Chapter 1: What are the typical roadblocks in real estate buying?
It's the Real Estate Podcast across every state, city and town of Australia.
And welcome to another episode of the Real Estate Podcast available on iHeartRadio every morning and also Spotify and Apple and wherever you get your podcasts from. Well, it's a Friday. The weekend is rolling into town. It's the 29th day of July for 2022.
And coming up this morning, we're talking with Rich Harvey, who is back from his holidays to discuss breaking through the roadblocks when buying property. And if you're celebrating your birthday today for the 29th of July, happy birthday. I see in the history books it was on this day the wedding of Prince Charles and Lady Diana Spencer took place.
Of course the couple divorced 15 years later in 1996 and then tragically Diana died the next year on the 31st of August 1997. And a report from Domain, Australia's median house price has fallen for the first time in two years and most of the decline is coming from Sydney and Melbourne.
In Sydney house prices fell by 2.7% and it's the strongest quarterly fall since early 2019 while in Melbourne the fall was 0.9% for the June quarter and it's the second consecutive quarterly fall for Melbourne. Interestingly, Australia's median house price is now $1,065,000. That is $10,000 less than what it was in March. But here is the rub. This is the perspective.
It is still $100,000 more than it was at this time last year. And you know, property is all about perspective.
Grab your coffee and switch on your real estate breakfast every weekday morning from 6.30. It's the main centre forecast with propertybuyer.com.au.
All right, let's check on your weather around Australia. Sydney expecting a shower or two today. Your high of 15 degrees. It's a beautiful looking Friday morning for Melbourne. Mostly sunny today. Your high of 13.
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Chapter 2: How can buyers create a successful property plan?
Brisbane, a fine blue sky day. 22 degrees is your forecast high and in Perth expecting the rain to show up and your high 19 degrees.
From first home buyers to property investors and everything in between, every morning on the Real Estate Podcast. Let's Talk Property, a podcast series with Rich Harvey.
Well, the decision to purchase property is a pretty big commitment, as we all know, but the rewards can be substantial. The idea of achieving the great Australian dream or becoming a landlord has been an aspiration for generations of Aussies. Yet at different times, people can freeze up after they make the decision to buy a home or investment.
And some can get cold feet after one property purchase and miss entirely the opportunity to build themselves a portfolio. So what are the typical roadblocks preventing you from reaching your real estate aspirations and how do you break through them? And to help us unblock the roadblocks, we have Rich Harvey, CEO and founder of propertybuyer.com.au. Good morning, Rich.
You are back from your holiday. Where did you go?
Yeah, good morning, Craig. Yeah, back from holidays today. Had a great trip away. Went to Central Australia. Saw Uluru, the Olgas, King's Canyon. It was just wonderful to get out to Central Australia. Sunny skies. Middle of winter is the best time to see it because it's not so hot. It's a bit like a mild summer's sort of spring day out there. It was wonderful.
Well, it certainly sounds like you had the weather on your side. You didn't miss much in Sydney.
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Chapter 3: What strategies help in overcoming financial hurdles?
Now, let's have a look at these roadblocks this morning. What is the first major hurdle that you see firsthand out in the marketplace stopping buyers from getting onto the property ladder?
Well, I think the main reason most people don't start is they've got no plan. They actually think about buying a property. They'd like to buy a property. They talk about it with their friends and family at dinners and barbecues, but they just don't get out there and know how to execute. The first step is to think long and hard about what it is that you need and then how to achieve that plan.
So, for example, is it a home you need? You need to write down all of the most essential and desirable things. If it's an investment property, you know, what do you want that property to do for you? Is it your first property or your second or third? You know, how is that going to help you achieve your goals? And then look at your resources and what you've got available both now and in the future.
You know, you might be on an income of 70K and go, oh, look, I can't afford that million dollar home. So you start where you're at and look at what your budgeting is, look at your financial commitments and work out how you're going to afford to buy this property. And there's also a lot of other information out there that you've got to understand. Basically, you need a road map.
And we're talking about roadblocks today, right, Craig? So if you want to get from A to B, if you want to drive from Sydney to Melbourne or Sydney to Brisbane, you just jump on the freeway. But if you want to get to a more trickier place, you've got to put your destination into the maps and work out how to get there, how much petrol to eat in the tank. Same with buying a property.
Work out what it's going to cost you and how the various steps are that you need to get there.
Yeah, and in a lot of ways, buyers are having to constantly change their expectations around property buying to align to the current reality at any given moment to market trends. So how can people do that whole process better, do you think?
It's funny you raise the issue of expectations, Greg.
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Chapter 4: How do expectations affect first-time home buyers?
That's the biggest, I guess, bugbear I have about people buying properties. A lot of first home buyers think, you know, gosh, well, you know, my parents live in this beautiful property in the suburbs, so I should be able to get something fairly similar to what they're living in now. Well, no, you can't. You've got to dial it back a few notches.
You need to get out there and have a look at what your budget can afford. So you need to go and see a finance broker, work out what it is you can afford, and then get out and wear out some shoe leather and see exactly what your budget can actually deliver. I mean, we are in a correcting market, but it's not going to crash.
I mean, don't expect a $2 million property to drop to $1 million in six months' time. That's not going to happen. So I think the key is to be realistic. If you can't afford to get a four-bedroom house, get a two-bedroom unit. Get a foot on the ladder. The other thing is to be flexible.
You know, you might start out with trying to get a three bedroom villa or a townhouse and realize, you know what, I actually can't afford it, but I do want to be in this location. I think fundamentally location is probably the most important thing to focus on to start with. And then think about upgrading the property type as you get more income and as you get more equity behind you.
Don't keep up with the Joneses. Make a start. Get on the property ladder and that way you can then start to build some equity. You know, I know for myself, I used to put up on the back of my wall a dream chart, you know, and it was fun.
You cut out pictures of magazines and statements and ideals and you put it up and, you know, you can actually make your vision a reality, not just by looking at that, but just by a visual reference every day to have some expectations and take a step toward those goals every day.
Yeah, good luck with anybody trying to keep up with the Joneses in this current market. Talking of the current set of circumstances that we face, how should buyers approach their major issue, and it is such a major issue, of getting a deposit together and also that finance approval?
Yeah, this is the biggest stumbling block, I reckon, Craig, for most people. I talk about planning, but I think second to that is getting the deposit together.
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Chapter 5: What are the essential steps to find the right property?
So obviously, if you're a younger person, getting that deposit is going to be challenging. And to be honest with you, I never got any help from my parents, but I'm actually looking to help my kids to get into the market simply because it is just such a big mountain to climb. Now, if you're trying to buy a million dollar property, you need 20% deposit, that's 200K.
And not many 23-year-olds have 200K sitting in their bank account. So how do you do that? Well, one is to knock on the door of the bank of mum and dad. The other is to do two jobs and be a squirrel saver. The federal and state governments in various areas, they have a help to buy scheme and some discounts on stamp duty. So you can take advantage of some of those advices there.
But as I said before, the key thing is go and see a broker, work out on your income what you can afford. And you might find you've just got to be patient and build up that deposit. Don't let it stop you. I mean, the key thing is don't go and spend that money on a holiday to the Maldives. Keep that for another day after you've got a property. But property is a tangible asset, Craig.
It's going to increase over time and it helps you, particularly as a younger person, with really good financial discipline. The key is saving, borrowing, scraping it all together, get that deposit together, and then get into the market.
Yeah, and one of the core things that you do is understanding the market, the trends, breaking down true valuations, in other words, taking out the guesswork. So is it fair to suggest then that some buyers underestimate, perhaps underappreciate, just how much time and effort it takes to find and research a suitable property?
Absolutely, Craig. It definitely takes a lot more time than most people give it credit for. When you're thinking about buying a property, you do need to allocate enough time. It's not like just packing up and going for a weekend away.
You do need to allocate time every week and every couple of days to keep looking at the portals, to keep going visiting opens and working out what kind of property is going to suit you. You know, you might need to attend a whole bunch of auctions on the weekend.
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Chapter 6: How important is a support team when buying property?
You're putting up your hand and then you constantly get pipped at the post. And it's like, oh, it can be so frustrating. Particularly last year, you know, during 2021, when we were going through that boom, you know, you had 15 to 20 people at an auction. And there were so many would-be hopeful buyers would just walk away with their heads down.
And that could be really soul zapping and really drain your energy. One of the things that we do as buyers agents is give that both emotional and independent advice to the client so that they can help understand where true market value is and work out what properties are worth pursuing and what ones are worth walking away from.
Most people on their own probably take around 12 months to buy a property from the time they start thinking about it, to doing the research, to getting their finance together, to actually evaluating what it's worth and then executing a contract takes around 12 months. We've found in our business, when clients engage, our average turnaround time is around 30 to 50 days.
So from the minute they sign the agency agreement with us, and then we do a brief, and then we start looking at a short list and finding suitable properties, yeah, it's around one to two months on average. And that's fairly quick, to be honest with you, because it's not about buying the first property you see, but sometimes the right one can come up. But it's about
eliminating the ones that don't meet the brief and buying the ones that do meet the brief. Don't shortcut the process of spending enough time buying your property, either a home or investment. This is, if it's an investment, Craig, it is like buying a business. You do due diligence on buying a business. Same with buying a property. You do adequate due diligence.
You go and check out the pest and building report. You go and check out the neighbours. You check out the neighbourhood. you check out the whole entire property, all the growth drivers, the local amenities in those things. And that all takes time. You can't just do that overnight.
And Rich, a few weeks ago, you gave us a really good breakdown on the team that you need to help secure a property. And I thought it's probably a really good idea just to go through some of those absolute essentials that you need on your team.
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Chapter 7: What common mistakes do buyers make in the property market?
Yeah, great question. I think it's always good to remember that trying to do it on your own is not the best way to go because you'll trip up at some point. You do need experienced advisors on the way. First thing you need, as I mentioned, is a finance broker. Make sure you've got one.
I would go to a broker rather than a bank direct because they're going to check out the best possible loans, particularly in a rising interest rate environment. It's great to get a broker to compare all the banks. It doesn't cost you anything. It's a free service because they get paid by the banks.
Secondly, you need a solicitor because they're going to check out the contract, look at all the special conditions and legalities and make sure they're on your side before you sign anything and commit to something that you shouldn't be committing to. Thirdly, you need a pest and building inspector. Whether it's a home or investment, you've got to check out that the property is structurally sound.
So don't buy a property without a pest and building inspection. Cost you $500 if there's not one available. Absolutely essential. As I said, I highly recommend getting a buyer's agent to help you in both the searching process because they'll be able to uncover more properties than you'll find on your own.
But most importantly, they'll give you really good advice around what it's worth and also find off-market opportunities for you to buy as well. And if you're an investor, you also need a quantity surveyor to prepare a depreciation schedule so you can maximise your tax deductions.
And just talking about tax, you'll also need an accountant to help you add up all of those numbers at the end of the year and make sure you're claiming every possible tax deduction you can. So as I said, there's sort of six particular people that you need on your team and very, very worthwhile paying your advisor as well to help you get a fantastic outcome.
Good on you, Rich Harvey. I know that today is going to be extremely difficult for you back into the work of it all, but it is a Friday, so you've got the weekend to look forward to.
Absolutely. It's great to have a break away. We recommend everyone have a refresher because it makes you operate better when you get back to work.
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Chapter 8: How should buyers approach their property search in a changing market?
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