EPISODE TRANSCRIPT

Patrick Berry
This time around. They’ve actually opened it up to be any home in Tasmania that the scheme is eligible for in two sections 200,000 of its brand new, $150,000 if it’s an existing home. So a home that somebody else has already lived in. And that I think is the absolute game changer.

INTRO

Aaron Horne
All right guys. Welcome back to the property part, your weekly engagement in into real estate here in the Hobart and Tasmanian marketplace. I’m your host Aaron Horne, and it gives me great pleasure to be joined as always by Patrick Berry and John MacGregor. How are we guys?

Patrick Berry
So excited to be here this morning as always.

Speaker 4
Hi, killin it must be feeling all right.

Patrick Berry
Yes, I’m coffee in and I’m happy.

Aaron Horne
I don’t know where to go from there. You really firming up the off the mark.

Patrick Berry
Just trying to bring up the energy levels without a few technical problems. First thing this morning about we’re good to roll.

Aaron Horne
It’s been it’s been a long time since we’ve had a real issue where we get halfway through a recording. And I have to say, like, always.

John McGregor
You can hear it in your voice through what happens. Like, Oh.

Aaron Horne
Yeah. Oh, look, I went in a real shame spiral there, just sighing. Like we we’d got about seven or 8 minutes deep in us.

Aaron Horne
Oh, my. What?

Patrick Berry
But it’s all good. We’re recording it back on track.

Aaron Horne
We’re back in action, and everything’s going well. We we could try and recover the same topics, but let’s just, like, jump straight into what we’re talking about. Today’s episode, we’re hoping to go on some of this housing affordability stuff that we were talking about in the past, almost kind of creating, like, a little trilogy of movies.

Patrick Berry
I guess we’re now into the third the third act.

Aaron Horne
Well, let’s hope this isn’t like kind of Godfather part three style. Not where it where it dips off and falls. Let’s think we’re kind of I like to think of us as the Return of the Jedi. Yeah. Although there’s still a bit of fun. There’s yeah, there’s plenty going on. But yeah, I think it’s kind of continue the topic that we’ve been talking about and like it kind of started off as proposals that that kind of might help the market.

Aaron Horne
And now it seems like the state government’s been listening to us. Yeah. And they.

John McGregor
They changed into that parliament. Holy moly, we do all this stuff.

Patrick Berry
Yeah, yeah.

Aaron Horne
Exactly. Yeah. These guys are going to beat us to the punch. So let’s jump straight into it. Before going into that. I do want to cover off on this musical that’s that hit the airwaves. Have you guys I know, Pat, you watched it. John, did you cover him, get a.

John McGregor
Chance last night or spoon into.

Patrick Berry
Well, you guys, if you are into real estate and you’re into musicals, then this is the perfect opportunity to be able to watch something amazing.

John McGregor
Because what it what is it? It was it was like the journey from like buying a house or something.

Patrick Berry
Yeah. So it’s it’s on SBS streaming this space now. I think it’s gold and it’s on demand. Yeah, that’s it. And the show is called Time to Buy a Real Estate Musical Journey or something like that. And I don’t know, it’s just gold. I think.

Aaron Horne
It’s fun. It’s one of those things where it’s like perfect parody where it kind of is. It’s so true to form and true to the current state of like, I guess it’s funny looking at it from inside the industry and being like, Oh yeah, these are the things that people can take the mickey out of us. But like, it’s got like boomer buyers and like the young up and coming millennials trying to get into the market.

Patrick Berry
And it’s got the mortgage broker, which she plays an amazing role in.

Aaron Horne
And searching online and trying to find the, the property property prices and like, this guy’s like a he has an existential crisis midway through. We don’t want to spoil any of it. But what was it like.

John McGregor

Patrick Berry

Aaron Horne
Let’s go in and out a few songs. It’s, you know, she’s a user from Roseanne. Yeah, yeah. There’s Alexi. Tell us one of my favorite podcasts is out there maintain that the singer slash actress, she’s one of the main characters. So yeah, it made made locally. Really, really funny stuff. So time to buy on SBS we just thought at the top of the show we.

Patrick Berry
Should, but don’t jump off this episode. What’s that after you’ve finished listening to this?

Aaron Horne
Indeed. Indeed, indeed. So yeah, look, let’s jump into some of the serious stuff and talk about some of these promises that are that are coming from the government because this might.

John McGregor
Be music to your ears.

Patrick Berry
Oh, that’ll be on the cutting room floor.

Patrick Berry
That joke one.

Speaker 4
I don’t mean I didn’t want.

Aaron Horne
Let’s jump into it. What? What are we talking about tonight?

Patrick Berry
Look, the Tasmanian Government has announced a bucket load of initiatives over the last week or so and they cover literally everything from new houses being built to first time buyers getting into the market to social housing like Granny Flats. Is everything in this and well first time I saw this, I’m like, I have to show Simon Paisley from property ology this.

Patrick Berry
This is just next level I need to get his thoughts on is a viable what is it like, is it going to have much of an impact and he came back and he what, what did he have to say? Yes. Yeah.

Aaron Horne
So basically Simon shouted at the Tasmanian Government saying the Tasmanian Government deserves a huge applause for introducing more effective housing policies than any other Australian state. So he’s basically just shouting and shouting us out as leaders. I’m here in Tassie and just being like, yeah, thanks for having the Coronas to uh, to tackle this.

Patrick Berry
Problem head.

Aaron Horne
On. Problem head on. Yeah.

Patrick Berry
And look, the first problem and it’s always been a problem in the private and the government section of housing is availability there’s just literally no stock available for the amount of people that want to live here. So the first thing that they did announce is that over the next ten years they’ll be building 6500 homes.

John McGregor
And that social housing, social.

Patrick Berry
Housing. So yeah, that’s entry level rentals that allow people to get a roof over their head so that they actually have somewhere to live.

John McGregor
I think, I think that’s a really strong commitment because the private landlords have been demonized in some sense for the rise in raising their rents. But it’s not that you can’t really have your cake and eat it too, where on one hand the demonizing the private private owners and not supplying any social housing as well. So it’s that this is a really good initiative to say, well, look, rather than putting all the pressure on the private industry, expecting them to cover the cover, the difference, they’re really ramping up to say, look, now we are committed to this to help both ends of the scale.

Patrick Berry
Now the question is, can they physically build 650 properties a year, especially with the Tasmanian building industry being that far under the pump? At the moment with construction. But it will be interesting to see if they can come forward on the promise.

Aaron Horne
Yeah, well I guess like in last week we spoke about medium density building and whether that was a viable option of the future. So it’d be interesting to see if at the start of this program if the urban sprawl kind of is what kicks it off when we get more subdivisions in places. But then, you know, it’s a more time period.

Aaron Horne
They work on building up rather than out.

Patrick Berry
Yeah, definitely.

John McGregor
And I think that’s where they’re trying it because we’ll jump around a bit because they’re all interconnected. Yeah. It’s because one of them that the mentioned here is the head works holiday program or odd phrasing as far as I can. As far as I’m concerned. But in that sense, what they’re doing with that is they’re going to allow a little bit of an extra subsidy to developments in the, in the form of, you know, providing, I think five to ten grand or something like that, helping, you know, connect power and a few other elements.

John McGregor
So it reduces the cost of connecting those blocks for developers.

Aaron Horne
Okay. Yeah.

John McGregor
Well, at the same time to they’re working on hopefully going to ensure that the approvals and the way that zoning is written and constructed, the moment makes it easier to repurpose these zones then obviously to where to create these developments in order to create more data houses. So there’s a little bit more flexibility to actually make this stuff roll out as well.

Aaron Horne
So rather than hitting a roadblock straight away, it’s kind of like.

Patrick Berry
Yep, well how do we remove the red tape and get this project off the.

John McGregor
Ground? And I think, you know, red tape is probably the best way to look at it with all the different ways to phrase it. That’s fundamentally what they’re referring to, is can we just make it easier to actually construct these construct these homes in the first.

Patrick Berry
Place, which is awesome, because if anyone’s dabbled in building or, you know, someone that works in the building industry, there is so much work just to get a house out of the ground, like, let alone finished for someone to move into. So wherever they can streamline that and they’re going to have to do something like that just to get these numbers of properties that they’re talking out per year.

Patrick Berry
Like that is a lot of planning and a lot of actual paperwork for a company can even come in and construct it for the government.

John McGregor
So and it certainly doesn’t. And there’s no shortage of people that want to do it. And that’s the that’s the thing. Like there is so much pent up demand of people wanting to do this and we’re stuck. We’re just physically.

Aaron Horne
Stuck. Yeah, I guess I’d side of the coin I hadn’t thought of was that the creation of jobs through all this as well is kind of yeah, there’s obviously a demand to to build. So it’s going to be, oh, that we need a bunch more people in that industry. That might bring apprenticeships, etc..

Patrick Berry
Absolutely. Moving across to the private sector of the rental aspect that also announced that land tax cuts will be coming into play for landlords. So people probably don’t understand. But if you own multiple properties in Tasmania on the property, that’s not your principal place of residence, you pay an additional tax tax.

Aaron Horne
Yeah, this is interesting to just kind of didn’t they raise it last year and now it’s coming back down. Is this kind of a I’m not up, this is off the night.

Patrick Berry
Oh, well, you know, so on that, if they raised it or not.

John McGregor
Fundamentally though, it’ll mean that it cost less to be able to own an investment property. Yeah.

Patrick Berry
So yeah. $220 million worth of cuts around this area. Their theory is that if a owner has less outgoings, it should be able to be able to make properties more affordable to rent so hopefully it’s two fold effect. I see. Maybe we might have some owners that are in a position to, instead of increasing the rent when the next rent review comes around by, you know, $30, they might be able to do $10 because they’re not trying to offset these bills that they now have.

Patrick Berry
That’s right. So there’s advantages there for long term tenants to potentially get a better deal moving forward. Yeah, for sure. And then from new owners that don’t actually have an investment portfolio, they’re looking to get into this space that allows them to potentially buy, you know, a property that might be a little bit dearer because they then don’t have this extra fee hanging over their heads that they’re going to have to cover each year.

Patrick Berry
So it may allow them to actually buy another property and get another home into the marketplace for people to rent for. So so I think there’s some really it seems like a pretty simple one, but I think there are some good advantages on different angles, how people might take advantage of this particular scheme. Yeah.

John McGregor
And maybe call me selfish but I think the idea, no matter where in what end you’re wherever you are, paying less tax is a good thing.

Speaker 4
Let’s just be real.

Patrick Berry
I’m fine. With the attitude of you guys. I pay my taxes and I’m fine with this. So if you’re listening, I’ve got no issue with what I buy.

Aaron Horne
Well, look, we’ve worked out. The state government listens along with all this, so. Yeah, and I’m sure they would have Lister-Jones episodes about tax preparation. Yeah. It’s such.

John McGregor
Feedback. It was actually the avalanche title was the title insurance was but I still get I still get to experience that. So so I guess then the I mean, one of the biggest the couple, the really big exciting ones, though, is the all the incentives for the first time buyers specifically.

Aaron Horne
Yeah, this is the meat I wanted to jump into. Like I know a lot of the people out there that listening to the show, I kind of in that first time buyer demographic and this one seems quite exciting.

John McGregor
Yes. I mean, one of the first things to up to 600 grand it’s been increased again is you are going to still maintain you have a 50% off year stamp duty. That’s significant. You know it’s $10,000 worth of savings pretty much.

Patrick Berry
And I don’t think people realize that stamp duty is even a thing when they’re first time buyers. I know we talk about it on the show all the time, but it’s the hidden fee that you forget about. Oh yeah. Well you’re looking to buy a $500,000 house and you don’t realize that on top of that it’s.

John McGregor
Probably a.

Patrick Berry
Great. Yeah, 15, $20,000 worth of stamp duty that you have to come up with. Yeah. And the bank normally doesn’t lend that money to you, so it’s money that you have to have in the bank. So with a 50% reduction in the stamp duty, it does mean that you can, you know, it makes it easier to be out actually by your first time.

Patrick Berry
Yeah, and it’s good to say that the Tasmanian Government realizes that the meeting houses in southern Tasmania and all over Tasmania have increased and so to increase that threshold to 600,000 for the rebates for first time buyer I think is fantastic.

John McGregor
And a footnote because at the other end as well as the offering that now they did listen, which is they’re going to allow that 50% rebate under that $600,000 for downsizers.

Aaron Horne
Yeah course. So this is kind of the people leaving the market or kind of get them out of grandpa. So let’s free up the four bedroom homes for people, for.

John McGregor
People living up which frees into the first time market again. And that’s so important because the when again it’s not if you’re the end of your life and all the all your equity and money is tied up in your one place you they can lose as much as $40,000 on the on the air so half of which is just paid and nothing but stamp duty which is just straight up tax again.

John McGregor
So the what’s really exciting about that then is that there are a lot of people that like I don’t want to move because I’m gonna lose all this money now they’ve got a better incentive to be able to exit out of that position which they were stuck in initially. So they’re really incentivizing the two ends of the market, the need that keep the whole thing moving, which is, which is really cool.

Aaron Horne
Yeah, excellent. Excellent.

Patrick Berry
But I guess the one that everyone wants to.

Speaker 4
Talk about is the one we’ve.

Aaron Horne
Left the last and I dare say this is the.

Patrick Berry
One where my jaw was on.

John McGregor
Guess when I read $1,000.

Aaron Horne
So that we talk about on the podcast, I said to Kay Baby and she’s like, What is this like? Are you like and you just listen if have to listen.

Patrick Berry
So so this is the one that’s the exciting one. It’s the, the old scheme, which was the home share scheme has been readapt it and it’s got a new name, John.

John McGregor
So it’s the housing market entry program.

Patrick Berry
Yeah. And boy, does that sound sexy. Who writes this now?

John McGregor
He’s the one that doesn’t put it was kind of cool. It’s like we’re going to be the bank of mum and dad for you. Yeah. That argument that young people other young people gets other young people saying well good for you you are the bank of mum and dad is like well how about we help you for you.

John McGregor
Yeah you know, and that’s sort of where I think they’re leading to.

Patrick Berry
So what does it mean? It means that the Tasmanian Government become a part owner of your home with you, but to help you out, they’re going to put up to $200,000 into a property.

John McGregor
Yeah. And on top of that too is that they’re going to obviously with their assurance you’ll only need 2% as a deposit.

Patrick Berry
Which is massive.

John McGregor
Yeah, yeah. Because it’s so important because the biggest challenge that everyone faces many times at the beginning is that savings for that giant deposit that you need because of all the additional costs. So the other part too is that you still need to be able to prove to the ultimate lender, which is the bank funding this loan that you can it can be afforded, you can do those repayments properly.

John McGregor
But the thing is, is there are a lot of people that are paying, you know, very high end premium rent and could easily afford a mortgage. But the only problem is, is the deposit we have to make that get well, that’s it.

Patrick Berry
Let’s say we look at a $600,000 home, which is the max for first time buyers, you know, that’s $12,000 in savings you need if you take advantage of the scheme to be able to buy a property.

John McGregor
Versus probably 60 to 70.

Patrick Berry
Plus you stamp JD say you probably $20,000 savings total you need to buy a $600,000 house which is ridiculous.

Aaron Horne
Yeah. Well like I, I guess like when I was trying to describe it to Sarah as I was saying, oh this is what’s come out, I said like oh we’ll just think about how much the market’s moved since we purchase like we had to save probably about what you’ve described described there. Like I had my money, she had her money, we put that together like forward to try and do it myself.

Aaron Horne
That’s how we got anywhere near. And then I said, well, think about how much it’s moved in the time you’ve, we’ve owned it, that’s probably approximately like that. 200 cases where we, we wouldn’t be able to afford and we wouldn’t be. So it’s kind of yeah. Moved with the market in a, in a really feasible way and helped out.

Aaron Horne
Yeah. These first time buyers that, that needed the money. So this is something I would definitely be jumping on board. Well, that’s.

Patrick Berry
It. Like most people would try to have 80% savings to buy a house so they can avoid mortgage insurance. You know you can’t go as high as 90, but on a 600,000 or so that’s 120 grand like trying to save that and then knowing that if you’re almost there the market shifts again on you and then you’re back behind the IPO like it’s quite hard.

Patrick Berry
I would have thought so. There are a few caveats with this, like all government schemes, but they are vast improvements on the old homes. Yeah, so the old time share scheme was. Correct me if I’m wrong, that would put up to 30% of the purchase price or.

John McGregor
The current one. Oh so yeah. So to a maximum of 30%, so the other one was actually a fixed member of about 50 grand.

Patrick Berry
I think that’s what it was.

John McGregor
So mind you at the time there was average prices for the properties that were available too that were around about 260 grand. So it was still a significant.

Patrick Berry
$50,000 maximum but it had to be a brand new home that was the cash. And obviously Tasmanian Government understands that there’s a lot of pressure on the building industry and as well at the moment and this time around they’ve actually opened it up to be any home in Tasmania that the scheme is eligible for in two sections, 200,000 if it’s brand new, $150,000 if it’s an existing homes home that somebody else has already lived in.

Patrick Berry
Yeah. And that I think is the absolute game changer because so many people wanted to take advantage of the previous home share scheme. Could but couldn’t because there was no buildings available to purchase because they were just too hard to secure. Yes. So this is probably where really makes a massive difference is that you can now shop in any suburb across the entire state and now we know that you can apply for home share up to $150,000 towards that property.

John McGregor
Yeah. And I guess the like taking it to the end as well as it this is a really good opportunity for those who want to do it. Not everyone is going to want to because I think people have to remember that it’s not free money. You still owe the government that money if you if you ever decide to sell with some things that people might forget about.

Patrick Berry
And you have to remember as well that it’s not necessarily going to be that one 50 when you sell so that one 50 that they prepared to put in will equal a percentage of the house that they own. So hypothetically they might own 28% of the house. When you go to sell, they get 28% of the proceeds so if the house has gone up $100,000, they get 28% of that $100,000.

Patrick Berry
So it’s you need to.

John McGregor
Get an investment from the government.

Patrick Berry
Yeah. So the way they’re looking at it is that, you know, the housing market is one of the most stable economies out there. So, you know, any money that the government invests, they should get back plus profit over time and that’s why they’re able to do this without charging fees.

Aaron Horne
Yeah, I know. And this is exactly kind of where we started two episodes ago.

Patrick Berry
With the Singapore.

Aaron Horne
Time scheme. Exactly. So it’s amazing that we’ve kind of without knowing like what was kind of we could say that we, we went inside. Yeah, actually we usually bloody.

Patrick Berry
Yeah. If anyone’s listening, we save the Tasmanian property yeah.

Speaker 4
Yeah.

Aaron Horne
Old heroes there’s the Dark Knight trilogy and then there’s the Property Trilogy and people are debating which one’s better.

John McGregor
And I see the ratings.

Aaron Horne
Yeah, I really liked Heath Ledger. Good, but I feel like John is the Joker.

Speaker 4
Yeah, he’s killing it.

Aaron Horne
No, it’s, it’s crazy that we kind of knowingly stumbled onto this, but he’s is it’s a massive issue that’s been affecting all the people across Tasmania and Australia. And yeah, I guess the State Government I’ve noticed and said like, all right.

Patrick Berry
And that’s it. You need to look at like the Mercury News paper how many articles have been put out about how people are sleeping on friends couches because there’s no rentals available or, you know, people that are being priced out of the marketplace because homes have increased too much in price so there are so many stories out there with people.

Patrick Berry
You know, your friend Joe, didn’t he make 13 offers on properties before he managed to actually win a property like that’s demoralizing for a lot of people. So many people just give up trying to buy a home because it’s too hard. So I think this is a nice round a package. I haven’t just sort of zoomed in on one sector and said, this is the only people we want to help.

Patrick Berry
They’re looking at it across the board for everything. Yeah.

John McGregor
And everything intertwines and together as best as I could. Absolutely.

Patrick Berry
So yeah, it’s a very clever scheme. It’d be interesting to see, you know, how it’s taken up and what sort of feedback it gets from the public as they start to realize these incentives exist.

John McGregor
Yeah, yeah, absolutely. And also to like, how does it have an effect on, you know, the, um, you know, the counterfeit, okay. Versus a home by looking to do it on their own versus a home buyer looking to do it with the government, do they all of a sudden have a leg up whereas they don’t like there’s, you know, a whole interesting waft of things that would carry out of the next, you know, however long this lasting for.

John McGregor
But in the end, though, the it seems to me that especially with the idea around development, the rezoning, the capacity to do more with less even they’re talking about repurposing the government buildings to be better utilized. You know, back to being able to, you know, do residential buildings above commercial elements, which brings more residential housing to dense areas.

John McGregor
You know, there’s if for all that element where they’re saying, look, we really want to focus on supply and they see that as a good thing for the future.

Patrick Berry
Mhm.

Aaron Horne
Yeah. Cool. I’d just like just to finish up, I’ve got a quote here from the Property Council of Australia, Tasmania executive director Rebecca Ellison. She’s basically said the government in the Government’s introduction of this approach demonstrates a government looking at new ways to tackle a very complex issue. Yes, across Australia and the state, it’s widely welcomed by the entire industry.

Aaron Horne
Yeah, massive issue. Obviously we solved it two weeks ago, but it’s good that they’re so good.

John McGregor
I mean happily to give them credit for. Yeah, like.

Aaron Horne
All we.

Patrick Berry
Did was Google how to fix housing.

Speaker 4
By us and we had a solved in an episode. That’s all you hear about.

Aaron Horne
All these luxury crime ones where they come in. You know, I solved the murder of.

Speaker 4
Like I say, our podcast.

Aaron Horne
Housing solved housing affordability. So just let it be known. Thank you for being part of this ride and yeah.

John McGregor
Yeah. And you’re and you’re welcome.

Patrick Berry
I’m sure Rebecca from the housing people that you’re talking about would not be insulted at all by your comments.

John McGregor
They did mention it, but it was off of off marks when the when and if it’s not.

Patrick Berry
Strained, it doesn’t count. Is that what you reckon, John?

John McGregor
Yeah, exactly.

Aaron Horne
Look, shout out to some amazing packages out there for the people that are trying to get into the into the market and into rentals and say, look, yeah. Shout out to everybody out there. It’s we’re excited about it. Pat was very excited at the start of the episode.

Patrick Berry
I was, oh.

Aaron Horne
And yeah, we’ll be back next week. Actually, I don’t think I’ll be back next week, but I have organized for Chris to come back in. Oh, boom. So yeah, talking with him. Hey, yeah, we’ve had a great response from his episode, but really, really good response. And yeah, we work on an investor series with him, so that’s a whole nother kind of offshoot that we can do.

Aaron Horne
But yeah, professional that.

Speaker 4
Might.

Patrick Berry
That’s not what I’m all about.

John McGregor
Year to your terms.

Aaron Horne
Yeah. Now look, I’m a guy, my brother is over with his family from Canada. First time will make his little girl and he’ll get to meet my two boys. So that’s. Yeah, two weeks off with, with those guys. So yeah. How down the floor with me. It’s not as.

Patrick Berry
I’m gonna let John make the buttons.

Aaron Horne
Do it. So, yeah, I mean, this is your time.

Patrick Berry
Your time machine, Jack.

Aaron Horne
All right. All right, guys. I’ll be back soon, but yeah. Chris next week with the boys and shout out to all the listeners to the probably, but say.

Patrick Berry
Let the guys.

Aaron Horne
See you you have been listening to the property, both recorded and edited by four.

Patrick Berry
One full media house in.

Aaron Horne
Conjunction with 414 property.

Patrick Berry
Code. This podcast is general information only and the thoughts of music’s oppressed is the opinion of our panel. And listeners should always seek their news, their own investigation into any topic we discuss to ensure they fully understand their own situation.

John McGregor
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 agreement or investment services no investment decision or activity should be undertaken on the basis of this information without first seeking qualified and professional advice.