Is the government fixing housing or making it worse?
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Everyone wants to know why housing has become so unaffordable. But what if the policies designed to fix the crisis are actually making it worse?
On Property Buzz, Phil Tarrant and Liam Garman question whether recent tax reforms, lending changes, and housing policies could have unintended consequences for investors, developers, and first home buyers alike.
From the crackdown on investor taxes to broader housing reforms, the pair examine whether the government’s approach will genuinely improve affordability or simply reduce housing supply and place even more pressure on the market.
They also explore Australia’s increasingly fragmented property landscape, where Sydney and Melbourne continue to soften while Brisbane, Adelaide, and Perth tell a very different story, proving there is no such thing as a single Australian property market.
The conversation then shifts to the broader economy, examining how higher interest rates, persistent inflation, and growing employment uncertainty could shape borrowing power, property values, and investor confidence in the months ahead.
Finally, the duo assess the potential fallout from changes to self-managed super funds, posing one critical question: if individual investors are gradually pushed out of the market, who will fund Australia’s next generation of housing?
CHAPTERS
- Intro and Industry Mood
- Budget Politics and Tax Reform
- Rates, Refinancing and SMSF Lending
- Further Market Analysis
- First-Home Buyer Expectations and Investor Demand
- Negative Gearing, CGT and Inflation Fallout
- Market Disruption and Investor Opportunity
- Further Market Analysis
00:01 Intro and Industry Mood
00:01 Liam Garman: This is a momentum media production. I could see myself on camera inside my eye. Phil Tarrant, Property Buzz Live on a Friday morning and for the first time in probably three or four weeks, hangover free. No offense. Last night, the back of the the end of the financial year is pretty pretty condensed with a whole bunch of different awards programs. And you would have you’ve been tuning into last little while, you know, we had big space awards, we had the real estate awards. We’ve had so many awards programs over the last period of time that July is a bit of a easier time for us. We do a bit in and around Canberra during July, but other than that it’s pretty good. So I’m fresh, I’m vibrant, still drinking a coffee. Not boss coffee. We’re still waiting for that sponsorship. Mr. Mr. Staturi I think they’re called Suntory. Suntory. Here we are. Talk about news about try and give interpretation. Alice around what’s going on in property over the course of the weekend. Property certainly is a story about the economy. Property certainly is a story around interest rates. Property certainly is a story around the direction and the future for Australia. I was recording a podcast, I don’t know if you are aware of it, called Contest the Ground, which is pretty popular in around national security and defense circles where we look at the security environment and Australia’s spot in the world and how it’s tracking. I recall this co host it with Dr. Marcus Thompson, who’s who’s a general in the Australian army for many years. He culminated his career as the head of or the inaugural head of information warfare for Australia. So this guy was a practitioner of offensive and defensive operations, information operations, which mainly used cyber as a carriage for it. And I record that podcast with him and we normally look what’s happening elsewhere around the world and some of the conflicts, some of the contests that’s taking place elsewhere, but importantly what that means for Australia at home. And the focus of our chat specifically this week was around the wedge that’s been driven in Australia’s society and that wedge being taxation reform, which we’ve been talking about obviously a lot on property buzz over the period of time. So this is where property meets all aspects of the economy. And my position is that property real estate is the most critical infrastructure of critical infrastructure of Australia and we’re seeing that played out. As we say I’ve never seen Australia more divided than where we are right now. I’ve never seen a government actually drive a wedge inside of the fabric of Australia and the sort of overall Sort of catch all for that discussion was Australia typically sat as sort of in the center. You had some views and opinions, shades of what center is, whether it was left or right of center. And that’s been certainly a very constructive way for Australia to make its mark since federation and particularly after World War II, as we’ve gone about growing as a nation. But it seems as though we’re not really in the center anymore. The views and opinions of the left and the right feel more extreme and I’ve never seen the nation more polarized and I don’t think this is a good thing. So I certainly urge the government to have a look at bringing the nation together. And they would probably argue that they are doing so by making it fairer for the, for everyone through this housing and taxation policies. But pretty much everyone I speak to has a view and opinion on this and I can’t see it stabilizing for any point in time. I think we’re going to have a period of distress when it comes to the economy, particularly when we look at some of the issues facing Australia and interest rates in relation to inflation, the advance of AI, the joblessness rate. So go and tune into it if you want to have a look at it. It’s called contested ground. I enjoy recording. It allows me sort of capture all the knowledge and interactivity I have with many different industries right across Australia and give a sense of interpretation to it. But what does that mean for Property Buzz? How does it blend in? Do Property Buzz. Well, Property Buzz is my chance to really have a big opinion on what’s going on in real estate Australia. There’s someone else who has an emerging opinion and sometimes can dwarf mine. Liam Garman, who’s the managing editor of Real Estate at Momentum Media, my co host across Property Buzz.
04:26 Phil Tarrant: I think I’ve only got an opinion now. I’ve only got opinions.
04:29 Liam Garman: You’re allowed to have opinion.
04:30 Phil Tarrant: Yeah.
04:31 Liam Garman: You’re allowed to have opinion.
04:32 Phil Tarrant: Well, I mean, you know, opinion opinion’s an antidote to what we’re seeing a lot in the headlines.
04:36 Liam Garman: Yes.
04:36 Phil Tarrant: And you know, data is a dime a dozen. And I know this is something that you’ve been focusing on a lot recently, but data is a dime a dozen. Now if you’re going to. Anyone can cherry pick data. Anyone can cherry pick data. And you look at the headlines from the major daily newspapers every day and property’s over. Property’s over because Sydney’s going to fall 10% and Melbourne’s gonna fall 10% and it’s done. And we’re gonna be talking about this a lot today but you know, opinion covers between the lines because yeah, maybe, maybe Sydney, Melbourne are tracking down a bit in certain markets. Not all of them, none. The first home buyer market’s pumping. It’s a very liquid economy, super liquid economy and we’re gonna be talking about a bit later as well. But the fact that the national broadcasters are talking about this and the national newspapers are talking about this. There are cities that are still going up. Adelaide, Brisbane, Perth, still, still tracking st. Well stabilizing I think is what we’re well looking at now. It’s kind of plateaued to zero in some areas. Subzero in some areas. There’s enough data going to the point before about cherry picking data. There’s also data that says it’s still going up.
05:39 Liam Garman: Every politician now is a property commentator. I’ve seen Senator Bragg is being very vocal online and he’s got some views and opinions around it. Actually ran into him in, in Canberra, had a bit of a yarn on him on the night of the, the opposition response and he, he’s sort of, what is it now? Six weeks on since the budget. Six probably. He was still sort of forming his opinion at that point in time and he’s certainly got an opinion now. Every single senator and every single MP is a property commentator right now and, and you’ll see how many of the sort of broad, main, broad sheets or mainstream media is really cultivating. Sunrise for example is certainly trading off it. They’re bringing in, you know, whether it’s, you know, the Housing Minister, Clara o’ Neill or Michaela Clash.
06:31 Phil Tarrant: Cash.
06:31 Liam Garman: Cash also had a chat with her. She, she’s, she, she’s, she’s good fun. She had some, you know, some big views and opinions when I spoke to her but they’re out there and they’re pushing it and there’s that both sides are arguing hard. The Treasurer’s been pinned down on, you know, you said that housing was going to just grow slower than what it has been up until this point, but it’s actually going backwards and he’s defending his position saying you can’t just look at property as a one or two month cycle. Property goes up or down whether or not him and, and Minister o’ Neil had sort of really swapped notes before they started talking about that because he was sort of having to pull back on some of her comments in relation to saying yeah, property goes down. He’s saying no, no, probably’s not going down. So been this environment for a little while where everyone’s pointing fingers at each other saying what are you actually trying to work out here? Remember the changes to the tax regime. The government according to them is to make housing more affordable and a fairer Australia for all in principle sort of makes sense. It’s very egalitarian and culturally I think that sort of works for Australia whether or not they’re going to get there and whether or not the ends justify the means. Because there’s a lot of second and third order issues now impacting property markets. I was reading in the paper yesterday and I spoke to this as soon as it took place when the deal was done by the Greenslam in order to remove SMSF lending. Developers now coming out echoing exactly the sentiments I had which was this has got to slow down development so then doubling down. Yeah, so pretty much they’re saying 30% of new build apartments, typically pre sales, were SMSF investors and are saying well okay, are we going to be able to replace that? Is there going to be enough investors outside of self-managed super who are buying new build properties because they can’t buy existing in order to get the negative gearing benefits or the CGD benefits? They’re saying maybe not, but the numbers are a lot more staggering than that because they’re saying it’s just not the 30% that were bought by SMSFs. There’s probably, you know, three times that amount. And I’m sort of paraphrasing here because if they can’t get pre commitments to develop, that means none of these, none of these properties, none of these new developers are going to be made. Not just the 30% that might have gone to SMSF investors. So they’re saying it’s going to be a compounding problem and if anything they’re going to stifle development, I. E Building new houses as a result of those changes. Whether or not anyone thought about that, I don’t know. I have a theory which I’m happy to share with you around it is that we’re going to see this pivot to the government by proxy becoming the providers of investment investment properties for renters through incentivizing industry funds to buy, to let. And that’s going to be a growing cohort, a new asset class.
07:44 Budget Politics and Tax Reform
09:33 Phil Tarrant: We’re acting as a guarantor for developers maybe potentially.
09:36 Liam Garman: I think you’re going to see a lot more industry funds, a lot more industry funds moving into the buy to let space and whether or not that that will be good for the developers because you know, someone needs to build these things, you know What? But I think that’s going to happen. So by proxy because of the inter interconnectivity between the government and the industry funds through union connectivity, I think you’re going to start seeing what you see a lot more in Europe and that is going to be institutions, better commerce, owning property for rent in Australia, purpose built for the purpose of renting, never for sale to anyone else. And whether that’s a good thing or not, I’m yet to form an opinion.
10:15 Phil Tarrant: It’s interesting when you say did they think about, I mean maybe the super funds. They did, you know, maybe that was a bit calculated. But when it comes to smsf.
10:25 Liam Garman: And by the way the super funds get all the benefits of the taxation aspects of buy, build to build to rent inside of a super fund. So it’s good for the $2 trillion of SMSF monies owned by funds versus not so good the million in super held in soft managed super. So not good for them. If you’re a sole operator running your own fund, bad, you can’t do it. But if you’re oh good when you’ve
10:57 Phil Tarrant: got union members on the board it’s, it’s quite helpful.
11:01 Liam Garman: I know staggering by the way the amount of fees made by industry funds, call it a percent maybe on management fees of a couple of trillion dollars. It’s a huge amount of money and
11:13 Phil Tarrant: it’s only going to grow. It’s only going to grow. I would say that the Greens in particular would have had this on their, on their horizon for a long time. I remember on May 12th and I was reading just you know, people fighting on Facebook and everyone’s coming out on Facebook and a lot of people on the Greens were actually saying how disappointed they were and it was, it was quite widespread how disappointed they were that capital gain, Sachs discounts and the negative gearing was still applied to new builds. And I’m looking at that, I’m like. And that really defies logic to me and this is the opinion, right, this, that really defies logic to me. Because okay, it’s one thing if you’re going after the, you know, the straw man, the evil property investor. Right, the evil property investor. Okay, right, let’s part that for a second. The person that’s quite literally stumping up the money and the risk. At the end of the day risk is a very important part, the risk of bringing new supply into the market. So there are more rentals to choose from. So notionally with more supply, rents decrease to, to rug pull them as well. A lot of greens were very angry that they weren’t given that they weren’t treated the same. It’s very odd. It’s very odd. And I think fundamentally a lot of the Greens and you and I have done a few reaction videos with some of the, I think the Victorian socialists where they’ve come out and said, it’s got nothing to do with supply. It’s got nothing to do with supply. Because what investors do, Phil, what investors do is they buy up everything and leave it vacant. They leave it vacant so the rents go up. Really? Really. So the, so the mum and dad that relies on negative gearing and they’ve got one property as a nest egg, they’re leaving it vacant. Oh, no, no, it’s big institutional players. Like. Like who? Like I, I have never met a single investor and now you’ve got developers at Land bank and stuff. Completely different argument. That’s not, that’s not even in the same boat. I don’t think I’ve ever met an investor that’s intentionally leaving it empty. What are you going to. You, you. A single investor is going to influence an entire market. No, it’s ridiculous. These people living in fantasy land.
13:16 Liam Garman: Yeah, well, there’s a lot of people in Canberra living in fantasy land. Back to the point, there’s a lot of. I’m enjoying the commentary, you know, I’m texting some poly’s in the background as well and I’m finding it all quite entertaining and engaging. But you know, this narrative is going to, going to continue but, you know, now you’re going to start seeing, you know, moving into this, this build, build to rent phase. It’s, it’s been brewing in the background.
13:39 Phil Tarrant: Isn’t that built to rent? Built to rent being built by.
13:43 Liam Garman: Well, the government used to build the rent housing commission houses. Yeah. And they’d rent it out, you know, and then, you know, that was the
13:51 Phil Tarrant: way it was in terms of like the recent BTR legislation. You’re getting like multinational institutions that are doing it, whereas it could have been mum and dad’s providing that supply.
14:00 Liam Garman: Yeah, well, they want. Mum and dad’s providing supply. They want large institutions providing supply and you going to see a lot of direct or if not clubbing up where you know, to get these large build to rent investments, you call them what they are, they’re an asset out of the ground. It’s not just going to be Australian super. And by that I’m not saying the company, but Australians superannuation doing it. You’re going to see international foreign players coming in Going, you know, there’s a lot of, yeah, there’s a lot of sovereign funds out there and you know, I think of Japan, for example, who are looking to deploy their dough. They go, property in Australia, you got strong local participation by whatever fund it is. Superannuation fund. Yeah, we’ll club up with them and, and deploy some dough down here because, you know, it’s a safe place to invest. Housing is at a premium here in Australia. I could see why foreign funds and foreign entities will be looking at property investment in Australia as a vehicle. So maybe that’s the future of a property investment. I saw Alan Koller on the, you know, on the social media sort of saying, I don’t, he goes, I don’t think real estate property is a good. Residential property is a, is a good investment anymore for Australians. There’s other ways around it.
15:16 Phil Tarrant: I’ve gotta be careful because it’s very easy for us, you know, doing this live stream. It’s very easy for us to be, you know, everyone put more in, more and more in, you know, nothing to see here. It’s very easy for us to do it. But the data doesn’t lie. Yeah, the data doesn’t lie. And you know, I was doing a property management podcast with, with our, with our friend Alex Whitlock the other day and we were, we were unpacking the arbitrage in, in Melbourne unit market. In the Melbourne unit market. And like you can go into like South Yarra and Kew, you know, for people.
15:47 Liam Garman: 300 in the bit, right? Yeah, yeah.
15:49 Phil Tarrant: You know, and this, you know, socioeconomically, this equivalent of, I mean, they don’t really have an eastern suburbs in Melbourne, but it’d be a bit of a Walara, be a bit of a Mossman, like very, very gentrified in Melbourne. And if you’re going to get like a decent one bedroom in the threes, that’s bringing you 600 bucks a week rent. Some of these places that I’ve seen are in the 7% yield and also logically the capital growth play as well. Why? Because most developers, and I’ve got a lot of, I know a lot of
16:19 Liam Garman: people that, sorry, it’s a replacement value.
16:22 Phil Tarrant: It’s a replacement value. So you, they, they cannot. I think it’s like $16,000 per square meter or something. So if you’ve got like, even if it’s a, even if it’s one better, you know, we’re talking about like nearly $750,000, if not more to build a one better studio and that’s what they would have to sell for to almost break even. Now obviously they’ve got all the risk and you and I on every podcast we talk about all the reasons why the cost of construction in the next 12 months I think is going to rise quite substantially. I would say that replacement cost would keep going up. So there is an arbitrage area. Every other asset class you want to be buying that arbitrage. If you could, you know, back in the old days of arbitrage, back in the old, old days of arbitrage where you could buy a BHP share in Australia for $50 and sell it in the London Stock Exchange for 75. That’s an arbitrage. Right. You go bang, bang, done, cleared, made money. Arbitrage. That’s what we’re seeing in all these property markets. And it’s only going to get more when construction slows down and dips off. And it’s unfortunate to say and this isn’t to, you know, this isn’t as an investor but like it’s, it’s kind of a bargain.
17:37 Liam Garman: Yeah.
17:38 Phil Tarrant: Like it genuinely is. Like on a 5% deposit scheme, you know, you wouldn’t be paying any stamp on it at 350k, 400k, your 5% deposit, what 20?
17:51 Liam Garman: Yeah, well and this is the product, right? The type of products that are going to appeal to Australians whether they’re owner occupiers or property investors. Moving forward. Yes, there’s still going to be level attraction for five bedroom houses in the suburbs. But you need to remember you’ve got a lot more single people, a lot less people having children. You know, so you know lenders always sort of, they do, they get, they’re always, they’re always, they’re always a bit jittery around having too much exposure in unit markets which were studios or one betters. But that appetite is certainly changing. You know the products that are getting built now are a one bedroom apartment with a study nook for a single person or a couple which is actually
18:29 Phil Tarrant: one of the big, one of the really big challenges with supply. I mean demographer probably does need to look into it but it’s one of the really big challenges with supply which is most units being built in Sydney at least or 12 bedroom. Yeah, that’s why there is an extreme premium once you get up to a third bedroom in what you’re paying again that’s, that’s the arbitrage. But it is becoming, it is becoming the norm for one to two and for investors out there. Yeah. To satiate the bank’s appetites, you know, you don’t have to put in 10%. I think the maths was like we did, we did some back of envelope calcs the other day and it’s like even if you did extend yourself to like a two bedroom place, you’re out of pocket like 50 bucks or 100 bucks a week.
19:09 Liam Garman: Yeah. Because the yield and property investment certainly is a game of yield. Now you got to remember it’s a moment in time and I wrote to this in an opinion piece recently, you know, the, the market today isn’t going to be the market tomorrow. The tax settings today aren’t going to be the tax settings tomorrow. It’s just when that changes, who knows? Inflation data would indicate that rates may rise rather than go down.
19:25 Rates, Refinancing and SMSF Lending
19:30 Phil Tarrant: Well, I mean will that, you know, and I’m guilty of this, I’m guilty of it because I always look in the crystal ball and genuinely for all of our listeners at home and in the office, I feel like every time
19:40 Liam Garman: I comment, by the way, get the questions coming in. But Jacob standing by to, to answer, to tell us what they are.
19:46 Phil Tarrant: But anyway, you know, whenever it comes to rates, it’s almost just do the opposite of what Liam says, do the opposite lane. But you know, my gut feeling is, yeah, I mean look, the RBA is very clear. You know, the RBA is very clear. It prioritizes inflation, that’s its priority and inflation above unemployment. But the inflation numbers, yeah, you’re going to have to raise rates but man, for joblessness to go up nearly 20 grand, 20k in a month, it’s a lot like business confidence is so low that, you know, I don’t want to be like Europe where you have super high unemployment and you’ve got super low growth, super low interest rates and they are in a kind of period of stagflation where there is no growth. Inflation’s so low, jobless is. We are doing better than a lot of other likewise OECD countries. In part because of the independence of the rba. In part because of the independence of the rba. But I think looking at how sluggish the economy is, inflation says they should raise rates in August, but I think they’d be second guessing it.
20:57 Liam Garman: Yeah, well that’s sort of outside of
20:59 Phil Tarrant: our jurisdiction and that is, that just, that’s a guess. But you know, at this point with every new month of data that comes through, it’s almost just throwing a dart at a dartboard. Right.
21:08 Liam Garman: You gotta look at property as a. Australia is a property economy. We’re spoken about this. Our superannuation funds are highly exposed to property, government revenue. And I want to chat about and this can sort of my beef for the week, right? This is where I sort of try and give you a sense of what I’m seeing and maybe telegraphing what the consequences around it and something come through and a lot of people and it went through without a lot of fanfare. And this comes back to this concept of property as critical infrastructure. And pretty much most stories of Australian business are a property story. I think one in eight Australians are actually employed in and around property, right? Construction, everything connected with it, right. So when you look at major infrastructure projects they’re typically a property story, right. It’s about people need to live somewhere and therefore there needs to be infrastructure built around that. Whether it’s getting people in and out of a particular area or the infrastructure connected to allow people to live in a particular area. And you see the government, schools, everything like that. And you see government, both state and federal and local spend a lot of money on infrastructure, infrastructure enhancements. Now something that went through this week and I don’t want to butcher this because there’s a little bit outside my knowledge but I’ll just give you what I’m seeing and hearing that a bill went through so you know, legislation which pretty much said that the government is going to favor companies that have enterprise bargaining agreements in order for procurement. So when the government’s going we need to do things and therefore we need to pay money to do it and therefore we need companies in order to build, grow infrastructure type stuff. They’re going to preference organizations, businesses with enterprise bargaining agreements and typically enterprise bargaining agreements will be connected with, you know, unions, right? So essentially they’re going to be preferencing union orientated businesses. Now you know, you look at the numbers and the labor government grew out of, you know, blue collar workers, you know, something that you know was certainly my story and the story of my family, blue collar workers and a lot of strangers used to be part of a union, now they’re less so I can’t remember the numbers, about 15% or something out there now. But the government’s pretty much saying they’re going to preferentially look at organizations that have enterprise bargaining agreements in order to issue and deliver contracts around work. And a lot of this work is going to be connected with infrastructure.
23:53 Phil Tarrant: So a lot of people, a lot
23:56 Liam Garman: of people are questioning that because you know, everyone’s quite well of the rorts and you hear the government defending how, how how focused they are on removing corruption out of government orientated spending and they’ll flag obviously the CFMEU and saying yes, they put it into administration and it’s so important that they do this right. But the rorts are there and they’re present and you only need to think about some of the stuff you see. Like the example was they, they got the, the, the title of the Victorian premier’s name wrong.
24:32 Phil Tarrant: Oh yeah.
24:33 Liam Garman: For something, some, some plaque on something or other. Right. Instead of being the honorable, it was honorable. So they had to redo the plant. 70, 70,000 bucks. Right. And people are saying, you know, in a big scale there’s not a lot of money, but people are going to come on. So the point being is that, you know, and this, this was packaged up with something else spurious. No one really took any notice to it. But I know the construction industry has responded quite vocally around it. They’re not particularly happy about it. But again, it’s putting a division inside of things that it’s going to be harder for you to win government contracts if you’re not union aligned. Whether that’s right or wrong, I don’t know. But that’s reality of it. So I got a bit of a beef about this because that’s okay. I’m not saying union based or union orientated workforces are bad necessarily. Unions have done great work over time. A lot of people frame unions as in, well, builders and stuff. Now there’s unions for cops, there’s unions for nurses, there’s. There’s unions for teachers, there’s unions for everyone. They do great work, you know, representing their workforce and trying to champion better outcomes for them. That’s all okay conceptually, but the teams get framed inside of misappropriation of money for infrastructure spending is where the issue is.
25:44 Phil Tarrant: So up to $15 billion in Victoria
25:46 Liam Garman: got to be across this. Right. So whether that’s fair or not, I don’t know. And what about the businesses that aren’t union aligned? Does that mean they’re not going to be able to get any government?
25:53 Phil Tarrant: Okay, I’ll put this one out for you. We are about to get a question, but just from a philosophical point of view. You are such a good business leader. Right. Hypothetical or philosophical, but you’re such a good business leader, you look after your people so well, your people so well looked after that they never felt the need to join a union.
26:11 Liam Garman: Yeah. Which I don’t know.
26:12 Phil Tarrant: I’ll let that dangle.
26:13 Liam Garman: An issue is be careful what you wish for sometimes because it’s very structured, like you know, you know this concept that the bosses are paying as little as they possibly can. We’ve got to fight for employee rights. A lot of people got it pretty good anyway, so just flagging that whether or not this has conscious but it will be a property story and it may mean things are more expensive to build as a result of it.
26:34 Phil Tarrant: Well, they will and sorry, I know Jacob’s got a question but this is, is one of the biggest drivers of this collapse in supply is the trades workforce. And we have so much demand right around Australia for trades that you can earn a great penny. And I mean as the boss, you know. Right. Like as the owner, as the owner of a construction company or any one of the trades working for a government project, you don’t have to assume risk, you know, you don’t have to assume risk as if you were buying or building your own land where you have to assume all the risk. We are competing for a very limited pool of workers. So yeah, of course if you prioritize then the price is going to go up. Yeah.
27:21 Liam Garman: So if all the builds and trades are prioritizing government orientated projects and will come to the criticisms that the government’s spending too much money and therefore has the reason why I got all these tax changes because they can’t afford stuff up. But you’re compromising the private sector and private sector investors. So anyway, just flag it out. Jacob, question.
27:37 Further Market Analysis
27:39 Phil Tarrant: So Kylie’s asking or more saying we need more companies hosting satellite offices with zero discrimination on where workers may be located. If you can access a satellite office, you should be just as hirable as someone who has access to the flagship office in the city. This will reduce the housing squeeze and make commutes for a lot of people more desirable to live in more affordable neighborhoods such as western Sydney. I’ll say that look hireable. Sure, sure. You know one thing I always say to people when it comes to remote work is, you know, how good and long is your career going to be if you’re not in the office talking to people face to face. And I get the concept, I do get the concept because yeah, if you had a Wollongong, Illawarra office and a Central coast office looking from a Sydney perspective. Right, yeah, sure. Like it is, it would lead to better outcomes. But so you don’t get the on the job training, you don’t meet people, you don’t work with people. And this is just from a professional. Right. You don’t work with people to get new processes, you don’t identify new opportunities. Sure. Like from. From a housing perspective.
28:41 Liam Garman: Fine.
28:42 Phil Tarrant: From a personal growth perspective. I think from a personal growth perspective, for people that opt to work from home more than they need to, I think it’s really disastrous for your career. Not that I’m discriminating. Not that I’m discriminating, but if you’ve been in a workplace for a year and the amount of people that you know, you can count on one hand.
28:59 Liam Garman: Yeah.
29:01 Phil Tarrant: Versus something that’s hard.
29:02 Liam Garman: But, yes, I’ve been really clear on this. And you get to make a choice. Right. And I would say this to anyone in the organizations that I work within, or if they ever come and sit my counsel, two main choices professionally, you can either choose to have a job or you can choose to have a career. And they’re two very, very different things. And how you choose to approach that will determine what your attitude is towards what Jake’s talking about there, how involved or connected you want to be with the organization that you operate within. That’s the key thing. And hopefully I’m not remembering this incorrectly because this is a life, so I can’t change it. But the stuff around those changes to government procurement might have been linked with some changes to fair work. And the fair work being is that fair work is being smashed at the moment. Absolutely smashed by fair work claims because of the advent of AI. So everyone now is taking so many claims to fair work, which is all AI led Gump, where people, for whatever reason, are happy with outcomes at work. And a lot of it is around this. And I think I got tested this week. There was a case which is pretty much a guy who was told, you need to come back in the office three days a week. There was a company that had work from home and then whatever. And then they had a policy. You got to be three days in the office. And he said, I can’t do that because I’m the primary carer of my kids and I need to be at home to look after my kids.
30:33 Phil Tarrant: So what are you doing during the day?
30:34 Liam Garman: And this guy was a payroll clerk or something other or payroll operator. And the company’s defense was, again, this was a fair work thing. Pretty much going, you work in payroll, you need to be 100% focused on doing the payroll, because if you get payroll wrong, that’s bad. So you’re telling us you’re the primary carer for your kids at home from nine to five, while also simultaneously doing the job of being a payroll operator for this company. And the company won the Case they pretty much went, no, man, you can’t do that, right? So this expectation, right, of I’ll work from home because it benefits me and my family and there is a lot of merit and benefits to that. I’m not saying that, but it’s hard to do both effectively. So again, career, profession, career, profession.
31:18 Phil Tarrant: I saw that and it’s funny that you should give that example because I was, oh, I can’t remember what it was. It was looking. It was something to do with the remote work and, you know, people winning these cases with remote work. And someone said the exact same thing in the Facebook comments section of, like, well, how do I look after my kids if I have to go into the office for work? I’m like, that means you’re just, you’ve got an employer out there. Again, someone who started a company. Now, we’re not, we don’t have to talk about like Woolworths or something, but, you know, more likely than not, given how many Australians are employed in small business, you’ve got someone that came out, took the risk, started a small business, hired you, trusted you, entrusting you still to deliver a good job. And you’re openly admitting, with no shame, with no shame at all, that you’re basically getting subsidized to look after your children. Now, I, and, and to be clear, to be clear, I, I think that we can do the child policies better in Australia. And one thing, that childcare workers has
32:12 Liam Garman: got a huge increase because they need more childcare work.
32:15 Phil Tarrant: But this, and, but this is one of those things, Phil, where we talk about government misuse of money, misappropriation of money, which is, you know, when you’ve got some children out there that are subsidized, that’s like 190 a day for daycare. Why don’t you just give it to one of the parents, stay home or a grandparent?
32:33 Liam Garman: And this is a very uncomfortable conversation that Australia’s too scared to have at the moment. And that is, again, it’s a property story, right? This idea that in order to own property in Australia, both parents largely need to work, right? And people lament. The nostalgic idea is that why is it so the property system is broken? Because that is a fact. Because back in the day, post war, only one person had to go to work and they could afford a typical house in the suburbs, right? So the property system is broken because that is the case. The uncomfortable conversation that people don’t want to have is that there would be a lot of females and males, but let’s say female who would go, I don’t want to go to work, I want to be a mum and I want to look after children. That’s how it used to be done.
33:24 Phil Tarrant: Right.
33:25 Liam Garman: But they can’t because they both need to work or have multiple jobs in order to pay for the property in the house that they live in. So they go, well, someone’s got it, someone’s got a gift. So I’ll do my job at home and I’ll still look after kids. And I’m so good and capable and talented that I could do both. Now if you have a young child that’s sleeping in a cop, that’s okay. But this case was, I think it was a four year old and a two year old full time. And the judge judges going, yeah man. Like they’re not just going to sit there looking at your day like they actively need managing and that’s okay. So Australia again, this is, this grown up, mature conversations we have with each other is that there’s gotta be compromise somewhere and just going, you go to work and we’ll just put more money into childcare. The cynic would say you just want more people in the workforce paying tax, Right?
34:12 Phil Tarrant: Yeah.
34:12 Liam Garman: So why don’t you just think like they do in some places in maybe Hungary. I think it’s in Hungary. Incentivize families to concentrate on families. Incentivize. If the choice is this and whatever your version of a relationship is only just females because it’s easy. If the female wants to stay at home and raise children and do it the old fashioned way. Incentivize them to do so rather than trying to incentivize them to go to work by providing childcare over there. I think Hungary or somewhere, I think where they go, I think if you get up to, if you have three kids and you don’t go to work, they’ll actually. You never pay tax again.
34:50 Phil Tarrant: Yeah. Or somewhere else. Yeah.
34:51 Liam Garman: So you cop it in the front end. But then when you start working with the kids growing up, you never pay tax again. It’s like a negative property. Right. You’re paying forward your tax. You know, I think stuff like that
35:01 Phil Tarrant: is smart, sensible and it’s just so simple because I mean it, you’ve kind of built an industry that didn’t need to be there. People feel, and you’re completely right, people feel the need to go to daycare and childcare because you need two jobs.
35:12 Liam Garman: Yeah.
35:12 Phil Tarrant: And some of this and I think the subsidies, they’re tiered to income, but I mean Some people getting subsidized $190 a day by the Australian taxpayer. What about.
35:21 Liam Garman: Or buy Australian.
35:22 Phil Tarrant: Or alternatively, you could probably do it both ways. And I think this might be the lib policy. Correct me if I’m wrong for our listeners in the comments, but I think the lib policy is like a, like the grandparents, they’re saying, like maybe a grandparent will be able to claim part of it.
35:36 Liam Garman: Do you see that as part of the new financial year, they’ve then about another two weeks to pay parental. Pay parental. Right. 26 weeks. Yeah.
35:46 Phil Tarrant: Proper half year now probably get it.
35:48 Liam Garman: Get a halfway. Which, you know, that’s great.
35:50 Phil Tarrant: Yes. Yep.
35:51 Liam Garman: Your minimum wage went up. Everything like that. So. But. But this is the conversations we need to be having as a nation.
35:56 Phil Tarrant: You know what, Phil? It’s at all of this, you know, it’s all inherently inflationary. All of it’s inherently inflationary now by.
36:05 Liam Garman: Which is a property story.
36:06 Phil Tarrant: It is everything.
36:06 Liam Garman: Everything is a property story.
36:07 Phil Tarrant: It is a property story because it is inherently inflationary in so much as. Now you’re being taxed more. Well, actually. Well, yeah, we’re being taxed more, but we’re still in a deficit. So now we’ve created a childcare industry forcing two people to go to work. There is just more money in the economy. Yeah, and that’s, that’s the, that’s inflationary. That is inflationary. And one thing that I’ve been. That I’ve been dwelling on, Phil, recently, and it’s. It’s a bitter pill to swallow for a lot of millennials and Gen Z out there. But it needs to be said. And it sucks, but it needs to be said that, you know, you go out there and you’re like, you know, bloody hell. When my parents bought in this suburb, they bought for, you know, 200k and now it’s 2 mil. Like, this is bad. Yeah, that sucks. Like. It does. It does. And it’s unfortunate, but just because you can’t afford it doesn’t mean others can’t. You know, there’s. There’s a market price for everything, but there’s a market price. You know, there’s a market price now. And if you look at it and this. And it goes, you know, back to supply and demand, which is. Yeah. I grew up in Ashfield. Right. When I was growing up in Asheville, it was. Everyone had a kid. Everyone had multiple kids. You know, there were kids everywhere. You know, just everywhere. Now, it’s probably fair to say most of the parents never left. Most of the parents never left. And they’d suddenly have, you know, 10,000 kids that are looking to live near their parents and 10,000 kids all around their parents looking. It’s just, it’s, it’s a scarce resource and it sucks, I get it. But it’s a scarce resource and you are competing for a scarce resource.
37:35 Liam Garman: Yeah, that goes back to the, the question I come over saying, okay, well you know, we need to get people out into these, these commutable satellite towns in Sydney. It would be Wollongong or Central coast for example, and let people work from there and stuff. I saw something the other day. Wfh, work from home. It’s not work from home. It should be work, family, health. Right?
37:57 Phil Tarrant: Is that what they’re saying now?
37:58 Liam Garman: That’s what they’re saying.
37:59 Phil Tarrant: Oh, okay. Of course. Yeah.
38:01 Liam Garman: Well, what did I think of that? So it’s pretty much saying that let people do this.
38:04 Phil Tarrant: Yeah.
38:04 Liam Garman: So you work, then you got family, you got health. And there is a lot of arguments for people that want to argue the case for it that, you know, a flexible workplace is beneficial. I’m sure it is. But it’s got to be compromised with everything if you want to be hotshot, high paying executive when you get there. Eventually. I know some very, very well known executives of very large institutions, they’re going to work from home day. You know, the reason why is because they put the work in, in order to get to a point where they could actually do that. You know, there’s got to be middle ground for everyone in their.
38:37 Phil Tarrant: And they’re probably, typically, they’re also probably working when they’re working from home.
38:40 Liam Garman: Oh, they’re certainly working from home.
38:41 Phil Tarrant: They’re not doing, they’re not taking the piss. And there’s a very big difference between like yes, my work from home day, I’m going to go for a jog at lunch. Yeah, good. You probably come back more energetic. You probably come back ready to go. Versus I, I’m looking after two children which is again, they’re not sitting there, you know, passive.
38:58 Liam Garman: Yeah. You’re not, you’re not doing your job. It’s easy. So get a job that allows it. You got to remember a lot of people still can’t work from home. They just can’t work from home.
39:06 Phil Tarrant: Yeah.
39:06 Liam Garman: Doctors can’t work.
39:07 Phil Tarrant: No.
39:08 Liam Garman: You know, so again, haves and have nots a murder.
39:11 Phil Tarrant: Sorry, I’m working from home today.
39:13 Liam Garman: Yeah. So there’s a bit there around it also start of the financial year. I wrote a piece on this. I Think you published it on Smart problem investment, what it all means. I highly encourage everyone to go and check it out. Also penned a piece yesterday so it probably lands this afternoon. Savo, which is around negative equity. And everyone’s getting caught up in negative equity at the moment. The pollies have captured it. I spoke to them.
39:44 Phil Tarrant: I feel like you and I were talking about this last year.
39:47 Liam Garman: Yeah, I know I’ve been talking about a long time and when I was chatting with a lot of pollies around it going, do you guys actually understand where this is going to land? And like, you know, there’s going to be people in negative equity depending what happens with housing. So it’s a big headline issue. Now negative equity is only an issue if you need to transact sell a property. So but you know, and this is, and I’ve written a piece on this,
40:03 First-Home Buyer Expectations and Investor Demand
40:06 Phil Tarrant: I’m about to start a rant because you know, I see it on Facebook all the time. All, all the bloody time. Stop myself then all the time where everyone in the comment section, there are thousands of them, thousands of them where they’re, you know, oh, it’s only a problem when you need to sell Your property’s a 30 year game. Should be in your house for 30 years and it going down shouldn’t matter. When I was growing up, my parents had to sell their place because we fell in a really dire situation. Really dire. Parents had to sell. You know, actually happens to a lot of Aussies. Yeah, a lot of Aussies find themselves in a situation where they’re made redundant. Okay, I’ve got my buffer. I’ve got six months of buffer. Okay, well then you kind of eat through it. And things happen, medical issues, things happen where Australians have to sell. And what we have done is we have built an ecosystem where we’ve encouraged hundreds of thousands of young Aussies to put their livelihoods on the line. And those people that are in the comments section on Facebook, you know, have a good hard look at. And I hate this term, I’m going to say your privilege, check your privilege because clearly you, not you, but those commenters have grown up in a financial circumstance where they’ve never had to sell. Clearly those people have had the ability to hold onto an asset for 30 years. There are a lot of people that don’t have that. And by, by selling people a song and a dance where, you know, you can have your cake and eat it too, you can put next to no money down for your property. Don’t worry about it. It’s going to go up Anyway, and don’t worry about being a negative equity, it’s going to go up anyway. You’re selling these people a lie.
41:44 Liam Garman: So the cynic in me, and I can be cynical when I choose to be cynical. So I’m going to, I’m going to exercise that option now, is that. And I’ll argue this in this, this piece and you go and go and Read it on smartprintinvestment.com Is that
41:59 Phil Tarrant: what
41:59 Liam Garman: we have done is create a cohort of people which are now strategically vulnerable. And whether there is such a concept of strategic vulnerability, vulnerable, so strategic vulnerability, and whether that’s a deliberate effort on behalf of the government to create that, I question it. And this is being a cynic, right? So you’ve got a cohort of people who are hugely vulnerable now because they’ve strategically built vulnerability into their financial circumstances because of the 95% borrow. So you don’t have to use this in order to buy your first home, right? You can do it the old fashioned way and save 20% and buy a home now when it might be a smaller home, it might not be your dream home first. There’s still ways of doing it. So younger Australians, first home buyers and their parents, right, need to really look at the options. There are other ways to get into the market without being vulnerable. And you’re vulnerable because it might be perfect right now where you’ve got two people working and you can service a mortgage if and when. And it will be when things change. Someone loses a job, someone your wife or your partner gets pregnant, there’s an illness, you have issues with other family members, whatever it is, there will be something that will pop up which will test, that will test your, your, your strength and the integrity of, of your financial position. And that is the issue with a 90% scheme. It’s, it’s, yes, you can. Hold on, yes, you can do it. Yes, the way into the market, yes, hopefully the property goes up and you can refinance and get to a lower LVR position, all this sort of stuff, but that’s not necessarily the case. So, so, so I argue just for, of calm, but then also for people to explore other options. And if you choose to subscribe into the 95% thing, don’t get the biggest loan you can, like just invest within your means. Take the 95% but assume that you’re buying a property at 80% so you’re getting all the benefits and you’re keeping, you know, some dry powder with cash flow. But it’s, it’s when you get pushed and when you have to sell is when you have to find yourself in problems. So there are other ways.
44:15 Phil Tarrant: And if you’re.
44:16 Liam Garman: Everyone’s going to take it a bit easy.
44:17 Phil Tarrant: Yeah, you can do it strategically, keep the money in the offset. You know, there are ways you can do it.
44:21 Liam Garman: It’s a huge number of ways to do it. But. But don’t put yourself in a vulnerable position because, you know, you don’t. It’s horrible.
44:27 Phil Tarrant: That’s why I don’t know if it’s intentional. I think that there’s been a lot of negligence. I think it’s negligent. I mean, these are the people, you know, some of the treasury figures that are coming out are just every. And this.
44:37 Liam Garman: And, you know, again, don’t want to be too political, but the treasurer keeps resorting back to treasury modeling. You say it time and time, treasury modeling indicates. Treasury modeling says, treasury modeling suggests that this will be the case. It’s like he’s sort of, you watch what he’s doing. He’s saying, I’m making these decisions based on these facts and figures over here. Treasury gets it wrong and they get things wrong a lot, you know, and treasury typically ain’t good at forecasting how much stuff costs. Most things blow out most things, you know, like, you know, and we spoke about it when it happened. Like, treasury says, oh, there might be a, was a $2 increase in weekly rents as a result of something like, treasury ain’t always getting it right. But you can see he’s detaching himself from it. You know, he’s coming back. Well, I made the decision based on treasury modeling. How about some common sense, you know, anyway, so you’re seeing it take place right now. But if you’re stuck, the point being, if you’re worried that you’re over leveraged, if you’re worried and concerned that you may find yourself in a negative equity position or you’re on negative equity, there’s stuff you can do about it. And parents, the responsibility is as much on you as what it is your children who are taking on these things to consider other ways.
45:52 Phil Tarrant: The people that listen to this show are probably quite, quite good, Quite adept. You would think so. I mean, they’re getting professional education in their spare time, essentially. When it comes to property investing, one thing that, you know, I would say to a lot of Gen Z’s and millennials, being a young millennial myself, a lot of the, A lot of the advice that people get given at the family barbecue is really bad, really Bad. And I think it’s a, it’s a very fair thing where if you get the advice of, you know, just get on the ladder. Any means just get on ladder made. If you’re in Sydney or Brisbane, it’s probably not.
46:28 Liam Garman: Do whatever you can to start. Do whatever you do but be strategic about it, man.
46:32 Phil Tarrant: Like be strategic. There are options there where you can. Your rent vesting is probably the best thing, the best invention for Gen Z’s and millennials that you. Maybe it was, maybe it was, maybe it was, maybe not anymore. But there are alternative routes out there and don’t just.
46:49 Liam Garman: It’s very dangerous now reinvesting.
46:51 Phil Tarrant: Yeah.
46:51 Liam Garman: For, for younger Australians and whether they’re buying established property, not getting negative gearing or buying new build property, it’s gotta be more challenging to get debt into the future.
47:04 Phil Tarrant: You have to. Yeah, you have to be strategic about it, but you also have to be strategic about buying a ppo.
47:10 Liam Garman: But the point is that if you buy the wrong investment properties or investor, it may significantly detract from your ability to ever buy a principal place residence.
47:22 Phil Tarrant: Yeah, but I suppose, you know, buy the old advice of get on the property ladder at any cost and you buy a suboptimal ppoa, you might find yourself in a similar boat.
47:32 Liam Garman: Yeah, absolutely. So if that, if that’s your mindset. I mean my point, if you want to scrap, if you want to scrap and, and go hard, that’s fine.
47:39 Phil Tarrant: Yeah, I mean my point is get educated, you know, get educated. Don’t just listen necessarily to the, the spruakers, the finfluences. Don’t even listen to your parents. Don’t listen to Uncle Dave at the barbecue. Do your, listen. Do your own research. Do your own research.
47:55 Liam Garman: One of the great safety nets is education.
47:57 Phil Tarrant: Right?
47:57 Liam Garman: That’s what I’ve been encouraging everyone. Did you have another question? Jake, your hovering is sort of hovering.
48:03 Phil Tarrant: The subject’s gone.
48:05 Liam Garman: We missed out. Should we do a reaction video? All right, here we go. That looks like a very thin line on the screen. Here we go. Prices shows the largest monthly fall in
48:10 Negative Gearing, CGT and Inflation Fallout
48:17 Phil Tarrant: nearly four years and a 0.4% drop in June. Economists are putting this down to a triple whammy of rate rises, low consumer confidence. And the budget totality data shows Sydney, Melbourne and Canberra had the largest falls in prices, while Perth, Hobart and Brisbane actually saw price rises. Adelaide was flat. Now treasury forecasts in the budget were that housing price growth would slow by about 2% over two years due to the changes to negative gearing and the capital gains Tax very much a perfect storm.
48:52 Liam Garman: When you see this many things influencing the housing market negatively, you don’t assess things like property on the basis of
49:00 Phil Tarrant: a day to day basis. I would have thought that in a nation which needs a quarter of a million houses each year to house its residents, that we should be doing everything
49:11 Liam Garman: we can to get new housing supply moving.
49:16 Phil Tarrant: And the government says its goal is to make things easier for first home buyers. Time will be the judge of that.
49:23 Liam Garman: I ain’t got really anything to say. It’s pretty much covered all that. You saw, you saw the usual faces there so said of the brag, you saw the treasure there working with his budget.
49:32 Phil Tarrant: But the point is, you know, scratching the surface, I think with that video, Scratching the surface is there’s some, there’s some pretty good returns to be had in the small capitals, which, and you know, I mean, not, I’m not, it’s not advocating for it, but if you see property prices, dwelling prices go up 0.6%, that’s still, that’s what, 7, 7.2% in a year, still solid growth. And that’s meant to be with a scared investor cohort. What it shows to me, what this deems to me is that yeah, there is maybe some uncertainty in the investor cohort, but one, the PPO mark is flush with cash, two, the economics fundamentals are stacking up, which is there are still good properties out there to invest in where they tick all the boxes. And three, the supplies is not coming to the table. And you know, the state governments, rightly or wrongly, they’re building a lot.
50:29 Liam Garman: So there’s so much noise around this right now. And again, it’s a national sport, everyone talking about this right now. But I sit there and I just go, is the juice worth the squeeze for investing? Just in general, like, you know, you go and tackle inverted commas, bold and ambitious tax reform. So they’ve done all this stuff. So it’s saying there that it will slow price growth by 2%, right? You go, okay, is it worth it? Like, is all of this worth it? How broken, like how broken is the, the property economy? How broken is the property circumstances for Australians? You know, you do all these changes, put all these incentives in place to try and slow growth by 2% and all the hurt and angst that it’s creating around it and compromising people’s ability to create wealth into the future. The consequence of disincentivizing people to take control of their own financial future and grow wealth outside of a reliance on the government and Superannuation and. Or a pension. Is it all worthwhile? That’s the question. I don’t have an answer for it. But what I would say, and I’ve been pretty clear on this, the government has an objective. Fine. Philosophically it makes sense, you know, making housing more affordable, allowing Australians to get into home ownership. That’s great. Right. But you can only do this bold, ambitious tax reform once and once you’ve done that, if nothing really happens, once you’ve done that, what else are you going to do? And what else are you going to blame because you’re going to take that away once. So what’s next? And who knows what. What, what, you’re going to start taxing the family home.
52:11 Phil Tarrant: And it was a bit of a. Yes. What an own goal. You know what an own goal from the government because they probably, they would have probably got 50 plus 1 of, of Aussies supporting more punitive tax measures on property investors.
52:25 Liam Garman: But you’re told, and the polls would indicate that most people are happy with these changes.
52:28 Phil Tarrant: Well, they’re happy with parts of it. Yeah, they’re happy with parts of it. I think that there’s, you know, the, the support for the CGT discount, it’s going through the roof. As in the old policy. It’s going through. I think it went from like 26 to 41. Yeah, yeah, it went from like 26.
52:44 Liam Garman: Really going to make that. CGT ain’t really going to make that much difference. Well, and there’s an argument about some people going to win, some people are going to lose. Yeah, we’re going back to how it used to be and they try to simplify by just going, just do a 50 flat discount. Because I think my point, trying to
52:57 Phil Tarrant: work it out, following on from what you were saying, is that you had one chance to do it. Now when you see that support for the old policy went up like 15% in two months, you can’t be any more punitive because you lost the argument. And I think they lost the argument through greed, which is my point. You know, if you, if you went off to the quote unquote evil property investor, probably 50% plus 1 of Australians would have been fine with that. When you bundle in, oh, I don’t know, person just putting a few hundred dollars away into ETFs and small business owners, it’s pretty unpopular at that point.
53:29 Liam Garman: This, is this the idea that. How thought through was it? I don’t know. Going back to the discussion I, you know, with, with Marcus Thompson on that contest ground thing is like, we’re losing important and critical aspects of. Of leadership in government as a result of the cycle for how decisioning takes place. Now, if you go back to some of those other tax reforms over the years that were in consultation phases for years, like, like years there was structure around it where they would debate and consider it. Right. But. But now it’s, it’s. It’s fixing the plane while it’s in the air. They’re going, we’ll do this, we’re on our way. Oh, that’s not working. We’ll fix it. Oh, we’. That. And then, you know, using loose commentary like, yeah, we got that widow’s tax thing wrong and CGT changes in. Yeah, we’ll fix it in the next tranche of legislation. Everyone’s going, how many more tranches are there going to be? Like, why don’t you just do it properly, do it once properly, without trying to jimmy it up and appease people on the way. It’s, it’s, you know, it is fixing the plane while it’s in the air and whether or not we’re going to land at the right place, who knows? But unfortunately, this is the way that it works now and this is the way that policy is going to have to be said. It’s like, open. It’s open planning. It’s absolutely open planning. We’re going to do it and we’ll work it out on the way as we get there.
54:44 Phil Tarrant: If we need to change it, we’ll change it.
54:46 Liam Garman: There’s good bits with that, there’s bad bits with that as well. But if you want to give, you know, continuity to Australians and give them confidence to actually make decisions based on facts that they understand and they know are going to remain, it’s not really cool. But anyway, we’ve got another reaction video. Yeah, all right.
55:01 Market Disruption and Investor Opportunity
55:03 Phil Tarrant: I had a mate who’s got a few houses and he’s like, I was
55:06 Liam Garman: gonna get more houses now, I’m not
55:07 Phil Tarrant: gonna do that now. And I was like, I hate to break it to you. Yeah, that’s the point.
55:11 Liam Garman: I had the same thing.
55:12 Phil Tarrant: A friend who was like, really into, like, that kind of investment properties.
55:15 Liam Garman: I don’t make my money in property, not shares.
55:17 Phil Tarrant: And he’s going off, I can’t buy any more houses. I’m like, that’s you being angry is a good thing. Because in a first home, you know,
55:23 Liam Garman: two teachers can buy their first house.
55:25 Phil Tarrant: Yes.
55:25 Liam Garman: In the 60s, it was like, you know, there’d be two teachers, two nurses,
55:28 Phil Tarrant: they’d have a house paid off, you know, they’re living well on one ways
55:32 Liam Garman: you could do it.
55:33 Phil Tarrant: Yes, and, and, and I think that’s the point.
55:36 Liam Garman: What’s the point? Sorry, what’s the point they’re making now? You know, are they saying that this is what they wanted to do, so this is a good thing?
55:44 Phil Tarrant: But this is, but this goes back to what I said before and it sounds, it’s not, it’s all heartless, it’s just them’s the numbers. Like, it’s. Just because you don’t have the money for a house doesn’t mean someone else does. Doesn’t.
55:56 Liam Garman: Punter, punter, politics bloke.
55:59 Phil Tarrant: I don’t know who these people are.
56:01 Liam Garman: Yeah, yeah, okay.
56:02 Phil Tarrant: I don’t know who these people are. But you know what, there are a lot of people out there that are flush with cash. That’s, that’s just, that’s how it is, you know, and if you go back to the Asheville example, you got like the old school California bungalows and nearly $3 million to. Yeah, like them, them’s the numbers, you know, and yet in a west, you know, Haverfield next to.
56:25 Liam Garman: Yeah, next to beautiful.
56:27 Phil Tarrant: Yeah, well, it’s further away from the river but, you know, like that’s. Are you expecting that these areas are going to go from two and a half million dollars down to 900? So that’s my point, right, like, do you expect that because these tax changes have happened that suddenly everything is going to be affordable, that that’s not the case? You know, that’s the first one. That’s just, that’s not how the maths works out. The second one is, oh, I’ve got, I’ve got this mate that owns all these houses and now it’s not going to buy any more houses because he said, oh, now without negative gearing, I can’t afford to buy more houses. You’re lying or your mate’s not a good investor. Like at that point you’re just buying for negative gearing. I don’t know how much disposable income your mate’s got if he’s just buying all of these houses and then offsetting losses on tax, by the way, you don’t get all the losses. Obviously the watches of this show would know, but I’m not sure if those two gentlemen do. You don’t get all the money back. It’s just a tax offset. Like it’s, you know, you’re not just printing money. So I don’t know how much disposable income that your Mate’s got that. Clearly he’s buying in his personal name because he’s buying his personal name. If he’s relying on negative gearing that he keeps racking up negatively geared properties and the bank’s still happy to lend to him, like that’s, that’s just not how this works. So I’m gonna guess you’re lying is the second part. And also the third part is, you know, we evidenced with that Channel 7 video before, hey, a lot of those multi million person cities out there, they’re still green. Yeah, still green. They’re still going up.
58:03 Liam Garman: I think we spoke to this point last Friday where there was a story that I was reflecting on which pretty much said there was someone saying I went to buy a house as a first home buyer and I was beaten by an investor. I thought all the investors were gone because the government’s looked after us and got rid of investors. And the point being, no investors are out there right now because investors see value and investors, you know, all property investors aren’t using negative gearing as a vehicle, as a moment in time to be negative again, your property. So this idea that if younger people are listening to the government and what they’re interpreting from what the government is saying is that we’ve removed investors from the market, that is certainly not the case. So I would certainly, if I was providing advice to the government, I would make sure that the rhetoric is clear.
58:55 Phil Tarrant: They want that rhetoric though. That’s how they’re winning all these young voters. But these gentlemen, I mean for someone that knows the industry quite well, I think it’s fibbing. That’s the point of it. Well, not really. You can still get very good valued houses.
59:09 Liam Garman: The point of the government of these changes to taxation is to make housing more affordable. Right. Because you’ve got less people who want the housing or less investors who are the evil people who have been pushing prices up. So we’ve got rid of all them and therefore housing should be growing at a slower rate. That’s not really the point.
59:27 Phil Tarrant: I mean to your point before about the rent vesting as well. It’s, it’s that generation that would be standing most to benefit from red vesting and that rug’s been pulled from them. Negative gearing, you know, if you’re pursuing a policy of negative gearing, you know, presumably buying in your, your own name, presumably you’d be, and I’m going to say like a very broad brush approach, I don’t think that there would be many Australians out there that would have Much more. And it’s like 71% of investors have like one property. Right. But like, even within the property investment pool, I don’t know how many property investors would have three negatively geared properties in their own name. I think it’d be very low.
1:00:07 Liam Garman: There’s not a lot.
1:00:08 Phil Tarrant: It would be very low. Like so low that the, the only people that you’re really going after with these changes at the end of the day are mum and dad.
1:00:18 Liam Garman: Yeah. Who haven’t yet done it yet.
1:00:19 Phil Tarrant: Yeah, it’s the, the people haven’t done it yet through reinvesting or your mum and dads who have got one as a nest egg or they’re thinking of getting one as a store of value because you’re buying through a trust and you got hundreds. They’re kind of. Okay, maybe. And that’s what these gentlemen don’t understand anyway.
1:00:37 Liam Garman: Punters, property investors.
1:00:38 Phil Tarrant: Yeah, There we go.
1:00:40 Further Market Analysis
1:00:40 Liam Garman: All right, good. Liam, I don’t know if we’ve solved anything today.
1:00:43 Phil Tarrant: No, we just, we created more issues for the government, covered a lot.
1:00:46 Liam Garman: And we’ve got to be careful with. This is not a beat up the government podcast.
1:00:50 Phil Tarrant: I thought that was the brief that I was giving. No, no, no, no. We’re, you know, we all give credit where credit’s due. We’ve always done it. We’ve always done that.
1:00:56 Liam Garman: It’s about sort of the E that we live within and how that’s affecting and shaping the property sector in Australia. And there’s so many different moving parts of it all, but, you know, it’s gonna give us plenty to talk about.
1:01:08 Phil Tarrant: You know, I, I do, you know, we do want to see like, young Australians get affordable property. Like, I think throughout this, throughout this example, throughout this podcast and our previous podcast, you know, we’ve live streams like, we’ve given ample, ample feedback of, hey, this, this would really drive downward pressure on prices. At the end of the day, if you don’t want to facilitate money going into building new homes and building new apartments, well, the supply demand is in disequilibrium. It’s as simple as that.
1:01:41 Liam Garman: Well, we’re not even close to getting to those ambitious targets set by the government in terms of new builds and if only. And as I spoke about with self owned ship is the stuff, like, we’re only putting more reasons in place for people not to be developing property unless you get the shift where, you know, your, your super funds are going to be the custodians of property investment in Australia moving forward, wouldn’t it?
1:02:05 Phil Tarrant: It would be Take it away from the mum and dads and give it to the big institutions.
1:02:09 Liam Garman: Yeah. Because Australians can’t manage their own money in their super funds.
1:02:12 Phil Tarrant: Right.
1:02:13 Liam Garman: Tell you what, my returns have, since I’ve been self managing have been very, very good compared to the, the, the straw that broke the camel’s back for me is when I had a BT fund where all my money was in BT.
1:02:26 Phil Tarrant: British Telecom?
1:02:27 Liam Garman: No. Banker’s Trustpac.
1:02:30 Phil Tarrant: Yeah. Right, okay.
1:02:31 Liam Garman: Yeah. And I got a 0.1 return one year and I just went, nah, it’s gone.
1:02:35 Phil Tarrant: Yeah, yeah.
1:02:37 Liam Garman: But the point is now it’s like, you know, it might not make sense
1:02:40 Phil Tarrant: like you were talking about it once.
1:02:41 Liam Garman: You can still buy it, you can still buy residents dropping your super friend, you can’t leverage. But the reason why you did it, because leverage made sense.
1:02:47 Phil Tarrant: Yeah. So yeah, what was that? You know you and I were talking a few months ago on these live streams and I told you how my super balance went backwards.
1:02:54 Liam Garman: Yeah.
1:02:54 Phil Tarrant: Because I went to hyper growth. And everyone’s like, go hyper growth when you’re young. Okay. I’m like whoa, start of the financial
1:03:00 Liam Garman: year two days ago, I said, I said I’m, I’m, you know, I’m done. You know, I want great exposure to international shares. If you look at diversified sort of portfolios, I’m not providing financial advice at all to anyone because I’m not qualified to do so. But the performance of international, you look at the performance of the asx which is largely sort of banks and technology
1:03:22 Phil Tarrant: stocks vis a vis The S&P 500
1:03:26 Liam Garman: versus say US shares which are AI and chips, maybe property might not be the place.
1:03:35 Phil Tarrant: But this is one of those things that the government said is the Prime Minister’s release when he was talking about SMSF lending, said it was to help diversify SMSFs because too many SMSFs were over leveraged in property. And it’s like, well I know to that example before it’s like, well I’m 100% exposed to equities. It’s not doing too well. Anyway, anyway, them’s the numbers.
1:03:56 Liam Garman: And what do I, if anyone can tell us if they heard anything because I sort of flagged this maybe a month, two months before the budget was, was, was table. And I said, and I’m fortunate that, and this property buzz is the fact that we sort of sit at this sort of intersection of all these different things. We hear a lot, we speak a lot. We, we, we, we get a lot of info. I was told on very good accounts by someone that I Trust that they were told they’re. They’re a buyer’s agent.
1:04:29 Phil Tarrant: Right.
1:04:29 Liam Garman: I’m going to finish on this point. And again, you can be a sort of conspiracy theorist or whatever you want to be around. They were told they actually got a detailed mandate from someone that said, I need you to buy me two properties before budget. And he goes, oh, why so specific? Well, I’m quite close to the government and I’ve been advised that it will be beneficial for me to buy two properties before the budget is heading out. So, you know, he took the mandate and did it. But then you saw, I think it was a Dai Lee. She’s mp, right? Yeah, yeah, she was. She was up against Christine Keneally, who the parachute of the end labor stall war died and died.
1:05:21 Phil Tarrant: Great.
1:05:22 Liam Garman: And I think she questioned the PM and she goes, how many people knew about these changes prior to you manning down? How contained. What confidence do you have that this was contained with a handful of people? And did anyone exploit their knowledge on the basis of what they knew was going to be happening in the budget to either shape their own property investment decision making and. Or support friends or family around it? Like, I know for a case that it was happening, whether it’s coincidental, I don’t know. I’m not gonna draw that conclusion. Make your own conclusion. But I think it was a pertinent question.
1:05:57 Phil Tarrant: It was a great. Because if you think could not answer it.
1:05:59 Liam Garman: How many people. How many people. How many people do you think knew about the change in the budget? Tens of thousands.
1:06:07 Phil Tarrant: Yeah. Because they put in the headlines tens
1:06:11 Liam Garman: of thousands prior to it.
1:06:12 Phil Tarrant: Yeah.
1:06:13 Liam Garman: You know, and how many of them acted on that? Right. Like, you know, if you’re a company director acting on things which you shouldn’t
1:06:19 Phil Tarrant: be acting, you’d be walked out in bloody handcuffs.
1:06:21 Liam Garman: You go to jail.
1:06:22 Phil Tarrant: Yeah.
1:06:23 Liam Garman: You know, so I think, I think it was a pertinent question. They don’t like answering those questions.
1:06:28 Phil Tarrant: Die’s question was fantastic. And I think it was. It was actually.
1:06:30 Liam Garman: The.
1:06:31 Phil Tarrant: The direct wording of it was actually very not accusatory. It was like, can you confirm? I. I don’t want to butcher it. People go online and look at it. It was along the lines of, you know, can you confirm that no labor mps purchased this knowing the. It’s a yes or no. Yeah, it’s a yes or no. And the fact that you can’t even answer.
1:06:51 Liam Garman: But if it was no, we just go no. Right.
1:06:54 Phil Tarrant: I mean, it’s just.
1:06:55 Liam Garman: It’s just so don’t like politics not that we’re looking to so confrontational at the moment politics, because it’s it’s a role of people in opposition or independence in the House to question government, hold them accountable and that sort of stuff. Right. But frankly, the hostility of how this is playing out right now I find quite tiresome and fatiguing because every pushback is why are you voting against tax cuts where this bold reform is generational equality, all that sort of whatever. Right. Like. And they’re nice concepts. But to actually get a genuine definitive answer around what I would say are fair and reasonable questioning is. Is quite fatiguing. And I know a lot of Australians have been and they’re becoming very fatigued by it. Anyway, Property Buzz is where we talk about these things.
1:07:46 Phil Tarrant: Yeah.
1:07:47 Liam Garman: Go check it out. Go to propertybuzz.com the U lots there. All the other stuff REB Spi go knock yourself out. All very good. Enjoy this. This is sort of.
1:07:56 Phil Tarrant: It’s always good way to end the week. Yeah.
1:07:58 Liam Garman: And. And put it in your calendar. Friday mornings. Every Friday at 10am will be live for an hour or so and a lot more of it moving forward is really popular. So thanks for tuning in. I hope you enjoyed that and we’ll see you next Friday morning. Until then, bye bye.