July 29, 2025 • 31 mins
So the story goes, you buy inside the 'zone' of a top public school and your property purchase can only be a winner. Well actually... the numbers don't really say that: In fact, as an investor you may do better somewhere else!
Eliza Owen, head of research at Cotality Australia, joins Associate Editor - Wealth, James Kirby in this episode.
In today's show, we cover:
- Are public school zones hot property or not?
- School fees versus property price premiums
- Underquoting is back with a vengeance
- Downsizing into apartments
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hello and welcome to the Australians Money Puzzle Podcast. I'm
James Kirby. Welcome aboard everybody, Well, welcome aboard. Eliza Owen
my guest today, regular on this show. Delighted to have
Eliza come into the studio. How are you, Eliza?
Speaker 2 (00:24):
Really good? It's great to be here. It's great to
see you in.
Speaker 1 (00:26):
Person, isn't it. Yeah, well, I don't know if it's
great to see me in person, but it's nice to
do so. As you know, folks, Eliza's been on the
show regularly and we always have very interesting discussions about
properly because she's right across it working for the Toutality
Group formerly core Logic. Now what cut my eye was
(00:47):
She's done a deep dive and I've never seen this
done before on this What will we call it? Is
it a suburban myth? Maybe it is a suburban myth
on the back of your figures. That's how in private
school zones, public school zones, I'm sorry, posh school zones,
we can see do very well and that they are
(01:08):
a sort of secret, sort of gold mine of the
property sector. Everyone assumed that I reckon it was true once.
Is it still true?
Speaker 2 (01:17):
This is a great question, and it's probably worth just
doing a little bit of background on where we were
coming at from with this research. The background was that
we developed this new tool where we could essentially create
custom boundaries, draw a circle on a map of the
property market, and analyze all the properties within that. So
we applied it to school zones where we identified top
(01:41):
performing public school zones so that we could answer this question,
is it worth paying premiums on houses in these top
performing public schools to save on private school fees and
the kind of cost benefit of that. So we found yes,
it probably is worthwhile in most markets to be paying
(02:04):
a premium anywhere between fifty thousand dollars all the way
up to one point two million dollars, which I'll come
back to in a second, but you'll be paying potentially
hundreds of thousands of dollars on school fees, and where
real mortgage payments go down over time, school fees tend
to go up and up and up. Plus you're getting
the benefit of a really solid education.
Speaker 1 (02:26):
But so it sounds to me that if it's true
still that as a property investment, a property inside a
top school zone is a good asset it's true, but
it's a closer on thing that you had to actually
go deep in. You had to look at everything. You
(02:47):
had to subtract, as such the school fees that person
might be paying over a long period of time and
on balance, whereas once upon a time, I imagine it
was a knockout. Is the reason there's such a premium.
Do you think there was a period where these zones
really and that they've run so high now that there
isn't much left in it? Because it seems to me
that you found in Sydney and Melbourne school zones often
(03:07):
the capital growth was actually weaker than the rest of
the city. Explain what happened there?
Speaker 2 (03:13):
So this was the big catch right. We could look
at the median house values in and outside of the catchments,
but we could also look at the capital growth trend
long term, and that turned out to be weaker.
Speaker 1 (03:23):
When you say long term, how long is that?
Speaker 2 (03:25):
So we looked at a fifteen year period and for
six of the nine areas that we analyzed, we found
that the fifteen year capital growth was lower than outside
the catchments. We don't really know why exactly, but we
think it could be linked to an affordability issue. These
areas inside catchments. Not all of them, by the way,
(03:46):
not all the areas we analyzed had a premium, but
most of them did, and we think that because they're
just inherently higher, it's harder for them to accrue more
value over time.
Speaker 1 (03:57):
Yes, they've reached it, perhaps reached something of a ceiling.
So if you were to buy something in these school zones,
the first thing is they're much dearer than surrounding properties
for like for like. Secondly, the growth is weaker over
fifteen years than outside. So really it seems to me
(04:17):
you'd want to have kids in schools as an investor,
it mightn't really stack up absolutely.
Speaker 2 (04:24):
It really comes down to your individual cost benefit analysis,
which is going to include your education goals. But another
catch that we found with this analysis is that if
we're looking at just public schools that are not selective,
then the schools we looked at Epping Boys, Cheltenham Girls
in Sydney, Princess Hill in Melbourne, for example, they rank
(04:46):
really well within public schools that are not selective, but
when you start doing the rankings by all schools, they
fall right down the list. So even if you pay
those premiums. You not necessarily going to be ranking in
the top ten or twenty when it comes to HSC
and VC results. That's something to keep in mind as well.
And it's kind of an unfortunate statement about the equality
(05:10):
of you know, education quality across the.
Speaker 1 (05:12):
The schools that serves. They change. Yes, school that's a
great school is not necessarily a great school ten years later.
Speaker 2 (05:17):
Well, one of the more positive stories we found was
Elizabeth Murdock, for example, which has actually been rising through
the rankings, so that had outperformed in terms of capital
growth and the premium wasn't even as high at about
fifty thousand dollars. So there were some good news stories
that emerged from it as well. But hopefully it's useful
for house hunters in that young family stage of life
(05:41):
to help them realize, you know, whether it's going to
be the best decision for them to buy in or
out of the catchments.
Speaker 1 (05:46):
So it works well, it would seem to work well
for homeowners that are using the schools, and obviously the
more kids you haven't the school, the better. These exact true,
all fine, but from an investment point of view, then
what about years did you look at that at all
inside that ranger, I think we found out about renting
in that area.
Speaker 2 (06:05):
Yeah, so we had a look at rent values over
time as well. Each of the areas, or most of
the areas that we analyzed, had a premium on rents,
and that premium on rents averaged about three and a
half thousand dollars a year. So again, if you're making
that cost benefited analysis when it comes to schooling, I'd
say it's still worthwhile renting within the catchments that we
(06:25):
looked at, because most private schools are going to be
starting at least three and a half grand a year.
So depending again on how you treat education, how you
value education, that could be worthwhile. One of the things
that's really worth noting about this analysis, and this is
where I come back to that one point two million
(06:45):
premium I talked about earlier. This was for a pocket
of Sydney's North Shore where you had a cluster of
Cholara High, Willoughby Girls and Linfield Learning Village, But all
the catchments also encompass a lot of the North Shore
train line. We weren't controlling for other factors here, so
that could be another reason there's a premium in that area.
Speaker 1 (07:08):
Okay, Yes, of course, it's not just the school, Okay.
Was there any evidence that the volume of rental property
in the school catchment zones was higher than the zones
outside the schools.
Speaker 2 (07:20):
We didn't look at the volume, but we did look
at trends like time on market, selling times, whole periods.
Conditions were generally tighter within the catchments. There's all sorts
of housing techniques that people have used to try and
get their kids into these catchments, into good schools. Unfortunately,
(07:41):
there's even been cases of fraud.
Speaker 1 (07:43):
Of course, family address or whatever.
Speaker 2 (07:47):
Which I think to me ultimately screams for the need
to kind of uplift the education standards in other areas
of the city so you don't get such housing pressure
in those catchments.
Speaker 1 (07:57):
And there's also something of a jerry wondering that can
happen in the schools because they can change their zones,
can't they. It's their right to do whatever they like,
and if they want to snip out a neighborhood they can,
and you can't take them to corder or anything if
you bought a house in that district. Well.
Speaker 2 (08:14):
I also thought it was interesting that Doncaster, which was
a really high performing school in the VCE. They established
a second campus so that they could expand their school
zones and that ended up creating an uplift in price
premiums in those some of those suburbs as well. So
it's fascinating the interlink between the two. Another really interesting
(08:37):
one was Cherrybrook Tech, which a lot of people talk
about in Sydney as one that increases house value. That
wasn't the case. We actually found that it sat about
one hundred and fifty thousand dollars under the medium of
surrounding houses.
Speaker 1 (08:50):
Hy on a straight price straight price comparison.
Speaker 2 (08:54):
Yeah, so again just coming back to the methodology part
of it was basically we looked at the school zone
as if was one housing market, and then we compared
it with houses in the same suburb that were outside
of the catchment. So we get a little bit of
a like for like. But the reality is outside the
Cherrybrook Tech catchment, you have new metro stations, you have
(09:15):
houses that are probably larger, including in dural which is
this kind of you know, you get more estate housing
outside the catchment there, so that probably drags up the
median as well. So there's a lot of things to
take into account when you're looking at some of these areas.
Speaker 1 (09:29):
Gee's fascinating though, I mean, it really is, and I
can you know, I know that it's a big game
in both Melbourne and Sydney particularly, but in all cities
about the housing whether to make the effort to buy
inside the school zone. And it's interesting. I mean, tell
me if I'm wrong, but it would seem in conclusion
on your report, which is a terrific exercise that, as
(09:50):
I say, I've never seen done before that for homeowners
using the schools on balance over a long period of
time parannum, there is probably and that the clearity is
an advantage. But for investors, the capital prices are so high,
and they're higher right than the neighborhoods outside generally, so
(10:12):
so you're as an investment option, it's doesn't necessarily seem
to appear better.
Speaker 2 (10:20):
No, I would say if you're looking at this from
an investment perspective, you might be better off looking at
other amenities, such as new infrastructure that's going in so
you can capture the value before it's established. We're actually
seeing a lot of that in Sydney with the establishment
of the Metro West and the metro airport lines. Some
of our fastest capital growth in the city across the
(10:42):
market is occurring in those areas where they're awaiting those
metro lines to be established. So maybe better off looking
at something like that than an established good school zone
from an investment perspective.
Speaker 1 (10:55):
Interesting. Yeah, and Velbrunt Similarly the tunnel, which obviously is
going to go across to the West Sidney. Some of
those suburbs are quite are red hot actually already, and
I'm sure that's the factor that I haven't seen any
sort of deep research work like you've done here. Terrific. Okay,
we'll take short break. We'll be back in a moment.
We've got some very interesting issues you want to deal with,
including the nasty business of under quoting, which I'm afraid
(11:19):
is back with us. Hello, Welcome back to The Australian's
Money Puzzle podcast. James Kirby talking to regular guests Eliza
Owen of the Cautality property group, which you probably knew
(11:42):
as core logic now under quoting. I did something on this,
so we have it in the Wealth section of The
Australian this week, and it's worth I would say humbly
that it's worth looking at for the simple reason that
there does seem to be does seem to be an issue.
And one of the more interesting observations was by Anysa Cavello,
who will be on the show By the Way next week.
(12:02):
She's a property buyer's advocate based in Melbourne and she,
like everyone in the story, she said, yes, it's happening,
but in a sort of fiercely pragmatic passion. She also said,
it's proof that the market is rebounding. Underquoting. It seems
to be a real issue in a rising market, particularly
at the entry level. Entry lever seems to be the
(12:23):
part when everyone's got the toughest, doesn't it. Really.
Speaker 2 (12:27):
I think it's really hard. As you say, at an
inflection point in the market when it's rising, kind of
compounds the issue because on top of potential underquoting, you've
got unintentional underquoting where the market is just moving faster
than where people think the market is. I know from
the first home buyer experience, it's just kind of a
part of the process and unfortunately a bit of a
(12:49):
humiliation when you understand that the listing price isn't representative
of what a property is necessarily going to go.
Speaker 1 (12:57):
For isn't there laws against it?
Speaker 2 (13:00):
Yeah, there definitely is, but I think that it can
be maybe difficult to bear out and potentially also a
lack of complaints, And this is something that I think
was in your eyes.
Speaker 1 (13:14):
People don't complain because they just move on. They just
move on to share. Well, that's it, you know, we
go to the next auction next.
Speaker 2 (13:21):
They accept it as a function of the market, which
is really weird because you don't see it in other transactions.
But I think fair trading so far this year in
New South Wales has received one hundred and twenty five
complaints about under quoting. In the year to date for
New South Wales there's been seventy four thousand sales. So
that gives you a sense in.
Speaker 1 (13:42):
The ocean, you know, exactly so, but yeah, so it
probably not indicative of the issue.
Speaker 2 (13:47):
Potentially not. And I guess that's the thing. If you
do think that an agent has misrepresented what the property
was going to go for, maybe it is worth looking
at fair trading and making a complaint. But I think
think it's also really worthwhile as a buyer to arm
yourself with comparable sales information, right, Yeah, yeah, or the
valuation that you can see on listings. Sometimes if it's
(14:09):
not suppressed, or even if you have apidata, you can
look it up there and just.
Speaker 1 (14:13):
Use your common sense. I mean, if you're talking to
an agent and they're saying, okay, well, the range on
this is let's pick a number. Okay, the range on
this is eight fifty to nine hundred, and last weekend
you saw several similar properties that all went for over
a million, then that is not the price that's going
to go for whatever that agent is saying. And I
find if you quiz the agent, they'll say this is
(14:36):
the They're careful. They're all careful not to be seen
as overcoating. So what their defense would be is they
will say, this was the figure that we agreed in
the kitchen two months ago when I sat down with
these people for the first time, and they don't change it.
But I would like you to explain what is really
not the downside of all this. I mean, the obvious
(14:59):
downside is that people waste their time, and it's not
just wasting their time and people trying to buy a home,
you're trying to imagine living there. But I think the
worst part of it is that people are used as
cannon fodd are really at auctions, aren't they? So they
turn up all they've done all this work, as Louis
Christopher was saying in the story, they've done their pest
inspections and their size inspections, and they're sitting there like innocently,
(15:20):
and you know, the auction opens and they're gone. They're
knocked out in minutes. So that's the downside I think
of it.
Speaker 2 (15:27):
I agree. I guess I've never really understood the upside.
To be honest, I would have thought it'd be more efficient.
Speaker 1 (15:33):
There is no real lopside. It distorts the market. I mean,
someone wins this one. The seller wins, I suppose because
perhaps they had a perhaps they had a livelier auction
than they might have had. But that's about it.
Speaker 2 (15:45):
Really. Yeah, perhaps you create more of a sense of
urgency for the buyers that are eligible to get the property.
But as you say, the downside is the financial, temporal
and emotional investment that people are making in the property journey.
And it is a bit of a rite of passage
when you're a first home buyer in Australia to set
to revise your expectations. We have a tool if you
(16:08):
google it, it's just mapping the market catality. You can
actually see median house and unit values by suburb. Even
going into that and saying, okay, what are the suburbs
that are ten twenty percent below my budget? That's probably
where I'm going to have a lot more control in
the buying process.
Speaker 1 (16:26):
Allowing for the price ranged to be ten or twenty
percent under.
Speaker 2 (16:30):
That's what I range speaking from a person.
Speaker 1 (16:34):
Such a low and then you've got less likely to
be disappointed. Yeah, I think so.
Speaker 2 (16:40):
But even as someone who'd been researching the property market
for years and years, I still had to go through
that same revision of.
Speaker 1 (16:46):
My own and you know, you know more than most.
Speaker 2 (16:48):
I went into some ouctions quite hopeful, but that arm
yourself with comparable sales that have happened recently take into account,
and hey, if you've got the money, why not get
some buyer representation as.
Speaker 1 (17:00):
Well an advocate at the auction for you. Yes. Absolutely,
And look, the one thing that I think all the
listeners would know is that this used to be very hard.
To find out what the comparable sales were. You had
to go down to the titles office, and you can
do it in two seconds, souse, use those tools all right?
I think since I have you in the studio, I
wanted to ask you all a two other quick questions, just observations. Really,
(17:21):
we talked some time ago and we had a very
interesting discussion, and I did the story which was one
of the more interesting ones I thought in Property of
the Year so far from me, which was about the
apartment people losing money in apartments. One in five apartments
selling at a loss inside of Melbourne. Ninety percent of
loss making sales of dwellings in Sydney being apartments, a
real weakness in that market, and you mentioned and you
(17:43):
showed how it was weak for years now. I've just
discovered recently that you know, coming up to half of
all apartment buyers are downsizers, and downsizers invariably are selling
a home, so there they've got much more money than
the average apartment buyer. But I just wonder if that
cohort then is more exposed than we might have realized
(18:04):
to these weak apartment prices. If the people are that
core hord that are setting the family home and moving
into apartments, if apartment prices are so weak, are they exposed?
Speaker 2 (18:14):
This is such a good question, because if you look
at the performance in houses and units over time, annualized
growth over the past decade has been about six percent
for houses compared to just three percent for you.
Speaker 1 (18:28):
And it's mortari on it's six percent, isn't it exactly?
Speaker 2 (18:31):
But I guess it's worth making the distinction between apartments
that are likely to sell for a loss versus apartments
that downsizes would be targeting. A lot of those loss
making sales we talk about are skewed by a very
specific kind of development that went up throughout the twenty
tens when investors were very active in the market, and
(18:52):
they were I would say somewhat investor gradestock a lot
of them, not necessarily the kinds of things that are
downsizer would be targeted. So there aren't markets where units
actually outperform houses where you'd have to imagine cashed up
downsizes might be interested in. Like Maruci in the Sunshine
(19:13):
Coast region, annualized growth for units is eight percent in
the past decade compared to seven percent for houses.
Speaker 1 (19:19):
Is that right? So these are a tree change beauty
spots basically where retirees flocked too, So we can guess
the rest for sure. So we can guess the suburbs
around the country, won't them off. Yeah.
Speaker 2 (19:30):
Yeah, So that's a really important distinction to make, is
that the apartment stock is shaped by demand, and if
demand is coming from cashed up boomers, then you're going
to get some really nice stock. And I actually think
that's really exciting.
Speaker 1 (19:45):
They're not going to buy an anonymous apartment on the
twenty second floor of an anonymous tower in the middle
of the city, probably probably, And even if.
Speaker 2 (19:55):
They do, even if they buy something that doesn't return
a lot of capital growth by the time you're downsizing.
Is high capital growth really one of your goals financially?
Maybe it is, But I think you've got to make
a compromise between what's a high growth asset and what's
a suitable home for you to live in. In most cases,
you're not going to make as much money off an
(20:15):
apartment as a house because house has the associated land,
which is where most of the value is coming from.
But if you're at a stage of life where a
house is just too difficult for you to maintain, then
you're risking some of the appreciation on the actual house itself,
you know. So there's a compromise that's got to be made,
and hopefully you can strike a good balance between a
(20:37):
sound investment and something that's also manageable and enjoyable for.
Speaker 1 (20:41):
You to live. Okay, So as you say a good
point that it's not a strictly financial and economic move,
it's a lifestyle move, and then we have to sort
of apply a different criteria, okay. And just one of
the quick thing about property looking forward, a lot of
talk about tax now. Every single tax summit of that
(21:02):
nature when the government have them, they have them to
see if they can get some support for tax changes,
and it would seem the big items on the agenda
are capital gains tax reform, which would play straight into
property trading if you like, or property sales. Immediately, all
property sales would not be as lucrative because they're talking
about winding back capital gains tax benefits if you like.
(21:26):
Also some talking about access to the pension again that's
linked with the price of a family home. And then
we have the new supertax, which again will kick property
holders first, I think because they're the most illiquid and
that they're sitting ducks really in an unrealized gains tax.
It seems to me that there's a sense perhaps that
whatever way it moves, it's property that's going to get
(21:46):
it in the neck if there's tax changes, what do you.
Speaker 2 (21:50):
Think, Yeah, I think it's a real possibility. And we've
you know, I've seen the pendulum kind of swing both
ways on housing affordability and what we need to do
to dress housing. Twenty twenty one, we had the inquiry
into housing affordability and supply was very supply focused. I
think now we've got the pendulum swinging more towards demand
for a few reasons in that there's more there's a
(22:14):
gradual decline in home ownership. There's a recognition even from
property owners who are trying to help their kids into
the housing market. They're recognizing how difficult it is, and
also supply constraints. There's only so much we can do
to affect supply when cyclically we've got a bunch of
dwellings stuck in the pipeline that continue to place this
(22:35):
strain on labor and material costs. So eventually you've got
to look at demand, and a lot of that demand
side comes from the tax space. So I think the
pendulum is swinging. I think we've moved a long way
from twenty nineteen, when capital gains negative gearing was smacked
down at the face it was untouchable. Yes, society is
reactive and we have to remember that property operates within
(22:58):
a reactive institution and it is subject to change, and
we don't rule it out.
Speaker 1 (23:03):
Okay, very interesting. I expect you're I expect you're right.
It'll be really interesting to see which taxes do come through.
But it seemed to me that when you look at
all the suggestions and the submissions, the common denominators, invariably
property is right in the middle of that. Okay, we'll
be back with some questions, some of which are quite
properly focused in a moment. Hello, Welcome back to the
(23:38):
Australians Money Puzzle podcast. I'm James Kirby talking to Eliza
Owen of the Cautality Group Property Research House. I'm sure
you're familiar with it now. As a question from let's
post the first one from Bruce who says about that
discussion on capital gains tax discount, I accept that fifty
percent was introduced to these complexity, but surely with modern
(24:00):
computing power it would be relatively easy to adjust CGT
for inflation and to throw a cat amongst the pigeons.
Some may argue that other forms of income are not indexed,
so why should CGT get this break? Okay, great question, Bruce.
Two parts to it. One is that the original explanation,
(24:20):
the original I think it was John Howard and his
solution about inflation and indexing and everything else around CGT
was to introduce this discount, basically a permanent discount, which
meant if you held a property or any other asset
for more than a year and you sold it, there
was a fifty percent discount on the capital against tax,
which like if your salary owner works out at something
(24:42):
like your what your tax is on your salary now,
so it comes in maybe twenty twenty something percent. Now.
He then adds that the logic for it was indexing,
So why don't they just index it? Again? Well, I'm
which you, Bruce, why don't to index everything? But of
course they don't. They some things, they don't index other things,
and that is how they Actually that's a policy lever
(25:04):
and that's not going to change. So for instance, oh hey,
well the new supertax is and indexed, for instance, but
the pension's indexed twice a year, so you get all
those sort of variations. What do you think about his
basic contention that does not need to have the discount
at all.
Speaker 2 (25:19):
I think indexation is a great idea, Yeah, for sure.
Speaker 1 (25:25):
I think it was.
Speaker 2 (25:25):
Lucy Ellis a few years ago made this really elegant
argument that you could discount capital gains by two and
a half percent a year the mid range of the
inflation target over the.
Speaker 1 (25:36):
Long term, and you'll be doing the same thing from
a policy perspective.
Speaker 2 (25:38):
Yeah, and that could be a really interesting way to
wind back what is largely considered an overly generous capital
gains discount on windfalls. I also think it could have
better housing outcomes, because if you look at periods of
windfall capital gain, we actually see a spike in short
term selling, which can be disruptive to renters because people
(26:00):
are bought in. They've made, you know, a few hundred
thousand dollars their property. Yeah, exactly one year before you
get a fifty percent discount on capital gains. Come on, man,
that doesn't seem fair to me. Have them hold the
property for longer, and you can incentivize that through a
gradual indexation of the of the capital gain. I'm not
(26:21):
sure about the computational capability required to adjust for inflation.
But I agree with the Bruce. I think you'd have
to imagine that the technology and the data we have
is a lot more sophisticated to do that.
Speaker 1 (26:32):
Now, Absolutely you would. Yeah, I mean, the only thing
would be getting it past the people who had a
miserable rental yield and finally cuts some cafital gains and
thought they were going to get a fift percent discount,
but they're probably brand fathered.
Speaker 2 (26:44):
Yeah, that's a really good point.
Speaker 1 (26:45):
Yeah, all these things are generally If you didn't, I mean,
there would be there would be a lot of trouble
I with think politically. Okay, but thank you, Bruce. This
is always information only, not advice, of course. Okay, Melissa,
Hello Melissa, what are your feelings about income protection and
life insurance paid from within superannuation. I've left it late
to consider insurance, and now that I have my first child,
(27:06):
I'm refocusing on my priorities. Okay, Well, very broadly, and
this is for all the Melissas in the world. It's
not an individual piece of advice. But paying your life
insurance inside your super probably makes a lot of sense
because you're super fun unless you have an SMSF and
you haven't said so, your big super fund will get
a much better deal on life insurance than you will
(27:28):
as an individual should you call up one of the
big life insurers and try and do a deal with them.
So it is one of the advantages of having yourself
in a big super fund. Income protection insurance I put
to one side. To be honest, that's a whole debate
about whether you ever needed and at what point you
needed and where you need it. It costs a lot,
I know that, and I might just put that one
to one side. But on the life insurance broadly, for
(27:51):
most of the time you get a better deal. It's
inside your super fund, all right. And David says, you
claim that you can negatively gear shares as easily as
you can negatively gear property, and that's inaccurate for three reasons.
Margin loans of higher interest margin loans are subject to
margin cause margin loans offer lv or as compared with property. Yes, okay, David, True. However,
(28:16):
you don't have to be It doesn't have to be
a margin loan. It doesn't always have to be a
margin loan to negatively gear shares. So I suppose the
first thing I wanted to talk about with you, Eliaiah
is it is a funny thing that you can negatively
gear shares of property. And for a long time they
were both negatively geared, and there was they were commonly
negatively geared. And then around the gfcch a while ago,
(28:40):
I admit, the whole thing of negative gearing shares was
just like forgotten. It was just like pushed to one side,
too dangerous. But everyone said, yeah, I keep going on
the property. So there seems to be a cultural acceptance
that you can negatively gear property but not shares, but
you can do both.
Speaker 2 (28:57):
Is that because shares were rising so consistently posted to
you with lower interest.
Speaker 1 (29:01):
Right pre GFC. Yeah, yeah, yeah, there was a long
there was, there was a long good spell. Yeah, absolutely,
very a.
Speaker 2 (29:07):
Bit out of my wheelhouse here now that way, you've
mentioned shares, not property.
Speaker 1 (29:11):
But it fell. But as we often mentioned and recall
on the show, shares fell fifty in two OA two
oh nine. Now that hurts a lot of people. But
to David's point, David and anyone who's interested in this,
you can negatively gear shares number one, number two. Yes,
margins are are common but they are not the only
way that you can borrow to buy shares and negatively gear.
(29:35):
There's all sorts of structured products, equity builders and all
the sort of thing out there from the banks. There
is also just general loans of a various type where
you can just get a loan, and of course how
you gear is up to you. I mean, some people
use their mortgage if their spare capacity on that. That's
obviously the only negative there is. The lower the rate
(29:55):
you pay, the lesser negative gearing sort of works. But
I'm just making the point that yes, you can negatively
gear into shares, and it doesn't have to be margin loanes.
I'll take your point, David that margin loanes have all
those issues, but you can do it outside margin doones.
We might come back to this another time when we
have someone more willing to wade in, sorry David, of
(30:19):
share trading, which obviously we couldn't possibly ask Eliza Oh
to do because she is a property expert and has
been terrific on the show today. Thanks at Elizah.
Speaker 2 (30:27):
You thanks so much for having me.
Speaker 1 (30:29):
Really good to have you in the studio and lovely
to talk, as I say, face to face. We'll do
it as often as we can on the show. Okay, folks,
keep those emails rolling. The money puzzle at the Australian
dot com dot au talk to you soon.
Hello and welcome to the Australians Money Puzzle Podcast. I'm
James Kirby. Welcome aboard everybody, Well, welcome aboard. Eliza Owen
my guest today, regular on this show. Delighted to have
Eliza come into the studio. How are you, Eliza?
Speaker 2 (00:24):
Really good? It's great to be here. It's great to
see you in.
Speaker 1 (00:26):
Person, isn't it. Yeah, well, I don't know if it's
great to see me in person, but it's nice to
do so. As you know, folks, Eliza's been on the
show regularly and we always have very interesting discussions about
properly because she's right across it working for the Toutality
Group formerly core Logic. Now what cut my eye was
(00:47):
She's done a deep dive and I've never seen this
done before on this What will we call it? Is
it a suburban myth? Maybe it is a suburban myth
on the back of your figures. That's how in private
school zones, public school zones, I'm sorry, posh school zones,
we can see do very well and that they are
(01:08):
a sort of secret, sort of gold mine of the
property sector. Everyone assumed that I reckon it was true once.
Is it still true?
Speaker 2 (01:17):
This is a great question, and it's probably worth just
doing a little bit of background on where we were
coming at from with this research. The background was that
we developed this new tool where we could essentially create
custom boundaries, draw a circle on a map of the
property market, and analyze all the properties within that. So
we applied it to school zones where we identified top
(01:41):
performing public school zones so that we could answer this question,
is it worth paying premiums on houses in these top
performing public schools to save on private school fees and
the kind of cost benefit of that. So we found yes,
it probably is worthwhile in most markets to be paying
(02:04):
a premium anywhere between fifty thousand dollars all the way
up to one point two million dollars, which I'll come
back to in a second, but you'll be paying potentially
hundreds of thousands of dollars on school fees, and where
real mortgage payments go down over time, school fees tend
to go up and up and up. Plus you're getting
the benefit of a really solid education.
Speaker 1 (02:26):
But so it sounds to me that if it's true
still that as a property investment, a property inside a
top school zone is a good asset it's true, but
it's a closer on thing that you had to actually
go deep in. You had to look at everything. You
(02:47):
had to subtract, as such the school fees that person
might be paying over a long period of time and
on balance, whereas once upon a time, I imagine it
was a knockout. Is the reason there's such a premium.
Do you think there was a period where these zones
really and that they've run so high now that there
isn't much left in it? Because it seems to me
that you found in Sydney and Melbourne school zones often
(03:07):
the capital growth was actually weaker than the rest of
the city. Explain what happened there?
Speaker 2 (03:13):
So this was the big catch right. We could look
at the median house values in and outside of the catchments,
but we could also look at the capital growth trend
long term, and that turned out to be weaker.
Speaker 1 (03:23):
When you say long term, how long is that?
Speaker 2 (03:25):
So we looked at a fifteen year period and for
six of the nine areas that we analyzed, we found
that the fifteen year capital growth was lower than outside
the catchments. We don't really know why exactly, but we
think it could be linked to an affordability issue. These
areas inside catchments. Not all of them, by the way,
(03:46):
not all the areas we analyzed had a premium, but
most of them did, and we think that because they're
just inherently higher, it's harder for them to accrue more
value over time.
Speaker 1 (03:57):
Yes, they've reached it, perhaps reached something of a ceiling.
So if you were to buy something in these school zones,
the first thing is they're much dearer than surrounding properties
for like for like. Secondly, the growth is weaker over
fifteen years than outside. So really it seems to me
(04:17):
you'd want to have kids in schools as an investor,
it mightn't really stack up absolutely.
Speaker 2 (04:24):
It really comes down to your individual cost benefit analysis,
which is going to include your education goals. But another
catch that we found with this analysis is that if
we're looking at just public schools that are not selective,
then the schools we looked at Epping Boys, Cheltenham Girls
in Sydney, Princess Hill in Melbourne, for example, they rank
(04:46):
really well within public schools that are not selective, but
when you start doing the rankings by all schools, they
fall right down the list. So even if you pay
those premiums. You not necessarily going to be ranking in
the top ten or twenty when it comes to HSC
and VC results. That's something to keep in mind as well.
And it's kind of an unfortunate statement about the equality
(05:10):
of you know, education quality across the.
Speaker 1 (05:12):
The schools that serves. They change. Yes, school that's a
great school is not necessarily a great school ten years later.
Speaker 2 (05:17):
Well, one of the more positive stories we found was
Elizabeth Murdock, for example, which has actually been rising through
the rankings, so that had outperformed in terms of capital
growth and the premium wasn't even as high at about
fifty thousand dollars. So there were some good news stories
that emerged from it as well. But hopefully it's useful
for house hunters in that young family stage of life
(05:41):
to help them realize, you know, whether it's going to
be the best decision for them to buy in or
out of the catchments.
Speaker 1 (05:46):
So it works well, it would seem to work well
for homeowners that are using the schools, and obviously the
more kids you haven't the school, the better. These exact true,
all fine, but from an investment point of view, then
what about years did you look at that at all
inside that ranger, I think we found out about renting
in that area.
Speaker 2 (06:05):
Yeah, so we had a look at rent values over
time as well. Each of the areas, or most of
the areas that we analyzed, had a premium on rents,
and that premium on rents averaged about three and a
half thousand dollars a year. So again, if you're making
that cost benefited analysis when it comes to schooling, I'd
say it's still worthwhile renting within the catchments that we
(06:25):
looked at, because most private schools are going to be
starting at least three and a half grand a year.
So depending again on how you treat education, how you
value education, that could be worthwhile. One of the things
that's really worth noting about this analysis, and this is
where I come back to that one point two million
(06:45):
premium I talked about earlier. This was for a pocket
of Sydney's North Shore where you had a cluster of
Cholara High, Willoughby Girls and Linfield Learning Village, But all
the catchments also encompass a lot of the North Shore
train line. We weren't controlling for other factors here, so
that could be another reason there's a premium in that area.
Speaker 1 (07:08):
Okay, Yes, of course, it's not just the school, Okay.
Was there any evidence that the volume of rental property
in the school catchment zones was higher than the zones
outside the schools.
Speaker 2 (07:20):
We didn't look at the volume, but we did look
at trends like time on market, selling times, whole periods.
Conditions were generally tighter within the catchments. There's all sorts
of housing techniques that people have used to try and
get their kids into these catchments, into good schools. Unfortunately,
(07:41):
there's even been cases of fraud.
Speaker 1 (07:43):
Of course, family address or whatever.
Speaker 2 (07:47):
Which I think to me ultimately screams for the need
to kind of uplift the education standards in other areas
of the city so you don't get such housing pressure
in those catchments.
Speaker 1 (07:57):
And there's also something of a jerry wondering that can
happen in the schools because they can change their zones,
can't they. It's their right to do whatever they like,
and if they want to snip out a neighborhood they can,
and you can't take them to corder or anything if
you bought a house in that district. Well.
Speaker 2 (08:14):
I also thought it was interesting that Doncaster, which was
a really high performing school in the VCE. They established
a second campus so that they could expand their school
zones and that ended up creating an uplift in price
premiums in those some of those suburbs as well. So
it's fascinating the interlink between the two. Another really interesting
(08:37):
one was Cherrybrook Tech, which a lot of people talk
about in Sydney as one that increases house value. That
wasn't the case. We actually found that it sat about
one hundred and fifty thousand dollars under the medium of
surrounding houses.
Speaker 1 (08:50):
Hy on a straight price straight price comparison.
Speaker 2 (08:54):
Yeah, so again just coming back to the methodology part
of it was basically we looked at the school zone
as if was one housing market, and then we compared
it with houses in the same suburb that were outside
of the catchment. So we get a little bit of
a like for like. But the reality is outside the
Cherrybrook Tech catchment, you have new metro stations, you have
(09:15):
houses that are probably larger, including in dural which is
this kind of you know, you get more estate housing
outside the catchment there, so that probably drags up the
median as well. So there's a lot of things to
take into account when you're looking at some of these areas.
Speaker 1 (09:29):
Gee's fascinating though, I mean, it really is, and I
can you know, I know that it's a big game
in both Melbourne and Sydney particularly, but in all cities
about the housing whether to make the effort to buy
inside the school zone. And it's interesting. I mean, tell
me if I'm wrong, but it would seem in conclusion
on your report, which is a terrific exercise that, as
(09:50):
I say, I've never seen done before that for homeowners
using the schools on balance over a long period of
time parannum, there is probably and that the clearity is
an advantage. But for investors, the capital prices are so high,
and they're higher right than the neighborhoods outside generally, so
(10:12):
so you're as an investment option, it's doesn't necessarily seem
to appear better.
Speaker 2 (10:20):
No, I would say if you're looking at this from
an investment perspective, you might be better off looking at
other amenities, such as new infrastructure that's going in so
you can capture the value before it's established. We're actually
seeing a lot of that in Sydney with the establishment
of the Metro West and the metro airport lines. Some
of our fastest capital growth in the city across the
(10:42):
market is occurring in those areas where they're awaiting those
metro lines to be established. So maybe better off looking
at something like that than an established good school zone
from an investment perspective.
Speaker 1 (10:55):
Interesting. Yeah, and Velbrunt Similarly the tunnel, which obviously is
going to go across to the West Sidney. Some of
those suburbs are quite are red hot actually already, and
I'm sure that's the factor that I haven't seen any
sort of deep research work like you've done here. Terrific. Okay,
we'll take short break. We'll be back in a moment.
We've got some very interesting issues you want to deal with,
including the nasty business of under quoting, which I'm afraid
(11:19):
is back with us. Hello, Welcome back to The Australian's
Money Puzzle podcast. James Kirby talking to regular guests Eliza
Owen of the Cautality property group, which you probably knew
(11:42):
as core logic now under quoting. I did something on this,
so we have it in the Wealth section of The
Australian this week, and it's worth I would say humbly
that it's worth looking at for the simple reason that
there does seem to be does seem to be an issue.
And one of the more interesting observations was by Anysa Cavello,
who will be on the show By the Way next week.
(12:02):
She's a property buyer's advocate based in Melbourne and she,
like everyone in the story, she said, yes, it's happening,
but in a sort of fiercely pragmatic passion. She also said,
it's proof that the market is rebounding. Underquoting. It seems
to be a real issue in a rising market, particularly
at the entry level. Entry lever seems to be the
(12:23):
part when everyone's got the toughest, doesn't it. Really.
Speaker 2 (12:27):
I think it's really hard. As you say, at an
inflection point in the market when it's rising, kind of
compounds the issue because on top of potential underquoting, you've
got unintentional underquoting where the market is just moving faster
than where people think the market is. I know from
the first home buyer experience, it's just kind of a
part of the process and unfortunately a bit of a
(12:49):
humiliation when you understand that the listing price isn't representative
of what a property is necessarily going to go.
Speaker 1 (12:57):
For isn't there laws against it?
Speaker 2 (13:00):
Yeah, there definitely is, but I think that it can
be maybe difficult to bear out and potentially also a
lack of complaints, And this is something that I think
was in your eyes.
Speaker 1 (13:14):
People don't complain because they just move on. They just
move on to share. Well, that's it, you know, we
go to the next auction next.
Speaker 2 (13:21):
They accept it as a function of the market, which
is really weird because you don't see it in other transactions.
But I think fair trading so far this year in
New South Wales has received one hundred and twenty five
complaints about under quoting. In the year to date for
New South Wales there's been seventy four thousand sales. So
that gives you a sense in.
Speaker 1 (13:42):
The ocean, you know, exactly so, but yeah, so it
probably not indicative of the issue.
Speaker 2 (13:47):
Potentially not. And I guess that's the thing. If you
do think that an agent has misrepresented what the property
was going to go for, maybe it is worth looking
at fair trading and making a complaint. But I think
think it's also really worthwhile as a buyer to arm
yourself with comparable sales information, right, Yeah, yeah, or the
valuation that you can see on listings. Sometimes if it's
(14:09):
not suppressed, or even if you have apidata, you can
look it up there and just.
Speaker 1 (14:13):
Use your common sense. I mean, if you're talking to
an agent and they're saying, okay, well, the range on
this is let's pick a number. Okay, the range on
this is eight fifty to nine hundred, and last weekend
you saw several similar properties that all went for over
a million, then that is not the price that's going
to go for whatever that agent is saying. And I
find if you quiz the agent, they'll say this is
(14:36):
the They're careful. They're all careful not to be seen
as overcoating. So what their defense would be is they
will say, this was the figure that we agreed in
the kitchen two months ago when I sat down with
these people for the first time, and they don't change it.
But I would like you to explain what is really
not the downside of all this. I mean, the obvious
(14:59):
downside is that people waste their time, and it's not
just wasting their time and people trying to buy a home,
you're trying to imagine living there. But I think the
worst part of it is that people are used as
cannon fodd are really at auctions, aren't they? So they
turn up all they've done all this work, as Louis
Christopher was saying in the story, they've done their pest
inspections and their size inspections, and they're sitting there like innocently,
(15:20):
and you know, the auction opens and they're gone. They're
knocked out in minutes. So that's the downside I think
of it.
Speaker 2 (15:27):
I agree. I guess I've never really understood the upside.
To be honest, I would have thought it'd be more efficient.
Speaker 1 (15:33):
There is no real lopside. It distorts the market. I mean,
someone wins this one. The seller wins, I suppose because
perhaps they had a perhaps they had a livelier auction
than they might have had. But that's about it.
Speaker 2 (15:45):
Really. Yeah, perhaps you create more of a sense of
urgency for the buyers that are eligible to get the property.
But as you say, the downside is the financial, temporal
and emotional investment that people are making in the property journey.
And it is a bit of a rite of passage
when you're a first home buyer in Australia to set
to revise your expectations. We have a tool if you
(16:08):
google it, it's just mapping the market catality. You can
actually see median house and unit values by suburb. Even
going into that and saying, okay, what are the suburbs
that are ten twenty percent below my budget? That's probably
where I'm going to have a lot more control in
the buying process.
Speaker 1 (16:26):
Allowing for the price ranged to be ten or twenty
percent under.
Speaker 2 (16:30):
That's what I range speaking from a person.
Speaker 1 (16:34):
Such a low and then you've got less likely to
be disappointed. Yeah, I think so.
Speaker 2 (16:40):
But even as someone who'd been researching the property market
for years and years, I still had to go through
that same revision of.
Speaker 1 (16:46):
My own and you know, you know more than most.
Speaker 2 (16:48):
I went into some ouctions quite hopeful, but that arm
yourself with comparable sales that have happened recently take into account,
and hey, if you've got the money, why not get
some buyer representation as.
Speaker 1 (17:00):
Well an advocate at the auction for you. Yes. Absolutely,
And look, the one thing that I think all the
listeners would know is that this used to be very hard.
To find out what the comparable sales were. You had
to go down to the titles office, and you can
do it in two seconds, souse, use those tools all right?
I think since I have you in the studio, I
wanted to ask you all a two other quick questions, just observations. Really,
(17:21):
we talked some time ago and we had a very
interesting discussion, and I did the story which was one
of the more interesting ones I thought in Property of
the Year so far from me, which was about the
apartment people losing money in apartments. One in five apartments
selling at a loss inside of Melbourne. Ninety percent of
loss making sales of dwellings in Sydney being apartments, a
real weakness in that market, and you mentioned and you
(17:43):
showed how it was weak for years now. I've just
discovered recently that you know, coming up to half of
all apartment buyers are downsizers, and downsizers invariably are selling
a home, so there they've got much more money than
the average apartment buyer. But I just wonder if that
cohort then is more exposed than we might have realized
(18:04):
to these weak apartment prices. If the people are that
core hord that are setting the family home and moving
into apartments, if apartment prices are so weak, are they exposed?
Speaker 2 (18:14):
This is such a good question, because if you look
at the performance in houses and units over time, annualized
growth over the past decade has been about six percent
for houses compared to just three percent for you.
Speaker 1 (18:28):
And it's mortari on it's six percent, isn't it exactly?
Speaker 2 (18:31):
But I guess it's worth making the distinction between apartments
that are likely to sell for a loss versus apartments
that downsizes would be targeting. A lot of those loss
making sales we talk about are skewed by a very
specific kind of development that went up throughout the twenty
tens when investors were very active in the market, and
(18:52):
they were I would say somewhat investor gradestock a lot
of them, not necessarily the kinds of things that are
downsizer would be targeted. So there aren't markets where units
actually outperform houses where you'd have to imagine cashed up
downsizes might be interested in. Like Maruci in the Sunshine
(19:13):
Coast region, annualized growth for units is eight percent in
the past decade compared to seven percent for houses.
Speaker 1 (19:19):
Is that right? So these are a tree change beauty
spots basically where retirees flocked too, So we can guess
the rest for sure. So we can guess the suburbs
around the country, won't them off. Yeah.
Speaker 2 (19:30):
Yeah, So that's a really important distinction to make, is
that the apartment stock is shaped by demand, and if
demand is coming from cashed up boomers, then you're going
to get some really nice stock. And I actually think
that's really exciting.
Speaker 1 (19:45):
They're not going to buy an anonymous apartment on the
twenty second floor of an anonymous tower in the middle
of the city, probably probably, And even if.
Speaker 2 (19:55):
They do, even if they buy something that doesn't return
a lot of capital growth by the time you're downsizing.
Is high capital growth really one of your goals financially?
Maybe it is, But I think you've got to make
a compromise between what's a high growth asset and what's
a suitable home for you to live in. In most cases,
you're not going to make as much money off an
(20:15):
apartment as a house because house has the associated land,
which is where most of the value is coming from.
But if you're at a stage of life where a
house is just too difficult for you to maintain, then
you're risking some of the appreciation on the actual house itself,
you know. So there's a compromise that's got to be made,
and hopefully you can strike a good balance between a
(20:37):
sound investment and something that's also manageable and enjoyable for.
Speaker 1 (20:41):
You to live. Okay, So as you say a good
point that it's not a strictly financial and economic move,
it's a lifestyle move, and then we have to sort
of apply a different criteria, okay. And just one of
the quick thing about property looking forward, a lot of
talk about tax now. Every single tax summit of that
(21:02):
nature when the government have them, they have them to
see if they can get some support for tax changes,
and it would seem the big items on the agenda
are capital gains tax reform, which would play straight into
property trading if you like, or property sales. Immediately, all
property sales would not be as lucrative because they're talking
about winding back capital gains tax benefits if you like.
(21:26):
Also some talking about access to the pension again that's
linked with the price of a family home. And then
we have the new supertax, which again will kick property
holders first, I think because they're the most illiquid and
that they're sitting ducks really in an unrealized gains tax.
It seems to me that there's a sense perhaps that
whatever way it moves, it's property that's going to get
(21:46):
it in the neck if there's tax changes, what do you.
Speaker 2 (21:50):
Think, Yeah, I think it's a real possibility. And we've
you know, I've seen the pendulum kind of swing both
ways on housing affordability and what we need to do
to dress housing. Twenty twenty one, we had the inquiry
into housing affordability and supply was very supply focused. I
think now we've got the pendulum swinging more towards demand
for a few reasons in that there's more there's a
(22:14):
gradual decline in home ownership. There's a recognition even from
property owners who are trying to help their kids into
the housing market. They're recognizing how difficult it is, and
also supply constraints. There's only so much we can do
to affect supply when cyclically we've got a bunch of
dwellings stuck in the pipeline that continue to place this
(22:35):
strain on labor and material costs. So eventually you've got
to look at demand, and a lot of that demand
side comes from the tax space. So I think the
pendulum is swinging. I think we've moved a long way
from twenty nineteen, when capital gains negative gearing was smacked
down at the face it was untouchable. Yes, society is
reactive and we have to remember that property operates within
(22:58):
a reactive institution and it is subject to change, and
we don't rule it out.
Speaker 1 (23:03):
Okay, very interesting. I expect you're I expect you're right.
It'll be really interesting to see which taxes do come through.
But it seemed to me that when you look at
all the suggestions and the submissions, the common denominators, invariably
property is right in the middle of that. Okay, we'll
be back with some questions, some of which are quite
properly focused in a moment. Hello, Welcome back to the
(23:38):
Australians Money Puzzle podcast. I'm James Kirby talking to Eliza
Owen of the Cautality Group Property Research House. I'm sure
you're familiar with it now. As a question from let's
post the first one from Bruce who says about that
discussion on capital gains tax discount, I accept that fifty
percent was introduced to these complexity, but surely with modern
(24:00):
computing power it would be relatively easy to adjust CGT
for inflation and to throw a cat amongst the pigeons.
Some may argue that other forms of income are not indexed,
so why should CGT get this break? Okay, great question, Bruce.
Two parts to it. One is that the original explanation,
(24:20):
the original I think it was John Howard and his
solution about inflation and indexing and everything else around CGT
was to introduce this discount, basically a permanent discount, which
meant if you held a property or any other asset
for more than a year and you sold it, there
was a fifty percent discount on the capital against tax,
which like if your salary owner works out at something
(24:42):
like your what your tax is on your salary now,
so it comes in maybe twenty twenty something percent. Now.
He then adds that the logic for it was indexing,
So why don't they just index it? Again? Well, I'm
which you, Bruce, why don't to index everything? But of
course they don't. They some things, they don't index other things,
and that is how they Actually that's a policy lever
(25:04):
and that's not going to change. So for instance, oh hey,
well the new supertax is and indexed, for instance, but
the pension's indexed twice a year, so you get all
those sort of variations. What do you think about his
basic contention that does not need to have the discount
at all.
Speaker 2 (25:19):
I think indexation is a great idea, Yeah, for sure.
Speaker 1 (25:25):
I think it was.
Speaker 2 (25:25):
Lucy Ellis a few years ago made this really elegant
argument that you could discount capital gains by two and
a half percent a year the mid range of the
inflation target over the.
Speaker 1 (25:36):
Long term, and you'll be doing the same thing from
a policy perspective.
Speaker 2 (25:38):
Yeah, and that could be a really interesting way to
wind back what is largely considered an overly generous capital
gains discount on windfalls. I also think it could have
better housing outcomes, because if you look at periods of
windfall capital gain, we actually see a spike in short
term selling, which can be disruptive to renters because people
(26:00):
are bought in. They've made, you know, a few hundred
thousand dollars their property. Yeah, exactly one year before you
get a fifty percent discount on capital gains. Come on, man,
that doesn't seem fair to me. Have them hold the
property for longer, and you can incentivize that through a
gradual indexation of the of the capital gain. I'm not
(26:21):
sure about the computational capability required to adjust for inflation.
But I agree with the Bruce. I think you'd have
to imagine that the technology and the data we have
is a lot more sophisticated to do that.
Speaker 1 (26:32):
Now, Absolutely you would. Yeah, I mean, the only thing
would be getting it past the people who had a
miserable rental yield and finally cuts some cafital gains and
thought they were going to get a fift percent discount,
but they're probably brand fathered.
Speaker 2 (26:44):
Yeah, that's a really good point.
Speaker 1 (26:45):
Yeah, all these things are generally If you didn't, I mean,
there would be there would be a lot of trouble
I with think politically. Okay, but thank you, Bruce. This
is always information only, not advice, of course. Okay, Melissa,
Hello Melissa, what are your feelings about income protection and
life insurance paid from within superannuation. I've left it late
to consider insurance, and now that I have my first child,
(27:06):
I'm refocusing on my priorities. Okay, Well, very broadly, and
this is for all the Melissas in the world. It's
not an individual piece of advice. But paying your life
insurance inside your super probably makes a lot of sense
because you're super fun unless you have an SMSF and
you haven't said so, your big super fund will get
a much better deal on life insurance than you will
(27:28):
as an individual should you call up one of the
big life insurers and try and do a deal with them.
So it is one of the advantages of having yourself
in a big super fund. Income protection insurance I put
to one side. To be honest, that's a whole debate
about whether you ever needed and at what point you
needed and where you need it. It costs a lot,
I know that, and I might just put that one
to one side. But on the life insurance broadly, for
(27:51):
most of the time you get a better deal. It's
inside your super fund, all right. And David says, you
claim that you can negatively gear shares as easily as
you can negatively gear property, and that's inaccurate for three reasons.
Margin loans of higher interest margin loans are subject to
margin cause margin loans offer lv or as compared with property. Yes, okay, David, True. However,
(28:16):
you don't have to be It doesn't have to be
a margin loan. It doesn't always have to be a
margin loan to negatively gear shares. So I suppose the
first thing I wanted to talk about with you, Eliaiah
is it is a funny thing that you can negatively
gear shares of property. And for a long time they
were both negatively geared, and there was they were commonly
negatively geared. And then around the gfcch a while ago,
(28:40):
I admit, the whole thing of negative gearing shares was
just like forgotten. It was just like pushed to one side,
too dangerous. But everyone said, yeah, I keep going on
the property. So there seems to be a cultural acceptance
that you can negatively gear property but not shares, but
you can do both.
Speaker 2 (28:57):
Is that because shares were rising so consistently posted to
you with lower interest.
Speaker 1 (29:01):
Right pre GFC. Yeah, yeah, yeah, there was a long
there was, there was a long good spell. Yeah, absolutely,
very a.
Speaker 2 (29:07):
Bit out of my wheelhouse here now that way, you've
mentioned shares, not property.
Speaker 1 (29:11):
But it fell. But as we often mentioned and recall
on the show, shares fell fifty in two OA two
oh nine. Now that hurts a lot of people. But
to David's point, David and anyone who's interested in this,
you can negatively gear shares number one, number two. Yes,
margins are are common but they are not the only
way that you can borrow to buy shares and negatively gear.
(29:35):
There's all sorts of structured products, equity builders and all
the sort of thing out there from the banks. There
is also just general loans of a various type where
you can just get a loan, and of course how
you gear is up to you. I mean, some people
use their mortgage if their spare capacity on that. That's
obviously the only negative there is. The lower the rate
(29:55):
you pay, the lesser negative gearing sort of works. But
I'm just making the point that yes, you can negatively
gear into shares, and it doesn't have to be margin loanes.
I'll take your point, David that margin loanes have all
those issues, but you can do it outside margin doones.
We might come back to this another time when we
have someone more willing to wade in, sorry David, of
(30:19):
share trading, which obviously we couldn't possibly ask Eliza Oh
to do because she is a property expert and has
been terrific on the show today. Thanks at Elizah.
Speaker 2 (30:27):
You thanks so much for having me.
Speaker 1 (30:29):
Really good to have you in the studio and lovely
to talk, as I say, face to face. We'll do
it as often as we can on the show. Okay, folks,
keep those emails rolling. The money puzzle at the Australian
dot com dot au talk to you soon.
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