588 | Is THIS Australia’s ‘Best Value’ Property Market? - Chat with Greville Pabst

People don't feel confident enough to go and put their property on the market. We are in uncertain times bond markets are responding. We're now starting to see the share market. We're losing hundreds of billions of dollars. They have an actual plan for population growth in July to manage it through infrastructure spending. You're tuning in to the Property Couch. Australia's number one property, finance and money podcast. Featuring the Titans of the industry since 2015, we're trusted by tens of thousands of investors on their journey to financial peaks. This show is powered by more. Welcome, Couches, to another exciting episode. Today we're double-clicking on the Victorian and Melbourne property markets. To do that with me, I've got my couch crew, brand new to the couch. I've got Shane Pope. Well, you're mate. Appreciate it. Now we'll learn a little bit more about you and I also have the legendary Gravel Paps who's joining us. Welcome, mate. Thank you, Gravel. Now if you don't know who Gravel Paps is, you really don't know property experts in this country. Gravel has been around for decades. He is the founder of WBP Group, which is a property valuation advisory group. He also has a vendor and buyer's advocacy and property management business, also under his same name of Gravel Paps. So make sure you check that out. And if you also have been listening to the show for a reasonably, reasonably long period of time, then you'll also know that Gravel was on episode 182 of the podcast, the property catch. And we talked about everything you need to know about how to value your property. So that is a timeless episode from one of the greats in the property market. So we're thrilled to have you along for today's discussion. And both of you, Gents, obviously in the Melbourne buyers advocacy scene. You're out there in the field doing that type of thing. So there's a lot to for us to cover off today in this episode. But before we do just a little bit of housekeeping, next week we've got a Q&A episode. So you've got any questions that you want answered. I'm excited to bring the cap screw on to answer those questions for you. You get a free start and build course if you also send us in those questions. Remember the speed pipe in terms of audio questions or you can write to us as well. And finally, final reminder, our three K a week audio book. That is about to be pulled off the ears. So you only have until March 18th to listen to all of those episodes before we remove them from the podcast feed. So there we have it. And also some big developing news is obviously being the conflict in the Middle East. So before we finish today's show, we're going to talk about how that may also impact the property market. But let's get started. I want to talk about the Melbourne market in general. It has been an underperformer really for last five to eight years. Yeah. Let's talk. I'll start with your gravel, obviously. What what has been your read in terms of why the Melbourne market has been underperforming over that time period? I think there's not just one thing been. It's quite a number of things. I think in Melbourne particularly, COVID had more profound effect than the other states. And I think it's the last five to eight years. I think Melbourne's underperform for the last 10 years. If you compare it with Sydney Brisbane Adelaide. Oh yeah, for sure. It's Melbourne. Yeah. It's Melbourne has underperformed. And in fact, Melbourne in Australia, we've had a property boom over the last eight to 10 years. And unfortunately, Victoria has missed that boom. We have completely missed this cycle. Now, that may be a good thing. It may be a bad thing. But as we come into what's ahead is perhaps some difficult times. You mentioned Middle East. I think we're properties going to correct in the next few years. And maybe that may safeguard Victoria. Because it won't fall as much. I don't think is the other states. Because it is it hasn't gone up as much as the other states. So that's kind of as much to lose. Yeah. Yeah. So that's something that I think to think about. There's always a silver lining. When you look at things, you have to look right. When you're playing in the decades, those types of things right themselves. But I think, you know, in terms of you've got we've got to study why the Melbourne market has done what it's done. Because the reality has been that the so-called economic conditions in Melbourne have been favorable with the government spending and the big build and so forth. But that hasn't translated to what I would call private demand. And you know, it's all been pretty much government spending that's propped up the economy here. And then we've seen countless numbers of adjustments to policy that has really, I mean, you know, on record multiple times of saying that, you know, Melbourne Victorian government is anti-property and anti-property investors. It feels it in their behaviour. Yeah. They would sometimes don't say that. But everything that they have done so far in the last 10 years has hurt. Yeah. Yeah. I mean, you know, obviously the 133 reforms. Yeah. When it comes to the tenancy acts. Yeah. The now the minimum standards, the energy efficiency system. The last one after the late sex, I think was the straw that broke the camel's back on it. Yeah. You know, that's when we started to say the mass exodus of longer term investors. Yeah. And look, Texas, that necessarily the other thing that stops it. It's if you've got capital grows, you know, people forget about taxes. Yeah. When you have no capital growth and you've got taxes, people then walk with their feet. Yeah. And that's what's happening. And, you know, land lords are exiting this state. Yes. Right. Land lords are exiting in drives. You know, I see it every weekend. You know, when I go to an auction, investors aren't there. Yeah. They're owner occupies buying these. You know, you go to those little beautiful little streets in South of the area, Millswood, Marn or you know, Rockley Road. Typical investment streets. Yeah. And you'd expect investors to be buying those two-beige and three-beige and flats. They're not. You know, it's own rocket buyers are buying that for seven, eight hundred thousand. Yeah. Is that what you're also seeing Shane in terms of what's out there? Yeah. I do see with the team that I work with in, we have invested purchases in the self-buying the owner of stuff and I'm getting a lot more opportunity of late in the last year than I had any recollection of getting in the years before that and the other areas of property that I worked in. So yeah, we are seeing it at the coal phase. I'm up against mum and dads and sometimes kids with mum and dads and yeah, but what I am finding on the back of that, it is becoming a little bit this year post Christmas as the market started on. It's becoming a little bit easier to forecast a sales result and have some confidence about actually going to win it. We know what our budgets will do. Whereas in some of the options I was going to last year, investors had unlimited pockets. Yeah. Like it was hard to get homes for the owner of your spot, owner of your place that I'm working in. Yeah. There's just all the debts. Yeah, that's the thing. There's not the depth of buyers. Agents, if agents have got one buyer, you know, they're lucky. This is price point relative to anything under 800 within 12 columns of the city is is high property. Yes. Once we start getting into that mum and dad have a child and you need three bedrooms and you're happy to be 15 in case from the city, there's more choice and there's more stock coming on now. We're seeing that call phase since probably the back end of January. Start of January, there was still very little stock and those first few options were really hot and some great sales results for vendors. But now there's more choice and a lot of the back of buyers from last year feel satisfied. Well, I did a two-better in Mooney Pondons, an auction and it was a sort of a period replica. So brick, you know, 240 on square meters of dirt double-grar, dried away, but still a two-better. Now, you know, we were looking at that for an investor client who was an astute longer term investor and I thought, you know, I had 1.35. So, you know, they were obviously trying to get it around 1.3. Our stretch was to 1.35. And I was, you know, reasonable crap, 40, 45, 50 people. This is going back to sort of mid-February. I had to do the auction for one of our team members whose sister was getting married. So I said, I'll stand up, you know, that's the cobwebs off and go and do some bidding. So I did. As did your shoulder go. Was it okay? Yeah, it was okay. I'll start next to the auction. Here as I did use all the tactics that I did. I called the auction by their name. You know, your tactics. And so the reality is, yeah, we started at 1.2. So it was nice start, moved along. There was four or five first-home buyers. They got knocked out about 1.25, 1.28. And then okay, who's who's left? And then I had a couple of investor bidders and a buyer's agent come in at around 1.31.32. And I'm sitting there and I'm like, and it's still going pretty strong. And I'm sitting back. And so it was real surprised to me, right? Because I'm thinking, right, so we're up to six bidders so far. Right. And then I'm thinking, okay, that's interesting. And then all of a sudden, I'm at sort of my top peak. I've got my buyer on the phone because they're in a state. And I'm sort of thinking, we, you know, it's a wait for us 1.35. We got one last at night. Now we stuck to our guns. And then all of a sudden, I had two new bidders coming. And it's pretty unusual. It is unusual at the moment. Like, you know, I hadn't seen this for a while. Right? I mean, and what it was, I said, the lady who won the property was sort of in her mid-60s. It was obviously at downsides of her. She was with her two adult children, got it. Maybe it had lost her husband recently and you know, was then need to be at home. And that was the property. Yeah, and I suspect what a pain cash for it. But everything has to be right about that property. Yes. At that price point. Yeah, exactly. If it's an apartment, it's going to have a, you know, large balcony. It has an outdoor space. Yeah. I said it would floor plate, I said it would size, a car park. Oh, that sort of thing. You can't change. Yeah. It has to be perfect. But for this buyer here, it was perfect for her. Now, it ended up dropping on the hammer at 1.39. Right, so it pushed and I'm like, whoa. For a two-bed-a in three-tourns. And so, and again, I was like, so, but look, nothing to do. Neat and tidy, really, you know, sort of probably a building in 80, maybe early 90s. And so, you know, in terms of that. So, no restumping, nothing for her to do. Great. Other than just come in, live, be close to her boys and that's hoping so. There are those types of, I suppose, outliers. But to your point, you know, the inner, inner beast of Melbourne has really been challenged in terms of, you know, those, again, those beautiful streets and those areas, whether the two-bed-a-semis and all those types of things, where we were getting the 1.3s, 1.4s in some good markets. We haven't been getting those, Flemington, those type of things. 1.1, 1.2, sort of those types of properties. You get a little bit more land mass and you've also got some right-of-ways. We're getting that. But I'd say where it is competitive, is the sub 650 market for the quick and top. Out wide, if you can find it. Yeah, it's not there in a line. Correct. If you can find it. And the investor, the inner state investor, is sniffing out based on the unit. They are there. They're not there at the moment above that sort of 8.59, 100 frames. You're getting a few. Yeah, if you're in a happy day. So they're paying over as every time. They're so far over. I'm seeing that in my pay-oation business. Yeah. It's a real win-win play. And they're getting out. Some of them now. Yeah, they're getting out there. They're getting out on their finance. Some of the guys went out to some auctions recently, particularly out in the West. We're seeing it. And you can be day six or seven of a campaign once you've crossed the bridge in 3.5 an hour over the Westgate. And they'll have six or seven unconditional cash offers above the range. And they're all buyers agents and nearly all of the marine to state purchases. And three or four of them have not even seen properties. They've got the buyers agents included. Yeah. These guys, some of them kept always just ring up and say, can you send me a video that'll do send it to the client Astra contract? It is wild. But the video from the selling agent. Yeah. I can't tell. What does that is just? I mean, that's just so unprofessional. Well, you're just smoking about that at the end of last year. I can do an amp. I can do an amp. If you please, just do an amp fire then immediately. Yeah. We're getting back to the market conditions. Yeah. I think if you look at what the agents are doing, that sort of tells a bit of the story as well. I mean, it doesn't seem still to be the confidence to go to auction. You know, we're seeing more and more sales going private selling before auction. That's the big one. E O I. Yeah. It's still, you know, and that tells a story because that tells a story of the confidence in the market. Hey folks, Ben here. I hope you're enjoying the podcast. Now, if you want to take your property, finance and money knowledge, even further, check out the new mind knowledge in more. We've packed my knowledge with over 120 plus free resources from free reports to educational video series to fact sheets on demand courses and heaps more. Get started today at the propertycouch.com.au/myknowledge. Well, we started with auction clearance rates in the 70s. And we had sort of just before the long weekend, we had the pretty size of number 1200 also coming in. And we pushed out a late 60s or 68 or 69, with a final of around 6465. That tells me we've got a balance market, but it doesn't tell me that we're, you know, like when we start seeing consistencies in the mid 70s, and finishing around that sort of once we get all of the data coming in from Cotality and so forth, we're finishing in the 70s. We've got a moving market. That becomes very much a seller's market. But right now, it does still feel like it's delicately balanced. You know, again, some pockets are doing better than others as always, that markets within market story. What percentage of it is going to auction though? Well, you know, like, well, the numbers are still pretty high. They are. They're still pretty, they're still pretty reasonable of total sales. Well, good point. I mean, I don't know that it's number of, it's still going to be about 30, 40%. Yeah. Yeah. I was largely into it. But obviously, yeah, yeah, I mean, it was the ripple effect that sort of happened and when to your point, the agents know when they've got multiple buyers, they'll take it to auction. So when you're talking about suburbs like, I don't know, what's only a Banderer, those types of northern suburbs, they're going predominantly by auction. Then you know you've got a good market, some market, right? We're not saying to your point, we're not saying that spread out as far. We're certainly still seeing like the inner and middle rings. So we're not talking about so 5K to the city and then 7 to 8K from the city. They're still predominantly going to auction in what we're seeing. Yes. But it's that sort of, I suppose 10 to 15 kilometer as the crow flies. That's where they're making judgment calls around expression of interests and those types of things. On the free standing houses, they seem to be still more auctions. But then it's the tan houses, then it's the villa units and the apartments, the I-Greek. It's a slower thing now. But the trend on the days of market, stock on market. So we're seeing stock on market from a long term perspective, still being below the 5 to 10 year in terms of that turnover and stock on market. We have seen obviously the seasonality spike where we've got around 16% more new to stock on market in the last four weeks. But overall, we're still down around 1% below the stock levels of where we were this time last year. So we're not saying, you know, that's what I'm saying. If we think really short term, it's quite delicately poised, which brings me to my next question. That's because of the uncertainty and the fear in the market. So it implies a wise to it. That's why the stock levels, unless they have to, they're not going to. The stock we're seeing is investors off-loading because they can't afford it. But four sales, but other people, they're holding. The opportunity sales are disappearing. Okay, so let me click on that as well. Usually the very great properties, you know, they are really properties with huge owner-occupier here. They can sell in any market right because they're the prize. The prize always wants them. Yes, yes, yes, yes, yes, yes. But to your point, when we know we're in a softer or a sluggish market, it's the B&C-type properties that we're seeing get them turned over. And to your point, I think some of those are potentially from investors, landlords, who are tapping out. And so that stock isn't as prime as some of the stuff that we would normally see when the market turns. Is that a fear assessment? Yes. Seeing some of the buyer behavior as well changed from late last year, even to early this year, you know, we were heading to auctions and we were forecasting to minimum seven, but up to 12% on average over the top of the quip range. And to be fair, largely through no fault of the agents, the market was really in that kind of condition. They weren't able to add the prize in that high, but it was just getting run on through competition. And then anecdotally, I've got a client who's buying out in the South East and suburbs right near the water in Mentone. The auction range is 135 to 145. And they've gone in with an unconditional offer week two of 14. And then we're just seeing the agents scramble around to try and find if that will do it, and they'll try and get it done. Yes. You know, because that heat that was there is gone and a lot of the buyers are, well, that's what I'm prepared to pay and I can't borrow anymore now. My borrowing capacity is set. So prices feel like in that family market up to one and a half is kind of maybe not peaked, but certainly slowing. It's where the first home buyer's fall off is. Yeah, it is, but to talk about base like that bright and market has been disamated. Yeah. And I'm here actually spoke to my bright and bright with the other day. And he said he's hearing from people, well, I haven't even thought about it, that crypto. Well, yeah, the drop in crypto in the bright and market has apparently affected the bright and market. And that's the wealth effect. Yeah, that's the world of the king. And that market is just like, well, when the share market's done really well, traditionally, you'll also see Melbourne and Sydney property prices do also great. So you've had a good year on the stock markets, but if everyone's loathed up on crypto and that's a blind set, right? Yeah, it's like new money. I could afford it is the broads. And I think that's a fair observation. They've come in on the on the tables of the money that they're so called mate, the paper profits. And now, yeah, well, crypto is down. I was down 40% on looking at it this morning. I think it's in a Bitcoin at the time of recording was sitting about 98,000 I'll say. It's kicked up a little bit. That's all I think that's off the back of the bond markets and what's happening on your price, which we'll get to. I want to pick up on the point you made before we all about this idea of owner occupied buyers. I think you're right in the sense that there is this floor that's in the market right now, that it's not top because of investor demand. And we're seeing property prices find their equilibrium based on the fact that we've got predominantly owner occupied buyers and they're traditionally not foresellers or impatient in terms of their attitudes. And I think that boaths well for any further correction in the market. Yes, but I think what is, yeah, which leads me into the next question, which is around, what's going to trigger a revival? Because we know that change will come. We know that at some point, we're Melbourne sits in terms of its price to value compared to Sydney, compared to Brisbane Adelaide Perse. It's at its worst level that we've seen, you know, I've been doing this for 30, 40 years, but it's at its worst level in all of that period of time. You know, regression to the mean suggests that at some point, it's going to get back to that level. What does it need to see, you know, some of that activity happening and some of that capital will gradually rise? So you're right, affordability is a key driver. So that will be the catalyst and we're already starting to see it. You're seeing, you know, edustate buyers starting to see that Melbourne is cheap and it is cheap. But God's sake, it's going to be the, you know, the most popular city in Australia very soon. I mean, the infrastructure, yeah, with this big bill. I mean, the infrastructure is off the charts. I mean, probably the best of any of the capital cities in our country. It's a business of, you know, the road network is a training world. It's an incredible city. I mean, I'm very, look, I'm, you know, I'm very judgmental on this government in terms of their waste and how they delivered the, the, you know, this infrastructure. Yes, but to your point, it bodes well for future productivity. Yeah, it bodes well for the infrastructure you need to grow for the next 20 or 30 years. So that's that, that is true. And I think you're right in the sense that, I mean, my biggest worry still remains the debt, you know, in terms of having to pay that level of debt off and what are the, what's the tax scenario that has gone to look like here because what we have seen is that, you know, through taking out that 30% of that buy market. So let's say you've taken 15 to 20% of the buy market out in the investor market. That's left you with around 10 to 15% of investors who might, might at the end of the day be judged as smart investors because they're playing the decades game, not playing the trading game. So they're potentially going to come in at a fair value. And they're going to see, you know, it might take two or three more years. And that's what I said in my, my broad outlook that I recorded a couple of weeks ago. I said, Melbourne looks like it will be the best performing market over the next decade to 15 years, purely off the back that it's been the worst performing market. Yes, but the fundamentals is still, it's the second biggest city. It still has the population and immigration story and that demand, sorry, of needing housing. So whether that's rental or whether that's to living. So if you're going to afford the hold, yeah, it's probably the city to be in. But it's actually we've still seen the end 15 years. Right. We will look back to this episode. We'll look back to this episode and we'll be proven right. Right. Yes. Yeah, this is the bottom of the market. And we'll say in 15 years time, Melbourne will outperform the rest of the country. Yeah. I mean, look, it's still, it still needs to be economy. Still needs to be well managed. Yeah, that's how, you know, like at the end of the day, it does feel like we've got an economy that's not pro business. And, you know, like work from home and, you know, looking after the workers, you need that investment. You need that, you know, foreign investment and the local business investment. If we don't get that, we do run a risk of Melbourne losing that momentum. And if there's no jobs here, people will. So that's that that's my only sort of concern. Everything else stacks up. Every, like a fundamental stack up to me, the multi-culturalism stacks up for me. Everything about the attractive livability of Melbourne stacks up from that sense. Well, that's a great city. Yeah, we'll get, we'll get on the, you know, on top of the crime and the few other things that are also, you know, if you're all living in a state and you're looking at what's happening down here with the youth crime, those types of things, I think, can be addressed with a more firmer, government direction around that sort of area. But every, every other fundamental says that this is still a knowledge center. And it's the second biggest engine run, second biggest economy in the kind of buy. And not just by small amount of it, you know, if anyone wants to go and do their research, just try being a grow state product. And they have a look at Queensland versus Victoria versus New South Wales and versus WA. It is New South Wales. And then it's significantly closer to that is Victoria. And then there's this massive gap. It's just data. They like between Queensland and WA. That said, you know, they are in good positions. You know, they've got good state governments, they've got good levels of debt. Queensland's got a population boom going on because they live in some areas going up. They've got a vibe going, they've got good confidence. But the property prices there feel toppy in terms of what they're looking at. And I'll always say Australia with the population that it has and it gets to 35 million people. We can only have two international CDC. Melbourne and Sydney now, Brisbane, Adelaide, they're going to have their spikes. But with the population of our size, we can only have two international sins, just like Canada, Vancouver, Toronto, Australia. It's going to be about Sydney and Melbourne. Well, a lot of people also don't realise when they look at the American markets. Yeah, and I haven't done this data for probably about five or six years now. So I may be slightly wrong off this, but there are only six or seven cities in America that's bigger than Melbourne. Yeah. So a lot of people get this perception. Like Melbourne is a mega city. And it just has fallen out. And it has once the world's most livable on several occasions. Oh, yeah. Like it's actually a brilliant city on the world's scale. Correct. And in terms of mega cities, scale size, what we have seen, and I'll do some other future podcasts we will talk about this around the powers of mega cities and their flywheels that they create. But we're talking about a city with a population that's in the just outside of the top 100 bigger cities in the world. So those, even though Australia, at 35 million, we've got really small population for our end mass. Yeah. And there's lots of livability around what that particular story looks like. So is there any other observations we want to make on Melbourne before we move to looking at some of the regional markets? I really enjoy buying property over to an half million. (laughs) Yeah, absolutely. We found a property. We found a property about October last year. And Vendor valued three. Yeah. A agent agreed to try and given where it was and what it offered, I think they were bright. It is a $3 million property. The problem that they had was that there was only one buyer who agreed with them. And then the next bunch of buyers were all at two and a half. So I just said to my client, "Well, we'll wait." And we did. So that was in, I think we founded in the October and looked at it in November and we inspected it five times. Yeah. And then we bought it for 2.65 million. Doesn't look like much in Melbourne, but that does it? $20. No, I mean, no, it was about half an hour out. Yeah. About half an hour out. But yeah, that pricing over to a half, it just came back. And what are you seeing at the, I mean, you obviously, you know, one of the best independent buyers agent Vendor Abgit's in the state. What are you seeing at that prestige level that you're seeing much activity happening there as well? It's pretty, it's pretty tough with that top end. Yeah, it's slow. Yeah. And there's not a lot of urgency. And I've seen the buyer. Yeah. I think, you know, they're telling me if I, there's some really good quality properties on the market. Yeah. I don't disagree with that. I think people are going upon reflection, look back in 10 or 15 years time and say, do we should have maybe bitten the bullet and grabbed that, you know, should have caught him. I mean, you'll grab him. And then piece of real estate in a prime of the lounge. And at the moment, yes, I'm, you know, I'm looking around for land in that sort of, anything above 800, 900 square meters is going to be prime real estate over the court. Yeah, I don't know. I guess you would have seen this. And this is what people are doing. A lot of people are selling their investment properties. And they're going out and they're buying the most expensive house they can, spending $10 million and putting all of their money into their own occupied house. That's what all day. That's great. Yep. Right. And particularly those who are, you know, 60, 65, 70, you know, retirement, building their inheritance. Building their inheritance. And it is, it's a smart strategy. Yeah. That I'm seeing a lot of that and of purchased, you know, a number of properties. Yeah, I'll be late last year for a couple of people that have done that and like bought one in Mathura Road 2 rack. Yeah. For someone who did that and, yeah, it's, it's, it's, it's, I mean, most of the government continues to rule out any changes to principal place of residence. Capital gains exemptions. Is there a hair long for? Well, I mean, it's a political nightmare. But I, you know, I've called it, that they need to do something about that right. It's they want to, you know, if you want to have human mobility and you're going to keep rich, right? ratching up Stan Judy, Steve Judy, Stan Judy. That's, I mean, we'll have it. Well, let's debate that another time because it's some point in time. If I can buy an $8 million property and in 20 years time sell it for $14,000,000,000 and make a clean $6 or $7 million tax free, at some point, that's going to be socially unacceptable. And I suspect we're going to start to see a small amount of our capital gain in our principal home being shaved off as, you know, contributions to our forever needed government spending money to keep, you know, to no one left behind strategies right there when you're in the country. We know people have, you know, fought accumulated eight. Ten of us in properties that and then you think, is that a strategy or was it better to go and buy, put it all that in one good asset? Well, and then, and then just shift that. Correct. You know, every few years. If you're doing, you can do any accumulation face. Look, I mean, obviously, you can't do that when you're young. So you're talking about someone in their 30s who needs, we've always said, Broughton, I've always said, two to three good properties out over the long term, that gets you to your 65. But to your point then, it's like, we've always said to live off the passive income. But there's, there's going to be people who will do transition to retirement planning and estate planning. And they might say themselves, you know what, they're doubled in value or trippin' value. I'm going to now take the, take the medicine. Now let's, let's see what happens with capital gains tax and negative gearing. Probably not a bad segue. Are you hearing anything on the ground around the potential changes to capital gains and negative gearing? Not so much in my world because I'm buying Prince Prince, Prince Prince, so the only commentary I hear is glad it's not us. Yeah. What about, what about from your investor client? I think it's still a bit early. I think I think people are a bit asleep with what's up about how it will be very important. If they're going to do it, we can't stop it. We've seen them say things about property and how they're going to help the market and all those people for 10 years and their behavior has been the opposite of that, what they're actually done has heard of. But you're right. I think largely from the rest of the team I hear that people are asleep on it and depending on how the government puts it in place and how they get it across the line, the term and how bad that impact is because nothing about what they're suggesting is going to be good for anyone that it affects. Yeah. It is a supply problem coming isn't there? It's here. They just haven't, you know, they just don't learn from history, do they? You know, we look back at the 1993 back in peating, boarded in and defect that he had on on rents. Didn't we have to have a recession then? Well, we did, you know, like the phenomenon of the public. Yeah. We had vacancy rates back then higher, vacancy rates were higher than what they are now. And they cause rents to spike. So the same thing's going to happen only worse. So you can combine that with the Middle East, but I'm going to go regional before we tap on that little rock and see if we can break that. Let's talk about regional markets. What are you seeing in terms of regional Victoria? Where do you like? And what's the case for the region of the property for sale in ship? There we go. It's been for sale for ages, but it's actually over $2 million. Okay. So you've got some, it's going to be a little late. It's good. It's about 2,000 square metres of land. It's a beautiful mid-century style house. So it's one of the most popular business houses in ships. But $2 million in ships a lot of money. Yes. There's a small percentage of it. Yeah. Quite. So it's a, it's a, it's a hard one. We try to look at, you know, I suppose they're targeted to the Melbourne market, country, trade change. Yeah. Maybe some doctors, local doctors in the country, you know, make sense. I mean, the weather up there is stunning. Once you get that in, break the vibe. It just, it just changes everything from life. So, it's amazing. But, yeah, but Rachel, look, I like, like, say, Jolong, I've bought a number of properties in Jolong. I just think in terms of price point, you know, I've had clients that have said, look, I've got a million dollars. I, you know, I want to buy a house. And I think, well, I can't really buy you a good house in Melbourne for me, and dollars. Absolutely. Right. So, yeah. But those days are gone. Yeah. Yeah. Maybe, you know, we can go to Jolong. Then I can get you, maybe I can buy you a house in Jolong in, in, maybe in Newtown, maybe in Belmont, maybe in Hamlin Heights or something like that. They'll post they'll grow up to all those places, a million dollars with that you, yeah, 4 beds, 2 bars, a bit of yard. Yeah. And good condition. Like nothing to do for a little period of time. The area is that like Jolong is probably my hotspot for regional. Yeah. Well, absolutely. Absolutely. A million dollars will be the price. We'll even, you know, Jolong, Jolong Wastel, whatever it is. What was with the botanical gardens? Is it? Yeah. Cutting your car. Is that the, yeah. Yeah. It's beautiful. I mean, you know, I guess so much money going, sorry, there's so much money going into the port over the next period of time, as well as the next five years. It's, it's destined to become a shipping city. They're going to need workers. They're going to need houses like they have an actual plan for population growth in Jolong to manage it through infrastructure spend. Like it's very clever. So even now, like we've seen Jolong over the last two years actually run pricing up pretty hard. Yeah. So mine and Sue got a ways to go. Yeah. Well, Jolong is definitely performing well. Yeah. What about the more affordable commutable market? So have we seen anything there? I mean, I've got a strong eye on Balorat, and I think Bendigo. It's not quite in that commutable belt, but you can understand why there's still, you know, in terms of brick and tile, but then some of the oldest style weather board homes are representing reasonable value. It's good value out there. I've got a client at the moment that we're trying to relocate to the Mornington Peninsula and part of the move of their sale of the asset in Bendigo. It was Daisy Chained. So their contract of sale was linked to their purchaser, but it was Daisy Chained five times out in Bendigo. So synchronized settlements. Correct. So they sold and it was subject to the Uncon. Subject to the Uncon. All the way back here. And so they were all set up. So everyone's in agreement. It's actually a great dealing out there. The agents all know each other. The value was all know each other. The conveyances all know each other. So everyone was on the phone getting this deal set up and everyone assured us it was all going to happen. And then on the same day, everyone got a phone call. Silmens built. We know the date. It's all going to happen. So it was really nice. That doesn't happen that easily when you're in the inner city because of egos and disconnect and a lot of other different things, but it was nice doing that deal out there. I mean, there's still country lines, but it's too tough to still have there. I think with Bendigo, you need to be within two kilometers of the sea. Yes. If you can't go out and be there with the people. Correct. Otherwise, there's like farmland. Yeah. No one wants to be there. No. No. That's not scarcity. And for me, you know, the hospital is the heart. Is the heart, right? So the nurses that are closer to you are because it's all about for me, with investment properties about the rental pool. Yeah. So if you're all distance to the hospital, yeah, that's gold. Because that's your transient population. They go to bed to do that work. It's not. There's a lot of turnover in that area. So the rental pool is bigger. Yeah. Those infrastructure. Bendigo, the headquarters have been going back. Are they still there? Yeah. I believe they have still got, I mean, obviously Bendigo had a laid bank get a merge. So I don't know whether the full exact team and all of us are still there. But I mean, and also we bought a business in Ballarat, mortgage breaking business in Ballarat. And our team, the flat out there at the moment. And that's owner occupied the market. So what I like about that again, you know, my biggest worry about some of these enthusiastic buyers agents who are coming into markets is that there's no underlying demand from owner occupies. It's all being investor driven growth. And that's when, you know, when the tide goes out, that's when we know who's going to be swung out. We know all those buyers. It's satisfied. Yeah. What is your asset? What's an Google buyer? And I know that this is underpin by first-home buyers who can get into those markets. That that boaths well for me. And I love the fact that, you know, a game commutable, which gives you a little bit of insurance policy. My health and I think it's going to also be an interesting one in terms of what's happening there. We've seen Cranbird and all that area down down that sort of, they've run, but they've run through these, these buyers agents who are in a state. Yeah. And we're starting to see a spike in the number of rental vacancies in those areas because they're coming and bought them. Oh, I would touch you with a vegetable. Yeah. And they promise, I don't know, you're promising them five percent yields and then they get the reality of it's going to be three point two and when people can't afford to hold them, yeah. That market potentially comes back a touch. Yeah, it's quite great. Well, that's right. And, you know, that is, that's a big problem in some of those areas. And I think if you're doing your own research, the best way to do that is just look at the, the count of rental vacancies and measure that over time. And if that's moving in an orderly direction, that's going to make it harder for them to be able to rent those properties. Absolutely. And everyone's thinking, well, I've got all this paper profit, but that's exactly what it is until again. It's only profit until it actually realises it. And so we do expect that there will be some volatility in some of those areas in the other sub-ocean. Things are moving though in Belive. Like because they're affordable, they're really starting to turn over and sell pretty quickly. Well, certainly on our radar, normally that's part of, you know, the conversations we make. Well, I want to, I want to now pivot for our final discussion around the Middle East. And this last week, I mean, obviously we're going to air on Thursday. There's been a lot of you know, large events around oil and there's been a lot of oil refineries that have been attacked. The shipping lane through, you know, the Middle East there is also a no-go zone at the moment. We are in uncertain times. Bond markets are responding. We're losing hundreds of billions of dollars of value off share share markets. Didn't the Melbourne market get hit for like 160 billion? No, Australian stocks. Australian stocks. Yeah, so that was right. So we've had a significant about 120 or 160 billion. Depends on the day we're recording and when it goes live. Of course, we're recording, you know, a couple of days before going live. But the the fear of stackflation is rolling through. Now for those people who don't understand the concepts of stackflation, it's a difficult one in respect of a good set economist's worst nightmare and it's a reserve bank's worst nightmare because what you've got is rising costs, but a slowing economy. And so you where as usually if you get rising costs with inflation, then interest rates go up and they slow the economy down because inflation is being driven by an economy that's running a bit stronger. So we demand is exceeding the supply and that's pushing up prices. But in this case, this is a supply shock. And so what we see here is oil then flows through the economy in so many different ways in terms of transportation in terms of production and energy production. Like we're seeing the gas price go up 500 percent because they can't get the gas out through those. So we've got a we've got a little bit of a shock, a supply shock that's rolling through the global economy at the moment. And that's going to have a confidence and sentiment impact in the short term. And it's going to make the RBA's job a little bit harder. So we often refer to these as we knew that it was a risk. So it has materialised as a bit of a black swan. And so it's going to make interest rates now live for potentially higher interest rates as we see this. We're sort of talking about some of the economists from the bank saying that inflation could peak at around 5 percent as opposed to the 3.2 to 3.5 that we've been forecasting as part of our original prediction. So is that an amazing three weeks after our market outlook? And in terms of that, now we do flag these as being risks, couple that though with negative gear in capital gain, tax reform. I think housing is going to that's going to that's put affect the markets more significantly. And the biggest problem we have for housing in this country is supply. Yep. What do you how do you read this conversation in the short term, but also with your knowledge, experience over the decades, how do you read it in the long term? I hope that war doesn't last too long because I'll get it. I got a European. That's going to be what are you going by? We're going by the Americas. You're going the long route. Now look, I think whenever there's uncertainty, you know, business doesn't invest. No, people don't buy properties. Everything goes on hold. Yeah. That's what will happen. No one's going to invest. No one's going to go and buy our money. No one's going to there's only no capital investment. Yeah. Everything will go on hold and we haven't been waiting to see. That's what happens. Exactly right. The wait and see is that and look, if you've got in my world, we still get people that has to most. Families grow, families decrease in size, families break up, but it's the aspirational opportune purchases that maybe drop off. But so much of what I do will still have to happen. And so from the perspective of purchasing for owner rock, I like that because there will be people that will have to sell and they'll have competitive listings against them in the market. And that's great for the side of the business that I work in. For the investment side, maybe it's not so great unless you've got a view where you play in the decades and you want to spend your money and your capital growth over 10 to 15 is your goal. If you're in the accumulation phase, maybe Melbourne's to play for you, but for me, the atrocities inside, it's exciting. Even if they are getting going through marital issues, they'll say, look, the comment sets prevails. I'll say, listen, let's wait a few weeks, so let's wave here. The market is the pause happens. Yeah, the pause happens. I think that's what's going to happen. Look, I agree. How long this will go is how how much impact that we'll see in terms of economic activity. So the longer it goes, the worse the story gets for the economy and the worse the story gets for higher interest rates and so forth. I think that it's just the tightening of the band that eventually when it corrects itself, it comes back to the outer and faster. I mean, if you're playing a medium to long-term game, but what it does to Gravel's point, it impacts confidence and sentiment and then when we've got impacts on those two areas, we're spendless and so we want to have a surety around what's going to happen right now. No one knows what we're seeing is oil prices moved by 20, 30, 40 percent from what were they, $60, $70 a barrel now up to $120 a barrel over the course from the start of the world to where we are. So that has real ramifications. There would be boards around the country and around the world right now just basically saying, we don't know what the objective is here, we don't know how long this is going to go. No one knows. And so is it prudent just to slow down a little bit and that's why we're saying in the short-term share price corrections. And I think if this is over in two weeks, I don't think it'll be as a material thing for property. But if this thing drags on for two months to six months to 12 months and we're not any closer to a resolution over there and we haven't solved our supply issue with oil. And there is a broader conversation here tactically about the game plan that the US is attempting here. It's not being spoken about more broadly in the general media but the game plan here is they want to do a big deal with China and at the moment they don't have the cards to do a big deal with China. We're talking about US obviously. And so what are they gone after? They've gone, they can't go after Russia, they've got NUX. Right. So they've gone after Venezuela and they've gone after Iran. We don't have NUX who can destabilize China gets 80% of their oil from Iran. So if we've got an oil starvation going into China, we've got better leverage in that negotiation. So that's though, if that is the big gap, I mean we haven't heard that from the White House but that's a lot of the strategist who always tell this strategy after they've done it. Chris, we said in Australia, this is this no particular administration does not talk about their broader objectives here. Never. But we need a deal, done a trade and I suppose security deal done between China and the US. Once we know what that looks like and hopefully we'll you know we'll continue on. I'll fill it through and give some stability. If we look back to say 72, 73, yeah, when we had the oil crisis and it wasn't a BA then, sorry guys. And oil prices yeah, when yeah, up over $100 about it, yeah, it was it was chronic. Well, which yeah, we couldn't run the economy. Yes, we did that betcha. Well, we had a you know, it was there was a recession. Yes, in Australia. Yeah, 72, 73. So yeah, yeah, that that's what will happen here. If all prices stay high, we will we will go into a recession and rates rates will have to come down to stimulate the economy. Yeah. So we might have it. We might have a I can't see how oil prices and as you say, it might be a initial spot. But eventually they'll have to stimulate the only 20% of low-bloy oil supply. Yeah, right. But there's gas in there as well and gas is spiked because you can't get oil, you can have you can substitute with gas. Yeah, right. And AI needs an enormous amount of energy and gas is a substitute or a transition fuel. So there is a lot of moving parts in here. And I think I think the markets and the business and economists are trying to get their head around it. But there's a lot of known unknowns. And that's why these next two weeks will be interesting to see how that plays out. Obviously, around nominated another leader, which is the son of, you know, in terms of that. So we don't have a resolution there. And whilst we don't have that, it's uncertainty not just also for the Melbourne and Victoria markets. But more broadly, I suspect that this could have flow on effect into other markets if this thing drags on. So this is the X factor that we set at the start of our economic and property outlook at the start of the year. These were the caveats. We said this is our base case, which didn't include walls, you know, and it didn't include negative cap and negative gearing the capital gain sector form as well. So there is a lot of uncertainty with uncertainty, potentially people sitting on the hand. So it'll be interesting to watch as Victoria might be the safe haven. Well, we're going because we haven't. Well, I can't go any lower. No, no, there's safe haven. Well, they just send you around. People are actually working, getting their jobs done. So you might be right that they may not be as severe a correction if they happen. So we don't want to scare monger, but there's obviously a lot of, you know, moving parts out there, which comes back to the point that Gribbel are making. If we come back after our retirement in 10 or 15 years and we sit on this couch and we say, well, where we write about the Victorian market in terms of a good time to buy it, I think history will probably be the probability will be in our favor that Melbourne will continue to be the second biggest economic engine in this country and house prices and land values will continue to grow as more and more people move to in your point 35 million people. Melbourne is going to get their fair share of them. We're going to be as eight to nine million people, you know, over that time as well. So that's the answer to the Gordon message around playing along the only part that I would pick out there is that I don't expect you to have retired in 10 or 15 years. I expect you to still be here. Thank you. Maybe not. But I mean, I've heard of everybody and I think one would probably have won a couple more premierships along the way as well. Anyway, I'll leave with that. I won't give you a final or I'll reply on that one. Yeah, it's so. All right. As we wrap up today's episode, I also just want to remind you that if you are interested in the market, make sure you obviously study the data and the best start of the study in our opinion is our free property report that is available on the more platform. So go and check those out. There's suburb reports that go rich into detail around 27 odd variables that we look at in there and data points for you to study. And just a reminder also for next week, it's a Q&A. So we'd love to have some relevant questions where the state of the market is to my special couch crew. Mate, thanks for coming on again. That's great. It's great to have you. You can we're obviously in the show now. You can check out Gribble's details with the link in the show notes as well. And, Shane, welcome to your first episode. You got it. You got it. You got it. Thank you. I've managed to say a few words amongst you two. I'm happy with what I said. I think it. Very good. All right, everyone. Until next week, Laura's remembered that knowledge is empowering, but only if you act on it. Until next week, bye for now. Hey folks, opt to hear your smart money sidekick inside more. 20 episodes cover the foundations we build on every week. And yes, listening on one and a half speed is totally acceptable. If you're short on time, download our free binge guide. It distills those episodes into one easy read with heaps of visual diagrams alongside free tools inside more. You're all in one financial home to help you organize your money and plan your next best move. Check out all the links in our show description. And just a quick reminder before you go, anything we cover on this podcast is general in nature. 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