Hello, and welcome to The Australian's Money Puzzle podcast.

I'm James Kirby.

Welcome aboard, everybody.

Welcome aboard to an increasingly lively and lucrative I think residential property investment market.

And we've been saying this for some time that it was improving, it was coming and here we go.

Lots of reports now you'll see talking about not just the fairly good returns in recent times, but strong prospects across the board.

Now when you look at it more closely, it's the strongest prospects are actually outside the metropolitan cities of Sydney and Melbourne, and it is coming down again perhaps to Perth, Adelaide and Brisbane.

However, folks, the big market, the market that's really got the volume and probably the outlook long term I think, and it's come up on the show regularly is Queensland, specifically Brisbane and the Gold Coast where we have a lot of action happening.

And if you listened last week's show and Missa Cavello talking about how investors are now increasingly willing and it's increasingly easy to invest interstate.

My guest today is an expert on the Queensland market, specifically Brisbane.

He's based in Brisbane.

I know him a long time.

It's Sam Price of a Templeton.

He's a buyer's advocate in the city.

Well, you're doing your own thing for about fifteen years now, aren't you, Sam?

I have Jan Yes, yep, doing my own thing.

Had the property management for long time as well, and Tim planning before that, but just now it's purely buyas agency in buying throughout Southeast Queensland for mums and dad investors as well as a rocketpaths as well.

The reason I mentioned that you're doing at fifteen years is that I want investors to know first of all, before we talk about the specific attractions of Queensland and certain issues that are happening there.

Should find very interesting folks.

You do need to know that hasn't always been so good, and there was a patch where Brisbane really had it hard as a property investment market due to floods that were quite devastating and spectacular really if you were ever in the city after those floods, and similarly another issue was overbuilding.

So just cut to the chase.

In terms of Queensland as a distinct market.

To me, these are the distinct risks.

There are those risks still in place.

Has anything changed?

The flooding is definitely still in place.

So as we know, we had the big floods in twenty eleven in Brisbane, then another one only ten years later in twenty twenty two.

Yeah, they were devastating in Brisbane.

I think having two in close succession really taught us a big lesson.

And although we can't change the flooding and the weather, of course, what we can do is build to accommodate the flooding.

And so since that time, all the buildings that have been done that a flood affected, they've kind of taken that into account.

So I think we've learned to live with it now, James.

So their values have jumped back and people are not as concerned about it these days as they were.

However, Brismoo City Council has been excellent in providing information to buyers.

They have a like a flood report on every property within Brisbane City Council.

They have a flood map as well, so when you're buying, always look at the flood map first of all, then look at the flood report and it will tell you how the different floods and how many meters of centimeters of water when over the property if it wasn't affected at all.

So that's a staple check that you do forever property.

Would you say that is a distinct feature of the Brisbane market as opposed to see Melbourne.

I'm not sure about the flood search in Melbourne, but I know for Morton and Ipswich the Brismoo City Council flood mapping is excellent.

It is quite conservative at the moment, like there's a lot of properties that are within the realms of being flood affected that I don't think ever will be, so there is quite a buffer on it.

Yeah, but then we're only talking about if twenty percent of the not even twenty percent probably z it might be like ten percent of Brisbane.

So it is a small it is, but it tends to be very attractive inner city zones by the river and where all the apartment blocks are too.

It's worth listeners knowing.

I can remember looking at a property in Brisbane in the Interpilly area after the floods, first floods and a lovely place on a park and then the really state agent said I must buy low Point out where the flood reached here.

He put his hand up into the air, you know, about six ft high, speechless.

I'll never forget it.

So I want to start the show just by putting that on the table separately, that there was an overbuilding, apartment over building.

What situation at the moment.

Now we're in a start of you know, under supply for sure for apartments.

I think we're back to ninety ninety levels of supply coming on line.

So it's all that I was supplied the ninety nineties and the two thousand, since that's been all absorbed now and given the cost of construction the last you know, since COVID has been very high and escalating, it hasn't warranted developers to press the trigger on building the quick rise.

Since COVID of property values, I think they've got to a stage now where it's economic to build units.

Like if replacement of a two bad, two bathroom unit is in excess of you know, one one point two mil, well, now we've reached that point where the market will be happy to pay that.

And therefore there's a lot of projects in the pipeline that can now go ahead, which so currently and under supply, everything's selling very quickly.

Naturally in these times, they do over react sometimes and build too many.

But given it takes three to five years for these buildings to get built, we're not going to see that for some time.

But there are our pockets in Brisbane where you know, you could potentially see it.

And even now I'm guarded about recommending clients buying those areas for the perceived you know, over building that could happen.

They could have.

Yes, it could happen.

So in terms of investor activity in Brisbane, is it across the old dwellings or is there still a specific action in houses?

Are they still within a price range for investors to get access.

Yeah, I think a lot of there's two types in the vests.

One is the one that wants to buy in Brisbane okay, and then there's for their own reasons and the you know they might live in Brisbane.

A lot of people tend to buy where they live.

Then you've got a lot of investors that deal with properly like a commodity, and they'll buy anywhere in Australia.

They won't need the property and so forth, and those people kind of hunt around.

They might be looking in Tansbula, Mackay or Melbourne or Sydney or Perth and so forth.

But for the ones that are buying in Brisbane, it's more difficult.

If the average buyer Australia wide buying the commodity product is really it's between five and seven hundred thousand, then if you apply that to Brisbane, stock is a bit tight.

So you're looking at an inner or middle ring unit for that sort of money.

And if we're looking for a house, we're having a look outside of Brisboo City Council into like Ipswich or Morton in areas like that.

So yeah, there is a sweet spot in Brisbane for buying investment properties.

I believe James which is not a house for five to seven hundred thousand.

It's more a middle ring suburb house and land.

But for that now you're paying like one point two one point three.

But for that it's a six hundred square meter block.

It's got a postal house on it, so built after nineteen forty six, which allows you to knock it down in the future.

It's eight to ten kilometers from the city.

It could be north, it could be south, it could be an area like Stafford heights, Kepera Michellton on the north side, or Macravad's Holland Park SoRs it on the south and that has lent themselves to a high land component of seventy percent of the value at least is in the land, good rent for return.

We can knock it down in the future and rebuild, which is starting to happen, or we can renovate it, put on a deck and so forth.

So that's kind of a sweet spot for house any right.

Tell me compared to when you started in interest and activity in Greater Brisbane Compared to when you started.

It's definitely picked up a lot of recent times.

The last few years.

It's more ouner occupiers that I'm seeing at open homes.

The investors are still a little bit light on.

I think the ones following the online social media buyas agents are flocking to the different areas throughout Australia.

So the ones I'm seeing at the opens primarily owner occupiers and then probably local investors or people buying from into state that have plans to move up here on the short term or the long term.

Okay, tell me, just for our listeners who would be considered who don't live in Brisbane, but would like to consider it and knowing that the fundamentals are so good, and knowing that the city has outpeaced the other two, the other the larger cities Sydney and midd some time, and that the forecasts that have just come out this week from SQM suggested that would continue.

Knowing that what are the districts?

Do you think investors should start looking in this city?

You'd have to give us the entire post codelistic because it would take it away.

But tell me just the years where you see there's particularly you know, good prospects.

Yeah, I like for it's probably two one is the investment unit market, so that's sub a million dollars.

So lately there's been good ones on the five K fringe of the city.

For seven hundred to tw eighte hundred thousand, that's what you're paying for a solid walk up unit that's had some work done, it's got low body corporates, it's got a good sinking fun there's no lift, there's no pearl.

It's a smaller complex of six to ten, six to fifteen.

There's a sweet spot and they're kind of the five K ring from the CBD.

Then you've got and that can be north to south as well.

And then you've got the Middle Ring suburb by I mentioned, which is really it's over a mill now.

It used to be like cheaper like everything, but now it's one two to one three for that eight to ten k house.

So they're probably the two sweet spots.

There's also in the city units.

We bought one the other day at Kelvin Grove which is near Victoria Park where the Olympic Stadium is, and that was six ninety.

It was a one better but in a small complex of eleven good rent return, good capital growth.

Given its proximity to the Olympic Stadium as well, it was like three.

Clicks something I really do want to pick up.

We're going to take a break, but we've going to talk next about I suppose the big issue, the big theme for Brisbane property folks over the next decade, it's the Olympics, quite simply, and it's going to If Sydney in two thousand is anything to go by, we really have something to talk about.

We'd be back in a moment.

Hello, welcome back to the Australians Money Puzzled podcast.

I'm talking to Sam Price of Templeton Property Group.

He is a Brisbane based buyer's advocate and he has been in the market for some time.

Sam.

It's very easy, I suppose for the analyst to pot out a report and say Sydney Olympics, or at least Brisbane Olympics are coming.

It's going to be a huge thing for the city.

We have clear evidence that prior to the Olympics, in the run up there is strong residential property price patterns in many cities.

Our nearest comparable city is Sydney, which was just twenty five years ago, the Sydney Olympics two thousand, where Sydney had a tremendous run up to two thousand and actually it lasted for a year or two longer, but it then had a real slump because Olympics were over, because there had been an element of prices being pulled forward.

Tell me your view about Brisbane and what the Olympics might mean to it for investors.

Good question, James.

I think Brisbane's very different than Sydney.

I know, I don't know exactly where Homebush is, but I know it's some distance from the CBD.

Brisbane is very different.

Like if you look at Victoria Park, which is where the stadium is going to be built.

It's literally two kilometers north of the CBD, close and the spring Hill swimming Pool where it's going to get rendov it's going to get rebuilt is the Aquatic Center that's less than two kilometers and it's going to be a flyer from spring Hill to Hurston and it's going to be really integrated with the CBD.

So this infrastructure they're building is not at a remote part of Brisbane.

It's actually in the heart of the CBD where it's close to the hospital, close to the rail line.

It's really going to change the dynamics of the city, not just for a short term, but will benefit from it from for decades after that as well.

So how do you think that would be different then for investors?

Do you think there is a I mean, I put it to you, do you really think Brisbane can escape that particular issue that will be a run up and then they'll hangover if you like, after the Olympics.

Yeah, it's probably like a good wedding, James, the next morning you'll feel a bit tired and you wonder where the money went and things like that, and wasn't worth it, but so I think there will be a lull after it for a little time.

There will be a big run up which people can capitalize on for the next seven years.

There may be a little lull when we find our feet, but I think we'll find like even if we need thirty there's talking that we need thirty thousand trades people to help build all this infrastructure.

I reckon a lot of them will move to Brisbane for the work, follow the money, but they end up staying here as well.

But I think it's going to ramp up the population, build up the right infrastructure to set up for the future.

There might be a little bit of a softening after that, but then I think it will just carry on its merry way with these new beautiful stadiums for the cricket and the AFL and football, and it'll be a great injection into the Brisbane economy that will benefit for many years.

We've had a real debate on the show abou whether Brisbane's having just a moment in the sun if you like.

The natural order of things is that prices should be Sydney first, Melbourne's second, Brisbane third, as it always was for who knows how long.

Essentially, some people suggest structurally that might be different that actually it may never go back to that order.

What do you think?

I'm asking you, as a buyer's advocate putting that on the table for me.

I'd fall off my chair if he says no.

But what do you have to say now?

I do think that I think Brisbane has its place.

I don't think it Zebra.

Sydney is just magnificent with the harbor and so forth the water.

Melbourne has its character and its history that Brisbane can never compete with either.

So I think Melbourne will you don't get it sacked together over the next decade and will pick up again.

So it probably it's rightful place.

But Brisbane will be at that younger brother that's kind of nipping at its heels, and that's setting up the infrastructure.

And when people come up here like they did after COVID and experience just the weather even and the opportunities in Brisbane, they like what they see and feel.

And the number of people that I've helped buy family homes up here and they haven't the bird up here with work because they've been brought up here for work, but they haven't known a lot of people and they've really done it for their family and for their future.

So I think it has its place for that for sure.

The flips out of this, of course, is that the prices have drifted up much higher.

Unemployment rate's more or less the same in the two states.

For nothing in it where was upart of time?

The whole thing was, you know, you got a job in Melbourne, you couldn't get one in Queensland as easily.

The flips out of that, of course, is that you're not getting the internal migration you used to.

Basically, the person is sitting in the suburban bloc and who was ready to retire in the suburbs of the second biggest city they can't move to well, they certainly can't move as easily as they could.

I mean that would be a drag on prices, would it not.

In the fullness of time.

It may well, James, Yeah, because the cost of buying and selling it is huge at the moment, and that's why I think stock levels so low everywhere, because the cost of stamp duty and so forth to such that we we're not as mobile, readily selling and buying as we used to be.

I think that well, Melbourne will find its feet.

I think there's a lot of investors buying in Melbourne at the moment, but whether that changes the dynamics of some suburbs that there's an influx of investors and you know, you're really mak your money without our occupiers.

You know, when they come into an area or rejuvenate it, that's where you get the real growth.

That you need, that heft in numbers to transform the investor Obviously, even though we have an obsurge of investor activity, they're not going to transform areas in and by themselves.

That's a really good point.

Okay, we have some very interesting issues we want to talk to Sam about in the next segment.

Have some really good questions and have one on social media influencers, which I think you'll find fascinating, folks, because we've been thinking about them as sort of players in the share market, but they are emerging as players in the property market.

We'll tell you all about that in a moment.

Hello, Welcome back to The Australian's Money Puzzle podcast.

I'm James Kirby with Sam Price.

Sam.

Yes, so in fact I was on I was actually speaking at an ASCIC whatever get together conference some time ago, and it was all about influencers, influencers that awkward term for social media players who build up a following, invariably with very light credentials, if any, in finance, suggesting how people can make money easily and fast, often suggesting how people can make money without even thinking or taking any risks, and of course that's impossible.

But most of the focus has been in the share market, and to be fair, there's good influencers and bad influence.

I want to talk about bad ones here.

So what surprised me is I didn't really, I really didn't realize that the issue is just as alive in property, and only a few days ago it came to light in a very clear way.

There has been a burst of you like of social media influencers in the property market suggesting that people like listeners to the show can get around lending limits, for instance, or LVR limits by creating trusts or family trusts or companies and then going to the bank that way, or going to lend us that way.

Macquarie Bank surprised everyone by standing in a few days ago and saying forget it, no more of this, no more, We're closing this whole thing down of lending into companies and trusts.

So that was hard evidence actually of both the influencers influence.

But I want to ask you what do you think of that whole story and does it concern you?

It does Jomes because of what I've learned in life is that sometimes the people that can best sell things and not the best to be listened to with.

I tell people they should be, you know, be very careful who they take the advice from.

When it's a social media of course, and I often think that the people that are following them can be can sometimes be quite easily led into areas where it is more you're risky than the otherwise would think.

And a lot I know a lot of the markets buyers agents are putting people in throughout Australia.

I don't think a long term hule, so you do have to treat it like a penny stock where you might jump in for a number of years, but then there is a time in the medium term you do have to sell to get out.

They're not buying Hull forever.

I think a property in Brisbane, like I think it was Charlie Munger or Warren Bofthet used to say, you want to buy a company or a property that you can put in your bottom drawer and figet about for ten years and pull it out and toust it off and it's in better shape that it was when it went in.

And I think property in Sydney, some parts of Melbourne and Brisbane there's properties definitely like that I'd be happy to hold.

But some of these other areas that are being sell throughout Australia, I'm a little bit a bit sus on whether they will be that good whole long term that I think you'd have to watch it closely and have an exit strategy for it.

So it's a different type of investment completely.

Do you think some of these buyers agents are in legue as such with the influencers.

A lot of them are the influencers themselves.

I think James as agents and they're selling their areas.

You know, they normally have a particular patch where they like and they can rent that up and sometimes refer to pump and dump where they can actually change the market because they are literally are buying twenty to fifty per months, so you just have to be aware of that.

In Brisbane at the moment, it's in these regional areas and pockets of Melbourne and towns will and down where they're actually changing the whole market with their attention.

Yeah, that's really interesting.

But let's just let's interrogate what mcquarie implied.

They didn't like this, right, So what the influencers are seeing, and let's assume the very best case scenario.

Let's assume the listener the reader of the influencer actually has a clue and actually does understand to some extent property market, and then they hear something they've never heard before, which is, you know, you can borrow more and you can be more active, and you can be a bigger investor if you'd go and examine family trust structures or company structures, because it gets around the borrowing limits that you've probably already reached if you are an active investor.

What's wrong with that?

I've always been told diversification is key, James.

So I have to pull out all their money into super and put into a two properties that they'd be very concerned.

I think you should have a mix of stock market investments and property.

It should almost be fifty to fifty in the perfect world.

So I'd be very concerned about pulling out all my money into super and putting into you know on black Oh.

Absolutely, well, yeah, I'm not even thinking about taking money out of Super.

But obviously this is an issue in that area.

Yeah, yeah, but I would seek financial advice on that, James, be very careful.

I look at the costs of maintaining that company structure or trust is very expensive per year.

It is you also, if you're buying in trust, the ability to inject more money.

I know with super you have to When people come to me to buy in a super fund, they need to get a certain return, which means we're often buying it an a an a area where we've got a lower land to value ratio.

We're getting a higher rent.

You mean to get a they have to get a higher running yield?

Do they?

Yeah, a higher yield to how to hus renovations to the property are the so all of a sudden, when they want couple of growth and I put them in one suburb, now we're looking at yield and something quite modern with an on sweat and paint and within ten years old, I'm buying in a different area where I can't guarantee the couple of growth that I could in that other area.

So you're being restricted in what you buy.

But back to the trust structure you were seeing, it's expensive.

I imagine the other issue is that there are investors who may not realize that basically cut to the chase, they're not worthy enough to use these I mean, if they're that expensive, if they were that easy, everyone would have used them.

There's reasons, isn't there that people don't use trust structures.

She might do it if you've you know, for asset protection, if you work for yourself and you secure some money away and things like that, or ought to avoid land tax.

You know, they might put each property in a different corporate structure to reduce the amalgamation of the land tax.

But I think that the costs involve the in and outs.

I think it's well worth some people considering.

I think a lot of people that are sold on those ideas might not have the gun powder to actually, yeah, pull it off successfully.

Yes, and of course immediately making it harder for themselves.

The hurdle to success is higher because they've put it in a trust structure and there's all the fees attached to that and other limitations.

Okay, very good.

Also, now I want to just if you bear with me and stay with us.

We have one or two questions from Ross or Uss.

After listening to the podcast recently, I told I'd send you an idea.

Last month I wrote to the Treasure Jim Chalmer's and I can confirm this idea is being considered by his policy team.

How about that, folks, Okay, here's the idea negative gearing should only be available for long term rental properties.

Yes, indeed, I don't not a bad idea, as negative gearing sort of proposes go in terms of trimming it.

In terms of restricting it, there was, of course the two sixteen policy from the ALP that it would be restricted only to new properties, but most people don't want to negatively gear new properties, just broadly in principle.

What do you think of Ross's idea?

I think it has some merit.

I think by the sands of that the government is looking at different options to tweat negative gearing and capital gains tax down the line, So I think it might happen, and that I think I can.

How would that influence my buying decisions now?

So i'd know I do in the best I want to go and have five or ten little investment properties throughout Australia or should we focus on one or two outside the family home of quality residential properties that set them up for the future.

Because there's two different directions there.

So I tend to think they might cap the number of properties you can have.

Do we need ten or twenty investment properties each?

Given the rental issues at all?

So I think they definitely will look into that.

Whether it's the negative gearing or the percentages or the capital gains tax, they will.

I think it's inevitable.

I think, to be honest with personally, I think it's CGT.

They'll go first, but let's see, Okay.

Final question from Grant.

Thanks so much for the podcast.

I love it.

Hypothetically speaking, given the current stock market is at all times high, if you basically he says, you know, he's overexposed to shares.

Shares have been very good.

If you were starting again, how would you deploy them money today?

This is this never advice, it's information for Grant and all the grants in the world.

Diversification, as you said at the start, Sam, is always warranted.

And in your world, I imagine people have too much property and that enough non property assets.

But for someone who's had a very good run on the market, and the market has been very good for a few years, I would suggest to that someone that universal type to consider investment property.

What do you think and I'd agree you would agree of course most people.

But yeah, as I said, I like the fifty to fifty approach.

People have a principal place, but then when that is well under control, using the equity and that property to buy an investment property.

I do prefer a quality investment property.

It still could be in inner city unit, but not an apartment of high rise it's a particular type of unit, or a townhouse, or getting the one as I said, you can put in the bottom drawer and keep it for ten or twenty years and well it'll be doing wonderfully when you pull it out.

So I do like quality investment properties rather than playing it as a numbers game.

James, Okay, very good, And of course, I mean the issue for folks is just to state the obvious.

The hard part, of course, is using real property residential bricks and mortar as diversification is I completely supported.

But the hard part is that the high entry costs, it's very hard to you'd love to go and buy six houses in six states or something.

If there was six states you'd love to buy.

You'd love to diversify your property, but it's very hard to do because it's a big ticket item.

And as you could hear from Sam's earlier part of the show, the prices he was talking about even across the middle suburbs of Brisbane, they are considerable now compared to most people's diversified portfolios.

But a point really worth thinking about.

Sam Price, Templeton Group in Brisbane.

Lovely to talk to you, Thanks for coming on the show.

Thank you Jens, thanks for having me.

Good to see you again.

Great to have Sam there.

I know him a long time.

As I say, he's been through the ups and downs and now enjoying the ups of the Brisbane market, which looked like they're going to continue for some time.

Okay, we have the ACIC Commission Alan Kirkland on the show later in the week.

If you want to ask him anything.

He's in charge of all consumer stuff at ACIK.

Now it's your chance forty eight hours to do it.

Until then.

The money Puzzle at the Australian dot Com dot au is the address talked to you soon