Have you been thinking about investing in the Australian property market?
Things change fast, and here at TSC, we like to keep up to date with the latest developments, which includes engaging with our extensive network of contacts within the financial industry.
TSC Mortgage Brokers’ Matt Punter recently had a call with our good friend Hamish McIntosh, who’s the Head of Property at the Australian property specialists, One Haven. With decades of experience between them, Matt and Hamish discussed recent property market developments, and what those developments could mean for anyone looking to successfully invest in Australian property.
Matt Punter:
We’ve got Hamish McIntosh from One Haven Property Partners. We work really closely with them at TSC Mortgage Brokers, and Hamish and I have had a couple of catch-ups now to chat about the market and just what’s happening around Australia.
Importantly, One Haven focuses on buying property, helping people to buy property based on the numbers. Hamish, I always enjoy talking to you about what markets are moving, what’s happening in them, and wonderfully, it’s all data based. So I love that you guys take that approach. And it’s one of the big reasons that we love to deal with you, and a lot of our clients are now dealing with you also.
So, welcome.
Hamish McIntosh:
Thank you very much. Excited to have another chat with you, mate. I think last time we caught up, it’s been a fair bit happening in the market since then, around locations, assessments, rate rises, which I know some stuff we’ll discuss about today.
Yeah, it’s been a great period of time for us. Obviously, we are a Melbourne based company, some huge activity now happening down in our own market, which is great.
But there’s no doubt, positivity around Australia. It’s been a great 12 months for the market. And yeah, keen to obviously explore a bit further today.
Matt Punter:
Yeah, let’s talk about markets that are moving at the moment. Obviously, Melbourne’s got its own set of metrics that are happening at the moment. And Melbourne property, as I understand it, has got a lot more affordable in the lower range.
Obviously, lots happening around taxes and things that have happened down there. It’s quite a topical thing for people to talk about. But I know that you’ve done your numbers on that too.
Did you want to comment on specifically that market, or any others that are working around Australia at the moment?
Hamish McIntosh:
Yeah, definitely. So I guess as a company, we’ve been doing a lot of work, I think, like most property companies Interstate, in the last three to four years. So a lot of work in Queensland, which has been a huge growth market for a lot of our clients, a lot of work in Adelaide, bit of work in Perth. But there’s no doubt now we’re seeing, I wouldn’t say it’s a tipping point, but it’s a few alarm bells. Like I’m sure everyone who was listening would be aware of areas like Ripley and Green Bank and these areas in South East Queensland.
We were selling house and land there to clients four years ago, five years ago, for $450,000. That same property is now selling at $950,000 to a million dollars, you know. So, it’s a bit of a tipping point. Do you think to put a new client into a property at a million dollars that was $450,000 four years ago? I’m apprehensive right now. You want to try and time the market.
It’s to the point now where Melbourne, which I’ve never said again, really on record, but that’s the related situation we’re in, is pretty much one of the most affordable markets in Australia, right? Our median price point, it’s a couple hundred grand cheaper than Brisbane, you know, depending which data resource you look at, cheaper than Adelaide, cheaper than Perth. You know, all these things that have been happening over time, we’re very similar price points to those locations. You go back through history and look where Melbourne’s price point was pre-COVID. This is all not making any logical sense at the moment.
And to make your point before, about many of our changes within the Victorian market, it has brought in some fear. And I think it’s really important to understand what’s real and what isn’t, in regards to the Melbourne market. And a good example is the land tax question you brought up. Like, when you really look at it, the land tax threshold of Victoria has been decreased. So how that works, guys on the call used to get essentially a free amount of money for your land value, then you’d pay your land tax amount on top.
Melbourne’s threshold used to be $300,000 was free, and obviously then if your land value was $500,000 on your property, you’ll pay land tax on $200,000. But they decreased that down to $50,000, right? What a fantastic incentive. Thank you, Victoria, right? But the realism is that your land tax bill has gone up.
And we look at the numbers: if we buy a purchase price of a property at $750,000 and your land value is $400,000 or $450,000, your land tax bill is going to be anywhere around $1,500 to $1,700 bucks a year, right? Which is tax deductible, so it’s cost you $1,000 bucks, right? Most common people buy one property. Is that going to blow their budget? No, it’s not. Does it impact people that own multiple investment properties, have big holdings all around Victoria? Yes, it absolutely does. But how many Australians own five, six, seven, eight investments? Right? Obviously, it’s a very, very minimal part of the population, under 1%.
So we’ve got to look at this and analyse it in detail, and that we are seeing the Melbourne market start to move. There’s no doubt about that. We’re seeing some growth, affordability, the interstate markets will keep pushing forward, but they have to slow down at some point, right? And again, I know there’ll be a lot of Brisbane people on the call. Brisbane has moved at 90%, nearly 90% growth over five years now, huge growth. It’s been strong.
Matt Punter:
It’s been strong. We’re seeing a lot of calls in the back half of last year, and certainly to start the year, the phones are ringing hot, with rate rises, but also people have got equity. You know, this is the wonderful thing that we’re seeing in any markets that have moved, which I know the Perth market’s moved, the Adelaide market’s moved, Northern Territory I heard recently as well, they’ve had some really good growth up there.
So everyone’s got equity, and it’s an opportunity that people, particularly a lot of our client base who are looking to improve their asset position or their net asset position through property, they come to us because we’re property-centric in the way that we go about running a finance brokering business.
Can you talk to the equity part of it? There’s super inside super, a lot of people have got superannuation, either held with a retail or industry fund, or, we’ve got a lot of people now that are setting up self-managed super funds, because it’s a lot cheaper to do it. It’s a lot cheaper to run it. Do you want to just comment on what you’re seeing as far as investors that you’re working with? They’re trying to grow their overall portfolio, are they mixing some super with outside of super? Is that the general play that you’re seeing?
Hamish McIntosh:
Definitely, so structures are really key, important aspects of growing any portfolio, not just about your super, but about buying out a trust or company structures, or whatever it is. That’s your plan to create wealth over time. Your plan at the start, restructure is so important, right? Because, as you know, Matty, you’re a broker, mate, obviously, you know your tipping point in your personal name for borrowing capacity will hit a little capacity at some time. So you need to think of diverse ways to keep growing your portfolio. And there’s plenty of strategies to do that.
There’s no doubt the interstate markets where we work with clients, and no doubt, even Queensland residents that live down, same as Adelaide and Perth, they’ve experienced some stuff in the last four or five years, which they haven’t actually got to experience in their lifetime. Because pre-COVID, their markets were a bit more, they were ticking along, they were still still going okay, but nothing like they’ve experienced in the last three to four years. But now they’re sitting on hundreds and hundreds of thousands of dollars of equity, wondering what to do next. So there’s no doubt the equity conversation is a really key one. Releasing it out, keep growing your portfolio, look to get a balanced approach and diversify your portfolio around Australia… It’s a very important aspect to it.
SMSF is a huge one. There’s no doubt that’s definitely the biggest one I see in the market coming through in terms of inquiry from a lot of our referral partners that we work with. The SMSF setups, I would say us as a business four years ago, we would maybe help one, two out of ten buyers would come through us for SMSF. It’d easily be over a third of our business now, helping clients buy properties for super funds. And it’s really important advice, I believe, we give clients to make sure you’re buying the right properties. Because your decision-making has to alter a little bit, from what you buy inside of your super compared to what you buy outside of super, because of how the regulations work, and what you should buy in terms of rental income and yield versus growth outside of it. There’s so many factors to make sure you get right, but there’s no doubt that’s the biggest one we see coming right through at the moment is the SMSF conversation.
So yeah, for us, it’s a very diverse range of clients we work with. The strategy is critical, and obviously for yourself. There’s no doubt the rate rises for us as well have had a little bit of impact. I’d be keen to hear your thoughts Matty, around what you’ve what you’ve seen at your end, in regards to your client base. Even more around structural advice, when we see rate rises, that’s had a bit of an impact. I’d be keen to hear your thoughts around what you’re seeing your clients, what they’re saying around what they need to do, from a personal point of view?
Matt Punter:
Yeah, it’s an interesting one. Obviously, the back end of last year, and even through most of January, we expected rates to be stable, if not, a small reduction. Obviously, the inflation numbers came in, unemployment numbers, and the RBA have upped the rates by .25. So that stimulated a lot of conversation. We’re talking to a lot of people about splitting loans, so partially-fixed, partially-variable.
We specialise in borrowing capacity. Our niche in lending is around helping people build portfolios by structuring correctly. So we use personal income and personal names for purchasing. Sometimes in one partner, sometimes in another partner. We use entities. We use SMSF. So we’ve got a bit of a multi-faceted strategy to maximise borrowing capacity.
One of the things we love about working with you, and our clients have certainly given us that feedback, is that you understand the property piece, we understand the lending piece. Together, we can help them acquire more assets in better locations where the numbers support it and the growth supports it. Because all we’re seeing is growth in equity. As we’re revisiting balance sheets for our clients from last year to this year, or a couple of years ago, we’re seeing humongous growth in equity, net equity.
So yeah, it’s been an interesting one. We’re certainly doing a lot of borrowing capacity work at the moment, but even more critical than ever, I think people need to speak to a broker.
If they go directly to the bank, they’re getting one offering, one credit policy, one borrowing capacity calculator, and no gray. We’ve got a lot of lenders that are particularly in the non-bank lender space.
We just had a look at our book for last year, where we wrote our loans, and we wrote a smidge over 300 million for the year, and 88% of that was with non-majors. So it’s interesting, when your focus is: “How much can I borrow to buy more property, to create more equity?” there’s a whole lot of solutions out there that people are missing if they’re just staying with their traditional lender.
Hamish McIntosh:
Yeah, there’s no doubt. I guess you talked about the growth of Queensland. I do this for a living, man. It’s mind-boggling, some of the results that we’re seeing.
We do reviews every 12 months with our clients, and I don’t want to do it at times. I sometimes just sit back and I laugh, and I think: “This is just unbelievable, what is happening.” And I guess for Queensland, it’s not really slowing down anytime soon at the moment. To think Ripley and these areas are now worth a million dollars. I saw resales in Ripley, 420 square meters, for a million dollars. That’s crazy numbers, right? It’s mind-boggling.
This is where you capitalise for your clients you’ve got up there. They’ve got equity. This is where you can really grow your portfolio really quickly. You’ve had the opportunity to get one of the best growth markets around Australia. We talked about advice and structure and all the things to get that right. Your journey’s away. You can get to financial freedom, or property. Whatever your journey is that you want to get to on property investment, a long way down the path now, due to what’s happened within that market where you guys are.
Matt Punter:
Yeah, and we’re certainly seeing that. We’ve got a fairly large client base and a larger database that we feed into, and there’s people all around Australia, expats overseas as well that we’re seeing. The ones that have been aggressively building their portfolio have generated the most amount of wealth that we’ve seen in probably the last three, four years.
We do the reviews of the clients as well, and we talk about: “Where do you want to go? What are your goals now?” And as long as they can see that equity growing, their appetite grows. They’re looking for ways to add one more property, do one more deal.
I think we’ve got exciting times ahead. I think this year we may see another rate rise, we may see another two, depending on what the inflation data looks like. It’s going to be more important than ever for people to assess their options – their lender options – but also to assess the numbers in the market.
Again, I keep coming back to this, I love that you guys base all of your decision-making based on macro. It doesn’t matter which state it is, where the client is. You’re just buying on the numbers to get the growth so that you can buy another property in a year or two years time.
Hamish McIntosh:
Yeah for us, it’s definitely a non-emotional decision. It’s just around wherever the data takes us and what the best decision is within the market, and that has been interstate. But there’s no doubt, from what we’ve seen, affordability is the biggest reason. Rate rises – it’s no doubt that they have a more impact on people’s decisions. You know, if your borrowing capacity is dropped by 50 grand, or whatever the rate rising impact has had on you. Personally, I think it makes markets like Melbourne even more appealing, given how affordable it’s become.
So it might alter people’s decisions from, say, spending 900 in Brisbane, which their budget was, and they’ve said: “I only want to spend 800 now,” because of the fear of more rate rises coming. So all of a sudden, there’s less buyers going to those markets, and then they’re putting more compression on the Melbourne market, because that’s just where their budget has taken them.
So we keep following it all through. Data doesn’t lie. You look at historical evidence of growth. Melbourne was a great growth market for a long period of time. Now sort of plateaued through COVID. I live here. It’s been brutal, right? No doubt, it’s been a rough few years, but we’ve got it, we’re starting to come out the other end of it.
Matt Punter:
I saw some migration data, and it actually, for the first time, looks really positive, population numbers coming into Victoria?
Hamish McIntosh:
Yeah, it is. Across the board, our vacancy rates are back to pre-COVID levels. You know, all this thing is showing a bit more stability in interest within our Victorian market. So, yeah, migration is strong. Population is strong. You look at our internal migration data, it’s a lot of people. You know, the old conversation around more people moving to Queensland than Victoria. There was a report done by COMSEC or CBA a while ago – there were more people moving to Greater Geelong than Sunshine Coast right now. So in and around Greater Geelong is a great pocket.
I guess, a comparative for Brisbane would be, say, Toowoomba for you guys. In regards to, all the people know a lot about Sydney, so it’s a Newcastle to Sydney, sort of feel. Toowoomba is sort of a really good market, which I love. I think it’s really good value and sort of represents a lot about where our world is headed. You know, the work from home, lifestyle, all the things drawing off, is a lot of that as well, and have a great amenity in schooling and health and all the things you need to raise a family.
No doubt. Melbourne is finally, as I said, Matty, I live here, mate. It’s showing the signs of a market that’s heating up after a pretty rough period of time, and there’s no doubt that people’s decision-making in the market is shifting and altering back towards Victoria, which is great for us. Because we are a big, strong market, and we need to get back up through that pack where we belong.
Matt Punter:
Well, it’s an opportunity. I guess that’s the main thing, isn’t it, that you’re identifying where the opportunity is right now for people that are looking, or even just thinking about: “Okay, what if I did that? What would it look like?”
So, if we’ve got people that are interested in having a chat with you – obviously there’s no obligation – they just want to understand what their options are, what it would look like, what sort of service you offer. We obviously try to pre-vet a lot of our clients that are looking to do this, so we’ll no doubt have some pre-conversations with people.
I love that you can give them a broad approach to the market, whether it’s South Australia, Western Australia, Queensland, Victoria, it doesn’t really matter where it is. It’s just where the numbers point to, to say there’s infrastructure. I know that you do a multi-faceted look at where to buy now, where is the opportunity today, and it might be different in six months’ time, so we’ll continue to work with our clients.
Hamish McIntosh:
Yeah, I guess on that point there, that’s why we’ve designed the business this way. There’s so many property companies out there, guys. Again, anyone listening here, you are looking at property, I’m sure your algorithm and Tiktoks and Facebooks are just full of every property company under the sun with different opinions. But my business partner, I’ve been really clear on this: the design and holistic model, right? So I don’t want to be pigeonholed with one type of stock.
So we do every service. So we do off the plan real estate, we do established real estate, we do SMSF, we do a lot of advisory. We’re licensed in all states. So I believe it allows us to give a pretty non-biased approach around where we think you should buy, because we do every service, and we can just direct you where we feel is best. We listen to what clients say: “Yep, I’m hearing what you’re saying, I’m hearing some pain points. Here’s probably the market that’s going to work best for you because of X, Y, and Z,”.And that might be cash flow, cash flow growth, or whatever it is.
I’m going to use an example at the moment. I’ve got two different clients I saw yesterday. There’s a really good way to compare it. I saw one client earning close to a million dollars. Single, no obligations. The next client I saw has got seven children between the ages of three and 16. So I guess, for yourself, how can you possibly compare them and put them both in the same conversation in regards to strategy? You can’t.
You must then alter and look at different markets with different clients. So every strategy is always tailored, it’s always individual, and obviously the purchase of what you buy will always be different depending on what the main pain points or the trigger points are of clients to make sure the property marries up all within this.
I love what we do. The company’s growing, and I love working with yourself and your clients, Matty. They’re awesome clients, awesome people. Yeah, we’d love to keep growing it.
Matt Punter:
Yeah, we like to have conversations with them, just to work out, you know. We take a bespoke approach, like you do. And I like that, that you can work with: “What do they want? What are their goals? What’s their risk profile?” So we do a lot of that kind of work with our client base, and we love to have those conversations about: “what does tomorrow look like for you? What is 10 years? When do you want to retire? What do you want that to look like?”
So I think it’s important that together, we’re providing a holistic service that’s right from finance pre-vetting and working out what their position is in life and where they want to be, to then going to the people that are experts at it, which is not what we do. We do the finance fees, and we help them to release equity and structure in the right way to get maximum opportunity.
So Hamish, wonderful to speak to you again, mate, and obviously we’ll be doing a lot of work again this year. So we’ve got a number that are already working with you guys and having chats. So we’ll get this out to to our our base, and just let them know that there are options out there. If they’re looking to find out what they’re able to do, what the numbers look like in certain areas, then we’d certainly recommend they have a chat with you guys.
Hamish McIntosh:
Perfect. Thanks, Matty, and thanks for having me go up. I look forward to catch up with anyone on this call and I’ll be in touch in the future.
Matt Punter:
Awesome, mate. Thanks for your time.
