Linkedin
Facebook
Email
more
The talkBIG hosts are joined by Julian Muldoon, Director and Founding Partner of 1Group Property who shares his insights into the state of the housing market in Australia and what we can expect to see throughout 2023.
Housing and the property market has become a hot topic in Australia. The RBA rate hikes have caused a lot of stress for many Australians – People who are trying to enter the property market are struggling because they can’t borrow as much with the higher interest rates, a lot of people with mortgages are seeing their assets drop in value at the same time as their repayments increase, and we’ve seen a significant increase in rental prices .
In this episode, Andrew, Young and Chris chat to Julian about the current state of the property market, and ask the burning questions every Aussie wants answers to.
Highlights include:
- The state of the Australian housing market in 2023
- Will housing stock levels increase?
- Forecasting opportunities for new builds and property development
- Will house prices stay low or can we expect prices and the property market to rise again?
- Is the property market going to crash or is 2023 a good year to get into the market?
- How can people looking to buy their first home get into the current housing market?
- Why are rental prices so high right now?
- Are apartments a good investment in Australia?
Take a listen and subscribe to talkBIG on your favourite podcast platform.
Please note: the information shared on this podcast is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making an investment or trading decision you should consult with your financial adviser & consider how appropriate the advice (if any) is to your objectives, financial situation and needs.
For expert financial advice tailored to your personal situation, please reach out to one of our wealth management specialists.
EPISODE TRANSCRIPT
Andrew Sykes: Well, hello, everyone, and welcome back to the RSM talkBIG podcast. My name's Andrew Sykes and I'm joined today by your regular hosts, Young Han.
Young Han: Hi.
Andrew Sykes: And Chris Oates.
Chris Oates: G’day everyone.
Andrew Sykes: Well, welcome, everyone. And today is probably one of my favorite topics. We're going to talk property. We’re going to talk resi property in particular. And to do that, we're joined online by Julian Muldoon from 1Group Property. G’day Julian.
Julian Muldoon: G’day Andrew. Hello, everyone. Great to be here.
The state of the Australian housing market in 2023
Andrew Sykes: So, Julian, property expert, we've had him on before and he's going to be here today and share some insights into the current state of the housing market and what he thinks 2023 is going to look like. And what a year and what a time.
Andrew Sykes: We're sitting on the back of the ninth RBA interest rate rise in a row. We're starting to see some real stress come in for Australian property owners and those with debt; it's really starting to bite. And a lot of people are worrying about property, but also a lot of people are starting to say, well, what's the opportunity? I love down markets in property rather than booms, because when property prices go down, you have opportunity to buy.
Andrew Sykes: I personally find it hard to buy when prices are going up strongly, so I’d be really interested to get some of Julian's take on where he sees prices now, where we're at in the cycle and how we are going to look going forward.
Young Han: It will be very interesting because, you know, I'm in a different life cycle. I've got a younger family, bigger mortgage. I’ve not gone through that property crises in my life. It's probably the first one that I've seen in my life that actually was really low and then gone down, up and down again.
Andrew Sykes: That's a really good point. Many of our listeners have only ever seen property go up.
Chris Oates: Particularly in the last few years, just that run that the property markets had and it's been a real shock to the - well, to everyone. With our clients from financial advice, talking cashflow, talking the impact just to people's lives. It's… Yeah.
Andrew Sykes: Yeah. So Julian, what sort of impact have you seen since rates have started to rise?
Julian Muldoon: Well, first of all, just to kind of backtrack on the comments around the negative side of it and not being exposed to it. It has gone down the last couple of years because at the start of COVID it went down, it went significantly down. And that was probably the best opportunity we saw, jeez, in the last 20 years - was the start of 2020. And I'd say looking back over the last 12 months, the second-best time was as soon as the rates started to go up.
Julian Muldoon: Sentiment went through the floor and property values followed for a really, really short window. And then they kind of rebounded a little bit again, especially in Melbourne, Sydney and Brisbane. But now it seems to be a more steady decline across all capital cities, now. The only place it is in positive territory is really Perth, which is a pretty unique economic and property climate.
Andrew Sykes: Okay, so you’re picking up on that when COVID - when the pandemic first started - we saw a bit of a selloff in property, didn't we?
Julian Muldoon: We did, yeah. I mean, listings went down about 40%, which was not too dissimilar to what we saw last year as well. So, the market would have been a lot worse last year, I think from a value point of view, if the listing's maintained.
Will we see stock levels increase in the residential property market in 2023?
And that's really the big question for this year too. If buying power diminishes, there's less buyers in the market because they can't afford to buy what they want.
Julian Muldoon: Are we going to see stock levels increase? If stock levels stay relatively low, there's less buyers, less sellers - then the market would definitely decline somewhat. But how significant that decline is, we'll have to wait and see.
Chris Oates: I think one of the biggest things of what stock could come on the market is... we've seen interest rates - and people were able to fix in such low rates - and the impact that that's going to have. Just in 2023, in this calendar year, there's something like 800,000 fixed loans that are around that 2% or under 2% interest rate - that have to come off. It's something that, with the increase that's been there, it's something that hasn't been seen for 40 years.
Young Han: I think that will definitely have an impact because I've seen some people that got onto the market and bought because the interest rate was such a low rate, so they could afford it. But now with the interest rate going up and then the fixed deal is going to expire, they might not be in a position to be able to actually afford it.
Andrew Sykes: So Julian, as you can tell, there’s a bit of fear out there about this fixed interest rate dropping, right?
Julian Muldoon: Yeah.
Andrew Sykes: What are you seeing? What do you think?
Julian Muldoon: Well, if you go back to when rates were around 2%, I mean, we always ran our cash flows for investors at 5% and 6%, we never change that. If anything, it goes up from there, not down from there. And I think the banks are running around the same levels. But if rates get up around 6% or 7% in the pocket, then that means that we're up above those assessment buffers.
Julian Muldoon: So it's a bit of an unknown as to whether people can afford them. But I mean, also, if you go to investment properties, I mean rents are up anywhere from 10-20-30% depending on where you're situated. And the vacancy rates are below 1%.
Julian Muldoon: So, you’re not going to have a vacant property and therefore no income. It's whether you can cover that difference. And I think when you’re looking at owner occupiers, I mean they're not going to firesale their home because rates are high. Because you would think they're still going to be employed.
Forecasting opportunities for new builds and property development
Julian Muldoon: I also think there's a lot of positive pressure out there as well. You know, immigration's firing up and that's going to put even more pressure on the rental market.
Julian Muldoon: Construction levels are declining rapidly because a lot of new builds are just not feasible anymore and build prices are too high and new building starts are backing off, as are renovations. So you can see how the other cycle starts to build. Population grows, less development starts, less projects are feasible. And then naturally you'd think that within, say, ‘24, early ‘25, if rates are back down around 4%; you could see another swing that's in the market that's really, really positive.
Julian Muldoon: I think one of the questions that everyone's got at the moment is, well does that make 2023 the Year of Uncertainty or the Year of Opportunity and there is a pretty compelling case to say that that is the case.
Will house prices stay low or can we expect prices and the property market to rise again?
Andrew Sykes: Yeah, what you're saying really ties in with something I've seen over my career as an accountant. Is that house prices tend to be what we call really sticky downwards. So they'll shoot up, but they don't really tend to - it's really hard to push them down because as you touched on, Julian, if the price is not right, people just won't sell unless they're forced to.
Julian Muldoon: Right. Well, the data on that is in the last 20 years, I think it's been five times that the property market's gone into decline. When there was regulation around investment lending and Royal Bank commissions and, you know, federal elections and negative gearing talk - about being abolished and so forth. All of that put the market into negative territory, but it only ever went down between 5- 10% and places like Sydney went down the hardest, generally and most of your smaller markets like Adelaide, Canberra etc are places that tend to hold up reasonably well.
Julian Muldoon: And we've already really seen that 10%. Which is not a perfect indicator of future performance, but historically if you look at how the markets performed, it really only ever got 10% below its peak and this time they're picking it to go 15- 20%.
Julian Muldoon: If you consider that this is a more drastic decline that's predicted, then once again you would say, well, okay, once it goes back the other way… It's going to go pretty hard, especially if we've got all this pent-up demand in the buyer market because of a lack of affordability around higher interest rates, plus the population growth that we're expected to see.
Julian Muldoon: From that point of view, it could be the most severe downturn and the best opportunity.
Young Han: And I think that's why it's important to have a strategy set up even when you're actually buying a property, just like when you're looking at the share market, investing in the share market or whatever your other investments are…. When it comes down to it, property investment is a long-term thing. You shouldn't be thinking “Oh, it's peaked, I need to sell,” and “It's down, I’ll buy.”
Young Han: You shouldn't be doing that because you are never going to be perfectly right at the right time.
Chris Oates: Yeah, It's the old saying of time in the market, not trying to time it.
Andrew Sykes: Yeah. But everyone touches on predictions and forecasts. I find it really funny that we're happy to listen to the predictions of people who are now picking a drop and nobody picked the boom over the last two or three years. I think forecasts - I always take any forecast, good or bad, with a grain of salt.
Julian Muldoon: Yeah. And that's where it becomes down to the quality of the asset you're investing in and whether it fits into your long-term objectives. And, you know, it's probably an amazing time to upsize. It's a difficult time to buy newer property or new builds. If you look at premium suburbs where someone's got a nice contemporary home they built three or four years ago.
Julian Muldoon: Well, the cost to replicate that is significantly higher than potentially the comparable sales that are historical. So people are paying premiums at the moment for renovated properties or nearly built properties in more blue-chip suburbs. No one predicted that either. There's little small subsegments that are growing really, really well.
Julian Muldoon: And then there’s major infrastructure investment in places like the Western Corridor of Melbourne, Western Sydney, the Aerotropolis around Badgerys Creek. There's so much going on. Which is all these little anomalies that are just not as widely impacted by all of that macro stuff. Because people are moving there for job opportunities or there's rezoning of areas happening. I think we all still get a bit too stuck in the big macro drivers and forget that, well, hang on, there's actually a significant amount of really positive stories that are happening, but more at a suburb and regional city level.
Andrew Sykes: What you're saying, if I read between the lines of what you're saying. Take consideration to those macro drivers; interest rates, what's happening. But focus on the underlying asset, the quality of the cash flow, the reasons why a specific property should either hold its value or increase over time.
Julian Muldoon: Correct. 100% right. I think what can happen now is… What happens when the market rises rapidly is that everyone just buys anywhere and the tide rises. And similar returns happen across a vast number of suburbs - that are not equal suburbs. Similar properties perform exactly the same, even though one is on a busy road, one isn't. Because everyone just prices everything the same.
Julian Muldoon: Then the market, slows down, goes out, the tide goes. Then all of a sudden the quality suburbs or the quality drivers maintain or continue to grow. We all know it's harder to buy in premium suburbs all the time, regardless of really what the macro drivers are. And I'd say the same is true now. If you've got big things happening like a new airport, you've got new transactions happening and schools are being upgraded. Well, they're areas that are going to continue to perform reasonably well.
Julian Muldoon: It doesn't mean that they grow every single month of every year, but they're going to perform really well. And the time to get into those areas is now when the sentiment is down and there's less competition. Because they’re probably going to go harder than everywhere else when the market swings the other way.
Is the property market going to crash or is 2023 a good year to get into the market?
Andrew Sykes: Yeah, okay. Well, I'm going to get straight to it and ask you the question that I want to know - and I think everybody who is listening! And noting this is general advice and not advice for anyone to go out and buy a property. But the question we always get asked: is the property market going to crash and is ‘23 a good year to get into the market?
Andrew Sykes: Is it going to crash or are we buyers? What's your take?
Julian Muldoon: The truth is borrowing capacity is going backwards. If you could afford a million dollars 12-18 months ago, you might be down to around $850k now. With that really baseline scenario, you'd have to assume that the buying power is not there. The values are going to slide. But once again, it really depends on what kind of stock levels come through and also depends on the areas you look at. Because I'd say there's a lot of new property belts where you might have 90% lands and people bought at real premium prices and there's going to be a significant decline in values in those areas.
Julian Muldoon: Or you could have some larger projects where bill costs have blown up and they're trying to readjust contract values. And once again, it just doesn't meet the established property market value. So therefore, there's a bit of a discrepancy between what people are paying and what they are really worth. So, there's definitely going to be some real hurt pockets this year.
Julian Muldoon: But are they property styles you would be buying? And then generally we say, well, no, we're not really wanting to invest in those areas. We're looking at more established suburbs and more established properties, essentially. And in most of those areas, a well-located property that ticks all the location drivers, they're generally going to hold their value quite well. But there will be opportunities that fall through the cracks.
Julian Muldoon: There'll be what we would call assets that are listed at the wrong time. There just isn't the buyers in the market in that moment, and they’ve committed elsewhere. And they've got to sell and they need to get a deal done and they lived in the house for 20 years. They don't want any money on it so whether they sell it for $1.2m or $900k really doesn't matter. They're not trying to get rid of any liabilities. Those kind of opportunities are going to be in abundance this year. But you’ve got to have a wide lens on the market. So if you research one suburb and watch it for 12 months, there may be no dream opportunities that pop up.
Julian Muldoon: So you've got to have a much wider lens, a lot more research, a lot more irons in the fire. And you’ve got to be willing to show up and do due diligence on a lot more assets, attend a lot more auctions, see what passes in. Vendor situations are massive this year.
Julian Muldoon: And agents are probably going to make 60% of what they made in the last couple of years. Are they going to be willing to do deals and pull properties onto the market? I think if you’ve focused your energy in the right areas, I think this year is going to be a phenomenal opportunity. That's what we're seeing. But it's got to be something that you can afford to do with higher interest rates as well.
Andrew Sykes: So you're sticking true to that theme of good quality assets that have potential to grow. Good areas, good assets. But you're saying do the extra research, be patient and use this year as an opportunity to get a good quality asset at a better value price.
Julian Muldoon: 100%. And look, bigger blocks that you can subdivide. I mean, no one's buying them at the moment because there's just no immediate opportunity. There's too much risk there’s the higher holding cost because it's less income on a on a more expensive asset. I mean, if you've got a bit of cash and you can mitigate some of that risk because you can go in with a lower LVR, for example, then that's an opportunity.
Julian Muldoon: I think this is where tailored strategies are absolutely critical this year. It's really hard to give blanket advice, and blanket advice is probably a risky thing anyway. Because everyone's going to have a totally different personal dynamic, financial dynamic and property dynamic as to what they want to get out of it. And also different risk appetite at a time like this as well.
Julian Muldoon: But yeah, there is definitely some subsectors from a property style point of view and you know, things like for example, multi-unit sites where there's 4 to 6 units on the site. They were 2% yield, but they’re back up around 5% and 6% yields again. All of a sudden that's an opportunity again.
Julian Muldoon: So I think it's really important time to seek advice, get a clear strategy in place. Because there's opportunity in a lot of places that maybe you’re not looking. And then if everyone's sitting back waiting for the tide to turn, well naturally you’re just gonna have more competition when that happens.
How can people looking to buy their first home get into the current housing market?
Young Han: I think that kind of gives us a bit of relief that it's not as bad as we think. The scary interest rate rise is not going to be always the negative thing. I've seen a lot of people and especially my age group, there are people who's looking to buy their first home and saving up for it.
Young Han: And but then because of the interest rate, they're afraid of it. What's the advice that you'd like to give to them?
Julian Muldoon: Yeah, cracking the market's really challenging. And I think that's something that - depending on where you live in Australia - is a different scenario. For example, the Sydney market's really tough because rents are so high. If you're renting and trying to save your deposit for a home in a market where prices are also really high, it's a really challenging dynamic. And even if you're making great money, it can be tough. And if you add kids into the equation, all of a sudden you can get locked into renting for a long term.
Julian Muldoon: Whereas in smaller capital cities it tends to be a lot more achievable. Canberra is perhaps a bit of anomaly around that, through the median price there.
Julian Muldoon: But you know, I think I’d just encourage them to consider medium density and high density assets OR moving further out of town and being willing to travel. I think a lot of people get frustrated at the housing market, the middle ring in inner cities is unaffordable. Well, that was probably the same for every generation that's come through. Not many people have been able to buy the single fronted Victorian terrace walking distance to the MCG for their first property.
Julian Muldoon: You've got to start thinking about these other properties styles - that are probably more suited to the budget as well. And look, it is a really tough decision because if your dream is to be in the housing market but you buy a unit... Well housing market performs at 8%, units are at 3% - you can get priced out over the next 5 to 7 years.
Julian Muldoon: So it is a big question whether you trade the lifestyle for the suburbs. And I think it really comes down to what you ideally want to be in with your future family dynamic. And the good thing now is that the flexibility around work, which has allowed people to say, well, look, maybe I will move to Wollongong or Geelong or Newcastle. And maybe I will chase a lower price point and a better lifestyle but still maintain my capital city income.
Julian Muldoon: So I think that's a pretty special landscape that we didn't have two years ago.
Young Han: And that that's exactly spot on with what I've gone through. When we first married we had a one bedroom apartment in the Canberra CBD and then we just sold that. And with the kids starting up school, we were actually looking at the suburbs that's got a good school, are safe and easy to get around.
Young Han: And we just invested in that kind of house property in a good catchment area, especially with education. And that's exactly what we did.
Andrew Sykes: Yeah. And Julian, you touched a little bit on timing there. I will say that another thing I've learned in my career is: it's never a good time to start a family to start a business or change jobs or buy a house. It's just do it when you can, because if you wait for perfect timing, it's never great.
Julian Muldoon: Oh yeah, there's advantages to both things. Have kids later in life, you're more financially set up. But you're going to be a lot older when the kids are growing up. And the other dynamic is you’re getting in early and you may be forced to move out to the suburbs to find that space. I mean, we're pretty lucky in Australia that most property markets perform reasonably well.
Julian Muldoon: And generally speaking, it's the strategy that does yield returns over the long term. And if you manage it, your debt reduction, well and you pick the right property, I mean it can really set you up to give you a lot of options to either go coastal or move closer into the city. And I think choice in options is what everyone is looking for.
Andrew Sykes: So you're saying, even if you’re a first home buyer and your budget limits you to, say, an outer suburb, there are still good opportunities there?
Julian Muldoon: Oh definitely. And I think the rentvesting strategy is a really powerful one at the moment, too, while rates are higher. You can use it if it's relevant, suitable; and negative gearing will offset some of those costs. And continue to rent in a cheaper area. I mean, that's a strategy that works really well in Melbourne where you can rent relatively cheap properties compared to places like Sydney. Doesn't work as well in Sydney.
Julian Muldoon: But there's definitely ways you can and I did that personally. I mean, my first three properties were investment properties that I rented out in blue-chip suburbs that I couldn't afford. And then selling off those properties allowed me to buy the family home when I was ready. There's so many ways to tackle it, which actually gives you the best of both worlds, which I think we're very lucky to have here in Australia.
Young Han: Yeah, and each year our government has different incentives for the first home buyer. I think the last year was that if you were in the home before, but then if you've rented - so you sold your home - and then you've been renting for two years, then you're eligible to receive the grant again. So it's actually also important to look at what's available and utilise that rental market as well as investing.
Andrew Sykes: Yep. So: get advice.
Chris Oates: Well, that's exactly right. That's what I was going to say. The key thing is to talk to the people that know what they're doing. We’re all good at what we do, whereas look at Julian, who is good in the property market.
Why are rental prices so high right now?
Chris Oates: But also, we've touched on rent and yield a few times, Julian. You say Melbourne, you can do it. It's a little bit cheaper; Sydney is a bit more expensive. Overall, I think rental prices have gone up. What's driving that?
Julian Muldoon: Well, yeah, it’s really fascinating. I mean one of the things that scared us the most, being in the property game two years ago, especially - we're in Melbourne, Sydney and Brisbane. But being in the Melbourne office was, you know, no immigration. We thought, wow, you know, two and a half percent population growth for so many years, now it's gone into negative territory. We're losing people. What’s gonna happen to the rental market?
Julian Muldoon: Because if vacant properties, no income, and then people losing jobs - that's a diabolical situation. But it ended up being that none of it happened and it was the expansion of single households that was amazing. I think there's about 35,000 new single households formed above the norm.
Julian Muldoon: People decided they wanted their own space and they needed to work from home. So they need to have an office, they don’t want to be in share houses. And I'm sure there's probably some relationships, too, that unfortunately didn’t make it, which added to that data.
Julian Muldoon: And apparently it's been a growing trend, and what COVID seemed to do is accelerate people moving to regional and smaller capital cities. Which is already happening, but it accelerated it. And it accelerated the expansion of single households as well, which is really fascinating. But also to a lot of these coastal regions that had, you know, 40% rental market, all of a sudden people were buying secondary assets, lifestyle assets - and a lot of investment properties turned into homes.
Julian Muldoon: So, if you go to the coast of Victoria, I mean there's just no long-term rentals down there anymore because a lot of people bought holiday houses and then a lot of holiday houses are on short term rental. So that's really squeezing the market there as well. Same with AirBNB. If you go to small places like Noosa and Port Douglas and other places, it’s very hard to get long-term rentals.
Julian Muldoon: So, I think there's a number of factors that are really feeding into it. And really the big one was it just accelerated a lot of what we were already seeing with how people were choosing to live.
Chris Oates: Yeah, I know quite a few people that have moved or went down to the south coast of New South Wales.
Young Han: Yeah, because you can work from home!
Chris Oates: Yeah. I spent weeks and weeks there.
Julian Muldoon: Not a lot of elasticity in that. They are some of the markets I think could have some risk this year as well. Not all. I think the affordable price point in coastal regions will probably be okay, but I think the more premium might struggle. A lot of bold decisions to buy, you know $2-4 million properties in coastal areas that I think a lot of buyers are not going to be using enough to justify at 6-7% interest rates if they get up around that. So that's definitely going to be an interesting one to watch.
Andrew Sykes: And that's a really important point, isn't it? That pricing ultimately is driven by supply and demand. If we see there's probably, in some of those regions, only a limited demand for coastal property in the $2-4 million range, it's not going to take a lot of sales to get some real pressure on the price.
Julian Muldoon: No, definitely not. And that's what the media love and they'll put it up as a headline, you know, 40% drop in postcode ABC. You saw it when the city market went down. You know, the biggest drop in 40 years they were calling it late last year and it was all over the fin review and all the reputable media sources. And if you look closely at the data, it was only the top end of town.
Julian Muldoon: Most of the kind of $700k to $1.5 million suburbs are actually still growing. It was just that the blue-chip had come back rapidly, which it always does. It rises rapidly, it comes back rapidly. And naturally, that's what makes the headline. So the other guidance I’d give is: if you read a nasty headline, read the article because sometimes there's a bit more detail on it.
Andrew Sykes:Yeah. And that's right. It's a lot of fear and bad news sells newspapers, as they say. You don't get a lot of people reading if you write an article that says everything's okay.
Julian Muldoon:Just one thing on that too, Andrew. The game plan that was mentioned earlier is super critical, because if you don't have a game plan then you're making decisions on a whim. And if you do start to get negative sentiment or a friend of yours gets in your ear and says, “I know that you should do it now,” you actually start to get really uncertain.
Julian Muldoon: I think the uncertainty around what decision to make is almost more stressful than making a decision. And yeah, you are a bit of a yo-yo to the media and to other people influencing decisions. If you're not leaning on professional, independent partners, it can really help you get the right game plan in place.
Andrew Sykes: Yeah, and that's particularly emphasised when we say, okay, well we're not buying property for a month or two months or even two years to make a short-term gain. We're buying property to live in it, or as a long-term investment. And if we consider property over a 10, 20, 30 year cycle, timing becomes irrelevant. It's about your capacity in your plan to be able to buy in your strategy. And how you set yourself those goals so you can wake up at the start of each week and say, okay, what am I doing this week to move myself towards that goal of buying an investment property or my first home, etc.
Andrew Sykes: And then once you get to that point, don't worry about the market, get some advice, get a good asset and hang in there for the long term. Seems to be how it works best.
Julian Muldoon: Definitely, Definitely.
Are apartments a good investment in Australia?
Andrew Sykes: You did touch on before Julian about apartments and apartments grow at 3% and housing at 8%. Apartments come down more when we have a downturn as well. They don't grow as quickly and they come down quicker. What's your view on that?
Julian Muldoon: It really depends on what's driving the market. Like last year we saw houses come back a lot more significantly than units. Units generally take a lot longer to get moving in an upward cycle and then they have a longer tail at the back end of it, especially when it's driven by affordability.
Julian Muldoon: So for example, places like Brisbane where the apartment market has been relatively weak for a number of years. It meant that there was no supply coming in. So once the housing market moved to a level that was considered kind of unaffordable for the average buyer, all of a sudden they moved to medium density and high density.
Julian Muldoon: So it's got to be driven by affordability and that’s generally why apartments don't perform well in smaller cities like Adelaide or Perth in a lot of cases. And there's always exceptions to the rule. If it's a beautiful building in a unique location and you know, oversized place and views etc. But the general buyers apartment, you've got to be buying in places where it's driven by affordability. I mean Sydney, the Eastern suburbs of Sydney's apartment market is on par with, you know, the Melbourne or Canberra housing market. And that's purely based on the fact of the lifestyle and affordability drivers in those areas.
Julian Muldoon: And then also, too, the supply is the hard one. I mean if you buy a middle ring house, which is a 10-15km radius, generally in most capital cities, from the CBD…They’re reducing the supply for you because they're knocking them over to build townhouses.
Julian Muldoon: So if you buy a house and there’s 100 other houses, pretty sure in two years there'll be 80 houses and another two years there’ll be 60 houses. They're slowly disappearing except for the character heritage or the really big ones. With houses, the supply/demand equation is getting better and better, whereas buying units, the supply is always growing, always growing.
Julian Muldoon: Unless you're in really tightly held catchments like Melbourne would be. East Melbourne, you know, places like that where there's very limited places and parcels to build. So that's the challenge with apartments, there's always supply coming through.
Andrew Sykes: Excellent Julian, thanks for that, mate. There is some really good advice in there and that's about long term about getting quality assets, about planning what you're doing, having a strategy, get advice, have a strategy about overall buy a good quality asset. You're not going to worry so much about the market. Guys, that's all we've got time for today.
Andrew Sykes: Julian, thank you very much once again for joining us. Your advice is always appreciated, mate.
Julian Muldoon: It was an absolute pleasure. Thanks for having me.
Andrew Sykes: And Young, Chris, and from all of the team at RSM; this has been our talkBIG podcast. We encourage you to subscribe wherever you get your podcasts from and also recommend it to a friend as well. We'd love to have more subscribers. Thank you once again for your time and we look forward to catching you on the next RSM talkBIG podcast.
