Bonusisode with Nerida - Coronavirus, Property AND the Economy
Bryce hold way with another episode of the probably catch more recently caught up with narrative. Be Who's the chief economist at the Rei Group better known to most as real estate dot com dot a U and we had a really great chet lock we each and every month and we talked things Roy Navarre's how that would have an impact on property how that will have an impact on the tenants. What does it mean about the economy? What does it mean with all these stimulus packages? And how can people navigate through? What is a very very interesting to arm? So it was a great chat very insightful as always with all of narratives wisdom so let's cue up the interview that are recently had with narrative coningsby horror flicks. Sambra's huddle I am co host of the product. Tonight I have with may never be. Who is the chief economist at? Ruth's site they'll come by. Who we have on H. every month but Tim. Today's a little bit unique narrow in enact catch up to that first of all. Welcome back to the cash hangs having me. That's what a different school weeknights. Last time we caught up was Monday the second March Some four weeks ago and you and all we're talking about the fact that At the time the just vacation we have thirst corron of arse relied a disc and you and I had tied around. All you know a cautious. You know turnaround. What does that mean? But then what a difference. Four weeks thanks. Yeah I mean. Look at these changing. Today I think The the daughter and the information and the policy changes Fame to baby seems to be something you bang announced. Everything's I signed. It has been a very very difficult market to to work out. What's happening You know I'd be Steitz. We can clearly say that. There's a lot of distress Brenton's and a lot of ranches the young they're exposed to hospitality tourism entertainment They are also by Typically lower income by said that let's impact on then that that phone to people who I investment properties will be quite significant yesterday we need the announcement around banning of tenants from six month time period Beyond that you know we don't nine hell. Landlords Armas investment of these We will be Will HAVE INTENSIVE TECH SPIKES. Report is highly likely. There'll be some changes to the text bikes. Thera say but you know it'd be starting the government basically said wreck it out for yourself thousands and And Matt what's Your Best. Guess clearly the caveat that it is cristobal colon. You don't know what would be your biscuit on how they might respond around the incentives to the lands. Clearly the renter's will be doing top fraud and we want to be. I am an argument. All the rich grady investors versus the pull vulnerable tenants because at the end of the die for the majority of property investors vulnerable. Australians onside designing a very small percentage of the big fat cat suit having Whereas the majority you know self-funding sparring retirees. You are also on the challenges out what what is. What is your viscous of what that might be full services at of course the habit you KRISTA bowling him climbing we deny that I guess You're right on one hand. There there is sometimes conception that invested very wealthy and you know the realities of many invested one property. They may be paying themselves to top off the movie and enjoy themselves during an interview. Coding situation that can have caught significant flown impacts. I at least I guess what's available to landlords potentially won't be afraid we'll be payment phrase so at least you know that will heartfully tied some people over in terms of what the government will announce the two things that I've heard Some changes to negative gearing so there might be some text sent. You might to negative gearing Sending notes I land tax changes silent. Taxis in such Nishi for many investors of single on residential properties is a big deal for commercial property. Sorry they're treating. I'm hearing at the moment I thought by now. Even what's happening? The rental market is open out a little bit more clarity in what was announced yesterday but at this stage it's record at yourselves Bacanovic Some guy from the immediate just allow depreciation on all sorts of depreciation to be deducted again rather than The Chines might a couple of years ago. I think essentially a everyone. You know the fame of rolling this together on the Lam has to work it out of the tenant decide we'll at the other end of this the the property market and and those landlords they actually need an implied. That's part of the part of the biggest out of their exit route. If I can get that regular income side I think the number one suggestion is to communicate. Tokyo tenants. Don't treat them like less than just because they're having some challenges going to repayment plan like you said they. I guess you might have some further comments. But the Banking Association signed will allow out businesses to have some relief on On the pirates of the lawns as long as they pass that onto the commercial tenants arrangement. So I think it's important that we thought advise at landlord can have a repayment holiday. Therefore I have some relates to give the tenant some form of package that we can enter into so that I can never got through. The interesting thing is if you can't have addictions really does throw landlords protection insurance into a into a a different spice because I rely on you being out guy through the process of giving notice Giving the Ford is whatever state they're in and then at the end of that process that's when insurance keeps we'll nail the government's saying you can't do that so these insurance will be on in in modulus not necessarily covering him. Yeah I think this is right. I mean on one hand you talk. T- bank and Trauma Work Out. What's going on but also they need to look at your insurance and united Some In a very difficult situation I think so. Essentially the government can give some incentives to landlords like in We can all work collaboratively together to realize that we wanted to sell out and give give concessions on by as I think we can all navigate through it as long as as long as we don't have scenario with the poor landlord is asked to provide public housing because essentially you. We talked about it a lot of them. Just do not have the Mogae for that. I am what are some of the trends that you're saying on your sought women? I mentioned before that rental the rental market seems to be the mice challenge. We have seen a big decline in the number of people searching for parental properties out. We've also seen an increase in rental. Be Steaming send Partly we think it's because people if I if I cop Iran's maybe a crime family Flat Might Swim. Sanan increasing the number of people looking paper. Shad so you know that. Make sense that. If you can't afford on your on you may look to to share your property In terms of an and then also is starting to say a lot of Ambien Bay should short term accommodation switched long-term That that market is used really challenged of the mind of people out holidaying like they used to go somewhere like South Australia. Tasmania claims you know. Becoming Niece Viki actually getting vice sites and inclement crane finds one that we really saying gigging racing in finished Jing's wrench will be stings on thoughts. They've more than doubled. The last couple of weeks other buy side that you know the full style side is little French until last week we do saying highlight high levels of search compared to the same time last year so I mean that was interesting I thought it would automatically weekly Pau In terms of this way starting to pull back not surprising lame. You know this series. Search activity taking vice. We'll get a clear idea as to what's happened listings In the next couple of days I mean I think exclaimed matched I will be out because he was starting to stay rule recovering the property market. And if it's too much it's highly likely to Yup I guess One one real positive is One of the drivers or one of potentially driving some French release of societal Mugabe distress in the market and And we're not saying that as yet. Sorry that scrutiny than a and I think a lot of it has to do the fact that fundamentally this season a financial crisis we have banks at a cashed up right to all A mortgage payment raises a a that can handle certain level of non-performing line. Sorry the fact that receives a health crisis. Ten Productivity car process is in terrible situation from people and they jump security batch. The financial system using shot in the government has a lot of money to be able to to spend in trying to get a straight as unscathed as possible. I think you make a good point. You know the analogy that we've been trying to portray Wonder if you have some feedback on it is as you can imagine. A car The Ted the engine fully tweaked. United will and grace up it's ready for performance and that's essentially a symbolism from the guy that got the interest rates down as low as possible so money is actually cheap to get into the back of the car. You got the government. That's now doing their job. This filling the capital of fuel with Ron. But unfortunately getting I drive the car to get in and as soon as I can get in that. S- that means obviously will fulfill and the engines fully pronged it's old momentum so I guess You know on that as a backdrop to get some confidence that will this is quite serious but but ultimately it's it's it's not a demand driven. It's more supply driven challenge that means that we momentum back stop. What are your views on that analogy? Yeah that's the problem at the moment is that none of us can work properly. You know fancy will can stop working properly again. It's it's going to change things you know. I think it will be. It'll be interesting. How the recovery involves the moment Big Big cops not Implementing Tourism Entertainment. If you're in government took the health service you starting job guaranteed would date saying very very strong demonstrable you skill so you know in any any cross. We always say some PUTTS. The economy struggled completely and then other very very Repair well so you know that. That's probably how things will play out in longer. Time Around Theresa. We'll be one area of the economy that will take a long time to recover and primarily because if you have a look what's happening in the US at the moment Most of Europe You know even if we do get through these unscathed relatively on skype in terms of a health crisis. Never we can flatten the curve. We can preventive many jetsons possible You know when we're going to be in a situation where we are quite vulnerable to infection and say. Bang table from the states. We very rarely Michigan for prolonged period. And probably pretty much until we find some Q. Q. Of it some sort of vaccination so I think on one hand I once we're months ago at level of Of Infections down once we start to say you know nine nine more deaths. I think the economy movie gradually all But I've been to the world I think will take a little bit on dob interested in your view on What you think have been to the property market on. That's a really broad Simon because we've we retry educate people do not see a strategist property. Mock but there's a lot. There's a lot to be excited about erupting mystic. Batu strider in terms of the the fundamentals of property still remind where we've gotTA scenario with so many people moving to county and largely as I as a hallway undersupplied for the amount of people coming here. Neither this pockets with us. Not because it's on moving forward. You know you've got you don't have easy. Access to credit. Could increase all shape access to career at. It's not necessarily easy access to credit. You've got increased demand limited supply. So what is your view going forward? I guess at a macro level. And then if you wanna comment sort of mole micro market level going forward as you sort of navigate through the filter of of what we're facing. Romney. Yeah I guess you know. I'm I'm very optimistic person and I think they are you in the next United States months. Maybe it'll be a little bit longer but Giving stimulus in the economy will be full steam ahead once things get going again and it even has the potential given how much money thankful into the system that we sought to save the economy. You know at this stage. It's really boring. My tape we just. WanNa Kinda get trained. These six to three to six months I think I think we will say price declines. I say how we could not say prostate and primarily on. Tv will slow down significantly Who probably say selectivity. Lie Down as well you know. There will be a little bit of a hibernation of the property market. We're pretty much. Not Much Happen. Are over a prolonged period It was interesting show head. Look I mean having a look at some of the situation by Mercedes at the moment and the one that was really interesting looking at some of the data coming out of Beasley at the moment and It's looking surprised me at night. The data source with from a real estate research institute. So I don't I how how good they wear or whatever incredible or whatever you know that that would talking about between January February and you know I didn't have much data so obviously a lot worse he much but Site by sor sort of two thousand ten and twenty percent drop in sales which it actually surprised me. I thought in that would even that? That economy has a really shutdown and horribly impacted I would've thought that it would have been quite dramatic. I'm also interesting though talking about Cable looking at new apartments spice weights and I said that that a sandwich. You know against the lockdown down but quiting side The Italy squad interesting and I'M GONNA. I'M GONNA look at it quite closely now. The next couple of weeks just to say what what's happening there but you know I think for Australia. I think it'd be a few things I think. Anyway that has a high proportion of government any any like the government employment Profile will be a camera will be. It'll be impacted but you know I think it'll be impacted this time wise. I harbor with soul a very strong economic growth in Hobart over the past four years off the back of tourism and education have looked at truth minute doing anything at the moment and heartfelt which you've been locked down so you can get everybody on the trees more education so I have you know I've been watching it closely for the past five. You could have just been phenomenally of what's happened there but the tanks lake take it back hot significantly into into that market. Stop store opened up again and start to get people back into You know enjoying the truth attractions and entertainment and off the Taliban that leads to all and then and then you've got somewhere like W I N W why hasn't done well for a long time but look some good news. I would let me but you know you have look at J. that they they did the process you know. We still very strong growth. While processing tumbling in Melvin side A hardball I'm sorry her I think potentially could well. Because it's a mining town the economy driven by exports online or goals. This still goalies. They sang process at the moment. Because it is seen as the ultimate even You know lots of gold being exploited China you never covering nights honoring call view saying that's a potential for various. You know the monument. It's it's anyone's guess I could. I could list like some twenty random numbers and you can just put them wherever you want. In terms of what will happen. We'd pricing but you know the jets come to my thinking. Government focused health health. Kit for your economy is driven by that pretty fife at the moment in it at the other end of the sky. Oh trees Vulnerable on me. What do you make the headlines? with Some sign that the market's going to drop twenty percent so and a and a guy in which Makali'i told me about but did you mentioned that you will Cautiously optimistic Evidence to suggest that I look. It's impossible like literally impossible to come out with a cold and I think the number I love her number and as he read like you if that twenty percents premium Sydney Sydney is that Australia is a capital CD You know we are every time. There's a property downtown one market. Does I and another market completely collapse and get back to the early nineties? Melbourne Melbourne collapsed. Oh carswell monning. Boom J. F. Say if the premium you know this is such a mock defense. Iran people come out with twenty percents. I'm like officially. Explain Yourself. Water out here and they can lay. Luckily we don't know because the problem is the financial systems on a fundamentally that will unappealing distress a you know. We're not not as likely to say distress styles in the same way if the financial system collecting that job to employment was riding This time round. It's because they're all stuck in fun out me an properly and we it's likely to be relatively at Thame when things get back to normal normal ever again but you know they'll be more normal than they are now site. It's it's just a complete unknown. As to as to the potential impact Vignal David at that particular economist is is really quite credible. In the the bulk of the chat was about five percent and then it was just a a worst case scenario number twenty seven but of course that became the headline. And I think the town when when when you have a scenario what we're in if people are leaving it just kind of make sense that if there's a few distress sows unless people you know it's almost like a cocoon really isn't worldwide in towards for us to come back out of it and fly again. It counted as Mike Sense. It's like if you're in Iraq. And all of a sudden there's a Hato two-bedroom apartments that have just been released in particular quarter and that's caused the median price to drop. It doesn't necessarily mean everything to rex's drop so again. It's just about being balanced about what's happening in does having fundamentals that underpin it you mentioned before a little bit about the stimulus package What what what. What is your take on on what has been off. Do you think that it's appropriate or is that is that roomful onslaught? We could have done. Things better an equally. What does that actually mean for the for the person on the street the guy just big buckets of cash splashed design to get the economy moving. Which is Greg? What about when? Everything's back to normal when we have this debt. What does that mean for so yeah I know it's a it's an. It's an unusual. I may not a surprise on one hand. We do have Cash payments to people who are on John. Take for example by that fundamentally not debt as just cash that is trying to be pumped into the economy as quickly as many. If you look at what would happen if you guys someone hash now. He was fulltime employed and not in any distress because he paid any debt. Because you're worried about a few showers but when you're on jobs AK- United Genetic Denton. You've probably been any extra cash to even that helps to to really drive the economy You know I think if I if that's what you're referring to the mortgage raises one hand you get free. T. Mortgage but on the other hand end you line out and you know I. I don't know what a solution would be. I mean I'm sure someone has thought of something that might work alluvial at of it. You know if these stage I think Ideally defined go on for longer than twenty three and six months and It will lay to financial. Hit for a Lotta people for a long raisins you know whether they lost their jobs or whether they've had to take a mortgage phrase for whatever reason you haven't done obey the has to be has to be with you know the will be economic line and we're going to get away from having economic pain from the shutdown and I guess ultimately what the government is doing is just trying to meet him. Is that economic kind. Are you know the first stimulus was very designed to help people who were in Very vulnerable situations without a job you know potentially with no income Dan Things of going by you know. I think I thought continuing to ramp up and change what I guess. One of the challenges that the Marines. Everyone's falling one and you know on one hand we're trying to stop the spread of a virus and trying to get people. I in a very very different. Why and then on the other hand deflating to these old economic outcomes which you know it's very hard to avoid them and And government you know just trying to work out the best way I mean. I don't get something wrong. You know like I doubt we paying that. They are and to be terrible. But you know there's some wheezing happens to the market and you know it's just not ideal but I think you seeing here right now. You know it it kind of same allison born at doing you know agree in terms of infected if it's GonNa Repayment Holidays. It means we're interested kept laws and then we'll end up paying more of the law of the line that they caught of smack sense to be the process of You talked about we will go to experience in Pine. That'll that'll be a process of admission Forgetting throat but but just take me back to one on one but if the government spending You know when when we g of say that. Twenty one billion in surplus. We don't have that NASA of the spending all this cash and the gang a quantitative easing at some stage that means on the other end. The government has a lot of debt to repay at some point but as a percentage of AD. Jd Pay It wasn't a big number. So does that disdain. That we're big enough to ride bus enough academy that on the rudest Pie that down. It's not any different to appease around the world yet farming. I guess you know you have a look around the world. Everyone got different problems near economies and especially infrastructure and You know we've gone into these. We've a pretty solid banking system which cheek you know. That's amazing that we regard that because that's going to help us right. The other big thing is that would come going into the service. Sorry we have money to spend Compare it to easily I never got out of the Jeff. Say Pretty much you know. It's pain ten years of very very tough. Conditions in each and banks were going on even before what was happening from their perspective. It's it's very very challenging then guarded to the. Us economy is doing has during very very well but then the health system is very complex and and they're in a very very difficult situation already in terms of trying to accommodate people in hospitals and ally. I you know I think I mean it's a wife. Criticize them around government policy and around. You know how how things don but I think going into this week. We are going in a very fortunate position in that we followed solid banking system sep loss Jason Economic Growth We're GONNA come out of these heartfully depending on how long it dragged on for heartfully less less impact than other places around the world and we're going to become more desirable than full people to come here brought. So if you're getting days Margaret's see one approved by the Rod Season. I want to live a strident. I want to get a good job. That WANNA buy into place increased demand but will the sudden the way that we navigate through this in the lifestyle that we have on offer will become even more results. Something like this is any social benefits slots on nights social benefits of what we're going through a he As a civil and a piece tomato people becoming more connected the people are funny will remind themselves was really important to you that you have a view on that. Yeah I think I mean it safe interesting King Lot. We come media If interesting how much in demand if it was and how seriously enrolls it numb enough there also were taken seriously. But it's five in in these sort of environment Have a strong have strong. Gentlemen out there. You know reporting playing on happening I think expanding really interesting change Yeah I've got an idea out there when we're GONNA have a lot of fun. United in obey such a nice environment to be out of each other in person and To be at appreciate spending time with family friends infest awfully changed by Yeah you know. I think it was the even even of environment I mean if you have a look at the comments that are to get badly five it for you know. Has some positive things happening but will try. I mean it will change the way we we. Aw I've got no doubt and I think it will also try to where we are because the potential of something like this to happen again. You know it's possible so I I think who will likely say the ability of government to shut down international lots for example very quickly Waikele via a scenario day think massive investments in hospitals. I you know I think the healthcare fix will get a massive amount of money thrown into it Investment in medical research and help reset get a Lotta fundings. There will be some shift around in terms of what we say is important and what can also keep a cipher in the future in Inhabiting true we spent said to spend a spread a message over Stein common spreading contagion of social connections of math. Is I'm connecting with folks. Haven't spoken to in a long time and it's it's actually been really nauseated. Really refreshing side. Hopefully that becomes an ongoing Benefit of of something that is very positive auctions. A closed down on the weekend but It's interesting because the initial reaction is to go over golf's that means the property market shuts down any. I don't think the second lock the vast majority of transactions done in poverty anyway so it which was interesting. After a couple minutes reflecting archives business Walk Actually Investment Trade but the real estate agents are resilient Stride I you know for as long as you need to shuffle in your safe to get more comfortable so too will a real estate agent to make sure that I can actually transact until they get to a scenario like what we go to New Zealand. Where shutdown still open for business. You know you can still transacting real estate carney. Yeah Damn auction the United. The I guess. The discussion around won't be made of now auction with dramatic. When you look I lay around seven two thousand nine hundred ninety seventeen and actually went to auctions. You know it is a tiny tiny propulsion. It is oh sorry Idiots Parkistan the premium into the market. I mean look where my sections type vice there in Melbourne bb camera. They're in a bit of harms. United Psychiatrists bit a suburb side It I guess in terms of you know statistic that everyone loves which clearance right. We have that as a as an indicator of in happening in in. Cps melons You know there was a lot of clearance right numbers and eat around on on the weekend and it really was meaningless. Many we have a look at. How many options were meant to fight? Insignia evening of about twelve hundred type life In the end three hundred agents reported results. you know with that was an auction or whether it was some of the main you know whether it was online auction with. I rang up a lot of people as she did to private style and sold on the Friday. Just eight nine. There was a lot of I guess unfit anti amongst agents on how things should be reported which is primarily. The daughter was wasn't really that useful in determining what actually was happening. It's changed its name is Is Well and truly reporting that. It's it's an off market environment and for example on the weekend way I will secure property at a lower price than a competing offer because we were able to let the I know that At client was A police officer and the employment was rock solid and that certainty that we get it. So it's it's a different game to play at the moment but it's still transacting in the still jibbidy and to be honest some opportunities in the five of those people who have security in the job. I have buffets implies and the the making ten fifteen I need decisions so there I will to actually pick up. Properties that sent water narrowly would be under much more competition. Which means that they're going to get it for a better price so I think the important point is as you said a very small percentage of them go to auction and this still business as usual at busy out of transact it's clearly business issue of what's going on for real estate agents and. I'm just conscious of your Tom. Because I know you. You very much in demand affects US making us into the last thing I want to talk to you about. Is the talk around white subsidies and what they've done in the banks and the Toll Karan. What might be happening in Australia. Have you got any Any insights Intel O'clock. And maybe when you think that might come into play. I guess whether or not you think it's a good idea. It's a very expensive way to get treaties and say you know one hand it again. You know he come back to the the amount of money the government has and how much money we should be spending The other hand I on a personal finance level dramatically changes. Why the people you the next few months. Maybe can guarantee that you'll get hydro. Pii Ranch you. You do everything pretty much. Normally you're getting paid your wife Against the government. You know this this three things governor trying to do the first to ensure that Able signed point and Do become employees that they can get through this without going into huge amounts of distress. That's pretty much have been doing at. The moment is trying to calm down and make sure they know that they supported and You know it's tough but you will cost you secondly in trying to prevent banks. I'm going bankrupt. Because fundamentally don't WanNa come out the other side of the huge amounts of this Lawson's unable to get back up and running. That's a huge food for businesses. And then thirdly These not attending to a financial crisis and are united that even dogs turning to a financial process that we're going to get into trouble at the moment in fact to gain going back to banks banks solid having enough money in a budget sip wants to be able to spend on. These things is putting in a pretty vicious but we don't want to get into a situation where that starts to change By even people implied hit them leaving lives at a relatively normal in such and such such complicated positions and keeping evening is going at least until we get to. The side is really fun. 'cause then help stop that Negative social contagion when you say unemployment figures Ballooning that starts to fuel bangs. Audie the the unemployment figures. Really BITE UP. Three subcategories outlaw. You'VE GOT THE GENUINE UNEMPLOYED. You've got the the group that had been stood down with reasonable expectation being reemployed. And then you've got the opportunities will normally. I wouldn't put my hand up as being unemployed but there's been a cash on here actually ahead of time unemployed so if you if you provide that incentive you know we we employ often at business so it certainly would help underpin Everyone's income going forward. And as you said you know we all expect Tyson's just little cocoon event that we just need to get through. And once we once we navigate that then it's then it's on the saw. I'm sitting interested that looks like and Clearly lady and in the UK to be interesting sandwich later. Here super appreciate your Tom as I said before a urine OPTIMA. There's lots of people who are trying to get your thoughts and your views. We always appreciate you coming on to the probably catch a that. I is is different. Posture wisdom in a sense of calm along. Hopefully on our audiences will benefit out of that so Certainly appreciate you'll Taunton. I narrow Anaheim next month so a lot clearer in. Hama about what's happening. It'll be interesting for a skit next month. That say how we now have gotten but Narrowness be who is the chief economist of Real Estate? Don't call more. In fact the whole area group we She's always generous with its own. We appreciate their company onto the proper catch bikes RHUMBA H. And every week been and all I will be talking about the lightest queries and updates. So if you go to the podcast we will come out every Thursday. Three o'clock so fox check it out probably catch dot com. Hi there folks. Bryce whole I hate before you go. If you're new to our community only listen to maybe a handful of episodes a thoroughly recommend that you go all the way back to episode number one where we unpacked all of the foundations when it comes to property investing for those of you. That might be a little bit. Tom Poor good news for you. We have a binge God. You can download right away. Which summarizes the first twenty episodes. We're back on the fan diagonal pillars of the ABC and so much more and you can get that straight away. If you go to the property catch dot com forward slash TPC twenty. You can download and consume it whenever you want. 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