Hello, and welcome to the Australians Money Puzzle podcast. I'm James Kirby Well, the editor at The Australian. You're welcome aboard everybody. I think you know, folks, there's an election coming down the line. When the government starts coming out with politically shrewd, if ultimately arcane news moments like threatening only by the way to eliminate debt card charges, which seems to be grabbing the headlines all week, probably something
everyone can relate to. When you really dive into that, it's not going to make an awful difference to the many people who are aware and irritated by those charges. What would make a difference, I think is if they started to tackle some of the really big issues in housing. And it's not just investors. Every day Australians want to be able to buy a home, to know they can, particularly younger Australians first home buyers. Every day Australians, millions
of them, are property investors. They're important, they're actually crucial to how the market operates. The market is it's a market and it's run by private investors. That is not an exaggeration, it's a fact. And they want a balanced playing field. My guest today, it's right across this. She's Sarah Petty. She's been on the show before. She's a real estate reporter at news Court, her son, she's a potential i think, first home buyers, so she has multiple
qualifications to talk to us. How are you, Sarah, I'm good.
How are you, James?
Very good? Thank you very good. I was some of the things I was alluding to. There was around all sorts of ideas being bounced around at the moment, I've just seen would you believe? Before? As I walked in to do this on the screen, I saw a senator and she is on air as we speak, suggesting that mothers women single mothers get special early access to Super to buy a home. Other people in the Liberal Party, Tim Wilson, for instance, pushing hard that anyone can get
access to Super to buy their first home. And then in recent days we've also had the notion that mortgage buffer, this is the three percent extra that the bank must add on to your rate to assess you accurately, that should be removed. If listeners don't understand that, we'd explain it to them in a moment. But all these things are all efforts to get people into the market. You're
reporting all the time. Just give me straight off in terms of someone on the ground every day on reader state what's the tempo in the market, like just at the moments heah.
In my opinion, it's a little bit two speed market. So you have capital cities like Melbourne, Dumarwin, Cobot, what all have actually seen a drop in prices over the last the twelve months to September, but in Perth, Adelaide and Brisbane prices are rising. Prices has increased by about twenty two from the last I saw, So it's very much dependent on where you are. And yeah, I guess what kind of buyer you are as well.
It really is two speed. Melbourne prices are falling right.
Yes, Melbourne's actually the worst performing market at the moment. Last time I saw, I think prices put down about around the three percent mark. So yes, there's a lot of reasons for that, which I'm sure you're aware of, James.
They have been echoed on the show. But I think it's worth everyone knowing listening that we have this extraordinary and extraordinary situation where the second biggest city in the nation, which is about to become the biggest quite soon. Is the cheapest. It is cheaper than Sydney where that was always the case, Cheaper than Canberra relative Nue, Cheaper than Perth, surprise, cheaper than Adelaide. Come on, city of five million people
is cheaper than Adelaide. That doesn't so some things amiss And I wonder if we zoning on that, Sarah, is it is it telling us something because there's certain issues with isn't that they did pilon the taxes in Victoria and the property investors certainly they certainly headed for the hills. But I just want to ask you whether whether on the ground in the market that people are of an
opinion that they can waste in their prices. Even price growth will soften in some cities or in particular cities like Melbourne, they're waiting for the prices to actually fall further. Do you get people saying that to you?
Sometimes? I think it's the more supply comes under the market because of rental providers or landlords selling up and perhaps moving elsewhere. I think property prices could remain either flat rub and drop more. I think that could be the case nationwide as well, in terms of maybe as more supply comes into the market. But I guess prices have to hit their peak in some areas at some point, so that'll be interesting. But yeah, we'll see whether or not.
I think the market slows down. I think there's still a lot of reasons as to why it could go up, especially when interest rates drop. I think a lot of buyers will then that may have been waiting to get into the market make choose to get into that point.
You're skeptical about that. All the economists, including property economists, saying price growth will slow. We were talking earlier before the show about is it paul A Monkton, that chief economist stat Bank of Queensland and his support there which basically says that, So do you think it won't happen at all or do you think it would just be a window of opportunity for buyers.
I mean, I've had a crystal ball that would be fantastic in my opinion. I think that maybe as there's more of a push to build more properties and more pressure placed on Yeah, I guess governments to build more, they could be prices maybe begin to slow. But yeah, I think it's depending on the market. I think perhaps in Perth prices might start to slow down because I've been so rapidly increasing, But I think it depending.
It's amazing, isn't it How cities can How on Earth can you have one really going up by twenty percent and the other one falling in the same national economic state? Has there ever been such divergence between the cities in terms of price action? I really don't. I can't remember a time. Certainly there was a period. There was another time where Perth had a big roll up on the commodity boom in the PREGFC and I expected was something
like that then. So just looking across then in terms of how people are viewing property and action in the market, you're an unusual situation, aren't you. That you're on properly all day, But you're also the very people were You are one of the very people we were talking about right trying to get into the market. So what do you think of these notions of letting you access your super early or cutting the assessment rate Basically what they call the buffer where the bank's assess you on three
percent more than your mortgage. So if your mortgage is sixth the bank actually assesses you on the basis that your mortgage is nine in et cetera. If it's seventy, assess you on the fact that it's ten. How does that affect you? How do you think affects people in your position?
Well, I'll start with the super. I think that being able to access your super, I think, but potentially if you're low income earner and essentially you're just looking to put a roof over your head, I think it could be a great incentive in one way. However, sometimes these incentives, if everyone has more cash in their loll can access more cash in their pocket, this can drive property prices up and negate that bit of extra cash. So I think it's definitely dependent on the situation and what type
of buyer you are. In terms of the service ability of the mortgage buffer, I think, in my opinion, could be a bit outdated in terms of the bank assessing if you could pay what an extra three percent on top of that interest rate. I think that I think based of how how much money you need to be able to put down today, which is a lot, I think it can copy a little bit out data. It could be at least dropped.
Okay, it could be dropped because rates are dropping. Yeah, So let's say you were really close to buying a house, really close. You know you have it, but you need an extra, right, I got to pick a number. You need an extra eighteen thousand dollars and if you get that, you can have it, and you can tap your super for it. And it's the one you've been trying for years. You've found it. All your ducks are in a row. There's no other way you can get this money. Would you tap your super? And what first?
This is almost like you're asking me personally.
I am asking you personally. I'm asking you with your two hats on, as both a buyer of the type you're talking about, property, professional, property reporter. I'm asking you, would you do it? And what do you think? Then the cost to you ultimately would be would it be worth it? Do you think?
I think honestly eighteen thousand In terms of yeah, if that's how much I would need to get a specific property, it could be a little bit over, But in terms of it would be very tempting to do so, because especially as your first home, and especially if you think it's worth that amount extra, it would be very tempting. In terms of the fact that I'll be in the workforce as a twenty six year old for the next
at least I don't know, forty five years or so. Yeah, potentially the pros outweigh the cons in my situation.
It's hard, isn't it. You know that you're pulling the legs from under your super basically, and it's all about compounding. But then you also know that you're going to get into the housing market. It's not just that you're not going to be paying rent, and it's not just that it's your gateway into the entire tax All the tax privileges, yes, exactly, the majority of them are linked with home ownership, aren't they.
Right through capital against tax exemption is only the start in forty five years, when you go to retire, it's still a winner. And so I think if turning the question, I know I did turn the question on you, and it's a difficult question. If you turned it on me, I would say, Unfortunately, I agree with you, because unfortunately I know that the tax system is so loaded in favor of homeowners that unfortunately it's worth taking the money out of super in certain circumstances to get the house
to get the house. So then when do you stop, just like the Senator this morning asking for particular issues for women that single mothers. I think it was and I should be across this, but it literally just broke an hour or two ago. But you can see how you open the door and it never ends to Super. You say, let people buy their homes with Super, let people pay their insurance with Super. Where does it end the other side of the coin, isn't it? Well take
short break, we'll be back in a moment. Hello and welcome back to the Australians Money Puzzle podcast. I'm James Kirby and I'm talking with Sarah Petty of the herd Son and New Core property reporter on the ground who was regularly on the show and gives us a very fresh angle really on the market from her perspective and
also her perspective as a potential first home buyer. By the way, folks, just to clarify, when I was talking in the first segment about new ideas around tapping Super, the woman I was trying to think of is Maria Kovakik. She's a senator and she is a Liberal Party senator and just this morning she has come out with a suggestion which is getting some attention as well, where single and divorced women would get access to their SUPER before
they retire to buy a home. She argues that such women could otherwise be forced to rent forever or be left homeless. It's again, just like we were talking working with Sarah in the first segment. It's so vexed really in some ways that the super is there, the money is there, and you can do other things with it. In theory,
what is the price of that. The price of that is that the person, for instance, in this situation would have less SUPER than they own their home, and what they would really need is a kind of a top rank financial advisor to do the numbers for them, and they would never be able to afford that. That is another part of the issue. Okay, so Sarah on that same issue. It just so happens. The first question is from Cameron, and he says about using super money and
getting a first home. Personally, Cameron says, I'm torn. I already own a property, so if everyone gets an extra fifty k to pile into property, I'm all for it because my house price will go up. I don't want this to go ahead though, as a future property investor, I'd like prices to stay reasonable. Looking at it from diment point of view, I wholly agree that not owning your home in old age is a significant disadvantage, and overall I think it probably should be allowed with a
few caveats. There you go. That's interesting about that. Do you think any of these claims, if you like, will come to anything, Sarah. That is we're literally getting every other week now ideas for what property, ideas about what you can do, which is super. Do you think this will ever come to pass? We know that the Liberal Party has a policy stated now that you can get up to fifty grand out from your super. The Labor Party is not budging on the issue at all. If
it came to pass. Do you think people would tap it?
I think so. I think absolutely. I think be a really great way of a first time bias to get into the market at a young age and at the time they can afford to make. Maybe there's risks or take those risks in terms of buying a property. Yeah, I think it definitely does depend on your age, though I probably wouldn't suggest doing it at the end of your working career, as that is your nested but it would be yeah, I think depending on your age, I think it could be a great Indea.
What your point is that you've time to catch up.
Absolutely, it will give you time to catch up, and hopefully home prices increase enough that when you do sell that property, you've made more money than you would have putting it in your super account.
You wouldn't be paying rent anymore, which is the huge issue that you would have to bake into any assumptions. And it's a powerful issue that we're underplaying, probably an underestimating. Okay, now, question from Donna, Hello Donna. She says, what impact could Elon Musks ten thousand dollars box of all houses have on the property market. It's interesting what Donna's referring to.
And she sent us a little video of of Elon Musk, who somehow has the time to do this along with everything else on Twitter and Tesla and space rockets, not to mention the amount of time he must be taking appearing beside Trump on his rallies. And it struck me that in our own market. Jeff Harris, Now, some listeners might be familiar with Jeff Harris. He was the co founder of flight Center. He was he hit the jackpot twice.
He was co founder of flight Center and then would you believe he was effectively a co founder and co investor in boost Juice in the very early days. So he's got it right twice in a row, big time. And he had a scheme where they would build sixty modular homes for homeless people in Melbourne some time ago, based in the Footscray area. I didn't catch up as to how that went to whether he ever got it done, but that was really interesting that it's like the tiny
houses too. I've had represented us from tiny houses on the show. Sarah, do you think people are a bit stuck in their ways about when we talk about the housing and sorting out housing? This is still a thing that everybody wants a housecleaven about apartments, not to mention variations on that. Do you think people should be a bit more open minded potentially?
I think it could be one thing. I think it could be a great way at less in the meantime, as when you continue to build more homes, the government continues to build more homes to set up these I guess portable homes to house the population as there are so many people struggling to keep a roof over their heads. But yeah, I think it's actually a really great incent
You've could be done in the short term, didn't. I think these boxable houses only take about an hour to construct, if I'm right, which is a lot quicker than building a home, that's for sure.
Yeah. Absolutely, Again, this is a difficult area. But which would you prefer in your city? Lines of people homeless under bridges or lines of people going into modular homes. It's not an easy decision, but I think most people would lean in a very clear way. Okay, we have some really interesting questions from Paul from Rowan coming up. We will back in a moment. Hello, Welcome back to the Money Puzzle. I'm James Kirby talking to Sarah Petty. Okay,
a question from Paul. Hi, guys, love the podcast. Question for you. With the government's ambitious objective to get one point two million houses built, private developers will have a massive role to play. Do you think there is likely to be a repeat of the home builder grants that were offered when COVID first hit Whoosh requestioned Paul. Yes,
they absolutely showered the building industry with grants. Home builder grants at the time of COVID, and then on top of that, of course interest rates were extremely low, and so there was a glot really of incentives to build. Here we are as some years later, and actually the only date that managed to really build a lot is Victoria, and that is the only state that has seriously good supply coming in, which is, ironically, if you're an investor,
the state where house prices are falling. It's a significant issue about how the affordability is better in Melbourne than it is in other cities. And I'm just thinking, even in my own world, we are on the Australian newspaper, for instance, we are continually getting people replanting themselves from city to Melbourne, for instance, where they were that this issue of the gap in what you can buy is remarkable considering you could have potentially the same job. I
don't know about more at home. I think they might have learned their lesson about going too quick on home builder grants the last time post, so I don't think they will be showering us with more. I think they will try other things, even if it's a pretty hard knuckle stuff like finding and shaming councils that are slow in proving I see that as, for instance, a weapon that's been considered at the moment. Have you come across that story, Sarah, Yes, I've.
Heard that they're I think in Victoria they've that's one of the things that the old government's trying to do is cut all that red tape and turn off all the nimbi's from development, slowing down development. Yes, I think in some areas that's definitely going to be an important
aspect for building more homes, and it's already underway. So in terms of the home builder grands, I'm pretty sure the Northern Territory has just started accepting applications for its Homegrown Territory and Fresh Start New Home programs, which has grants ranging from ten thousand to fifty thousand dollars. It'll be interesting to see whether what that does for the building industry over there and if we try and emulate something similar.
So yeah, so they're still coming, Paul. The States of course, can move on these things autonomously, so you will find there are home builder grants programs, as Sarah's finding out, literally being being signed off new ones as we speak. So there you are. I had that one. I also had that one wrong, but the state governments will do what they want to do. And as Sarah said at the start, it's a too it's a two speed market.
So what one state government needs to do in housing, say in Wa where prices are going up by twenty percent, and another stake government might need to do in Victoria where prices are falling, will be completely different. Okay, final question from Rowan, I'd be interested to hear your thoughts on whether capital gains tax is holding back residential development
and contributing to the housing crisis. And he then talks about various twists and turns around that I really don't know the capital gains tax for property investors anyone who's interested properly investment. Obviously, there are two huge tax issues which are accessible to the every day Australian and which is one of the reasons that the entire market is
dominated by private investors. Negative gearing where you can deduct the losses or excess costs of your investment from your income tax, and then the day you sell your property if you hold it for more than a year, you get a discount fifty percent discount on capital gains tax. And capital gains tax kind of works out at roughly what your tax rate is income tax rate. To simplify it, now, what Rowan is suggesting is that we unleash even more
private investors into the market. If he says capital against taxes holding back residential development, then obviously if you removed it, that would mean it would unleash it. I don't know. I think that's so unlikely. I think actually labor are actually talking. They're reviewing capital gains tax and negative gearing, aren't they say? H At the moment at least Treasury is.
Well, that's why I say, that's quite a contentious issue at the moment. Aster what's going to happen with the negative gear? I'm sure it's going to That's a really fund part about tax system, which is, yes, so heavily geared around property investment and the tax incentives. Say yes, it'll be interesting to see. I think there would be just a massive shake up of the housing market if either of these elements will change in any way.
Do you think people are are worried about this review? The review is from is officially Treasury, right, which is not officially the government as such, not the Albanese government. But hey, it's happening. Do you think people are worried and do you think anything will come off this review of capital gainst tax and negative gearing? Are people worried out there in the market?
Absolutely? I think a lot of people are. I think that I believe or over ninety listening of properties or rental properties in the market are owned by investors. So if you start to draw back on these tax incentives for people to purchase properties, I think we're going to have a lot of issues, and especially in Victoria, it'll probably be the straw that broke the cap was back.
Why do you say that?
Because Victoria is rey hampered by by taxes on property investors, from land taxes to now the airbnb taxing even which is nationwide. I think that'll be if it becomes too costly to own an extra property, I think that'll lead more people to sell up, and it won't be good.
That's a million dollar question, isn't it it? Yeah? Yeah, I think because maybe that is that's there is evidence of that happening already, isn't there in Victoria even without any changes to c GT or negative gearing? Yeah?
Absolutely, yeah, I think it'll be I think it'll be more especially problematic and as a current tenant myself hopefully soon to be first time buyer. It would be very problematic if I was continuing on as a tenant, that's for sure.
Yeah. Interesting. I'll just leave your listeners with one last thing, which is really worth thinking about. The negative gearing. People say, well, once upon a time the Labor government tried to close it down and it was poor Keating and he didn't manage it. And if Paul Keaton couldn't manage it, who could. But there's actually a much more recent example. It's New Zealand and Jacinta Aardurne, who, by the way, I apologized last week I called Justinta a Hearn irish her. I
didn't mean to. Justin to Ardarn went to close down the negative gearing and CGT equivalent tax breaks in New Zealand. And they're rentals sowared and narrative Conesby who's been on the show at the point that they are now among the dearest in the world. And guess what. The new government in New Zealand has reversed those changes that the
ur Durn government tried to bring in. It's very hard to go near this issue successfully, but we'll see okay, Hey, thank you very much Sarah for coming on the show. Great to have you on the show again.
Thank you, thank you so much.
Always good to get your point of view on things. It's a distinct point of view from people we often talk about what we don't actually meet that often on the show, and we should do so more often. Thank you very much everyone for listening. Do keep those questions coming in The email is the Bunny Puzzle at the Australian dot com dot au. Talk to you soon.