renot going to come down.
I've said it multiple timesInterest rates aren't going to
come down until next year.
Michael (02:43):
No, because some people were optimistically thinking it
was coming down the latter halfof this year, which is why so
many people bought, which is whyso many people were interested
in buying.
Joe (02:50):
But now we're actually finally seeing the effects of
the interest rates, because wespent the last 24 months with
interest rates going up and up,and up and up.
They're at 0.1%, which isridiculous.
That was mid 2022.
And then now it is mid 2024.
And this is the overnight cashrate.
(03:11):
By the way, this isn't what thebank is charging you, but 4.1%,
which means the bank is nowcharging you 6.1 to 6.5%.
You're going from paying oneand a half percent interest rate
on your home loan to 6.5% on amillion-dollar mortgage.
That is, thousands of dollars.
I am well aware.
Michael (03:31):
Michael is a… Recent first-time buyer.
Joe (03:35):
And he is feeling it.
Oh boy, I'm sorry mate, Ididn't mean to do that to you.
No, no, no.
Michael (03:41):
Long-term, this is good Short-term paying, long-term
game.
Again, this is what I keeptelling myself.
Joe (03:46):
That's the name of property .
But there were some reallysurprising results, and I do
want to add in this ismonth-on-month results, this
isn't year-on-year.
Perth grew 1.8%.
Michael (03:59):
Yeah, I think Perth is going to continue to just sort
of grow consistently.
Joe (04:03):
We've talked about it.
Michael (04:03):
To.
I think Perth is going tocontinue to just sort of grow
consistently.
We've talked about it To deathat this point.
Joe (04:06):
Yeah, it's just, they're investing a lot in Perth.
They want Perth to grow.
The Australian governmentdoesn't want Perth to be
dependent just on mining.
They want it to be its ownself-sufficient city.
It's the same time zone asChina.
They've also just got space.
Frankly, yeah, that's true.
Michael (04:25):
And people want to live on the west coast.
They like the fact thatsunrises on the beach is
underrated.
Sunsets, sunsets.
You know you're right.
Joe (04:28):
No, you're right, there's no uh, apparently there's a lot
less uh.
Michael (04:32):
Parking fines in perth I imagine there's just fewer
cars.
I don't think you have to fightfor parking as much in perth
people want to live there.
Joe (04:40):
They like the relaxed lifestyle, and you're also
entering the market at a muchlower just feels reasonable.
Well, more reasonable morerelative we're all relative like
you know, I follow hundreds ofbuyers agents and I follow
hundreds of uh propertydevelopers over in perth and
you're able to buy like fourbedroom houses with a swimming
(05:01):
pool for like $750,000.
Michael (05:04):
Compare that, believe that we're supposed to be
fucking, but compare that toSydney.
Yeah that's an apartment.
Joe (05:13):
That's maybe an apartment.
Michael (05:15):
Maybe yeah, Depends.
Joe (05:16):
These are places that are 15 minutes away from the CBD, so
Perth is going to continue togrow, especially because it's on
the lower end of the market.
When something is on the lowerend of the market, that means a
lot more people can buy it, sothere's just more room to grow.
Think about it like hot chips.
Yeah, hot chips cost two bucks,right, when they're on special,
when you go to KFC drive-thru,sometimes you can get a large
chips for $2, right, right, thatmeans a lot more people can buy
(05:39):
hot chips for $2.
Everybody's got a $2 coin onthem.
But if hot chips are $10,you're not going to get 100
customers.
You might get three customers.
Michael (05:47):
In a much larger scale.
It's like the luxury field,like luxury sector.
You've only got to sell 10watches that cost $10,000 as
opposed to 100 watches that cost$1,000.
Joe (05:58):
But that's what the Perth market is.
You've got a lot more room togrow.
Michael (06:07):
There's a lot more house and land packages and a
lot more people are going to beon the lower end of the salary
spectrum.
Yeah Well, that's just how Iuse it.
I don't know if it's a spectrumSalary bracket, tax bracket.
Joe (06:14):
Yeah, that one, the lower end of the tax bracket so they
can afford it.
So we are actually seeing amigration to WA.
Michael (06:20):
Which is a first.
I feel, yeah, I never reallyhear it before now.
I never really heard anyonegoing yeah, WA, I'm super keen
to go.
Joe (06:31):
Well, if a bloody house in Bass Hill costs $1.8 million and
you could go and get the exactsame house in Perth for $700,000
, people that don't have themassive family ties that we do
you and I being from WOGfamilies WOG and Lebanese
families, it's true, people thatdon't have, you know, so many
connections they're going totake the opportunity.
Michael (06:49):
I mean it just is opportunity.
Yeah, you've got that upfrontcost of moving to WA, but then,
once again, long-term, you'vegot way more opportunities,
especially if you've got work.
That's exactly right.
Joe (07:04):
Next on the list was Adelaide, at 1.7%, which is much
in the same as Perth.
Michael (07:06):
Adelaide's always a consistent thing it's not big,
but it's not small and it's notfar from Melbourne.
Yeah, so it doesn't feel likeyou're sacrificing that much
going to Adelaide.
Joe (07:15):
Not so much, and they've done a lot to promote the city.
There's a lot more festivalsthat happen there now.
They're very big on their winetourism.
Michael (07:25):
Oh, yeah, yeah.
Which valley is that?
Is that the Barossa I?
Joe (07:27):
think it's the Barossa.
Yeah, fact, check that onebefore we get to it.
But Adelaide's done extremelywell.
I don't want to harp on toomuch of it because it's very
similar to Perth.
You're just entering at a lowerend of the market.
You're buying a house for$700,000 to $750,000.
Even if you're an investor andthis is the thing about the
rental market all acrossAustralia you don't see rent
(07:48):
being below $500,000 or $600,000a week.
So if you're buying for $700,000, $750,000, you're still renting
the place for $500,000,$600,000 a week.
You're paying off that mortgagemuch faster.
You're paying off.
Yeah, that's exactly right.
As opposed to, you can buysomething for one point three,
one point four million dollarsin Sydney.
You're still getting fivehundred six hundred dollars a
(08:08):
week rent.
So rent seems to be almostuniform.
I'm not going to say it's 100percent uniform, because there
are places in Sydney that youknow you're going to rent for a
lot higher.
But we're starting to see amuch more uniform rental market
across Australia.
So people are taking advantage.
Investors are taking advantageof the high rental yield in
Adelaide and Perth, which is whythere's such a big demand for
(08:29):
buyers agents right now.
Michael (08:31):
Makes sense and also it's just.
It's just sort of seeming likeMelbourne and Sydney.
Everyone's just kind of.
I think most people just beenpriced out.
Not only that, that, they'regetting over it.
That's a hundred percent right,like what's what?
They're getting over it?
That's 100% right.
What's your average person'squality of life in Sydney?
Now it's dropping.
I don't know if it's likedropped to a bad level, but it's
dropping from what it was likepre-COVID.
People aren't traveling.
(08:51):
I'm not.
Joe (08:52):
I'm certainly not, and I've got something to add on top of
that, but people aren'ttraveling right now.
Michael (08:59):
And the people that are Well they're already loaded.
Joe (09:00):
They're already loaded.
So I want to get into the moresurprising results now.
Okay, and I'm kind of going togo a little bit back to front.
I'm going to jumble these up abit.
Brisbane grew 1%.
Michael (09:10):
It's slowing down and I think, as those investors are
now moving in, the prices aregoing up, not like dramatically,
but slowly, so that appetite iswaning.
It's not gone by any means, butit's not like it was maybe six
months ago or eight months ago,whatever.
Joe (09:23):
It's starting to like.
It's still growing.
Yeah, if a property grows by 1%a month, every month, there's
still a 12% gain in 12 months,still making money.
You're still making moneyinvesting in property in these
areas, probably better than theinflation rate, which is three
and a half 4%, but it's notgrowing at the exponential level
that we had seen in previousmonths.
(09:45):
The next result and we need todiscuss this is Sydney Sydney
0.3% growth.
I spoke on the podcast lastweek and I mentioned that I had
a couple that purchased inBlacktown.
They purchased for $1 million.
Six months later the propertywas worth $1.2 million.
So that's a 20% gain in sixmonths, which is insane.
Which is insane.
But it's not like that allacross the market.
(10:05):
No, blacktown.
They bought a house.
It's got land on it, it's, youknow, there's potential for
development later on.
Maybe they could put a grannyflat on it, maybe they can make
some additions, maybe you couldput got options.
But then you'll see other areasthat aren't growing at the rate
that they were earlier in theyear.
Michael (10:24):
Apparently, it's more wealthy.
It's wealthy areas.
Yeah, basically no one canafford it, and the ones that can
are already there.
Joe (10:30):
I'm looking at.
I'm not talking the wealthiestareas, I'm talking about
Cronulla, miranda, tarrant Point, san Susie, brighton.
They've really steadied off tothe point where it's like are
they going to maybe dip?
Is there going to be a dip?
Michael (10:45):
there.
I reckon there will be a dipeventually.
It can't keep going the wayit's been going.
It's not sustainable.
It's just straight up not.
People can't take it.
Joe (10:53):
That's exactly right.
And wages aren't growing to thesame rate.
No, we see every other weekanother developer goes bust or
another construction companygoes bust, yeah, which means
more layoffs, more layoffs, morelayoffs.
Michael (11:03):
What's everyone supposed to do?
Yeah, like you said, notsustainable.
Joe (11:06):
But Sydney at 0.3% month on month, that means it's 3.6% for
the year.
That means you're actuallybetter putting your money in a
term deposit account than buyingone of these properties that
are growing at that 0.3% rate.
Michael (11:20):
Would you call this period now like a readjustment
from the crazy stuff that we'veseen?
100% yeah 100%.
Joe (11:26):
I'd call it a readjustment.
It can't keep booming, yeah, itcan't keep increasing the way
that it does, and I've mentionedthis time and time again.
It wasn't the average mum anddad that were going and buying
these houses.
Michael (11:38):
No, no, we're families, these houses, no, no, worth
families.
Joe (11:44):
It were people that had land banked in the 80s and the
90s and they were just takingadvantage.
Why wouldn't you?
It was insane.
They were going to auction andthey were kicking the ass.
They were absolutely kickingthe ass of anyone that was a
first-time buyer.
We've got the migration issuethat I've harped on about
previously.
You're getting a lot ofexternal extremely wealthy
families coming to Australia andeither increasing the price or
(12:07):
just outbidding everyone at thesame time.
I went to an auction that went$1.5 million over reserve.
I turned to my wife and I go,we're already out After the
first bid, I go, we're done.
I looked at the families allaround us and I was like we've
got no chance here, right, itwent a million and a half over
reserve not over the guidingprice, okay, reserve, because
over the reserve.
So the people that sold werecheering those people.
(12:28):
Now and we're seeing thisespecially in winter they're in
Europe.
Michael (12:33):
Why not?
You just made your money.
Joe (12:35):
That's exactly right.
Michael (12:36):
My parents did a similar thing.
Joe (12:50):
They sold their house and they took the family to Europe
for christmas.
Because we'd never done that,yeah, because we'd never could
afford it.
Yeah, and we're starting to seethe increase of well, no, sorry
, not the increase.
We're starting to see theproperty market actually level
off a little bit, in sydneyespecially yeah, because of
these prices.
Like I just can't believe thatsydney only grew 0.3 percent
month to month this is good newsfor first-time buyers, though,
isn't it?
It's fantastic news forfirst-time buyers because they
can finally buy.
Well, I don't want to say theycan finally buy where they live.
Michael (13:10):
Not quite, yeah, but it's a promising sign for their
futures if they're in theprocess of saving for a deposit.
Joe (13:18):
If the trend continues, if the trend continues, this is the
thing.
This is the thing.
This is the result from May toJune.
So this is people are startingto go to Europe, they're
starting to take their holidays.
They've already bought earlierin the year.
The way that the propertytrends work in Australia is it
booms at the start of the year,it cools off around winter and
then it booms against Septemberonwards.
Michael (13:37):
It's so funny, so it really does just come with the
seasons funny.
Joe (13:42):
So it really does, just come with the seasons.
Michael (13:43):
It really does, because people don't want to go outside
when it's raining and go bid atan auction.
Yeah, fair enough, it's alreadymiserable, why make it worse?
Joe (13:48):
these are the two biggest results.
I'm going to start with hobartbecause I don't want to harp on
too much about hobart, becausethere's another major capital
city, but hobart is down half apercent.
It's interesting I wouldn'thave expected that most of us
don't, because we've discussedthings about.
Hob thinks about Hobart, thoughI think about Hobart.
I just bought it in Hobart.
Michael (14:03):
That's true.
Yeah, you probably think aboutit a lot.
Joe (14:06):
But Hobart's down half a percent.
It could be potentially becauseof the oversupply of property.
It could be because it boomedtoo hard.
Oh, and this is like a majorrecorrection and now it's just
starting to okay, okay.
But it's dropped half a percentmonth to month.
But the biggest one, thebiggest one we have to highlight
is Melbourne is down.
Melbourne is down 0.2% andMelbourne has had this trend for
(14:31):
the last three to four years.
Where Sydney is booming likehell, melbourne is growing, but
Melbourne isn't booming likehell the way that Sydney is.
Michael (14:40):
No, it doesn't seem like, like Melbourne doesn't
seem to be the place whereyou're guaranteed to make profit
on your property purchases inMelbourne anymore, like that's
just sort of seems to be the wayit's going, whereas Sydney, at
least for the last few years,has definitely been that.
But now we're starting to seeSydney, maybe like just coming
towards where Melbourne is, andI think that's just well.
(15:01):
It's hard to say, becauseMelbourne's approving far more
dwellings than Sydney is, forwhatever reason I don't know,
but it's happening.
Joe (15:09):
We're a much more nanny state than Melbourne, somehow.
Michael (15:13):
I think that's Australia-wide.
Australia's just a big oldnanny state.
Joe (15:16):
It is, but Melbourne doesn't have issues with
nightlife.
They don't have issues with theculture.
Melbourne's a nighttime city.
Sydney is a morning city, yeah,which I cannot stand.
Michael (15:27):
We've talked about this before.
Joe (15:29):
But Melbourne definitely has come down in value and they
highlighted some prettysignificant reasons why.
So Melbourne has a high supply.
Apparently, investors areselling rentals.
They couldn't get the people tomove in like they were
expecting them to.
Michael (15:45):
Yeah, and I wonder was it because rent was too high and
other people who wouldpotentially consider renting
there were just simply pricedout?
Because what I've been readingis that basically the places
that are available in Melbourneare not really desirable places.
People don't really want tolive there and especially and
(16:06):
the people that did were willingto live there aren't willing to
pay those prices and this justseems to be part of that
readjustment.
I wonder if that's part of it,like a bit of like consumer
psychology there.
Joe (16:16):
There is a bit of that.
There is the higher supply.
The locations where they arebuilding aren't as desirable,
but if you go to Melbourne CBD,every time I go to Melbourne CBD
there seems to be a new tower.
Oh okay, it's very different toSydney CBD because we have so
much.
Melbourne does have a lot ofheritage, but they also have
more space around the actual CBD.
Sydney's very twisty.
(16:36):
It's got a lot of hills.
So, it's not as easy to build inSydney, like Potts Point,
king's Cross, they literally hadto bring in a lockout law and
all these other things to beable to basically purchase these
properties.
To build apartments.
They had to kill the nightlife.
So they could do it.
They did, they basically did.
But Melbourne, as we could seenow, the supply in the CBD is
(16:58):
much higher than what it was inprevious years and we're
starting to see that acrossmultiple suburbs.
Are rents dropping in Melbourne?
Yes, they are, oh they are.
Melbourne's rents are droppingbecause investors are selling.
They're like no F this, I'm notmaking money.
The inner east dropped 4.4%.
Michael (17:15):
Yeah, sort of leading the charge in the drop.
I've only been to Melbourne theone time, really.
Yeah, surprisingly, I justnever had a reason to go.
I went for F1.
That's the only time I went andI was sick as a dog, so I
didn't really get to explore.
Joe (17:27):
You seem like a Melbourne transplant.
I know it all makes sense.
Michael (17:31):
It makes sense, but no.
Joe (17:32):
The hair, the glasses, the beard the hoodie, it's all there
but it's not nothing to look atwhat's happening down there.
Inner East is down 4.4%.
And this is Melbourne, innerEast, like Melbourne's within
Melbourne, the inner east ofMelbourne.
Tell it to me like it's.
Michael (17:50):
Sydney.
What's a roundabout area that Icould compare it to Haymarket,
haymarket, okay okay, broadway,it's like the inner west part,
yeah, yeah.
Okay.
Joe (18:03):
It's not the most desirable part of Melbourne, but it's
still.
It's up there.
Broadway isn't the mostdesirable part of Sydney, but
you're not expecting to get abargain.
Michael (18:07):
No, yeah, yeah, okay, I understand.
Joe (18:08):
So Melbourne's inner east dropping by 4.4%, the northeast
dropped by 1%, and that's monthon month.
If that continues, a propertycan lose some pretty significant
value pretty quickly, hence why, investors are selling.
Yeah, that's exactly right.
So that's a massive red flag.
And then the biggest one wasMornington Peninsula.
Michael (18:27):
I'd never heard of that place, but it's a big one.
Joe (18:30):
Mornington Peninsula dropped 9.7% in a month.
Michael (18:34):
Remember when I said earlier in this podcast that I
said oh, is that dramatic?
Yeah, this is.
Joe (18:38):
This is the dramatic one, because there was a lot of buzz
around Mornington Peninsula.
People were like, yeah, I'vegot to go buy Mornington
Peninsula, it's going to boom.
Was it like a Gold Coast thing?
Yeah, yeah, it had like a buzzabout it and everyone was so
excited to purchase there andthen it dropped 9.7%.
My personal idea around this isyou have to be really careful
(18:59):
and you have to reallyunderstand a CBD before you go
ahead and purchase and put yourhard-earned money in investing
in these areas, or whether youwant to live there, if you want
to live somewhere, and it drops1%.
But you know the area and youknow that there's more
development around.
They're going to be building.
They're going to be.
(19:19):
You know there's a new schoolcoming.
There's a new hospital coming.
There's a new highway they'regoing to be.
Michael (19:22):
You know there's a new school coming.
There's a new hospital coming.
There's a new highway Long-termlike reasons to stick around.
Joe (19:25):
You're sitting there and you're going okay, maybe it
dropped a percent.
I'm not going to sell becauseit dropped 1%, but if I'm
patient I could see the vision.
Yeah, If you're an investor andyou're not seeing these
locations every day, you're nothearing these conversations, Not
even in the same state yeah,that's exactly right.
And you hear that yourproperty's dropped 10%, I'm I'm
(19:45):
yet again shitting bricks.
You know like it's such a funnytime to be in the property
market in Australia and seeingthese cooling prices, seeing
every major city drop not dropas in losing value, but drop at
the rate that they're growing istelling me a lot.
It's telling me that, hey, theinterest rates being where they
(20:06):
are, it finally worked.
We're finally starting to seehousing values drop and we're
finally seeing people tightentheir back pockets.
And the number one result Iwant to see and this report
hasn't come out yet because itcomes out biannually, it comes
out at the end of the year andthen it comes out in the middle
of the year, so it's going tocome out in the next coming days
Okay, the retail spendingreport.
Michael (20:28):
Oh, yeah, yeah, yeah, because I've definitely been
spending a lot less, but that'sbeen for a while now.
Joe (20:34):
Yeah, you just recently purchased a property.
I'm looking at purchases andback in 2020 2021, when you know
, job keeper, job seeker werearound and everyone was just
buying anything from the iconicand stuff, just because like you
know, and my business was beingsupported by the government.
Yeah, and then, on the otherend of it, we also had.
We weren't traveling, I wasn'tspending money on petrol like I
(20:54):
was you couldn't leave the house, couldn't leave the house
couldn't leave the house formore than five kilometers, or
whatever it was all you had todo was online shop.
Michael (20:59):
That's a bigger problem than that's a bigger problem
than others.
Joe (21:02):
That's exactly right.
But you know, what we'refinally starting to see is the
overcorrection.
That's what I think hashappened.
I actually think it'sovercorrected.
We've gone too far.
We've gone too far in the sensethat building restrictions are
too high, interest rates are toohigh, cost of living is too
high.
There is one petrol stationdown the road from my house.
(21:22):
Okay, it's in a suburb calledPatstow.
Okay, this one petrol station,their petrol prices are always
20 cents less than the twopetrol stations ahead of it.
The traffic this one petrolstation causes every single day.
Michael (21:36):
It's got six pumps, everybody goes there because
it's 20 cents cheaper.
It's not a little bit cheaper?
Joe (21:42):
20 cents on a 50 liter tank is 10 bucks, are you the
mathematician?
Yeah, it's 10.
But guess what that 10 does?
That gets your kid an ice cream.
That gets you an ice cream.
That gets them a slushy.
Yeah, if you are a workingfamily, right now 10 is a lot of
money.
Yeah, three years ago, 10 wasis a lot of money.
Three years ago, $10 wasn't alot of money, and I've said it
(22:04):
time and time before money usedto be cheap.
Michael (22:07):
Borrowing money.
Do you want to explain to somepeople what you mean by that,
because I understand what youmean conceptually.
Joe (22:12):
So if I want to borrow $100 from you two years ago to pay
you back, it would cost me $102.
If I wanted to borrow moneyfrom you today $100, $.
If I wanted to borrow moneyfrom you today a hundred dollars
a hundred dollars would cost mea hundred six dollars.
Now that doesn't sound like alot in the grand scheme of
things, but if I've got amillion dollar mortgage okay, it
used to be twenty thousanddollars, yeah, now it's sixty
(22:33):
thousand dollars my wage hasn'tgone up by sixty thousand
dollars.
No, sorry, my wage hasn't goneup by forty thousand dollars.
Yeah, my wage has gone up threethousand dollars that time.
Michael (22:41):
So where are you supposed to find the extra cash?
Joe (22:43):
And it's across the board.
It's Coles Woolworths, it'severywhere, and I actually want
to hear what people have to say.
I want to know what they thinktheir predictions are for the
property market over the next 12months.
Is this going to be a trend?
Is this going to be somethingthat we're going to see
constantly, or is everyone justgoing to come back from Europe
(23:03):
and spend money again?
Michael (23:04):
I don't think so.
I think this will be a trendfor at least the next year or
something like that, I don'tknow, maybe longer, because I
just don't think.
Like we said before, it's justnot sustainable.
Where are people supposed toget this money, like some people
can?
Yeah, of course, maybe like 30%of the population, 40%, 50%,
but then what are the other 50%supposed to do?
Joe (23:24):
They are basically going to be living in rent and, as we've
said time and time again,living in rent is not the best
decision in the world, becausewhen you live in rent, your
destiny is controlled by someoneelse.
Michael (23:37):
You don't even have great rights to protect you as
well either.
Like if you get a good landlordor a good agent or property
manager or whatever, your lifewill be fine like a normal
person.
But there are terrible peoplein normal walks of life.
If you get a terrible person asa landlord who's not only after
(23:57):
like to make a buck but likedoesn't let you do this, doesn't
let you do that, but won't fixanything, won't do this, doesn't
let you do that but won't fixanything, won't do this, won't
do that.
I've heard horror stories.
Thankfully I've neverexperienced it.
But when I moved out afterpurchasing this place, we
switched property agents becausethe landlords live in America
so they don't really give a shitwhat's going on, really.
Yeah, so they were super chill.
(24:19):
They let us in for really cheapjust before it went nuts the
rent.
So we locked in a good ratebefore they could rise it.
It went up and everything.
But then when we left, theywere not satisfied with certain
aspects of our cleaning.
They weren't satisfied withcertain things and don't get me
wrong, I got my mum in there tohelp me clean.
My mum knows how to clean.
She's a walk, mum, yeah yeah, mymom knows how to clean.
(24:41):
She's a walk mom, so I I thequality of the clean was.
I was not like questioning it,but there were, there were dumb
things, so there was something Iwas worried about.
Actually worried about was thefly screen.
I had a cat in there a littlebit, a little bit torn the fly
screen, nothing major but alittle bit torn.
I'm like, okay, they're gonnaget me for that, but I'm I'm
willing to pay for that.
What they actually put in theproperty report was there are
(25:01):
water spots in the sink.
There's a mark behind thefridge.
You didn't take down a bathroomhook like a pull strip hook
that takes two seconds to takeoff, because in the mess of the
move we forgot the one littlehook.
Joe (25:12):
You didn't know if it was there before or thereafter.
Michael (25:14):
It just was just which was.
I didn't think it was a bigdeal either way.
Joe (25:19):
We made improvements.
You got a hook now.
Michael (25:23):
This is what I thought I'm adding value to this
property.
But that was when our propertymanager changed.
They gave a shit because we hada previous one and they were
like, yeah, this is fine, putthe cat in, put the paintings up
, all this sort of stuff.
They didn't care because weweren't destroying the place, we
were just living in itno-transcript.
(25:55):
As much as it sucks living withyour parents.
So that's the easiest way thatyou can save up for something,
because I mean, depending on ifyou have to, you know, pay board
or something, it doesn't reallymatter.
Even if it's board, it's goingto be cheaper than rent.
Yeah, you know, you don't haveto pay for food, you don't have
to pay for this, that and theother.
It's easier to not go.
Obviously, not going out is abig thing, but far out I felt
(26:22):
like I was playing catch up forthe rest until I got paid again,
which is not normally how itgoes, really Like just little
things, like just, yeah, Ididn't dip into my savings or
anything.
But it's also like I couldn'tlike buy a little like other
things.
Yeah, like I had to sacrificethings to go out, which for me,
it's like I don't really want tosacrifice, like paying for
groceries because I wanted to goout, which wasn't the case
(26:44):
because I live at home right now.
Joe (26:46):
I just hear all of these things.
Our wages aren't as high asAmerica, but our property values
are higher.
I hear time and time againpeople wanting to get in the
market.
They want to get in.
They can actually make theirrepayments.
I think the best advice I'mgoing to give to first-time
buyers and I've said this timeand time again look at these
prices dropping as a good thing,oh, 100%.
(27:07):
But don't get scared, Don'tthink to yourself property
prices are dropping.
Oh no, what was me?
I'm not going to get into themarket.
I would look at it and say tomyself now is the time for me to
buy, because when the interestrates finally drop which could
be six months, 12 months fromnow that is when I'm going to
experience a boom and that iswhen I'm going to be able to
(27:29):
accumulate some serious wealth.
Michael (27:30):
Oh yeah, property in Australia is I don't want to say
it's a safe bet, but man, it'sa pretty safe bet.
Joe (27:36):
It's a fairly safe bet.
It is.
It is.
I think this is not a trend.
It is.
I think this is not a trend.
This is a hiccup.
How long do you reckon thehiccup will last?
Michael (27:44):
though, until everyone's back from Europe.
You reckon it's only going tobe that long Interesting.
Joe (27:48):
I just think I see end of financial year come up.
Everyone's excited.
I want to buy, I want to buy, Iwant to buy.
We get a little bit of a lulleffect and save money.
That's it Right now.
It's just refinance save memoney, not anything else.
Not I want to buy more property, anything, it's refinance save
(28:10):
me more money.
I might get equity out becauseI want to buy something in the
long run To me, like the numbersin my head.
I always think to myself hey,just get the equity out so you
can buy something as soon as youcan.
At the end of the day, this isyour money, your livelihood, and
you don't want to make thosesacrifices.
And on that note, I do want tofinish this episode.
(28:30):
We could keep going for anotherhalf hour.
My name is Joe, that's I'm Shmo, and if you need any assistance
with your home loans,no-transcript.
Is Australia's property market finally cooling?
A recent report by CoreLogichas shown that housing values
are actually starting to dropand steady off Across all the
major capital cities.
Who are the biggest winners andthe biggest losers?
Find out in today's episode.
Michael (00:18):
Welcome to the Finance Show with Joe.
He's Joe, I'm Jes chmo, andtoday we're going to talk about
housing affordability.
What else d we talk about?
It's cooling, isn't it?
It's coming with winter, it'sstarting to look good.
Joe (00:30):
It depends on who you are.
It depends if you are aninvestor or if you're looking to
just buy a property.
If you're a first home buyer Ifyou're looking to just tap into
the market.
But a recent report byCoreLogic came out and is
highlighting how property valuesare actually starting to drop.
Michael (00:45):
Yes, which I mean as a first-time buyer.
I imagine they would be excited, yeah, but as a property
investor, Not so much.
Joe (00:53):
I'd be how do the kids say it?
Shitting bricks.
There's actually some worryingdata in here.
We don't know if it's going tobe a trend.
We don't know if this is goingto be a continued process.
We don't know if it's justbecause of winter, but
thankfully, today we're going tobe able to break it down.
So CoreLogic came out with thisreport.
Sales aren't as high as whatthey were and demand isn't as
(01:16):
high as it was in previousmonths.
Michael (01:17):
I reckon I mean a big part of it's got to be like cost
of living and interest ratesand stuff like that.
Everyone's just stretched a bitfurther.
Joe (01:23):
We've seen Woolworths and Coles just absolutely decimate
the market by having theirduopoly and continue to increase
prices everywhere For no reason.
For absolutely no reasonoutside of profits and they
posted record profits last year,didn't they?
Michael (01:35):
Yeah absolutely they did.
And what was their reasoninginitially for raising prices?
It was like war in Ukraine andit's like what does that have to
do with Australia?
We grow our own food.
Joe (01:45):
It was absolutely ridiculous.
And then they tried to come upwith wages are up.
That was another one, but thenreports came out and said that
they were underpaying theiremployees at the same time.
Michael (01:58):
I used to work for Woolies.
Fun fact, even I gotreparations from them.
It wasn't much, but it was acouple hundred bucks.
That was after like eight yearsof working for them, though.
Joe (02:08):
This is major supermarkets, major duopoly that are taking
advantage of the everyday personand that cost of living the
interest rates as well, notcoming down, staying stubbornly
high, has finally hit theAustralian back pockets.
Michael (02:25):
Yeah, I think everyone's savings are kind of
dwindling away and now they'rereally trying to tighten the
purse strings.
Joe (02:31):
I've been discussing this on the podcast for the last
three months and I've beentelling people hey, cost of
living is up.
Hey, interest rates, they'renot going to come down.
I've said it multiple timesInterest rates aren't going to
come down until next year.
Michael (02:43):
No, because some people were optimistically thinking it
was coming down the latter halfof this year, which is why so
many people bought, which is whyso many people were interested
in buying.
Joe (02:50):
But now we're actually finally seeing the effects of
the interest rates, because wespent the last 24 months with
interest rates going up and up,and up and up.
They're at 0.1%, which isridiculous.
That was mid 2022.
And then now it is mid 2024.
And this is the overnight cashrate.
(03:11):
By the way, this isn't what thebank is charging you, but 4.1%,
which means the bank is nowcharging you 6.1 to 6.5%.
You're going from paying oneand a half percent interest rate
on your home loan to 6.5% on amillion-dollar mortgage.
That is, thousands of dollars.
I am well aware.
Michael (03:31):
Michael is a… Recent first-time buyer.
Joe (03:35):
And he is feeling it.
Oh boy, I'm sorry mate, Ididn't mean to do that to you.
No, no, no.
Michael (03:41):
Long-term, this is good Short-term paying, long-term
game.
Again, this is what I keeptelling myself.
Joe (03:46):
That's the name of property .
But there were some reallysurprising results, and I do
want to add in this ismonth-on-month results, this
isn't year-on-year.
Perth grew 1.8%.
Michael (03:59):
Yeah, I think Perth is going to continue to just sort
of grow consistently.
Joe (04:03):
We've talked about it.
Michael (04:03):
To.
I think Perth is going tocontinue to just sort of grow
consistently.
We've talked about it To deathat this point.
Joe (04:06):
Yeah, it's just, they're investing a lot in Perth.
They want Perth to grow.
The Australian governmentdoesn't want Perth to be
dependent just on mining.
They want it to be its ownself-sufficient city.
It's the same time zone asChina.
They've also just got space.
Frankly, yeah, that's true.
Michael (04:25):
And people want to live on the west coast.
They like the fact thatsunrises on the beach is
underrated.
Sunsets, sunsets.
You know you're right.
Joe (04:28):
No, you're right, there's no uh, apparently there's a lot
less uh.
Michael (04:32):
Parking fines in perth I imagine there's just fewer
cars.
I don't think you have to fightfor parking as much in perth
people want to live there.
Joe (04:40):
They like the relaxed lifestyle, and you're also
entering the market at a muchlower just feels reasonable.
Well, more reasonable morerelative we're all relative like
you know, I follow hundreds ofbuyers agents and I follow
hundreds of uh propertydevelopers over in perth and
you're able to buy like fourbedroom houses with a swimming
(05:01):
pool for like $750,000.
Michael (05:04):
Compare that, believe that we're supposed to be
fucking, but compare that toSydney.
Yeah that's an apartment.
Joe (05:13):
That's maybe an apartment.
Michael (05:15):
Maybe yeah, Depends.
Joe (05:16):
These are places that are 15 minutes away from the CBD, so
Perth is going to continue togrow, especially because it's on
the lower end of the market.
When something is on the lowerend of the market, that means a
lot more people can buy it, sothere's just more room to grow.
Think about it like hot chips.
Yeah, hot chips cost two bucks,right, when they're on special,
when you go to KFC drive-thru,sometimes you can get a large
chips for $2, right, right, thatmeans a lot more people can buy
(05:39):
hot chips for $2.
Everybody's got a $2 coin onthem.
But if hot chips are $10,you're not going to get 100
customers.
You might get three customers.
Michael (05:47):
In a much larger scale.
It's like the luxury field,like luxury sector.
You've only got to sell 10watches that cost $10,000 as
opposed to 100 watches that cost$1,000.
Joe (05:58):
But that's what the Perth market is.
You've got a lot more room togrow.
Michael (06:07):
There's a lot more house and land packages and a
lot more people are going to beon the lower end of the salary
spectrum.
Yeah Well, that's just how Iuse it.
I don't know if it's a spectrumSalary bracket, tax bracket.
Joe (06:14):
Yeah, that one, the lower end of the tax bracket so they
can afford it.
So we are actually seeing amigration to WA.
Michael (06:20):
Which is a first.
I feel, yeah, I never reallyhear it before now.
I never really heard anyonegoing yeah, WA, I'm super keen
to go.
Joe (06:31):
Well, if a bloody house in Bass Hill costs $1.8 million and
you could go and get the exactsame house in Perth for $700,000
, people that don't have themassive family ties that we do
you and I being from WOGfamilies WOG and Lebanese
families, it's true, people thatdon't have, you know, so many
connections they're going totake the opportunity.
Michael (06:49):
I mean it just is opportunity.
Yeah, you've got that upfrontcost of moving to WA, but then,
once again, long-term, you'vegot way more opportunities,
especially if you've got work.
That's exactly right.
Joe (07:04):
Next on the list was Adelaide, at 1.7%, which is much
in the same as Perth.
Michael (07:06):
Adelaide's always a consistent thing it's not big,
but it's not small and it's notfar from Melbourne.
Yeah, so it doesn't feel likeyou're sacrificing that much
going to Adelaide.
Joe (07:15):
Not so much, and they've done a lot to promote the city.
There's a lot more festivalsthat happen there now.
They're very big on their winetourism.
Michael (07:25):
Oh, yeah, yeah.
Which valley is that?
Is that the Barossa I?
Joe (07:27):
think it's the Barossa.
Yeah, fact, check that onebefore we get to it.
But Adelaide's done extremelywell.
I don't want to harp on toomuch of it because it's very
similar to Perth.
You're just entering at a lowerend of the market.
You're buying a house for$700,000 to $750,000.
Even if you're an investor andthis is the thing about the
rental market all acrossAustralia you don't see rent
(07:48):
being below $500,000 or $600,000a week.
So if you're buying for $700,000, $750,000, you're still renting
the place for $500,000,$600,000 a week.
You're paying off that mortgagemuch faster.
You're paying off.
Yeah, that's exactly right.
As opposed to, you can buysomething for one point three,
one point four million dollarsin Sydney.
You're still getting fivehundred six hundred dollars a
(08:08):
week rent.
So rent seems to be almostuniform.
I'm not going to say it's 100percent uniform, because there
are places in Sydney that youknow you're going to rent for a
lot higher.
But we're starting to see amuch more uniform rental market
across Australia.
So people are taking advantage.
Investors are taking advantageof the high rental yield in
Adelaide and Perth, which is whythere's such a big demand for
(08:29):
buyers agents right now.
Michael (08:31):
Makes sense and also it's just.
It's just sort of seeming likeMelbourne and Sydney.
Everyone's just kind of.
I think most people just beenpriced out.
Not only that, that, they'regetting over it.
That's a hundred percent right,like what's what?
They're getting over it?
That's 100% right.
What's your average person'squality of life in Sydney?
Now it's dropping.
I don't know if it's likedropped to a bad level, but it's
dropping from what it was likepre-COVID.
People aren't traveling.
(08:51):
I'm not.
Joe (08:52):
I'm certainly not, and I've got something to add on top of
that, but people aren'ttraveling right now.
Michael (08:59):
And the people that are Well they're already loaded.
Joe (09:00):
They're already loaded.
So I want to get into the moresurprising results now.
Okay, and I'm kind of going togo a little bit back to front.
I'm going to jumble these up abit.
Brisbane grew 1%.
Michael (09:10):
It's slowing down and I think, as those investors are
now moving in, the prices aregoing up, not like dramatically,
but slowly, so that appetite iswaning.
It's not gone by any means, butit's not like it was maybe six
months ago or eight months ago,whatever.
Joe (09:23):
It's starting to like.
It's still growing.
Yeah, if a property grows by 1%a month, every month, there's
still a 12% gain in 12 months,still making money.
You're still making moneyinvesting in property in these
areas, probably better than theinflation rate, which is three
and a half 4%, but it's notgrowing at the exponential level
that we had seen in previousmonths.
(09:45):
The next result and we need todiscuss this is Sydney Sydney
0.3% growth.
I spoke on the podcast lastweek and I mentioned that I had
a couple that purchased inBlacktown.
They purchased for $1 million.
Six months later the propertywas worth $1.2 million.
So that's a 20% gain in sixmonths, which is insane.
Which is insane.
But it's not like that allacross the market.
(10:05):
No, blacktown.
They bought a house.
It's got land on it, it's, youknow, there's potential for
development later on.
Maybe they could put a grannyflat on it, maybe they can make
some additions, maybe you couldput got options.
But then you'll see other areasthat aren't growing at the rate
that they were earlier in theyear.
Michael (10:24):
Apparently, it's more wealthy.
It's wealthy areas.
Yeah, basically no one canafford it, and the ones that can
are already there.
Joe (10:30):
I'm looking at.
I'm not talking the wealthiestareas, I'm talking about
Cronulla, miranda, tarrant Point, san Susie, brighton.
They've really steadied off tothe point where it's like are
they going to maybe dip?
Is there going to be a dip?
Michael (10:45):
there.
I reckon there will be a dipeventually.
It can't keep going the wayit's been going.
It's not sustainable.
It's just straight up not.
People can't take it.
Joe (10:53):
That's exactly right.
And wages aren't growing to thesame rate.
No, we see every other weekanother developer goes bust or
another construction companygoes bust, yeah, which means
more layoffs, more layoffs, morelayoffs.
Michael (11:03):
What's everyone supposed to do?
Yeah, like you said, notsustainable.
Joe (11:06):
But Sydney at 0.3% month on month, that means it's 3.6% for
the year.
That means you're actuallybetter putting your money in a
term deposit account than buyingone of these properties that
are growing at that 0.3% rate.
Michael (11:20):
Would you call this period now like a readjustment
from the crazy stuff that we'veseen?
100% yeah 100%.
Joe (11:26):
I'd call it a readjustment.
It can't keep booming, yeah, itcan't keep increasing the way
that it does, and I've mentionedthis time and time again.
It wasn't the average mum anddad that were going and buying
these houses.
Michael (11:38):
No, no, we're families, these houses, no, no, worth
families.
Joe (11:44):
It were people that had land banked in the 80s and the
90s and they were just takingadvantage.
Why wouldn't you?
It was insane.
They were going to auction andthey were kicking the ass.
They were absolutely kickingthe ass of anyone that was a
first-time buyer.
We've got the migration issuethat I've harped on about
previously.
You're getting a lot ofexternal extremely wealthy
families coming to Australia andeither increasing the price or
(12:07):
just outbidding everyone at thesame time.
I went to an auction that went$1.5 million over reserve.
I turned to my wife and I go,we're already out After the
first bid, I go, we're done.
I looked at the families allaround us and I was like we've
got no chance here, right, itwent a million and a half over
reserve not over the guidingprice, okay, reserve, because
over the reserve.
So the people that sold werecheering those people.
(12:28):
Now and we're seeing thisespecially in winter they're in
Europe.
Michael (12:33):
Why not?
You just made your money.
Joe (12:35):
That's exactly right.
Michael (12:36):
My parents did a similar thing.
Joe (12:50):
They sold their house and they took the family to Europe
for christmas.
Because we'd never done that,yeah, because we'd never could
afford it.
Yeah, and we're starting to seethe increase of well, no, sorry
, not the increase.
We're starting to see theproperty market actually level
off a little bit, in sydneyespecially yeah, because of
these prices.
Like I just can't believe thatsydney only grew 0.3 percent
month to month this is good newsfor first-time buyers, though,
isn't it?
It's fantastic news forfirst-time buyers because they
can finally buy.
Well, I don't want to say theycan finally buy where they live.
Michael (13:10):
Not quite, yeah, but it's a promising sign for their
futures if they're in theprocess of saving for a deposit.
Joe (13:18):
If the trend continues, if the trend continues, this is the
thing.
This is the thing.
This is the result from May toJune.
So this is people are startingto go to Europe, they're
starting to take their holidays.
They've already bought earlierin the year.
The way that the propertytrends work in Australia is it
booms at the start of the year,it cools off around winter and
then it booms against Septemberonwards.
Michael (13:37):
It's so funny, so it really does just come with the
seasons funny.
Joe (13:42):
So it really does, just come with the seasons.
Michael (13:43):
It really does, because people don't want to go outside
when it's raining and go bid atan auction.
Yeah, fair enough, it's alreadymiserable, why make it worse?
Joe (13:48):
these are the two biggest results.
I'm going to start with hobartbecause I don't want to harp on
too much about hobart, becausethere's another major capital
city, but hobart is down half apercent.
It's interesting I wouldn'thave expected that most of us
don't, because we've discussedthings about.
Hob thinks about Hobart, thoughI think about Hobart.
I just bought it in Hobart.
Michael (14:03):
That's true.
Yeah, you probably think aboutit a lot.
Joe (14:06):
But Hobart's down half a percent.
It could be potentially becauseof the oversupply of property.
It could be because it boomedtoo hard.
Oh, and this is like a majorrecorrection and now it's just
starting to okay, okay.
But it's dropped half a percentmonth to month.
But the biggest one, thebiggest one we have to highlight
is Melbourne is down.
Melbourne is down 0.2% andMelbourne has had this trend for
(14:31):
the last three to four years.
Where Sydney is booming likehell, melbourne is growing, but
Melbourne isn't booming likehell the way that Sydney is.
Michael (14:40):
No, it doesn't seem like, like Melbourne doesn't
seem to be the place whereyou're guaranteed to make profit
on your property purchases inMelbourne anymore, like that's
just sort of seems to be the wayit's going, whereas Sydney, at
least for the last few years,has definitely been that.
But now we're starting to seeSydney, maybe like just coming
towards where Melbourne is, andI think that's just well.
(15:01):
It's hard to say, becauseMelbourne's approving far more
dwellings than Sydney is, forwhatever reason I don't know,
but it's happening.
Joe (15:09):
We're a much more nanny state than Melbourne, somehow.
Michael (15:13):
I think that's Australia-wide.
Australia's just a big oldnanny state.
Joe (15:16):
It is, but Melbourne doesn't have issues with
nightlife.
They don't have issues with theculture.
Melbourne's a nighttime city.
Sydney is a morning city, yeah,which I cannot stand.
Michael (15:27):
We've talked about this before.
Joe (15:29):
But Melbourne definitely has come down in value and they
highlighted some prettysignificant reasons why.
So Melbourne has a high supply.
Apparently, investors areselling rentals.
They couldn't get the people tomove in like they were
expecting them to.
Michael (15:45):
Yeah, and I wonder was it because rent was too high and
other people who wouldpotentially consider renting
there were just simply pricedout?
Because what I've been readingis that basically the places
that are available in Melbourneare not really desirable places.
People don't really want tolive there and especially and
(16:06):
the people that did were willingto live there aren't willing to
pay those prices and this justseems to be part of that
readjustment.
I wonder if that's part of it,like a bit of like consumer
psychology there.
Joe (16:16):
There is a bit of that.
There is the higher supply.
The locations where they arebuilding aren't as desirable,
but if you go to Melbourne CBD,every time I go to Melbourne CBD
there seems to be a new tower.
Oh okay, it's very different toSydney CBD because we have so
much.
Melbourne does have a lot ofheritage, but they also have
more space around the actual CBD.
Sydney's very twisty.
(16:36):
It's got a lot of hills.
So, it's not as easy to build inSydney, like Potts Point,
king's Cross, they literally hadto bring in a lockout law and
all these other things to beable to basically purchase these
properties.
To build apartments.
They had to kill the nightlife.
So they could do it.
They did, they basically did.
But Melbourne, as we could seenow, the supply in the CBD is
(16:58):
much higher than what it was inprevious years and we're
starting to see that acrossmultiple suburbs.
Are rents dropping in Melbourne?
Yes, they are, oh they are.
Melbourne's rents are droppingbecause investors are selling.
They're like no F this, I'm notmaking money.
The inner east dropped 4.4%.
Michael (17:15):
Yeah, sort of leading the charge in the drop.
I've only been to Melbourne theone time, really.
Yeah, surprisingly, I justnever had a reason to go.
I went for F1.
That's the only time I went andI was sick as a dog, so I
didn't really get to explore.
Joe (17:27):
You seem like a Melbourne transplant.
I know it all makes sense.
Michael (17:31):
It makes sense, but no.
Joe (17:32):
The hair, the glasses, the beard the hoodie, it's all there
but it's not nothing to look atwhat's happening down there.
Inner East is down 4.4%.
And this is Melbourne, innerEast, like Melbourne's within
Melbourne, the inner east ofMelbourne.
Tell it to me like it's.
Michael (17:50):
Sydney.
What's a roundabout area that Icould compare it to Haymarket,
haymarket, okay okay, broadway,it's like the inner west part,
yeah, yeah.
Okay.
Joe (18:03):
It's not the most desirable part of Melbourne, but it's
still.
It's up there.
Broadway isn't the mostdesirable part of Sydney, but
you're not expecting to get abargain.
Michael (18:07):
No, yeah, yeah, okay, I understand.
Joe (18:08):
So Melbourne's inner east dropping by 4.4%, the northeast
dropped by 1%, and that's monthon month.
If that continues, a propertycan lose some pretty significant
value pretty quickly, hence why, investors are selling.
Yeah, that's exactly right.
So that's a massive red flag.
And then the biggest one wasMornington Peninsula.
Michael (18:27):
I'd never heard of that place, but it's a big one.
Joe (18:30):
Mornington Peninsula dropped 9.7% in a month.
Michael (18:34):
Remember when I said earlier in this podcast that I
said oh, is that dramatic?
Yeah, this is.
Joe (18:38):
This is the dramatic one, because there was a lot of buzz
around Mornington Peninsula.
People were like, yeah, I'vegot to go buy Mornington
Peninsula, it's going to boom.
Was it like a Gold Coast thing?
Yeah, yeah, it had like a buzzabout it and everyone was so
excited to purchase there andthen it dropped 9.7%.
My personal idea around this isyou have to be really careful
(18:59):
and you have to reallyunderstand a CBD before you go
ahead and purchase and put yourhard-earned money in investing
in these areas, or whether youwant to live there, if you want
to live somewhere, and it drops1%.
But you know the area and youknow that there's more
development around.
They're going to be building.
They're going to be.
(19:19):
You know there's a new schoolcoming.
There's a new hospital coming.
There's a new highway they'regoing to be.
Michael (19:22):
You know there's a new school coming.
There's a new hospital coming.
There's a new highway Long-termlike reasons to stick around.
Joe (19:25):
You're sitting there and you're going okay, maybe it
dropped a percent.
I'm not going to sell becauseit dropped 1%, but if I'm
patient I could see the vision.
Yeah, If you're an investor andyou're not seeing these
locations every day, you're nothearing these conversations, Not
even in the same state yeah,that's exactly right.
And you hear that yourproperty's dropped 10%, I'm I'm
(19:45):
yet again shitting bricks.
You know like it's such a funnytime to be in the property
market in Australia and seeingthese cooling prices, seeing
every major city drop not dropas in losing value, but drop at
the rate that they're growing istelling me a lot.
It's telling me that, hey, theinterest rates being where they
(20:06):
are, it finally worked.
We're finally starting to seehousing values drop and we're
finally seeing people tightentheir back pockets.
And the number one result Iwant to see and this report
hasn't come out yet because itcomes out biannually, it comes
out at the end of the year andthen it comes out in the middle
of the year, so it's going tocome out in the next coming days
Okay, the retail spendingreport.
Michael (20:28):
Oh, yeah, yeah, yeah, because I've definitely been
spending a lot less, but that'sbeen for a while now.
Joe (20:34):
Yeah, you just recently purchased a property.
I'm looking at purchases andback in 2020 2021, when you know
, job keeper, job seeker werearound and everyone was just
buying anything from the iconicand stuff, just because like you
know, and my business was beingsupported by the government.
Yeah, and then, on the otherend of it, we also had.
We weren't traveling, I wasn'tspending money on petrol like I
(20:54):
was you couldn't leave the house, couldn't leave the house
couldn't leave the house formore than five kilometers, or
whatever it was all you had todo was online shop.
Michael (20:59):
That's a bigger problem than that's a bigger problem
than others.
Joe (21:02):
That's exactly right.
But you know, what we'refinally starting to see is the
overcorrection.
That's what I think hashappened.
I actually think it'sovercorrected.
We've gone too far.
We've gone too far in the sensethat building restrictions are
too high, interest rates are toohigh, cost of living is too
high.
There is one petrol stationdown the road from my house.
(21:22):
Okay, it's in a suburb calledPatstow.
Okay, this one petrol station,their petrol prices are always
20 cents less than the twopetrol stations ahead of it.
The traffic this one petrolstation causes every single day.
Michael (21:36):
It's got six pumps, everybody goes there because
it's 20 cents cheaper.
It's not a little bit cheaper?
Joe (21:42):
20 cents on a 50 liter tank is 10 bucks, are you the
mathematician?
Yeah, it's 10.
But guess what that 10 does?
That gets your kid an ice cream.
That gets you an ice cream.
That gets them a slushy.
Yeah, if you are a workingfamily, right now 10 is a lot of
money.
Yeah, three years ago, 10 wasis a lot of money.
Three years ago, $10 wasn't alot of money, and I've said it
(22:04):
time and time before money usedto be cheap.
Michael (22:07):
Borrowing money.
Do you want to explain to somepeople what you mean by that,
because I understand what youmean conceptually.
Joe (22:12):
So if I want to borrow $100 from you two years ago to pay
you back, it would cost me $102.
If I wanted to borrow moneyfrom you today $100, $.
If I wanted to borrow moneyfrom you today a hundred dollars
a hundred dollars would cost mea hundred six dollars.
Now that doesn't sound like alot in the grand scheme of
things, but if I've got amillion dollar mortgage okay, it
used to be twenty thousanddollars, yeah, now it's sixty
(22:33):
thousand dollars my wage hasn'tgone up by sixty thousand
dollars.
No, sorry, my wage hasn't goneup by forty thousand dollars.
Yeah, my wage has gone up threethousand dollars that time.
Michael (22:41):
So where are you supposed to find the extra cash?
Joe (22:43):
And it's across the board.
It's Coles Woolworths, it'severywhere, and I actually want
to hear what people have to say.
I want to know what they thinktheir predictions are for the
property market over the next 12months.
Is this going to be a trend?
Is this going to be somethingthat we're going to see
constantly, or is everyone justgoing to come back from Europe
(23:03):
and spend money again?
Michael (23:04):
I don't think so.
I think this will be a trendfor at least the next year or
something like that, I don'tknow, maybe longer, because I
just don't think.
Like we said before, it's justnot sustainable.
Where are people supposed toget this money, like some people
can?
Yeah, of course, maybe like 30%of the population, 40%, 50%,
but then what are the other 50%supposed to do?
Joe (23:24):
They are basically going to be living in rent and, as we've
said time and time again,living in rent is not the best
decision in the world, becausewhen you live in rent, your
destiny is controlled by someoneelse.
Michael (23:37):
You don't even have great rights to protect you as
well either.
Like if you get a good landlordor a good agent or property
manager or whatever, your lifewill be fine like a normal
person.
But there are terrible peoplein normal walks of life.
If you get a terrible person asa landlord who's not only after
(23:57):
like to make a buck but likedoesn't let you do this, doesn't
let you do that, but won't fixanything, won't do this, doesn't
let you do that but won't fixanything, won't do this, won't
do that.
I've heard horror stories.
Thankfully I've neverexperienced it.
But when I moved out afterpurchasing this place, we
switched property agents becausethe landlords live in America
so they don't really give a shitwhat's going on, really.
Yeah, so they were super chill.
(24:19):
They let us in for really cheapjust before it went nuts the
rent.
So we locked in a good ratebefore they could rise it.
It went up and everything.
But then when we left, theywere not satisfied with certain
aspects of our cleaning.
They weren't satisfied withcertain things and don't get me
wrong, I got my mum in there tohelp me clean.
My mum knows how to clean.
She's a walk, mum, yeah yeah, mymom knows how to clean.
(24:41):
She's a walk mom, so I I thequality of the clean was.
I was not like questioning it,but there were, there were dumb
things, so there was something Iwas worried about.
Actually worried about was thefly screen.
I had a cat in there a littlebit, a little bit torn the fly
screen, nothing major but alittle bit torn.
I'm like, okay, they're gonnaget me for that, but I'm I'm
willing to pay for that.
What they actually put in theproperty report was there are
(25:01):
water spots in the sink.
There's a mark behind thefridge.
You didn't take down a bathroomhook like a pull strip hook
that takes two seconds to takeoff, because in the mess of the
move we forgot the one littlehook.
Joe (25:12):
You didn't know if it was there before or thereafter.
Michael (25:14):
It just was just which was.
I didn't think it was a bigdeal either way.
Joe (25:19):
We made improvements.
You got a hook now.
Michael (25:23):
This is what I thought I'm adding value to this
property.
But that was when our propertymanager changed.
They gave a shit because we hada previous one and they were
like, yeah, this is fine, putthe cat in, put the paintings up
, all this sort of stuff.
They didn't care because weweren't destroying the place, we
were just living in itno-transcript.
(25:55):
As much as it sucks living withyour parents.
So that's the easiest way thatyou can save up for something,
because I mean, depending on ifyou have to, you know, pay board
or something, it doesn't reallymatter.
Even if it's board, it's goingto be cheaper than rent.
Yeah, you know, you don't haveto pay for food, you don't have
to pay for this, that and theother.
It's easier to not go.
Obviously, not going out is abig thing, but far out I felt
(26:22):
like I was playing catch up forthe rest until I got paid again,
which is not normally how itgoes, really Like just little
things, like just, yeah, Ididn't dip into my savings or
anything.
But it's also like I couldn'tlike buy a little like other
things.
Yeah, like I had to sacrificethings to go out, which for me,
it's like I don't really want tosacrifice, like paying for
groceries because I wanted to goout, which wasn't the case
(26:44):
because I live at home right now.
Joe (26:46):
I just hear all of these things.
Our wages aren't as high asAmerica, but our property values
are higher.
I hear time and time againpeople wanting to get in the
market.
They want to get in.
They can actually make theirrepayments.
I think the best advice I'mgoing to give to first-time
buyers and I've said this timeand time again look at these
prices dropping as a good thing,oh, 100%.
(27:07):
But don't get scared, Don'tthink to yourself property
prices are dropping.
Oh no, what was me?
I'm not going to get into themarket.
I would look at it and say tomyself now is the time for me to
buy, because when the interestrates finally drop which could
be six months, 12 months fromnow that is when I'm going to
experience a boom and that iswhen I'm going to be able to
(27:29):
accumulate some serious wealth.
Michael (27:30):
Oh yeah, property in Australia is I don't want to say
it's a safe bet, but man, it'sa pretty safe bet.
Joe (27:36):
It's a fairly safe bet.
It is.
It is.
I think this is not a trend.
It is.
I think this is not a trend.
This is a hiccup.
How long do you reckon thehiccup will last?
Michael (27:44):
though, until everyone's back from Europe.
You reckon it's only going tobe that long Interesting.
Joe (27:48):
I just think I see end of financial year come up.
Everyone's excited.
I want to buy, I want to buy, Iwant to buy.
We get a little bit of a lulleffect and save money.
That's it Right now.
It's just refinance save memoney, not anything else.
Not I want to buy more property, anything, it's refinance save
(28:10):
me more money.
I might get equity out becauseI want to buy something in the
long run To me, like the numbersin my head.
I always think to myself hey,just get the equity out so you
can buy something as soon as youcan.
At the end of the day, this isyour money, your livelihood, and
you don't want to make thosesacrifices.
And on that note, I do want tofinish this episode.
(28:30):
We could keep going for anotherhalf hour.
My name is Joe, that's I'm Shmo, and if you need any assistance
with your home loans,no-transcript.
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