Chapter 1: What is the main topic discussed in this episode?
It's The Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of The Real Estate Podcast, available on iHeartRadio and also Spotify and Apple Podcasts or wherever you get your podcasts from. Well, it's Sunday the 24th of April for 2022 on this long weekend.
Remembering the Anzacs and the Fallen tomorrow on what is the most important day, I think, of the year, Anzac Day. Good luck if you're having breakfast this morning, getting ready to either view property around Australia or attending that all-important auction, wherever that might be. It's the main centre forecast with propertybuyer.com.au. Alright, let's have a look at the weather forecast.
Firstly, in Sydney, expecting one or two showers today and a high of 23 degrees. Melbourne, mostly fine with 19. Brisbane, also one or two showers with 25 degrees.
Chapter 2: What are the latest trends in Australia's rental market?
And in Perth, possible morning smoke again. It will then clear to a mainly fine day and expecting a high of 29 degrees. We feature market updates, interviews and trends. It's your real estate podcast for breakfast. Well, demand for rental properties in capital cities across Australia is nationally rising at their fastest pace in seven years as supply is squeezed.
That is according to the new PropTrack rental report, which shows the first three months of 2022 shows severe shortages of stock. The report also shows the high increases in the rental demand per listing metric, which measures how many would-be tenants are viewing properties on realestate.com.au.
Melbourne and Sydney have seen the steepest year-on-year increases in demand per listing, which is up to 59.6% and 52.2% respectively to new highs. And demand is also up in Brisbane to 32.2% in the 12 months to March, while Adelaide's measure is 29% higher year-on-year.
So rental demand per listing nationally combined across Australia has increased by 37.1% year-on-year, and that demand is putting upward pressure on price growth. It's your real estate weekend podcast in review.
Well, earlier this week, we looked at the concept of sharing the cost of a mortgage with somebody that you know or potentially somebody that you don't to buy a property and share the cost of a mortgage. And I spoke to Rate City Research Director Sally Tindall. Well, it's all about thinking outside of the box. And so for starters, the obvious choice is to potentially, well, to buy with a partner.
But if you're not married or if you don't have that special someone in your life, that's not often possible. And so... Looking to a family member can be an option. Looking even to friends can be an option. However, it doesn't matter who you buy with. It's really important to sit down and make sure you're both on the same page.
You've got to think through the short-term strategy, the medium-term strategy, but also the long-term strategy for that property and for your plans. Otherwise, it could get quite messy quite quickly. You know, I'm just thinking the first question is probably, how much do you earn? Absolutely. You've got to go and sit down and work out how much you as a combined force can borrow from the bank.
And that's really important. But it's also really important... not just to accept what the bank says you can borrow, but to really map out your finances and have a buffer in there to plan for uncertainties.
Like if you're buying with someone that's a friend, you've got to work out who's paying for what when the roof breaks, when the roof leaks, sorry, or the hot water system blows up or strata decide to put up the levees.
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Chapter 3: How can sharing mortgage costs help first-time buyers?
You know, there are all sorts of costs that come with a house. It's not just the mortgage. Yeah that is true and the other thing about this is not to look at this as a radical thing but rather a necessary thing for the times that we live in and Aussies are pretty good at thinking outside the norms. In fact if there was a gold medal on offer for that Australia would win it every time hands down.
So I wonder Sally how much of this has a little bit of a stigma attached to it perhaps, or a bit of a class thing where maybe some of us are saying, oh no, no, no, this is well beneath me. It's funny. It's interesting. A lot of people want to live where their parents lived and they're looking to buy in a very specific area and they're hoping potentially to buy by themselves.
And the reality is property prices have changed so dramatically across the nation that you might not be able to afford the same area where your parents grew up or where you grew up. And that's okay. It's important to, you know, if you want to get a foot onto the property ladder, it's important to, you know, explore all options, understand what's available to you.
It could be that you need to look at something a lot smaller than you had envisaged. You don't need to buy your dream home straight away or potentially
looking in a completely different area, moving further away from where you work and commuting in or potentially becoming a rent vester and where you buy a property in a different location, you rent it out to someone else and you rent where you want to live. It's all about thinking outside the square if you've got that dream of getting a foot onto the property ladder.
Yeah, and that's really the point. If you want to get into this market, you've got to be thinking outside the square. And people will be making some excuses. They'll be saying, oh no, what if this?
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Chapter 4: What are the risks associated with flipping houses now?
What if that? Like one of them could be, let's say a couple of best friends go into this scheme and one of them loses their job. It's a bit of a road bump, but it's not insurmountable. And this is where we come back to, it's so important to work out all the different variables and have a plan, have a strategy in place.
It's never really going to unfold the way you think it might, but at least if you've war-gamed certain strategies and certain scenarios, then you can adapt it to whatever comes your way. So sitting down and getting legal advice is an incredibly good idea. But also just talking through what would happen if one of you lost your job and that one of you couldn't make the repayments.
Working out whether you would at that point sell or whether something, you know, you'd have some alternative plan in place. Talking and communicating is key in these types of arrangements. It's your Real Estate Weekend podcast in review.
Well, earlier in the week, we looked at the dangers potentially of flipping houses and being caught out paying too much for a property, then compounded with the cost of the reno itself. Is the time right now in the present market, is it a time to take stock and be more cautious around property flipping?
Well, I spoke to James Elgar from Mortgage Choice, who has first-hand knowledge of dealing with clients and mortgage lenders. For the last two years, we've seen some of what I would term to be those professional property flippers, you know, slash small-time developers.
They've really started to slow down and back away from the market, not just in the last few months where it's much more apparent, but probably over the last 18, we've seen some of those clients having conversations now saying, hey, there's not enough value versus the risk. Or we're competing with people who are just paying huge money in the hope the market keeps booming.
So even more so in the last couple of months, there's been the odd record price paid in some suburbs. But on the whole, most of those big prices are not being paid by those professional flippers. You've got people thinking, well, we hopefully see some double digit growth again this year. So if I end up paying a bit more now, I'll collect it back in the future.
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Chapter 5: How has the property market changed in recent years?
You would need to take a few brave pills to be doing that right now. And you were saying that you're seeing mostly professional types that are doing the flippings. Of course, you're always going to get some people that have watched a lot of the block and thought, gee, yeah, I could probably flip a property or two.
I mean, they're going to be really exposed if that type of person has gone out and overpaid for a property. Most of the flippers, you're saying that they are tradies, they're professional people. Yeah. That's right. So, we do still see the odd lifestyle flipper still around. They're the, like you say, the people who've seen the TV shows, the block and decided that might be a great lifestyle.
But, you know, 9 out of 10 probably of the clients I'm dealing with are active trades people with a plumber or electrician or a builder who have a day job, which naturally leans towards their ability to deliver home improvements or property subdivisions or extensions, renovations, that type of thing.
I've got countless plumbers and electricians who are still very confident they'll deliver profits from turning property over because their costs to do those renovations are substantially lower
And tell me a little bit about the challenging times for loans because starting to hear that there is more of this private equity loans around, I guess some people are going to fall into one way or another potentially. Yeah, look, it's continued growth in that private equity lending. The cost of funding is substantially higher than your mainstream lenders. That's, I think, twofold.
One is lending standards. Responsible lending rules have seen a lot more of the mainstream lenders pull away from lending for property renovation or development per se. where that space has definitely been filled with the private equity lenders who are looking to get in and out and help people turn property over and help them make a big piece of the action in return.
But obviously that comes with an increased risk too, because typically that's commercial lending.
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Chapter 6: What should buyers consider when entering the property market?
It's not so regulated. And so giving consumers that level of protection they might assume they'd get with a typical home loan. Yeah, we're definitely seeing more of that private lending. It's almost certainly as a result of tighter lending standards, which have all been put in place for the right reasons.
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