Property, politics, and the battle over facts

This is a Momentum Media production. And here we are live on a Friday morning, 10 ish AM. Phil Tarrant, Liam Garmin, welcome to Property Buzz where we navigate and uncover, discuss, interpret what's happened over the course of the last five days as we enter the weekend and everyone's getting out there or some people getting out of there looking at real estate and property. Try and give a sense of what's going on with the world, some narrative to it. Very popular, people like it. We're not very PC on this. We'll get stuck into the issues on the basis that we play the ball and not the man because that's not cool. But lots of issues in and around property, property investment, the economy and everything in between because we all know a real estate story is a story of Australia. It's ingrained, it's embedded, it's probably one of the most contentious talking points right across the nation, no matter who you are or where you go or your view of life and the color of your politics, everyone has a view around real estate. And there's the sort of things that we try and talk about without too much bias. The one man with plenty of bias is Liam Garmin. I've been known to play the man. Liam Bias Garmin. Liam Bias Garmin. But you know what? It's one of the reasons that we do this. And I think it's very fair that everyone's got a bias in this industry. You talk about the selling agents. There's never been a better time to sell is what they all say. And you know what? Maybe in a market where it's going down, maybe that actually is true. Maybe it is true because if you sell now and then 12 months, you hold onto your cash and then you buy in the low market, maybe it is true. But to a selling agent, there's never been a better time to sell. To a buyer's agent, there's never been a better time to buy. And throughout the course of the podcast today, or the live stream, because obviously we're doing this live, but we're going to be talking about some radically different interpretations of the same data that's coming out. And you've got experts on one hand saying that, oh, actually, no, prices are going to dip a fair bit further. And then you've got people cherry picking the data on the other hand saying, no, it's actually a really healthy, resilient economy. For us, we've got skin in the game, but not being in the business of selling or buying literally as a day job, we can call out the BS a little bit. Well, speaking of BS, I have my beef of the week, which I like to kick this off. Beef of the week. And we haven't spoken about this. And so I'm going to put you on the spot, and that's the way we like to do it on property bars. It's not really property bars, but it is property bars. So let's just go for, we have many different hats in lives, and we do many different things professionally. And podcasting is one of them. Some would say more traditional journalism is some of them. I obviously, the company director, I run technology companies. So I do a lot of stuff, right? But at the very heart and core of a lot of the things that I'm involved in is a media business called Momentum Media, which has been servicing Australia's professional audiences and markets for nearly 20 years, right? Pretty big business, cool business, does lots of good things. Anyway, what do you know of, or what have you heard of the government's funding of media houses? The journalism- The Journalism Fund or something. Yeah, yeah. The News Media Assistance Program, of which one was the Journalism Assistance Fund. So this is a fund created by the government to fund journalism. And it happened earlier this year. Momentum Media did not participate in it. And even if we did participate in it, I don't think we probably would have received any funding because we're probably not the version of media that the government is interested in funding. So about 60, I think 67, 68 million bucks has gone out earlier this year to all these media houses. And the idea is that it's there to be sort of promoting community-based media and all this sort of journalism, backing journalism and stuff, right? But Momentum got zero cents, nothing whatsoever. But I'll tell you who did get a lot of money was a lot of the left-leaning media outlets and houses, including many of the majors. So they took the lion's share of the funding. And there was a, I think they sort of gave money out of maybe 100 or 200 media companies, but the majors got the most of it. So the question I have, the beef that I have is, are they buying favorable commentary, they, the government, by funding these, what a lot would say, more left-leaning media houses? I've got a bit of a beef with that. Well, I mean, you've done more research and I have my knowledge of it really is only the headlines, but I mean, the headlines still tell quite a lot of a show that some of these large media houses do get several million dollars. Many millions. You know, so even though you might, and I'm not going to name them, but even though you might say, oh, there's such a household name, okay, publishing's in a, you know, for our listeners, publishing's in a challenging position. It's democratized, you've got online influences, you've got Facebook, you've got all these different things. People aren't going out every day and buying their $3, you know, newspapers. You know, that's the world that they live in. That is, people not buying the $3 newspapers is a multi-million dollar hit every day that these businesses have. So yeah, you know, millions and millions of dollars for even what you would consider a household name, people might not think it's a lot. It's massive. Of course, you're going to be buying off. I can't think of it any other way. And you and I haven't spoken about this, but I couldn't rationalize it in any other way, or at very least your shareholders, your board people would be like, even if there were no strings attached, let's say there were no strings attached and it was just to help healthy and informed debate from the government, I think you would have a lot of board members and senior staff that would be like, even if there are no strings attached, let's not rock the boat because if 12 months rolls around and we don't get more money again. Well, the conspiracy theorists are saying, well, isn't it funny how the funding goes up to the point until just after the next federal election? Who would have thought? It's a story here. Yeah, it's $67.6 million federal money subsidizing the wages of more than 2000 journalists and 185 media organization sparked debate over independence and editorial influence. So, you know, like News 24, Formscape, they didn't get a cent and they're not known to be on the left side of commentary, right? So it's a big beef I've got. What I'm happy to report is that we haven't been paid off. We haven't been paid off. Too opinionated. I mean, but like, you know, we don't need to spend too much time on it, but the state of journalism in this country, you know, we've had, and I think it's very fair to say that over the last few weeks, there's been this weird kind of rally around the flag effect for falling house prices. And what I mean by rally around the flag, the amount of opinion pieces and the amount of columns that I've read defending negative equity. Now, this is something that I talk about every single week, but it is just worth touching base on the point about journalism because there has been a massive influx of people saying it actually is okay because property is a 30 year game. And as I say to you every week, Phil, it's not necessarily. It's not necessarily. And I'm not talking about like speculative buying and selling and flipping. I'm not talking about that. I'm talking about, you know, what happens when the job losses roll through and then suddenly you need to sell your house. And then suddenly you're working every single day to pay the bank off an extra 100K, which you've got nothing to show for. It is an incredibly dangerous position. And when I see, you know, nine Fairfax papers coming out and defending it, it's very odd. It's very odd because all it takes is one small economic blip, one small economic downturn. I'm not even talking about GFC. I'm not talking about COVID. I'm saying two, three bad quarters of just employment going down a bit. That is several thousand people in negative equity. Just because 99% of people can afford their repayments now, doesn't mean that that's going to be the case when we've got a less resilient market. Well, I think the government of the day doesn't really want to be interacting with non-traditional media, much like the government of the day doesn't want to be acting and operating with businesses directly. They want to go through these institutionalized apparatus, the unions for workers and maybe the big industry associations. And the same applies to the media. They would rather they didn't have criticisms outside of the traditional media domain. And they often belittle other outlets with people with a voice, whether it's through social platforms or things like this. They would rather it's not there. So my view of all this is they're funding these traditional outlets and they're, you know, call it cronyism, who knows, but I'm sure, I'm sure there was a filter for who and how they chose to fund because you only look at some of those companies that weren't funded in journalism to question it. So what does this have to do with properties? Exactly what you're talking about right there because the stories that you are reading, just because they're from inverted commas, a reputable source, i.e. a traditional media

Independent and impartial. Anyway, just saying it, but we haven't received a cent. Yeah, and it's funny, you know, this is where you read the headlines and you can get two radically different stories from the same bit of data. And there are a lot of media outlets that are saying, you know, it's all fine. This is actually a really good thing. Well, not necessarily for a lot of people. You know, what about those people when you look at trust distributions, those older Australians that they didn't have the years and years and years to put money into superannuation, but they had a trust and they relied off of trust distributions. I did a podcast maybe two months ago or so where an accountant gave an example of one of his clients who had a trust which paid out $20,000 a year. And that was essentially her pension because she's an elderly woman, I think in her 80s, 90s. Obviously, being female probably had less time working and actually paying into the superannuation fund. You know, that disparity is quite obvious in terms of how much women and men have in their superannuation funds by the time they get to retirement. And now with a minimum 30% tax, this is a woman that got paid out $20,000 a year and now is paying $6,500 a year in tax because minimum. She falls below the income-free threshold, but not when it comes from the trust. Or those tradies, you know, those tradies that they had for years, it was assumed that if you ran a small business for X number of years, I think what, 15 years or something, and you go to sell it, you would be able to sell it without incurring tax because that is, in a sense, you've built your legacy, you've built your retirement. Well, not again if it was owned in a trust. So if you just threw luck or advice from an accountant or whatever it might be, if you set up in a trust, well, sorry, you went from 0% tax to probably, well, if it's a minimum 30% tax, you'd probably then go up to 47% for the sale of your business. And that was your nest egg. You know, yet we don't, and I very rarely see the journalists come out, and I mean, this obviously is a broad brush, but address these things that really impact regular Australians. And there are going to be a lot of Australians, it's not tax time. Well, kind of, but, you know, from May and when the budget passed, we haven't had a full tax year of this. There's going to be a lot of people, I think, come July 1 or whenever they put in their tax returns for next year, even, you know, August, September, October, they're going to be stung with a lot of money owing that they never even realised because, yeah, again, call it cronyism, but people, there wasn't a fourth estate here actually looking at this. Well, we were trying our best to identify all those issues, but this is the reality of the world. So, yeah, just wanted to flag that. I've got to find someone to ignore me, and there's been many things this week, but that particularly annoyed me. Yeah. We didn't participate in the scheme. If I knew about it, would have I? I don't know. I don't think so, but I don't think we would have received any money. I mean, there's an element of trust there. It's like, I didn't get any money. I don't know, maybe, but like, you know. I don't think we would have passed trust, though. Like, you know, I think the- Maybe one listen to Property Buzz, and I think half of Canberra would be mortified. Yeah. Well, they are listening to it. Yeah. I know a lot of politicians use this for talking points. Well, they do, actually, and a lot of- I sent you an Instagram reel a week ago where there were some buyers agents out there, and it's so funny because it's like 48 hours later, it's like the reel comes out. I'm like, man, you've almost stolen my exact wording. Like, really? Like, give me some credit here. Well, you know, our views are unique, and we typically, like, I think back to a lot of the commentary I've had around property. I don't like to talk myself up, but I normally flag something pretty early on, and then it becomes the thing everyone's talking about two to three months' time. And I'll say it, I flagged lending in self-managed super fund way before the budget. I think you're also the first person after Dashdot to flag the guarantees. I think you were the only person to do that, and now everyone's doing it. Everyone's doing it. So many people are online talking about that. Well, it's Property Buzz. We'll say it first. We'll do it without fear or favor, bias or agenda. Liam, you know, that's the way we like to do it. That is. So what I've seen this week, and we'll get stuck into it, and to your point around distributionary tax distributions, there's a lot of noise, and you've got to question the motive. And it was even a story here today, everyone's saying self-trustees keep property appetite despite borrowing ban, right? So everyone's going, self-trustees still think property is really, really good. They're just going to do commercial now because they don't want to put money into industry and retail funds because they're not getting the returns that they want. So you're going to see, I wouldn't want to be in the business of being a commercial buyer's agent in this market. I wouldn't mind being a commercial selling agent. You'll probably get a lot. Yeah, you're going to get a lot, but commercial buyer's agent, it's the new game in town. And we've had a couple of very good buyer's agents that specialise in commercial over many years. That now is, we've gone through this thing of everyone becomes a buyer's agent, and then they do all this sort of trust-based stuff and recycle equity and putting people in places, which we've token on extensively. That's been ended, negative gearing ending, which means they're all compounded. So they're all now specialists, every buyer's agent. I'm being cynical, right? But I'm allowed to do it because it's probably buzz and that's our job. I don't think you're being that cynical. Like I've seen- Maybe I'm being flippant in how I'm framing this, but all I'm saying is that watch how many expert buyer's agents there are around commercial and now watch the new systems, the schemes. I've got this formula, like blah, blah, blah, blah, blah. It's all going to be condensed now around commercial and everyone's going to be an expert at helping people buy commercial property and sell managed superfund. Again, I don't even think you're being flippant. I think it's happening. You see these buyer's agents, you go online and they're announcing about commercial property. It's like, man, I've known you for years. I've never even heard you say this once. Do you even know commercial property? They're knocking out, but it's like, yeah, I found this box with a roller door on it, right? They're selling these sort of storage stuff and they're legitimizing all the reasons why they're great investments. And I'm not saying investing in commercial and self-managed superfund is not a great investment. To the point, it is largely the best structure today that you can hold real estate assets if you can get leverage, i.e. commercial moving forward, for the purpose of retirement planning and generating income with a view towards tax. So it's going to be a flurry, but we spoke about this a couple of weeks ago. There's not that many commercial transactions in Australia. I'm still trying to work out. Part of the point is there's not a lot of data. That's the thing. There's no data. And if you've got people that overnight try and become experts in an area where there's a data-rich field, you know, there are 5,000 platforms to show you the resi hotspot if that even exists. That doesn't exist. 20,000 people telling you where they are. Like, no one knows really with commercial. And I know you and your team are trying to put some sense to all of this with some new reports around commercial property, which you've got coming out at a point in time. But yeah, just that's going to be there. It's the next big game in town. Well, I'll tell you what I've been seeing, not too dissimilar, but there's been a few ads come up on my Instagram. Oh, yeah? On the gram? On the gram. Free stamp duty. Builders have come out offering, you know, if you buy now, if you buy now, free stamp duty. And there's a few things in this field that it gets scratching the old noggin. It gets you scratching the old noggin. Because if they're able to say, you know, if you buy now or like before this date, you know, we'll throw in stamp duty for you. Now, stamp duty in New South Wales, I think if it's 1.5 mil purchase, it's about $60-something thousand dollars, right? So we're not talking about like insubstantial funds. Like we're talking about quite a lot here. That shows several things. The first is potentially how much profit is baked in. That's one part of it. Now, to look down that rabbit hole, there's always been that question you and I have raised, especially following May 12th, the risks that a lot of people are going to face if they start moving into the new build space, that being that you might fall victim to a spricker or a BA getting greased both ways, getting their hands greased. You can't say that. But they

There is a very big gap between the actual market price and the fundamentals of it that you might find if you go to list it for whatever reason. You might fall into an economically dire circumstance in a year or two or three or four. You're listing it for a lot less because you're not going to be in a position to say to the next person, hey, I'll pay for your stamp duty. Why would you be rolling the dice on a falling market, locking in a price today for something that's not going to be realized in 18 months, two years, three years time? It's absolute folly. Now, if you want to put my tinfoil hat on. Let's do it. Let's do it because it's what we do. So this sort of natural housing I called. So 1.2 million homes, they said they were going to build over three years. Yeah, it's 2029. 2029, whatever it is. 307,635 dwellings were completed in the first 21 months. So already it's 27% below the required page price. So not building enough based on what they're saying. Now, you can say that's actually a good thing because if there was a glut of supply on the market, it would probably drive down prices even further. But who most benefits from a guarantee that the stamp duty is going to be paid? Who most benefits? Probably the government. State governments. State governments. So let's query this for a moment. So a developer goes to the state governments, hey, look, I can guarantee you getting paid on the stamp duty thing because we're going to bake it into the price of the property. That means we're going to get more and more people buying new homes or new developments, whether they're investors or occupiers. So why don't you just help us a little bit? You know, wink, wink, nudge, nudge to get more of these development things up. And if you can make it a bit cheaper for us to do it, but we can keep the price high. And, you know, I'm going to guarantee because I'm selling this stuff that you're getting paid. Let's all do it. Is that just the market or is that something else? And you only need to pick up the paper at the moment to see some of the cronyism, to use the word again, happening in state governments in New South Wales in particular to go, that's an interesting incentive. So it's not like you get a free kitchen or you will give you a fireplace and a patio in our fresco area or a fire pit. It's like, no, no, don't worry about it. We'll make sure you get free stamp duty. It's not free stamp duty. It's just part of the purchase price. You pay the developer this much money at the point in time where you've got to settle on the contract. It's a marketing gimmick, right? And then they just go, there you go, done. They've already jacked up the price, a bit of a marketing gimmick. But I actually want to actually understand how it gets paid because the buyer still needs to pay the stamp duty. The developer doesn't pay the stamp duty on your behalf. It still needs to be paid by the buyer as part of the actual transaction that happens at that point in time, settlement, when everything goes, bing, must be like, reduce it, reduce it, settle down. It would just reduce the settlement amount or whatever. So it's just really, we'll give you a discount at the point of sale, which is contingent on us completing it. So it's a contingent discount. And actually one other thing, it's also contingent on the bank acknowledging that price as well. Because if the bank comes along and is like, woo, that area's just dropped by 15%, we're not going to lend to that. And then you've got to stump up the rest of the deposit. But the stamp duty is fixed based on the contract price, lending irrelevant. So they say it's worth 800 grand, even if it's only worth 650 at the point of settlement, you're still locked in at 800 grand. You've got to find additional though. You're paying stamp duty on 800. They're not going to go, well, the bank actually says it's 650, so you pay stamp duty on 650. So yeah, you're going to start seeing this stuff. You're going to see, buy new today, lock in today's prices for tomorrow. Have you ever bought new? No. Never? No. I have done, but not off the plan. Not like an off the plan house and land type thing. I've bought new where I've salvaged someone else's project. Yes. Which is different. But that said though, is that by buying it new and completing that project and getting an OC on it means I'm the first owner and therefore I get all the depreciation. Which I didn't buy for that purpose, but it's a nice to have. If anything, it causes me problems because there's so much depreciation. It's a bit of a headache. Bit of a headache. So be careful. So you're going to start seeing this free stamp duty. We'll give you $50,000 of extra fixtures and fittings for the prestige package for no more money. All this stuff's going to come out of the woodwork. It's happened all before and they're all going to be incentives to get people to buy new and there'll be people out there, you spoke to them, who were supporters of that and call them project marketers, which is like, and how's that word project marketers on a new thing? Someone's building 100 properties. You do a deal with a real estate company and go sell this stuff for us. Rather than being salespeople, we're going to call you project marketers because it's not actually there yet. You can help us market the project. You've got to sell these off the plan dreams and visions and build a model. That's project marketing. But a lot of those people also masquerade as buyers agents. Would you call grease? Did you say greasing? Greasing your hands. Greasing your hands. Grease palms. I'm okay with the concept. So their job is to move off the plan apartments and there'll be all the bells and whistles around it. It's great depreciation. You're going to get greater yield. You're going to get all these extra features and benefits. You never know the quality of this stuff when they come out of the ground. They're very, very hard contracts to contest in law because the, and I'm not painting a bad picture about developers. There's just developers, very good developers out there. I just want to be clear on that, but they have very, very good lawyers. It's very hard to get out of these contracts and rightfully, you've got to protect people. There's a lot of risk goes into this stuff. It's a discipline itself. So it's all going to come out of the woodwork. We're seeing it. If you see anything that's too good to be true, it's too good to be true. Remember also something like 40 to 50% of the costs of all new developments is government and other fees. It's got nothing to do with the value of the land and all the property on it. It's all the bureaucratic red tape around it. That's the issue. That might not even go anywhere because as you and I spoke about last week, we just did some back of envelope calculations about the number of, if the number of total auctions, we're just using auctions as an example. Now I think more people obviously selling by private treaty, but if you take the number of auctions have gone down by like 17% and then the clearance rate on average on top of that has dropped by 17%. If you took that as a sample of the population, then yeah, the government's going to be losing like, what was the math? It was like six and a half, $8 billion a year in stamp. And that's not even including the fact that house prices have dropped. Some of the larger banks have come out saying that we kind of summing it the year to date as in the calendar year. Yeah, we're expecting that house prices in Sydney and Melbourne have already dropped about 5%. That's actually like a very big reduction. So not only are the number of sales dropping, but also the actual settled price dropping. So that's a very big reduction in stamp duty. Double, double. So looking at the ways of actually increasing supply, if we're talking, if we actually want young people to get on the housing ladder and have a future, hey, they're going to run out of places to tax. And that's the worrying thing because, you know, who do you go after now? Like as a very reasonable question, if we're going to, we're already running at a massive deficit. So we're already running at a massive deficit. So it's going to be, you know. Well, the short point that you made a little bit earlier to me is around immigration policy. Yes. And I was actually going to turn this on to that. So if you're already running at a massive deficit and then your receipts drop, you've got to nail a larger gap. You're already going after trusts. You've already scrapped the capital gains tax discount. You scrapped negative gearing. What else are you going to go after unless, and I think the only real thing left is in terms of a realistic policy, like they will never tax the family home, I'm assuming. But the only realistic policies Labor would have left would be some kind of inheritance tax or jacking up income tax, which are the most unpalatable things. So they're going to have to cut. To your point about the immigration policy, it's a very interesting point. So this week we kind of had a bit of a divide in the Labor caucus. Now the immigration minister, Tony Burke, he's tried to play it down because I think it was on Tuesday he was meant to come out and give a press club statement talking about Labor's new immigration policy. Now the theory was, the theory was

apartment, which I don't think many people read into. Then you've got now Labor ministers kind of jockeying, saying, oh no, no, we really, really back family unification visas. So the people are like, well, hang on, was that going to be the substance of the press club statement that you were going to give? Anyway, so the theory is, was that we were probably minutes from midnight this week to seeing what might have been a substantial reduction in immigration visas. So where does that leave the supply and demand equilibrium? Well, perhaps it will alleviate it. Perhaps it will alleviate it. Who knows? You're starting to see some cracks appear, because I see Husic's also quite contrarian. He's injured. He's not holding back. No, he's not. He's not happy you got punted out of the technology portfolio. I don't mind him. I'm sort of turning faces. They're getting polarized now on immigration, but it was a sage reminder to me, because people are always for some reason interested in the circles that I navigate in. And because of my job, much like some of yours, we cover so much ground. I was out again last night at the Australian Aviation Awards, speaking to all the aviation people, Virgin and Qantas and stuff. Obviously, one of the big programs that Momentum does. But I spent some time this week having some drinks with some very senior people at the British High Commission. And we're just chatting about everything. A lot of it was sort of around business integration between Australia and the UK, the AUKUS arrangement, all the usual sort of stuff. But obviously, most things got onto immigration policies. All roads lead there now. All roads lead there rather than property prices rise, immigration policy. And for me, it was a sage reminder just how connected those two nations are, us and the Brits. And I think there's 1.8, I'm going to try and remember this right, because I was told 1.8 million Australians also hold UK citizenship, something like that. So nearly 2 million people here in Australia. It's still one of our largest cohort. I think it may have just been Eclipse, but it's still... Is it born in the UK? I would thought that'd be... Both passports. I've got both passports. Yeah. You've got both passports. Oh, my Australian one's lapsed. Okay. Yeah. Both passports, which a lot. So nearly 2 million Aussies. So what's that as a percentage, right? Maybe 6% a bit. So it's significant, right? So I think we need to be careful as a nation and everyone does do this to some sense is when people talk about immigration in Australia, they're not now talking about European migration, which up until the 70s slash 80s was immigration in Australia. And obviously, Brits and Kiwis and whoever has been coming here for years. And we saw post-war, a lot of Greeks and Italians. And even then, the xenophobia around that, even though they were European migrants, they were sort of... They're sort of like us, but they're not exactly like us. It was a big deal. And those communities copped it now. They're a critical part of Australia. I love the Italians and the Greeks here. They've done great work. But the immigration narrative now, everyone seems to forget about those things, which is still a big driver of migration. It's very polarizing. It's polarizing. Yeah, it's polarizing. But this is it. This is going to sound horrible, but someone goes, well, I don't mind an English person, of English extraction, getting a house down the road because whatever. But if it's a different version of that, then it becomes a problem. And I'm going to invite... If our listeners disagree, please feel free to get in touch and tell me your thoughts. Part of the challenge is the rate of immigration from very particular countries. And I mean, immigration is not spread like a normal distribution across different countries. It is usually clustered. When you do have for two or three years 500,000 people coming in every year, particularly clustered from a handful of countries, it is actually... If you're living in a working class suburb, if you're living in Western Sydney or the outer suburbs of Melbourne, yes, actually over the course of about two or three years, the suburb you know, it should no longer exist. Literally, it literally no longer exists. And it's funny. It works both ways. I grew up in the inner west of Sydney and none of my... Oh, no, one. I lied to you. One of my neighbors spoke English. One. And it's funny now when I go back to where I grew up and now it's like all kind of trendies because they moved out of Newtown. I'm like, well, it's kind of funny. Full of hipsters now. It's kind of funny. So it does work both ways. But I do have an element of sympathy for people that do see that because it's like, well, over the last 24 months, everything's changed. Everything's changed. And taking this to housing policy, it is heartbreaking as well. When I go back to the inner west and there are just these dystopian towers. It's like this used to be like a really beautiful federation street and it's all gone. The essence of what made these suburbs beautiful and tree-lined. It was never... I mean, back then, it was a decent place to be, but it wasn't like, you know, Vaucluse. And now you're there and you're like, this is heartbreaking. And the quality of the builds. I haven't been here for two years and there's this whole new apartment building and I can already see the concrete cancer. You take the destruction of beautiful heritage suburbs in Sydney, you add in just these dystopian large unit blocks. Then you add in the fact that young Aussies have bought these things being told it was a good investment and you're looking up like, mate, you are about six months from a very special big strata levy coming your way. I can see why people are looking for the alternative because what should have been a staged approach to bringing in important skills to make our nation better wasn't done right. And I do understand when there is a bit of division in labor about family reunification visas, it's like, well, at what point is the medicine the poison? Because, okay, you get one person that might be a fantastic builder and if they have multiple people come with them, then it is, is that one person going to build several homes? The maths doesn't add up. The maths doesn't add up. And immigration policy is a housing story. It's the reason we're talking about it. And we're being very considerate about how we're talking about through that lens. There's a whole bunch of other things, I don't want to get into it around it, but I think the point is that cracks are starting to appear. It's not- And cracks are starting to appear as well. I'm not metaphorically on buildings, I'm talking about within the government. It's not Kumbaya down there in the caucus. No, and they think, one, I think labor is starting to realize that labor is starting to realize that they thought Western Sydney would be a very strong wall against One Nation because it is inherently multicultural. Mate, if you go back to the 70s, the 80s, like you said before, a lot of the new Australians back then, they were fleeing communism. They were- They had a pretty tough time. They had a pretty tough time. And I'm using communism, obviously, as a broad statement. A lot of the migrant communities from the 70s, 80s, 90s, when you look at the civil wars they fled, the countries they came from, are very right aligned. This isn't a political podcast. This is anecdotally what I'm seeing. Well, yeah. This is anecdotally what I'm seeing. This is what some of the polls are starting to show, that there are migrant communities that aren't Anglo-Saxon, that aren't white Australian, that have very high support for One Nation. So I think what labor is starting to realize, oh my gosh, all these multicultural communities, which we took for granted for so long, they're actually, they're not happy with the way the nation's going. And they're starting to go to Pauline Hanson as well. But, you know, and the data is out there. You're seeing some major swings. You're seeing some major swings in some very multicultural suburbs. And it does show that there are going to be some cultures out there that are going to be very, very adjacent to the One Nation message. Maybe we should rename this podcast Politics and Property. Politics and Property. It could be fun. Or maybe we should do an evening, Politics and Property in the Pub. In the Pub? Let's do that. Port Politics and Property. Port Politics and Property. Port. Port. Port. Port. Not port. Port Politics and Property in the Pub. Yeah. We could get a thing and just, that'd be good fun. I'd get stuck in that. But what we're doing here is that most stories which make the news are real estate stories in Australia. And you talk about immigration and this idea that, well, maybe it won't be family reunion visas or whatever other visas there are. It's really just a transition of temporary migrants into permanent migrants here in Australia. So the point there is that, well, they've already been part of the saturation of the available property, right? So therefore, it should take less pressure on it. And I saw the REA boss come out this week, Cameron McIntyre. He's pushed back against the housing market forecast, arguing that widespread predictions of price declines in Australian capitals are overblown. Citing internal data, just a summary, he contends the pessimism is exaggerated and the market is more resilient than many believe. He comments

It's a pretty big correction. It is. The point is, and this is for property investors out there, how long? So you've got a 10% correction. How long will it be until they revert back to traditional long-term averages of price growth? And or has things been changed fundamentally forever as a result of these tax changes that the assumed compounding growth that we've seen over the years, decades in the past, will not apply for the years and decades into the future? So is the new benchmark now that property only grows at anemic levels, maybe like they do in someone like Japan? You might get 1% a year on it. Who knows? So this is the big what if for everyone right now. And I know a lot of people are curious and questioning it. We spoke about whether Australian mortgages are on the nose for international funders right now. They're not going to be getting the returns they do and all the risk is more exacerbated by the fact that you're not de-risking as you hold on to a mortgage inside a fund, a mortgage inside of a property because of price growth. And if anything goes wrong, you're always going to recoup your debt. So this is going to be a very interesting pathway moving forward. Every single person has got to have their own view towards this. That is, is property still an asset class which is going to be able to deliver those largely guaranteed returns if you hold on for a long time? Now, I'm not talking about immediately buying and selling in a year or so. Or is your money better placed elsewhere into other asset classes? And what does that look like? So I don't know the answer, but it's going to give us plenty to talk about for the next period of time. The next couple of years, right? And this is where... I don't know the answer. My instinct is we've got 30, 40 years of data which sort of says, irrespective of government policy or black swan events, of which we've had a couple, COVID, GFC, etc., property is reasonably resilient. And he's talking about there about the resilience. Obviously, he will say that because he's in the business of selling advertising, right? He's advertising his listings, right? So he wants a vibrant market. He doesn't care what the value of properties are. He just wants people putting adverts up to sell them. That's his job. So of course he's going to say that. And it shows that you can get one data set, as in a data set of the Australian economy or the Australian real estate market, and get multiple outcomes. And listings going up, it's a very interesting use of the words because listings going up could indicate that people feel comfortable listing, that they're going to get a good price, that, hey, I've waited for the last six months. And now I'm comfortable that I'm going to get a good price. That could be one behavioral insight. Or the alternative is, oh, man, I can't meet my mortgage repayments. I've got to sell. And those two tell two very different stories. So listings going up might not be the world's best metric. On the flip side, then you've got NAB predicting up to 10% price drops. Obviously, it's not like, yes, there has been a reduction in borrowing capacity as a result of negative gearing and interest rate rises. But ultimately, if you're buying through a trust, for example, you weren't really getting many of those benefits anyway. So is there some huge recession in liquidity in the economy? Probably not. Probably not. What it is more likely, and correct me if you disagree, but what it is more likely, it's a confidence thing. And I know, talking to my wife, we're planning the next purchase, the next moves. Oh, should we just wait a little bit? Should we just wait? And that's what I think a lot of investors are doing. Should we just wait a little bit and see what happens next month? Let's wait to see what the next RBA board meeting comes out with. Let's have a wait. And I think there's going to be a lot of investors that are sitting on the sidelines that could move should they wish, but they're waiting for that bottom. Now, the one thing that you could say is timing the bottom and all of that. That's what a lot of people, selling agents and buying agents would say. On just a real practical level, it's something that you and I have been talking about since May and all these announcements came out. But how much is it just going back to the basics? You're not going to get 20% per annum sugar rushes unless you happen into the one hidden gem in Australia. Get over the sugar rush mentality and get back to the mentality of underpriced value. Yeah, maybe it's just $10,000 under market price, but you back it, maybe you fix it up a little bit and then you hold it for 20 years. Maybe it's just going back to the basics. And that's what it was at the beginning of SPI. And I said this last year, I said this will be the way in which it works for the next period of time. We're going back to the future. Back to the basics. And you've got to remember also is that you get this sort of laser focus on fringe issues in and around property, which we talk about on this, right? But largely, and I just quickly looked it up, and we're 80% of the time, we're probably 90% of the time wrong on the stats. But there's about $350 billion sitting in mortgage offset accounts in Australia. $350 billion? $350 billion. That's a lot of money. That's a lot of money. So the point is, is that- That could be redeployed into property. Well, it goes to show the structural resilience of Australian real estate is that, you know, not everyone's got a mortgage, right? I think they're LVR for Australia is like 27%, right? Yeah. Value of property debt against it, right? And again, I've probably got 80% of that stat wrong, but it's thereabouts, right? Don't harm me to it. There is still a huge amount of money sitting in offset accounts, which means that, yes, I've got a loan to pay. Yes, I'm servicing the mortgage, but I've got some, oh, crap money sitting there on the side if I need it. So Australians will hold on to real estate, investors and our occupiers, as long as they possibly can before they have to sell it. They'll compromise everything else, family holidays, new cars, food, you know, in order to hold on to their real estate. You've got $350 billion in offset. 30% of Aussies have a mortgage? Something like that, yeah. So if you've got like $350 billion for 30% of Aussie homeowners or, you know, adults, I guess. Yeah. There's a buffer. There's a floor, I think. I'll tell you what they don't want to go after next is taxing that. Taxing the offsets. Don't put it into the ether. But you think about it, right? You've done it. You've put it out there now. But you think about it, right? You go, well, they're going to say. I'm going to blame you if they come out with this. Well, but the banks have requirements to hold a certain amount of money, so that helps out quite a lot, right? That's true. And that money's not sitting in bank accounts. The banks have blended out to someone else. But then how much, you know, if you've got $350 billion there, like how much? Because the benefit at the moment, like let's say 6% will be the average variable rate. Maybe it'll be higher or lower depending on who you are, but 6%. So that would be if you've got equities or any other asset class, you'd probably tax the full 47% freight. Realistically, like quick maths, that's a 10% annualized return. Like it's quite a good return for the offset. If they start taxing it, which they quite very well do, then you just buy more houses with it. If you're not going to realize, if it's not going to be beneficial. That'd be inflationary, right? It would be inflationary is my point. But you think about it, right? So the government will sit there. So here's an argument, and this is property buzz, where we think about stupid ideas. They go, all right, $350 billion, right? Okay, so that's money not in the economy getting spent, which therefore is not fueling economic growth and therefore restricting GDP development, right? And any dollar that's spent in the economy, the government takes 10% of it through GST, right? So that means there's this new sovereign wealth fund there that's not getting any utility whatsoever. It actually has inverse utility, right? Because people hoard it. Because people are hoarding it, and the government isn't able to get a drink on it, right? And if anything, it actually, in inverted commas, helps people minimize their tax because it sits in an offset facility and means they can actually hold more property and therefore use that in the old regime for negative gearing purposes. So just putting it out there, I wouldn't be surprised. Yeah. I wouldn't be surprised. They go, yeah. There's no utility in that. Yes, there's an argument to say, well, that means Australians are going to be more resilient and therefore happier and be able to work more because they've got fat in the system. I mean, to your point, you probably are right in what you flagged before, which is that liquidity buffer of $350 billion is very important for the banks, that you might have your Matt Comans of the world if Canberra starts flagging it being like, you know, we're going to have to find a lot of cash. If you start- Well, if all that money went out of the banks-

When you're doing stuff on the weekends, mowing the lawns, driving to look at real estate, sitting in the freezing cold, watching your kids play sport on a Saturday morning, this is the reason why we do it this way. But, Paddy, I have no idea what this reaction video is going to be, so I look forward to it and I'll give you my immediate reaction. 99% of people have met their repayments or are ahead on their mortgages, which means they can't be in negative equity because they're ahead. This guy gets a gold medal for the dumbest guy in the Goose government, and that's really saying something. He thinks, this minister, that negative equity is when you're paying off your loan. Negative equity is when your loan's worth more than your house. And there's a lot of people in Australia right now who are feeling that because of Labor's hopeless housing policies. Andrew Bragg? Yeah. I love Magoob. That's such a good name. Shadow housing. Mate, I tell you what. He started this thing called Magoob. Yeah, and now everyone's gotten onto it. Hey, you know what? It's so frightening. It's so frightening. Now, one thing I hate, Phil, is when people are like, oh, you failed Economics 101 or go back to university. Not everyone studied Economics 101. I remember when I was at uni and everyone was like, oh, go back to Economics 101. I don't know. I find it bullying, except in this case. Except in this case where it's you've got one of the highest decision makers in the entire country, in the entire country, super safe Labor seat, right? Super safe Labor seat, Kingsford Smith, assistant. That's our cabaret, right? Near like mascot and stuff, I think. Okay, yeah. So one of the highest decision makers in the country that has made policies. Now, not him, of course, not his portfolio, but he's been in the team which has crafted policies which are changing. And you know what? I'm sure that there are some first-time buyers that have done a really good thing from this, that have picked up a bargain and good work for them. It's changing the lives of tens of millions of Australians, mostly negative. Some well, I'm sure. And you can't even define it. You can't even define negative equity. So how do they – what was his concept of it? He just – as long as you're basically meeting mortgage repayments or you're ahead, you can't be in negative equity. But that's – Okay, so – Who does the risk assessments on this? I think what is confused is the idea that mortgage – well, not even mortgage stress. No, but you end up in negative – you realize a negative equity position if you need to sell. Yes. So therefore, if you've got extra cash and you're meeting your mortgage repayments, you don't need to sell. So he's saying there's nothing to – You'd still be in negative equity. Yeah, I know, but he's saying there's nothing to see here. So I think the concept he was trying to articulate – But he's not defining it correctly. That's the problem. Which is a job of politicians, but the concept he's tried to articulate is that – and if I were his sort of media people, I would have told him to say it this way. Negative equity is a consequence of needing to sell a property at a point in time for whatever reason and the property that you sell, the debt against it is higher than the property. So therefore, there is a gap. That is negative equity. However, that's only if you need to sell. If you do not need to sell, it's not an issue because you do not realize that unless they're going to start – It could be an issue. Unless they're going to start taxing negative – anyway. Unless they pick up your policy of taxing offset accounts that you've now given the government. So if you have enough money to pay your mortgage and you have surplus, should you have problems to pay your mortgage, it's not an issue for you. That's what he's trying to say. I get it. Phil, you're a working class guy. You're from Western City. I get it. Your labor roots are coming back to you. Yeah, I do like Magoo though. Yeah, it's great. I get it. You're being nicer to him, nicer than I was. I just think between this and our reaction video last week where the PM couldn't get – just didn't know how negative gearing worked, they might seem like small things. And to our listeners, some listeners might find it like maybe they might think it's trivial. I understand why you might think that because, oh, it's just the nuts and bolts and the policy. But you've got two dudes here on a podcast, the podcast. We're not dudes now, are we? We're two dudes. Two normal guys that just podcast that know substantially more about how our tax system works than the prime minister and a minister. Now, you and I don't fundamentally – people probably have gotten really good property insights from this. Good. But you and I day-to-day don't fundamentally negatively potentially impact the lives of millions and millions and millions of people. So while people might think it's trivial, I find it – it's almost like a tip of the iceberg. If this is the negligence that they're showing, imagine what is going on under the surface. How many misunderstandings are being brought into law? How many – just a fundamental misunderstanding of how the tax system works now is being brought into law because you just – you don't know. It's actually very, very worrying to me. It's really concerning and I would have thought if I think back to a NAE1 government and then we were reelected the second time around that they would have been found out more times than they have been. There's no opposition, right? They haven't been found out enough, and this is the role of opposition, right? Like I don't expect – I like politicians. It's a tough career irrespective of the color of your politics. It's a tough career. You compromise a lot. You're in the public eye. You never get thanked. It's a blood sport, and you can't be across everything, right? But if you're not across everything, don't engage in discussions which are outside of your ability to actually have an informed conversation around it. And I would have thought that the government got found out more often because sometimes looking under hood in there, you just go, oh, my God. Like some of those ministers – I don't want to be mean or nasty, but you see me sending estimates, and you just wonder how they've got to the position that they're in. And often they – thankfully, they're surrounded by the apparatus of staffers, right, who can brief them in and actually help them along the way. But every now and then they get found out, and most people just go, oh, it doesn't matter. Who cares? And this is why I enjoy sort of ensuring that I see both sides of politics, right, because the bubble you sit in, if you're talking to property investors, is very different than the realization of the bubble out there. Yeah. Yeah, I think it's going to change too much. You just got to hope that not too much damage is done. Well, you almost – The damage being done, right, is like what damage is actually being done right now in the housing market? Does it really matter that prices have gone back 10%? No, not really. Has that changed anything for me whatsoever? Not really. Not really. But I'm doing some refinancing. It might mean I can refinance less money and therefore maybe not buy some more properties or it might take a little longer. Yeah, okay, so what? But for most Australians with owner-occupier homes, negative equity is an issue if they've got to sell it. But the point is, and we just said this, around $50 billion in mortgage offset accounts. Yeah. It will do everything they can hold on. And worst case, they'll get another job or two jobs or three jobs or they'll get two people working and they'll do everything they possibly can. And that ensures the resilience of the housing market. Is it going to present the same opportunities it has done in the years past for a period of time? Probably not. But you know what? I'm not too worried about that. I couldn't agree more. I'm not too worried, Liam. I'm not too worried. Too worried. I'm not too worried. Too worried. I'm not too worried. We should round out. Anything else? No, that closes me. That might be my last rant. Yeah. I do love Magoo. I do love Magoo. I think we should – I want to actually have a chat on air with Andrew Bragg. Andrew Bragg, if you're listening to this. Yeah, yeah. I'll reach out to him. Maybe not for this show. I don't really want this to be too aligned, but I think for something else I've got an idea. Something else. Well, it's really sort of this ongoing narrative that I've been exploring over the last – this thesis of housing being the most critical of all critical infrastructure. Well, maybe we should just have our own property podcast. Yeah. That works. Property. No, politics. Sorry. We've got many property podcasts. We've got a lot. Probably politics. This is what this is, I think. But I don't know. What do people think? Should we start bringing poly's in on this? Someone said to me there was – I saw something come through the other day and one of our team members showed us, which was a certain commentator on the Instagram and the TikTok who – I can't remember his name exactly, but part of like a housing union. Oh, yeah. Looking to unionize. But what's – such Marxist language about organizing. I know who you're talking about. I'm not going to say his name because I don't want to invoke some – No, no, no. But there's about organizing.

Here's plenty to talk about. That's all I've got really for me. It's been an interesting week, lots going on, met some interesting people, navigated many different communities. From aviation to politics. Aviation to politics to... Geopolitics as well. Geopolitics. Yeah, geopolitics and whatnot. So, yeah, thanks for your time. Thanks, Phil. So, if people want us to shape and change what we're doing, what's the best way for them to talk to us? For all complaints, Philip. No, I'm kidding. For all complaints and suggestions and any video suggestions, I know thanks to the team that sent the videos in, liam.garman, G-A-R-M-A-N, at momentummedia.com.au. Yeah, if people want us to talk about concepts as well, about how things work, happy to do that as well and just generally... If we can get people to dial in. Yeah, I think we should do. Long-time listener, first-time caller. We can do that. We can do that. Play around with the concept. That's Property Buzz for this week. Thanks, everyone, for tuning in. We'll see you next time. Until then, bye-bye. The information featured in this podcast is general in nature and does not take into consideration your financial situation or individual needs and should not be relied upon. Before making any investment, insurance, tax, property or financial planning decision, you should consult a licensed professional who can advise whether your decision is appropriate for you. Guests appearing on this podcast may have a commercial relationship with the companies mentioned.