108 // Another Luke Warm Christmas

Episode:108
Show Title:Another Luke Warm Christmas
Cast:Aaron Horne & John McGregor
Guests:Luke McGregor & Chris McGregor
Show Length:25 minutes 53 seconds

What do you get when you put Three McGregor Men in a room with a Podcast host?….Another Luke Warm Christmas!!!

This week we are lucky enough to once again have John, his Dad Chris Mcgregor, and Logie Award winning Tasmanian Comedian and TV Star, Luke McGregor.

Listen in as the family members discuss all things affordability and what Australia may need to do to even the playing field when it comes to the property market.

Luke: In order to bring down the price of houses, you either can reduce the demand so you can Thanos snap half the population away and that will reduce the price of houses [Aaron: not a bad idea] or you can increase the supply of houses.

[into music]

Going once… going twice… SOLD! You’re listening to The Property Pod!

Aaron: All right, guys. Welcome back to another Christmas episode of The Property Pod! I’m your host, Aaron Horne, and it gives me great pleasure to be joined by a bunch of McGregors–I’m actually swamped by McGregor’s [laughter] here in the room–I’m surrounded by them. Last week, we joked about Chris Hemsworth coming on for the Christmas show but there were many complaints that we needed to get our original Christmas guest in, so we’ve called in superstar of Australian comedy and TV and Logan winner and all of the above, Luke McGregor!

Luke: Tasmania’s Chris Hemsworth [laughter]

John: Oh yeah!

Luke: Yeah, I bet everyone’s gonna be really happy they got me into Chris. 

John: You need to start a rumor that you’re buying property that we can spread.

Luke: Oh yeah, I wish [laughter]

Luke: That’ll work… [laughter]

John: I suppose there’s different budgets, maybe we could do it as a family as a joint thing but just probably wouldn’t be the same. I don’t know if you have the Hemsworth family all lined up on a beach, it’d probably be more interesting to see it than the McGregor clan.

Luke: They’re a handsome bunch. Anyway, you’re gonna introduce other guys? 

Aaron: Yeah, we’ll get there. We start with the stalwart of the family. He’s been here before. Let’s bring on to the mic, Mr Chris McGregor.

Chris: Welcome, guys. Thank you!  

Aaron: Yeah, not a problem. I’ve got

three strapping young McGregors in the room and I feel a little left out, I’m not donned in red and black. John’s got his red and black, looking sharp. How are you feeling, my friend?

John: Good good. Well this is lucky because Michael Frank loved it the second he saw it, but it’s just uncanny that this particular black and red tartan just happens to be one of the variations of the McGregor one. So, it’s nice when it’s actually quite a common shirt pattern but it’s just like… just subtly, it’s just like, “that’s a McGregor, that’s a McGregor, that’s a McGregor.”

Luke: So that would have been the same masks they wore back in medieval times so they had plagues back there as well…

John: Yeah, if the… like in Edinburgh where they used to have the pointy masks. They didn’t showcase the fact they used to paint them black and red.

Luke: You’re right… [John: Exactly] very cool.

Aaron: Very very cool. 

John: Historical fact.

Luke: I cannot confirm it tonight. [laughter]

Aaron: Well, guys. We thought we’d get Luke in today to have a chat with us about all things real estate. You came in last year and–oh you didn’t come in; we did it via Zoom and we chatted. It’s wonderful to have you in the studio. We’re just going to talk about everything that’s happened across 2021 kind of rotating obviously, wrapped up its final season. You’ve left the world of real estate [Luke agrees] and moved on to other things.

Luke: Space Ninja’s next or something. I have to write it.

Aaron: Man, I love the idea of Space Ninjas, tell me more. So, what is happening in your world before we jump into anything real estate. What’s going on out there? 

Luke: I’ve got ideas but Seals and I basically just thought we’ll take a holiday. My plan was to travel but that is not… [Aaron: …to be tricky at the moment] I don’t think New Zealand’s even letting us in so that was where I wanted to go. So, for the rest of the year, just get as fat as I can and then start trying to work it off in January, let’s plan.

Aaron: Bulk up like Hemsworth. Make your way to the east coast and try and see if you can get any compounds.

Luke: See if I can start auditioning for Marvel, that’ll be the goal . [laughter]

John: Is it a good rest to give your brain a space creatively but no pressure to do something? 

Luke: It’s good to just start doing…just start living life and trying to have experiences because that’s usually where you get your inspiration from [Kohn agrees] whereas during the locked in, it was hard to write just because you’re stuck inside, you’re not really experiencing anything. [Aaron agrees] Or I need to be on a tram and bump into someone and spill my drink on them and I  know so I could have got more stand up, so I’m not just sitting in my room, yeah, it’s difficult. I thought because we were sort of locked in, I had a bunch of time to write, but honestly, it was really difficult. I just, most of the time, you’d spend just trying to stay positive and play video games. It wasn’t a lot of… it wasn’t as creative as I thought it would be. 

Aaron: Yeah, it is a tricky one. It’s kind of like getting a uni assignment done. It always is done in the last bit when there’s kind of a bit of pressure rather than it being that, “I’ve got all this time in the world, I’ll get ready and I’ll do all this”

Luke: Oh that was the last minute. Most of the time, I would spend. So I wouldn’t do it and then on the last day, I’d start writing the excuse, I was going to give it to the lecturer and then I’d do it in the week after I got an extension, that was my plan.

Aaron: I quite regularly come up with really good ones. I feel like now in the modern world, it will be much more difficult with you having to put it online or go through all these other things–that’s a completely off-topic subject but… 

Luke: You just kept saying like…

Aaron: I’m just so glad I’m not at uni these days…

Luke: That’s your podcast. You can do whatever you want. [laughter]

Aaron: Whatever we want, well tell us about Ghostbusters Afterlife, thoughts?

Luke: Uh, I liked it but I don’t think I could discuss without going to spoilers. So, I’ll just say that it was fun and if you’re a Ghostbusters fan, it’s definitely worth seeing. 

Aaron: Excellent. Very happy with that; very excited to see. 

John: Well, I know one of the things we’re talking about before, you know, we started as a sort of thing to chew on. I mean even after this like the pandemic, everyone’s just come out of the gates and tried to invest as much money as they possibly can. People are trying to purchase homes right across Australia, both in Suburbia and regional areas especially and that said, you know, from one sense, you can say that’s a really great thing but on obviously, the other end of the scale, the topic that’s really coming back in the space is the housing affordability element and it’s I think one thing you’re talking about before, look that’d be really interesting thing to chew because what have you been thinking about? What have you observed over the last couple of years in that sense now?

Luke: Well, I mean the housing market is just, correct me if I’m wrong, guys, but it’s pretty much just been going up and up, right? [John agrees] So basically, you can either… in order to bring down the price of houses, you either can reduce the demand so you can Thanos snap half the population away and that will reduce the price of houses [Aaron: not a bad idea] or you can increase the supply of houses so the government if they want to make houses more affordable and just by that, basically just bring down the price. So, housing affordability,  i think we should really only talk about in terms of people who want to buy a house to live in so that basically means that they have to… so anything you do to help investors is going to make that difficult, so negative gearing makes it harder to buy a house to live in it because negative viewing exists. That means people can buy above their price range to buy a house to invest in. So, one simple thing they could do is say I only have never give like anyone who’s got negative gearing now gets to keep it, but in the future, anyone wants to buy a property as an investment, you’re going to you only play negative gearing to say people who want to make new houses,so new builds.

Aaron: New builds getter. Yeah, you can’t just buy another property and be like, “oh yep, I’m going to be negative…” 

Luke: Exactly. It’s kind of like it’s basically the government subsidizing speculation like you wouldn’t have the government subsidize share price, share purchases, so why should they also subsidize… 

Aaron: …just because it’s a bricks and mortar kind of thing…

Luke: Exactly. But new builds would encourage more houses to be built. So that’s one thing they

could do. They could also get rid of say capital gains. Get rid of stamp duty like stop taxing– it’s just unnecessary. You don’t need to tax these. State taxes are a bit different because which one state taxes, stamp duty? [the other three agree] So states obviously rely on taxes for income whereas the federal government doesn’t. So, their deficits aren’t the same as a household budget. So you can get rid of things like I believe capital gains is a federal tax, right?

John: Uh yes, income.

Luke: So, you can get a capital gains tax. So, the other thing that the government can do is just build more houses, so they could just build houses and then sell them on the market, in the same way they put money into gas pipelines, communication towers, et cetera. They just build more houses so they increase the supply. 

Aaron: Which in turn lowers prices because there’s more of them for people to then get into get out of the renting market, is that correct?

Luke: Exactly. So basically, you’ve got more houses available, so you got more in the pool. In the same way, if you had 10 people who wanted five bananas, the cost of those bananas would go up because everyone’s competing for those bananas which you’ve got 10 bananas for 10 people.

Aaron: For sure. 

Luke: Yep, so that’s some direct things that the government can do. The fear is and the tricky bit is anytime someone says anything about doing anything that might bring down the price of properties, a whole bunch of people with best interests [John: lose their mind] lose their mind and say, “oh my god, the market’s going to crash”. All of a sudden, your house is going to be worth nothing. But if you’re buying a home, it doesn’t really matter because if your house is worth $10 or whether it’s worth 1.7 million. When you sell it, you’re buying into the same market, [John agrees] but for investors, that can be an issue because they’re trying to buy a house and then sell it in five years time and make more money. So, investors get scared whereas home buyers, it doesn’t matter because you’re buying for a house. [John agrees] So I’ve talked for a long time. Dad, do you want to jump in there?

Chris: Increasing supply does help reduce the cost like for example, quite a few years ago, Melbourne had a real huge oversupply of apartments in the city there and agents were going into the docklands and turning lights on and off just to show some activity in there in which Melbourne’s probably the unit market’s got the softest prices in Australia because there’s quite a few there and increasing supply will help adjust. New Zealand has just gone into, they just got rid of negative gearing so we’re watching that space to see what happens there.

Aaron: Well, how recently did that happen?

Chris: It was only this year. We were watching that with interest.

Aaron: How long would it take to kind of get a case study or work out? What could then extrapolate onto Australia?

Chris: Well the interesting one is like Canberra. They’ve capped the rents by CPI and they lost 4000 rentals overnight on that one. I think the media does, sometimes, when you talk about an adjustment in prices, the media gets on it and says the market’s crashed but it hasn’t. It just puts fear, as Luke mentioned a minute ago, it puts fear in people’s minds and sometimes when it’s increased by a quarter of a percent or something like that in prices, then the houses are booming, well it’s not–it’s just adjusting. But this year has been probably one of the biggest ones we’ve had for a long time. All around most parts of Australia, the prices increased by about 24%–which is huge, where the year before was about eight percent and things like that. I noticed a guy in today’s news real… through real estate, he’s still thinking we’re gonna get double digit growth next year, so about 10%.

Aaron: Yeah, so I guess the scary thing for that, coming from somebody outside of the game, so say you’re renting and you want to kind of get into the property market that just seems like an impossible thing now, I guess like the Australian dream always used to be: if you work hard and you earn a crust, you’ll be able to own a home. I know we’re kind of discussing off-mic before just this idea of is it like a European approach to living situations where the idea… I was only listening to philosophy the other day and he was having a discussion about the idea of just renting and it’s quite often people will say, “oh, I’m just renting” as in it’s this negative idea of like, “I never own a home, but I’m just renting. I’m only here for the moment,” whereas, it’s like the goal is always to reach that idea of being a homeowner. Is that becoming an impossibility?

John: Well, it’s certainly a cultural thing, isn’t it? Because it’s the Great Australian Dream of home–it’s almost embedded into our culture in that sense, whereas as opposed to just being, oh it’s just just a choice. So, if it’s a legitimate choice, some people, if the choice is taken away from them, for example, if someone of lower means, but then yeah, you’re right, like why should they feel demonized for that idea?

Luke: Well yeah, people could start looking for their dream home to rent so that becomes their forever home that they rent which means we might have to look at rental laws into account. Dad, you were saying before we started that some parts of Europe, they allow renters to renovate.

Chris: That’s correct, yes.

Luke: And so, you know, we start to need to look at the rental laws and think, “okay, how do these apply to people who want to live in rentals long term and how do we protect them?” 

Chris: Well, what it does for the last ones in Europe where they do minor renovations and things like that is it actually becomes their home and they’re proud of it and they’re there for the long term, so they’re not moving here and there and so, they have started some rules changes in Victoria where they can do minor renovations without permission. 

Aaron: Yeah, I think that was something that came in earlier this year or last year about being able to actually nail a hammer in or hammer a nail into the wall without asking permission sort of thing which seems quite small but once you add that extrapolate that onto other things… 

Chris: And a theory that works well, except for one or two people with the next minute, people think they can knock walls out and things like that which would make it a bit of a problem and also, too, they allow pets now and that’s not a problem either until depending on what pet you’ve got like there’s a couple in the newspaper where there’s three guys bought one of those Alaskan…

Aaron: I like the malamute thing, yeah.

Chris: In a 67-metre square apartment and what’s it going to do through the day when they’re all at work, I mean those dogs need energy so it’s just the wrong choice of pet.

Luke: It’s another thing the government can do and particularly the federal level is that if people who own houses are willing to let their renters do more than they can, the government can step in and offer more protections. They can subsidize when things go wrong; there’s another form of government spending to try and help. [Aaron agrees] Basically, at some point, we have to decide as a country.  Do we care more about making sure people who want to buy a house have the most help they can get or do we help investors? And at the moment, it’s slightly geared to in favor of investors [Aaron agrees] and until we get rid of things like negative gearing, we stop subsidizing people who want to buy houses just as investments and if getting rid of negative gearing might not actually make the property market drive– [Aaron: –might not change too much] it might actually still rise but just a slower rate. We just have to do something that sort of slows us down a little and focus on homeowners and if that happens and people who buy a house to sell it five years later to make money, they are going to lose–there’s just no way around it. And they’re a very loud bunch, they don’t want that to happen. And even economically, I’m not saying they will but organizations like the Real Estate Institute because real estate agents obviously make more money than more house prices cost, there’s a financial incentive there for the market not to be messed with yeah…

John: And same with state governments. Because if the stamp duty is based on a transactional nature, often, it’s nearly at three… you know, three days…

Luke: Well, it’s a taxable income for them so it really has to if changes really have to happen at a federal level because the federal government’s the one place that doesn’t rely on taxable income to spend. They’re in charge of the currency, they can make change, they can do things the state government can’t. 

Chris: One of the things we’re keen to see is actually the tax on the stamp duty because that is a huge burden for buyers. One of my friends, I mean, people might say he’s not poor but I mean, he stamp duty to change it from his name to another person but one person to another was $250 000. Please don’t explain to me that it costs $250 000 to change from one person’s name to another and young first-time buyers really need to be given first such stamp duty relief to help if they’re in Victoria. Luke lives in the median’s–almost need a million dollars. That’s a lot of money for someone to come up with the extra money for the stamp duty and then for older people to get out of their homes, a disincentive, because they don’t have to go paying another fifty thousand dollars would have to change to the government just to change homes, so, it’s a tax that needs to be looked at.

Luke: Yeah, I completely agree and it’s another one where the federal government can say to the states, “get rid of this tax and we’ll make up the shortfall” like “we’ll make sure you don’t lose the money” Yeah again, it just has to happen at a federal level but it’s a tricky one to get. I mean, I think [ __ ] last election wanted to try and eliminate–they wanted to make it so negative gearing only applied to new builds and the amount of, if that’s correct, the amount of scare around that that it’s going to crash the market and yes, it’s just anyone who tries to dabble, it immediately start seeing these scare campaigns about it.

Aaron: And again, like I think, last time we spoke with you, we’re talking about how kind of this is all theoretical stuff up in here like as soon as you try and change something, there’s always someone that’s going to push back and say, “no, the reverse” of that’s going to happen and whoever’s got the louder voice will always come out on top or yeah [Luke agrees] so yeah, a very interesting kind of stalemate really until someone’s brave enough to push the boundaries and say, “yeah, we’re going to go this far”

Chris: And Luke touched on it earlier, too. It needs to be sort of grandfathered so if they’ve got an idea like for example, you’ve just bought a home, you pay fifty thousand dollars in stamp duty and then they change the tax, you don’t want to find out when so, you end up doing it on a yearly basis like a land tax whatever. The people have just paid their full stamp duty and buying homes; they don’t want to be lumbered down with another duty for the rest of their life. [Aaron agrees] Those need to be grandfathered. And then the only downside of that, too, is it may make people not sell because now, they’ve paid their money and if they buy again, then they’re lumbered with a tax for the rest of their life, so they’ve got to be really careful how they handle it.

Luke: That’s exactly right. Making sure that those who have whatever the law was before are disadvantaged by the change. So, it’s doable. It’s just we’ve got to make sure that no one minimizes any harm to anyone and make sure that it doesn’t… anyone who sort of just paid to empty doesn’t, that’s exactly right.

John: And that’s the thing. Everyone’s looking at who’s winning and losing and no one wants to give any ground. And it would seem to me that when obviously, for all these, I’d like that they hadn’t thought of it this way, but in the end, where is the incentive moving towards and who gains the most? And realistically, in my thought would be the only fairest way to do this is that there’s no incentives to any particular direction–there’s no incentive to new builds, there’s no incentive to new home, the first home buyers, no incentive to investors. It’s like just kill all of it. So, that’s just a thought experiment, I suppose. And then at the moment, though, because there’s incentives in every single direction, once they’re all removed there’s always going to be some adjustment where it finds its ground and now that’s no longer affecting the market. It’s going to take a series of years before that plays out on every end of the scale and so, is there a case to be made that by actually the government coming in and trying to incentivize in any particular way a good thing or would it be better if they just got out of it?

Luke: Incentives are good depending on what society needs. Like if you want to… if more houses need to be built because people are homeless, for example, incentivizing new builds is a good thing. We haven’t say taken away an incentive, for example, removing negative gearing moving forward, we’ve always done things where we’ve said, “okay, well let’s let’s give single parents money to buy a house” or “let’s prop up new buyers” so you just keep propping up different groups which doesn’t necessarily improve housing affordability,  it just means that there’s another person at that auction who can afford above what they would normally be able to afford. So it just keeps rising the price of houses so eventually, you need to do something where you take away an incentive which has a downward push on housing prices. 

John: Okay, we’re just removing that group from the auction.

Luke: Exactly! So, if someone who’s an investor can still buy a house but they can’t buy at the price range they would be able to buy it if they can negatively gear, so that takes them away from that auction at that price point. So now they’re looking at houses instead of 700 grand, they’re looking at houses 600 grand. 

John: Well, there’s something even in my short history, there’s a couple of things I’ve observed in both buying and then as an agent. So in 2000 and up to 2010 and locally, where they removed… well at the time we had the first time buyers incentive from the federal government which was at 7 000; they increased it to 14 000. And also, locally, they actually had half the stamp duty and then following 2010 I think it was and obviously, dates won’t be exact, they removed all of them. So, there’s no first time buyer’s incentive; there was no stamp duty. And we noticed especially in these like first-time buyers markets, the demand almost halved like the transactions of sales dropped dramatically. My sort of take on it was that obviously, it incentivized those people there and it gave them the ability to buy maybe one or two years earlier than they may have otherwise done because they didn’t have to save as much as traditionally you would have had to. Then I guess, if now all of a sudden, they’re starting to come back into gear again, so the first time buyers they’re… you don’t have to pay mortgage lenders insurance up to four hundred thousand and increase to five hundred thousand and the pace of those that prices continue to push quite fast and now it’s interesting if I guess there’s incentives across the board everywhere now. So, everyone’s got an advantage but now, they don’t because everyone’s got an advantage. So, I suppose, going back to the idea of the incentives then, the biggest problem is that everyone has an advantage and we’re not really… “propping up” is not the right word, but we’re not directing the market to where we think it needs to go.

Luke: Propping up is pretty much it. We’re propping everyone up as opposed to removing some of the advantages that someone has. [John: got you!] So the price just kept going up and up and up and up.

John: Yeah and so now, the problem is though is if anyone’s going to make the argument for someone to be disadvantaged when they’re like, “well, how come they get it good and how can they get it good?” So then no one wants to be making those hard calls. 

Luke: You just basically just need to do things that have a down impact like dad said, removing stamp duty has a downward impact on prices. Negative gearing moving forward, has a negative and has a downward impact on prices. Prices might not fall, they might just rise slower but it’s just very hard for a government to campaign for pushing prices down on houses because even if you own a house and all of a sudden it’s for… it was a million an hour worth nine hundred thousand, as a homeowner, it’s still scary like, “oh man, my house has got 900 grand”

Aaron: …but the market that you would then be buying in would probably still be at the same… [John: same level] space…

Luke: Well yeah, like the idea is because you’ve removed something that affects the whole market, the whole market’s gone down and when you buy a house it doesn’t matter. But it’s still hard for people to compute. [Aaron agrees] You don’t hear that something’s gone down. So, it’s just that sort of visceral gut reaction someone explaining the economics of it might not necessarily make you feel better.

John: That’s why you never want to look at your concept trading app every day because it’s gone *imitates sound*

Luke: But yeah, it’s just as a country, we just have to say we’re going to prioritize people who want to buy a house to live in or we’re going to prioritize people who want to buy a house to rent it out to someone so, I don’t know–it’s tricky.

Aaron: Yeah, it seems like a very tricky kind of space to be and it’s very interesting to chat about it. I guess being a Christmas episode we should probably try and lighten the mood just to touch before we sign off. [laughter] It’s kind of cool…

Luke: I’ve got some podcast feedback. So here are what I regard as the most boring of the episodes.

Aaron: Hit us up.

Luke: Okay, it’s when you get a staff member in and then you ask them, “what do you think it’s like working at 4one4?” [laughter] What are they gonna say? They’re gonna say, “oh, I hate it” like this is the most loaded question I’ve ever heard: you put a mic in front of them and you say, “tell us how good it is working at 4one4 real estate?” Oh my god, what am I going to say? “Oh, I love it. I love the staff here. I love you, guys. I love the podcast” like–

John: I hope at one point one of them just snaps…

Luke: I had someone quit on the podcast. “You know what? I hate it. I’m out.” [laughter]

Aaron: I’d love to see… That’d be brilliant.

John: Maybe we could sit there and give it a like in brackets as well, it’s just “puff piece episodes” 

Luke: Or only interview employees that have quit and are no longer working… like a feedback [everyone agrees]

John: Yeah, that’d be more interesting.

Aaron: Interview and record it and send it out live.

John: I think it’s great feedback but it makes sense to me… [laughter] 

Aaron: No look, mate. We actually do really appreciate that you listen in every week. I know you’re kind of it’s nice to listen to your brother’s podcast but it’s  actually that you give us feedback and say, “I really liked your COVID episode” “I really like this episode”. It does mean a lot to us.

Luke: And it’s great hearing down on it too.  I do feel like I’ve talked too much because, dad, you’ve got so much experience in industry. It’s fun–it’s just fun hearing my dad and my brother on a podcast.

Aaron: Yeah, I actually really like when Chris comes in. You’ve always got just what you say is brief and important and you get your message across straight away and yeah, you’re not mixing words up and completely like John.

Chris: I always appreciate the three minutes notice, too, by the way. [laughter] 

Aaron: That’s all you need. [laughter]

Luke: Money’s way to the bathroom, dad, get in here quick. 

John: You’ve been preparing 30 years for these moments, you don’t need it.

Chris: Thanks, guys.

Aaron: No, not a problem. Well, thank you so much for everyone that’s been with us across the journey of the 2021 version of The Property Pod. We do appreciate everyone that’s joined us. Thanks for coming in and having a yarn with us–absolute pleasure to have you in.

Luke: No problem, thanks for having me.

Aaron: Good luck moving forward. Good luck across the McGregor new year. I know there’s often economic debates to go over across the kitchen table so…

Luke: I won’t be living here so you, guys, have to go forward without me.

John: Although just leave some notes for me. [laughter]

Aaron: Party on wine, party on garth.

John: Cart! [laughter]

Aaron: Oh good, guys. Merry Christmas to everyone out there. We will see you all in 2022! See you!

John: Thank you!

[extro & disclaimer]

You have been listening to The Property Pod, recorded and edited by 4one4 Media House in conjunction with 4one4 Property Co. This podcast is general information only and the thoughts and views expressed are the opinion of our panel and listeners should always seek to use their  

own investigation into any topic we discussed to ensure they fully understand their own situation. It does not constitute and should not be relied on as purchasing, selling, financial, or investment advice or recommendations, expressed or implied, and it should not be used as an invitation to take up any agent or investment services. No investment decision or activity should be undertaken on the basis of this information without first seeking qualified and professional advice.