Lachlan Vidler on What PIPA's Survey Says About Investors Selling Out

In this episode, we explore the sharp shifts revealed in the latest PIPA Property Investor Sentiment Survey. Investors are selling out of some markets whilst buying into others, reshaping the nature of Australia's rental supply.

In high cost cities, the exit of long term investors means fewer family homes are available for rent, even as tenants face escalating competition for stock. And at the same time, the survey shows a strange duality. Nearly 60% of investors still believe that now is a good time to buy.

suggesting a fragile optimism beneath the pressures of rising costs and a regulatory uncertainty. And while the data reflects the voices of existing investors, investor lending is on the rise, raising questions about how newer entrants may be thinking differently about property risk and opportunity.

Welcome to the elephant in the room. This is the podcast where we love to talk about the big things in property that never usually get talked about.

I'm Veronica Morgan, real estate agent, buyer's agent and buyer's agent mentor, co-host of Foxtel's Location, Location, Location Australia, author of Auction Ready and co-host of Your First Home Buyer Guide.

Hi, I'm Chris Bates, ex-financial planner and mortgage broker, currently ranked number three in the annual MPA Top 100 Mortgage Broker Awards. Before we get started, everything we talk about today is not personal advice, and we recommend you engage the services of a licensed and experienced professional.

Our guest today is Lachlan Vidler, the Chair of the Property Investment Professionals of Australia, PIPA, the peak body advocating for higher standards and transparency across the property investment industry.

With direct insight into investor behaviour and sentiment nationwide, he's uniquely placed to explain the pressures driving investors out of the market and what that means for Australia's rental future. Welcome, Lachlan. Great to see you. You're new in the role, so is your first time in the hot seat.

Veronica, Chris, thank you for having me. Very excited for this chat.

Like I said before, a press record, mate. These are some of our most popular episodes because there's some good conversations, no pressure on really what we've sort of seen the last couple of years.

I think we did it with Nicola and really the dismantling or sort of the restructure or reshaping of our rental market.

And yeah, what's your sort of take on that? I think you're definitely right.

I think there's definitely a bit of a restructure going on, which is that I think that as a society, that great Australian dream of owning your own home and being able to have that at an age where your family can enjoy that for a considerable

amount of time and you're not just buying up when you're in your 50s or your 60s. I think that is slowly starting to slip away for a lot of people.

And by the effect of that, that means that people are renting for longer and maybe in places that they don't even want to rent. We obviously have the idea of rent vesting where you rent where you want to live and a lot can do that.

But for a lot of people, affordability is becoming a real, real issue. And we have an affordability crisis from a home values point of view. But I think that we're certainly shaping up to be entering the conversation of a rental affordability crisis as well, more so than ever before.

And part of that is caused by investors selling out. And that's through the survey results show that in certain areas in particular, there's been quite a lot of investors selling out. We'll get into that in a moment.

But what do you think is the single biggest factor pushing investors out of the market right now?

Well, I mean, according to the survey, the top reason that people have sold, not looking at selling, but have actually sold, the top reason was debt reduction. That was the top reason. We were sitting at about just under 42% for debt reduction. And I think that makes a lot of sense.

I mean, we've just moved through one of the biggest increases in the cash rate and by effect interest rates, probably in anybody's memory. And a lot of people were able to stay the course. And I think that they probably did as much as they could to keep properties under their ownership.

But now, I'm sure that that bite is there, right? That bite is there. And obviously the mortgage is the most expensive thing for most people. But if we go back to the survey, then the two next most common reasons were rising holding and compliance costs, and then increased land tax and government charges.

And I think that that's quite telling, which is that for a lot of investors, and I have spoken about this with somebody else,

I think that there's a bit of a loss of autonomy and that loss of autonomy is not just about control, but it's a loss of autonomy that's also adding into genuine increased costs that they have no control over. They can't go, your insurance is too high, go look for another provider.

But if your council raise bill is too high, you can't just pick up your house and move it to a different LGA and get a different rates bill. I think that there's a lot to be had in this conversation around that.

I think that reducing debt is an interesting one because that's like, it's kind of like the space we're in, right?

And we see a lot of people in their portfolios and I think there was definitely a desire, not just on their investment properties, the holding costs, rents have gone up, maybe their rents haven't gone up, you know, there's always a lag and some properties have got up a lot more than others.

And like you say, other costs have gone up. And so, It's been tough, right? And particularly if they're recent investors and they haven't bought them five, 10 years ago and with a much lower debt to what they're worth today.

But I think the other thing that's really been missed is just the pressure to pay their current mortgage, right? So it's the, when you're paying 6% on your home and you're paying all these, what do you choose? Do you choose your home or do you choose holding onto the investment property?

And they have been able to sell you know, for reasonable prices. So while the holding costs have gone up, the capital values of often a lot of investments have actually gone up. So there's also a desire to potentially just take some money off the table.

Yeah, I mean, I totally agree with you, Chris. I think there's definitely a common sense approach to that, which is that capital values have increased quite significantly over the last five years alone, let alone when you look at the investors who have held for 10 or greater years as their holding period.

And maybe there is a bit of wanting to take those winnings off the table. So I think, yeah, like you said, I definitely agree with that as something that is a factor in this.

But I think interestingly, you mentioned the costs and the fact that the costs have gone up, but also their equity stake has gone up in the property as well, naturally. I find it really interesting though, because that's great at the end of the life of a property.

You sell it, you get those winnings. But as you're going through, you could obviously draw equity down if you really wanted to, if you need a bit of quick access to it, assuming you can afford it. But you've still got to live day to day with the cost of that property.

And through the survey, we've seen that despite obviously quite a rapid increase in the operational costs of properties, 65% of respondents have said that they've passed on 10% or less of this operational cost increase to their tenants.

So the reality is that even though property investors are often demonized and demonized pretty strongly by a lot of mainstream media, they're not the bad guys. They're often just, you know, mom and dad investors and they're copying it. They're

And this is something that we've spoken about many times on the podcast. And the reality is that it's not as simple as, well, costs go up, so therefore I'm going to put rent up. Obviously, as an investor, if you could, you would. Let's face it. I'd like to cover my costs, thanks.

My increased costs. The simple fact is that you can only put up rents as much as the market will bear. And what is fair market value? I think it's interesting too, because you can see that the reasons for selling can vary widely.

Like if you look in Melbourne, for example, those costs are a big factor in selling and it's all about pain. Whereas in Brisbane, yes, their costs may have gone up, but it's also, it's all about gain because in Brisbane, particularly if you had an apartment, you might've sat on negative equity

for a decade or at least no gain or very little gain. And then all of a sudden you get these rapid increases in values that's happened in the Brisbane market, in particular apartments.

So I guess, what does this say about the short-term thinking of property investors that they're reacting so much to the costs of ownership?

I like where you're going with this question, Veronica. I think that what it says is there's a real difference in the psyche of people depending on the state that they own. And I think that that's really, really pronounced.

But when we actually go to the survey and we look at what some of the responses were, and we didn't break this down like state by state or anything like that. So, we didn't take it down to that level of fidelity. But when we look at what

respondents said in terms of their future selling intentions, I think it links in really well to what you're asking.

Because when we look at it, irrespective of where people do own or where they don't own, 51.3% of respondents said if they were going to sell in the near term future, the reason why they would do that was it would be because of federal reforms. Federal.

And then federal reforms, 51.3%, one in two respondents. We had almost 900 people respond and almost one in two said federal.

So that's, we're talking tax.

Well, and we didn't go down into whether or not that would be negative gearing specifically, but realistically, what are the biggest things that we're looking at? Well, it's been the negative gearing debate, and then it's also been the changes to super.

They're the two biggest things that have been on the cards when it comes to federal reforms, right? But then when you go down one step further, so that was 51.3%.

49.8 so we're talking like a very small percentage difference here 49.8 cited compliance costs as their next biggest reason why they would sell in the future and then the third biggest reason was land tax and government charges and that was the same percent as compliance and then to round out the top five we have rental caps and freezers and tenancy legislation

So, I guess off the back of your question about pain and gain and all the rest, when I look at a list like that, and that was why I said it before, I look at it as investors are really not liking the lack of autonomy.

And whilst you get the gains in Brisbane and people want to take that off the table, and we talk about debt reduction, that makes a lot of sense. And Melbourne is about pain. Well, Melbourne's about pain because autonomy has been taken from Victoria more than any other state. Yeah.

But then you would think that the investment numbers in Victoria would be really low, right? So the last two months, two years on your report, Victoria is named the least accommodating state, right? I get it. There's been lots of changes, tenants, the land tax, et cetera, et cetera, et cetera.

But then if you look at where investors are going to the market, 24% have bought in Victoria in the last 12 months. And if you think about where they're probably the most positive about at the moment is Victoria. So yeah, they care about tax.

Yeah, they don't want to be paying all these things, but they're also overlooking that and saying, I think this is still where I'm going to get the best returns as an investor. So how do we sort of think about that?

You know, we square that circle. Yeah.

And you know what? My best answer, and this probably doesn't come from the survey, my best answer for that is that investors, if you think about it, investors have really delayed being in Victoria since about 2021 when some of those reforms started. And it started with some of that tenancy stuff.

And don't get me wrong, obviously, and I think the two of you will probably agree, Certain tenancy reform is very important, right? We don't want people living in homes that don't have heating. We don't want people living in homes that are a shack, right?

But obviously, as part of that, there's also been other things that have happened that have reduced things like autonomy.

So, my best answer that I can give to that is that people have held off from Victoria for three to four years and we now look and it is the last really affordable capital city market, if we exclude Darwin really, that hasn't had much performance.

and is the second biggest city in Australia, being Melbourne, and obviously second biggest, pretty sure Victoria's second biggest state from population. And now it's like, well, you know what? We just have to overlook it, exactly like you said, Chris. We have no choice. And also, it's that affordability aspect.

People can only borrow as much as they can borrow. So now, you know, you sort of move into that conversation. And as a side piece, I did a bit of social media filming for myself this morning. And it was an article by REA from PropTrack, obviously their data arm.

And it said that there was only 73 suburbs around the country in capital cities that had a median price 600K or lower. And I think it really just really keeps rounding out that kind of conversation about capital city affordability or just general market affordability.

And ultimately, despite costs, if that's all that's left, that's all people can do.

When I've thought about this last two years is, and I just can watch it, I think it's a train crash, basically. We've seen investor after investor selling, which these reports keep coming out. I think next year you're going to see the same thing for lots of reasons.

And long-term investors, they're typically more maybe in the city, capital cities are bailing. And you've got a first-time buyer boom, right? That every time an investor sells, a lot of investors will probably take advantage of this as well, right? Like, why wouldn't you?

You know, if you could sell your, you know, apartment in Sydney for, you know, and I said houses before. Let's say it was an apartment worth a million. Now, next year, it's worth 1.3 because of the first-time buyer boom. A lot of investors will probably be the ones who sell.

But the new investors, just because of this belief with buyers agency and investment specialist buyers agencies going to regional areas and also budget because of what they can borrow from banks and what they can afford due to their current mortgage, are shifting to regions.

And that shift isn't a big deal if it goes on for one year. But if it goes on for five years... That's a lot of rental supply that we're going to lose in our capital cities. And it's never a case of every first home buyer was renting.

That's just not the case.

That to me is quite concerning because, you know, rents have gone up and it's already very expensive to live in our capital cities. But besides Victoria, where they're probably going to be buying a lot of houses in the fringes, let's be real, like they're not going to buy the apartment market down there.

There's been some of those buyers agents spruiking the one-bedroom apartments in Melbourne. Such great investment opportunities. Haven't you seen those all over Instagram?

Studios and one-bedders going for a couple hundred thousand. Anyway, that's sort of a slight segue. What do you think, Lachlan? I mean, you've helped a lot of investors, right? And that's not to say that's what you're doing, but it's just there is an impact here.

I do think there's also an impact here when the investors bail, right? Because they're not long-term investors. A lot of the old terms, I buy one property, I hold it. These are speculating type of, I'll get in and if the returns aren't there, I'll shift somewhere else because I'm location agnostic.

This is my mentality. I'm a borderless investor. So they go and buy in Adelaide or Perth or wherever it might be. That's not saying it's the wrong thing, but at some point they're going, oh, I'd rather buy a house in Sydney now for myself or I'd rather buy an investment property in Melbourne.

They dump that property. That creates an oversupply of properties and then they go to Melbourne market. That's also not great for our rental market because you haven't got this stability of rental supply. What do you think of all that? Where do I start?

What I think of all that, I mean, I don't think anything that you're saying are unreasonable thoughts that we need to be thinking about.

And I think that ultimately, one of the biggest things that I think we always need to keep coming back to, which is that structurally in Australia, we have a real problem with housing supply. And that's across all areas. It doesn't matter whether you're in a regional city or you're in a capital city.

We have a real genuine issue of supply. And for some cities, that can't be solved too easily without building up because there's no more land going either left, right or up and down, right?

I think that when it comes to what people might need to be focusing on, at the end of the day, if we can bring up more supply, it will also temper house prices.

It will also stop speculative investment to a degree because we're not going to see these crazy 20%, 30%, 40% increases in a year because there is just such a shortage of properties available in a certain market.

When a large group of people go into it, it then has a really disproportionate shift in in the performance of whatever that market is. So for me, the way that I think about it is to solve a bit of the speculative investing side.

Obviously, we could talk about things like regulation or the rest, and that is a genuine and important part of the conversation. But I think that we need to also not look at band-aids like stopping people who do the wrong thing, because that will always happen.

That's why we have jails, that's why we have a police force and all the rest, right?

You can never stop bad operators in anything of any variety, but solving the true issue at its core, which is the housing supply issue, I think is critical to probably stopping some of that speculative investment as well.

I'm actually not sure I agree with you, Lachlan. And the reason I say that is because if you look, say, just look at Melbourne. Melbourne has been well known to have an oversupply of apartments for well over a decade now.

And if you look at the last boom that Melbourne had, which is the same time Sydney had a boom in the 2012, 2017 sort of area.

Over that period of time, there was something like upwards of 50% of resales on new apartments in that period of time sold at a loss. So while the rest of the market is booming, you've got a two-speed economy effectively in the property space.

And so I don't think that necessarily these same buyers who are rushing into regional areas on the say-so of data-driven buyers agents are going to be going and buying all that new stock.

I think that it's quite possible for all of these markets to operate in their own speeds because they're all driven by different things. So I think supply is one issue. It's an interesting one because it's quite political.

It's very positive for every politician to come out and say, let's talk about supply because that's all stimulatory and we can actually give first-time buyers incentives and investors get better incentives for buying brand new, et cetera, et cetera. But the evidence shows that all of those buyers are actually worse off.

when I say all, not all, a higher proportion of those buyers are worse off than say five, 10 years than they would have been if they bought existing stock. And also the last time we had those booms, we didn't have the buyers agents buying en masse.

We didn't have the data-driven volume of buyers agents that we have now. So I'm not really sure that supply is going to solve that problem. What is interesting though, we're talking about the struggle or the dire shortage of rental stock.

The survey shows that only 42% of the sole properties actually stayed in the rental pool. And so we talked earlier about a shift where is a lot of established, and particularly if you're looking in Melbourne, a lot of established long-term owners have also sold out.

After being in the market for a very long time, they would have had homes, houses, as opposed to apartments. And so that's a structural shift because, you know, you've got a lot of investors buying back into the market from interstate, but are they buying the same stock that's been sold?

You know, are they buying different stock? So... That's, well, you know, they're buying on the outskirts versus on the inner ring. So there is a real structural shift. And what do you think that's going to mean long-term for tenants?

Well, I think, again, it creates very difficult conditions ultimately because let's just call a spade a spade. It's supply and demand. That's all it comes down to. And if there is less supply, like our demand side of that equation is not getting any better.

Like I think the most recent stats around overseas migration, I don't think they've done the 24-25 yet, but they've done 23-24.

We have 446,000 net overseas migrants, right? And I'm certainly not now about to say, okay, well, we stopped migration. Absolutely not. Migrants are super important and critical to the development of Australia's economy, business, society as a whole, culturally, that they bring so much into it.

But when we've got huge numbers of people coming into the country, they can't necessarily buy as soon as they get here. So where do they go? Well, they go and rent, right? Naturally, because that's all that they can do. So that's going to then go and suck up supply, right?

So when we're talking about a structural shift, it's again, to me, this whole conversation always comes so much in part to supply and demand because... the demand side as Australia's population continues to grow, whether it's from net overseas migration, whether it's the natural birth rate, whether it's homes becoming smaller in size.

We obviously saw an increase over COVID because people wanted to move back in and be around families. But now, especially with cost of living, does it go back up? Does it continue to split? Who knows? We'll see what happens. But we are not keeping up with the pace of properties required.

And then the survey, I think, just helps to really reinforce that. Like you said, Veronica, 42% of sold properties remaining in the pool. That means that we're almost dealing with three in every five properties are not. So what happens?

Well, the household formation is different. An owner-occupied home has, on average, less people living in it than a rental property. So I think that's one of the things that isn't often mentioned.

in the context of this, because Chris mentioned it earlier, it's not like every sale to an owner-occupier takes a rent around the market. It doesn't actually work that way. So it does create more pressure on the rental market.

Yeah. And I think I'm sort of just thinking through as well, like if you go back to 2015, you could borrow a lot more to buy investment properties. I'll be a rent investor. It's so easy to rent, particularly in places like Melbourne, but Even Sydney, I can rent wherever I want.

I'll always be able to rent. There's just always choice. Rentals were pretty like rental growth. Price growth was pretty stable, right? So there was this sort of this belief that I'd just be able to always rent.

But I think that sort of veil has been lifted the last few years just because A, rents have gone up. Maybe they've been kicked out of a home. They've had to move.

They're starting to progress in their life, kids, schooling, you know, this sort of, this belief that you can just, you know, rent this. So then if you can't rent this, then you've got to go, well, I need to buy a home.

So then you're basically creating home demand and you're going to create less demand investment stock, right? And then on top of that, if you then also made some changes with negative gearing or capital gains tax, you're only really compounding a problem that's already a massive problem, right?

So you just put funneling everyone access to super for home. So, you know, you're really creating a capital city. It's just this real... lack of rental stock, which is then creating a bigger rental crisis, which is creating even more desire to own.

And so how do you sort of, you know, manage that sort of rent vesting challenge? Because a lot of people aren't able to sort of pull it off, I believe, as confidently as they were say three or four years ago.

Yeah, I agree. And you mentioned negative gearing, for example. I want to throw another stat out from the survey here. 53% said they would stop investing if negative gearing was altered. So it wasn't even removed. It was altered. 53% would stop.

And then 35% would exit if CGT reduced down to 25% after one year. So the sentiment side of some of these reforms and changes is also, from my point of view, not helping some of the conversation that you're talking about, Chris. Because I'll be honest, I don't really have an answer.

I don't have an answer to it because I think that the issue has come about because it has compounded year after year for a significant period of time with so many different viewpoints on how it has got here from supply issues to migration issues to industry issues, even down to government and regulation and all the rest.

I'll be the first one to sit here and say, I actually don't really know how to solve it because I think there are a lot of problems and solving one to me is not going to fix all the rest of them.

You know, I actually think in a way our industry needs to have a different rhetoric. And so this sort of occurred to me recently in New South Wales. We've had tenancy reform.

That's been rolled out now and it definitely has not been as catastrophic, if you want to call it that, as Victorian tenancy reform. And to be honest, I think they went way too far. I think New South Wales is actually workable.

That said, I don't think any of our government departments are considering the actual industry enough because the industry is what has to implement these changes. You know, the property managers are the ones that actually have to roll this stuff out and make it happen.

But however, there's a lot of negativity around change, right? And if our Office of Fair Trading, if our Consumer Affairs, if they're not actually managing this really well, they're just dumping it on the industry to roll it out, then they're relying.

They're basically leaving it to the industry to create a lot of negativity around it, around change. You know, I was reading a forum on the REI New South Wales website, which property managers basically hands up in the air. This is going to end up in mass evacuation, mass sell-ups.

Investors are going to bail out of the market, blah, blah, blah, the way they did in Victoria. I don't think that's actually helpful. I think the industry needs to be a bit more responsible about that because if you're just contributing to the mass hysteria, then people are knee-jerking.

And fundamentally, I'd say most investors aren't what I call sophisticated investors. You know, you can see the knee jerking in terms of costs.

Like the reality is anyone who bought an investment property around when interest rates were at record lows around COVID, you've got to realize your costs are going to go up at some point. Now, I get that costs have come up from various angles.

You know, insurance has gone up and building costs have gone up. Maintenance has gone up and those sorts of things. I get that. But you must expect costs are going to go up. And I think a lot of property investors don't recognize that the first 10 years really is pretty tough.

You know, it's tough because, of course, your growth is incremental, assuming you bought a good asset. At year 10, you can look back and go, actually, it has done really well.

I've got great growth out of that, and it's been a bit painful, but now I can look forward to even better growth in the next 10 years.

And so I don't think there's enough of that conversation going on with individual investors for them to understand that it's not going to be a walk in the park. You're not just going to buy a property, and despite all those Instagram posts, there's instant equity uplift, and it's going to continue. So...

How can we as an industry have a more, I guess, a more mature conversation around this so that investors recognise that as long as they buy a good asset, this is, and they can afford the cash flow, that you've got to ride these things out rather than knee-jerking because interest rates go up or because there's some legislation that we don't really like.

I think that there's kind of two parts to this, right? I think as an industry to our clients or our consumers or whatever term you want to use, I think that that's where good businesses really thrive because they take their clients on an education journey as part of their service experience.

And that helps to elevate that exact conversation that you're talking about. So people do understand that you're not going to retire a property in 10 years. It might take you 20 or 30 years. And even then that retirement might not be at Richard Branson level.

It just might be at significantly more comfortable than a couple on the pension, right? So I think that on one hand, we've got that part, which is that businesses who do that, I think will really thrive and it will create sticky clients.

And it's almost like that idea of giving to an extreme level before you take, right? If you give all that to your client,

Even if it's outside of a service fee or it's an additional time burden on you, that should come back to you in spades because when they then go and try somebody else or speak with somebody else who isn't operating like that, they will then say, oh, wow, that person was actually exceptional at what they do.

I think that's one side. I think on the other side, the difficulty is that

conversations with governments at all levels of all parties it's not i don't think it's really related to any one group anywhere have become a lot more difficult and i think a lot in part because a lot of political agendas have become about grandstanding and the only way to get change through

is to grandstand yourself, to get enough support or enough visibility on it that political parties are then taking notice of, oh, wow, maybe we didn't do this right. Because there are so many factional issues that go on right now. Bipartisanship is probably at some of its worst levels that we've ever seen.

And then that makes it really hard for us, let's say, as a property industry to go, let's not sound a fire alarm about an issue that really doesn't need it.

Because if we just operate in a normal manner, we know that the government in power, whether that's federal or state or local, we know that we actually just have a great relationship. And if we take them facts and figures and real information, they will listen.

And I think that that's where we've gotten into a little bit of difficulty is that that real bipartisan open communication isn't maybe as prevalent as it has been in previous times. So the only way to do things is to pull a fire alarm. And I don't think that's right either.

But again, these are really structural issues that I'm not sure anyone has great solutions to right now.

I'm on a personal mission to help more people make better property decisions. You know, most people don't realise that they can cost themselves hundreds of thousands of dollars over the medium to long term when they make property decisions without all of the information that they need.

And what I do is help people with tricky real estate problems, which often masquerade as simple questions like, should I sell my investment property because the interest repayments are hurting or should I buy before I sell or the other way around?

You can connect with me and access all of the tools that I've created to help you make better property decisions at veronicamorgan.com.au. And there you will find resources for first home buyers, details about my buyer's agent mentoring program.

You can connect with my Sydney based property management and buyer's agency teams, Australia wide vendor advocacy, or ask me for introduction to the small group of buyer's agents that I would personally recommend across the country. That's veronicamorgan.com.au.

If you're considering a property move such as buying your first home, upgrading, renovating or investing, the team here at Alcove would love to help you think through your decision and get the finance right. Please go to alcove.com.au to reach out.

So your argument there is that really we have to get emotional about it or emotive about it because otherwise our noise isn't going to be heard above the noise of other lobbyists who are getting emotional.

I mean, I did go to an Office of Fair Trading, no, it was actually an REI New South Wales event, which was prior to the introduction of the latest round of tenancy reform here. And it was interesting because they had a representative there from the RSPCA who was argumentative.

He got up there and he was actually a belligerent. And I was shocked, actually, at this fellow's conduct in a room full of property managers who then have to implement the changes and manage with landlords and properties and multiple tenants and pets and the whole bit.

It was really interesting and I just thought I got a little tiny glimpse into, I guess, what the lobbying effort's like.

And I did, for the first time, feel a little bit sorry for the RIA New South Wales because they'd been saying for a while that they'd been lobbying hard and it was hard work. And I was like, oh, get over yourselves, stop whinging. But then I got an...

A little glimpse of that and I was pretty horrified, actually. So I think that's an interesting take. And it's a shame, though. But at the same time, I think that as an industry, we're creating a reaction amongst investors, existing investors.

And I think we have a job to do to sort of calm the farm a little bit as well.

and like i said i don't think it's right you know so i guess in principle i 100 agree with you it's like just that classic situation of brinkmanship right where you just one person or party takes it to one level and then the next party takes it to another level and the next party takes it above that and unfortunately when other interest groups or other factors are at play and everyone is playing at a level well above where you are and you're trying to be the really calm one and the really a measured response and all the rest

they're never going to hear you, let alone see you because everyone else is screaming from the hill. And I do not think that's right whatsoever. But I guess that's where it's about.

And I think we only have to look globally to see where other political bipartisan issues are going on as well, where how do we simmer it down? How do we take it off the boil, put it back to a simmer, let every interest group, every lobbying group, whatever you want to call them,

Have their say, but do it in a respectful, calm manner so that everyone has a fair go and no one is actually out there saying, and we say all the time with investors, investors are bad. These people are bad. You're the wrong. You're wrong. Rather than going, you know what?

I agree with this. I disagree with that. I think you're right with this. And I think I'm right with that. And I think we have lost a little bit of that ability.

What's your thoughts on, you know, part of the report is where have you sought property investment advice? Yeah. I think the biggest there is actually mortgage brokers. So, you can't possibly see anything wrong with that. Another 40% is the accountant. So, yeah.

Can't see anything wrong with that around their motivations around, I mean, property educator, 9%, no formal qualifications, free service provider, seven. So it's pretty, you know, it's diluted, right? Property investors, and obviously some have done it themselves or asked a family and friend, et cetera.

But these are probably more informed property investors, I would say as well, because they're probably part of your survey and- a little bit more probably thinking about it wouldn't apply unless you were at least thinking about these sort of things.

But I mean, yeah, accountants and mortgage brokers are basically driving property advice more than the 40% that actually go to property investment advisors.

I think it really shows the industry though, doesn't it? And you know what? I didn't actually have a look prior.

I'd be interested to see how that buyer's agent advocate number has changed over time because I think that it is still obviously a very new aspect of the industry at the scale we're seeing it.

Of course, people have been operating for quite a long time before it became a sexy profession to go into.

i'll have a look after this at what that looks like but how it's changed but i think it also goes to the core of where people feel trusted advice is coming from right like your accountant they manage your tax affairs you've probably known them for a number of years they understand where you're wanting to go to are they going to be the best to provide strategic property advice maybe maybe not i think it depends on their qualifications and their experience i think there's also something to be said for people staying in their lane with their expertise accountants are obviously

Accountants, not property. But they're probably filling in very good conversations around financial slash tax advice. To me, what I look at when I see this is it's really become important to make sure you understand what the qualifications of your trusted advisor are.

because people are going and speaking to multiple people because we're not saying one group stands out at 80%, right? We're not saying a buyer's agent stands out at 80%. We're not saying a broker stands out at 80%.

So it stands to reason off these stats that most people are speaking to at least two of the different people that are on this list. if not potentially more.

So the way that I look at it is, as I said, it's really important for any consumer out there who is looking at being involved in property and utilizing professionals to have that conversation. What is your experience? What are your qualifications? Can you do this for me or can you not?

Can you provide me tax advice? Because it sounds like you might be.

Having that very frank upfront conversation to understand where the left and right of arc should be with your provider or advisor so that then you can go and talk to different people who can fill in the gaps that that person can't and also shouldn't be filling in.

Well, that's quite interesting, actually, because, you know, the respondents on average are, you know, referring to two advisors. And that's more heartening than if they were just referring to a broker or an accountant. I think, you know, holistic property advice is needed. In my business, we're a proponent of holistic property advice.

And we absolutely will. Our little antennas got right. You do need tax advice. So you need to have an accountant who specializes in property advice. and tax.

You do need to get financial advice as well because property is not the only investment vehicle and we want to make sure you're considering super and you're considering other things as well.

And you do need to get borrowing advice and borrowing strategy in place because that's a scarce resource and you need to manage that properly. And potentially you need legal advice as well, particularly if you're going to be looking at structures and you need property advice.

So there's really five key advisors that you need if you really want to be having a proper holistic 360 degree view of your property decisions. So that is sort of heartening when people are getting at least two. But sadly, I think when it comes to property, as we all know, it's unregulated.

And so therefore, having those advisors stick to their lane is very important because I think it's really important to understand, particularly if you're going to a mortgage broker, and Chris, you can talk to these, It's free, right? Brokers don't charge for their advice typically.

And so there's probably a reason why the broker's number one. They're property adjacent and many of them give advice and I've heard it's often awful. What are your thoughts on that, Chris?

But without trying to throw the breaking world under the bus here, look, it is one of those things. They don't know what they don't know. And unfortunately, you know, clients are coming to them with plans to do things.

And as they go to discuss those plans, whether they're buying a house, whether they're upgrading or buying investment, et cetera, the conversation will come out, where are you buying?

And I think this is where mortgage brokers get into trouble, is they're trying to help customers, but unfortunately, they don't know what they don't know. And because they haven't got any invested in their knowledge to really understand the market, they're just basing their decision based on what their other clients have done.

And they haven't probably even thought about that very deeply, if I'm honest. They're just more focused around the debt side. There's enough things to think about there. And then they start basically giving advice based on knowledge that is very limited and they start partnering with the wrong people.

And I think this is where it all falls down because we get hit daily. That's not of, hey, can you send us clients? Can you send us clients? We're doing this, we're doing that. And let alone sometimes it's financial incentives, particularly if it's new property and off the plant.

And if not, with the proliferation of buyers agents coming in the industry, they're all needing clients. So they're all doing the same thing. They're all attacking the 20,000 brokers out there. And so I think this is where it goes wrong.

The broker hasn't really got the understanding that it's not okay just to refer all their clients to one buyer's agent. And they shouldn't just work with that one because they buy a lot off the plan. It's new and they're making money off kickbacks. So they just don't know what they don't know.

They didn't purposely go in there thinking I'm going to give the wrong advice. And Often they just build a partnership with someone and hopefully that'll be all right. It's just, I think buyer's agency thing takes a long time to get good at.

I just think it's one of those jobs that you can't just start with a phone and a laptop and start making purchases on property and have the knowledge.

I think it just takes lots of transactions and you need a really good mentoring program to bring these buyer's agents and then they get there, but that's just not the way it is. That's my problem with a mortgage broker. They just don't know what they don't know.

And unfortunately, what they should do is say, hey, I don't know, you should go and speak to PIPA or the REBA and go on your own journey. I'm not going to start giving you advice based on what I believe because it's often very limited.

if i can just throw one thing at the end i think that really speaks to staying in your lane if you are a mortgage broker provide that mortgage broking advice if you're a buyer's agent provide that property advice and if you're any of the other professions that we aren't listing that's why it's so important and i think the best part is you don't need to wear all hats like there is no need to do it you're actually going to give people a better service by drilling down into what you're exceptional at

And then letting other people do what they're exceptional at and build one exceptional team so you can refer your own clients out to who will be appropriate for their circumstances.

And then at the end of the day, the client still gets their exceptional service and they're going to remember who put them in touch with who. So you don't need to be everything to everyone.

Yeah. You know, despite the challenges that we've been discussing in this conversation, back to the survey, nearly 60% of investors actually still believe that the next 12 months is a good time to buy. So where do you think that fragile optimism comes from?

The survey had almost 900 response, right? So it has a very large response pool, which is great to give that statistical reliability.

But I also think that there would be something to be said for the fact that these are people who are responding, who are property investors, who are probably a little bit more knowledgeable than, say, the average person if you were to walk through your local Coles or Woolies and do one of those great Instagram interviews with a random person off the street.

So I guess where I'm leading with this is These people are probably very well versed in the idea that the best time to buy was yesterday and the next best time is today.

And obviously when they overlay that with their own circumstances and they go, well, yeah, you know, I know that if I'm in a position to be able to buy, I realistically need to be doing it because despite everything that's ever happened, the sky hasn't fallen.

And we do have some very important structural issues in Australia that will continue to prop up the house prices for probably quite some time to come in good areas. So I think that's probably where this optimism comes from.

I think that people are sort of seeing that and going, you know what, like we add in the fact that we're having rates coming down. We're adding in the fact that the survey was done just before spring. So maybe there's a bit of warmth in people's hearts getting around.

You know, I think that ultimately compared to winding the clock back 12 months ago or 24 months ago,

There's probably fractionally more optimism in society, in business, in just sort of the general feeling of where we're at compared to other times when it's been increase after increase, inflation at sky-high levels compared to where it had been for 15 years prior to that.

And I think there's just a little bit more for people to be happy about.

So those later points there, perhaps that's what lending is, because new investor lending is up too, isn't it? I mean, you've got any data on that, Chris?

Yeah. You know, obviously you've got the investors that, you know, I need to do something. I can't afford to buy my own home. So that's just absolutely there. You've also got people who've got a bit of equity in their homes.

They've never entered the market for an investment property or they had one before they bought a house. And they have learnt and they go, I can't put much more in my super. The cost of living crisis is only making investors more anxious, right?

So they're making them go, oh, I can't just sit on my hands and just, she'll be right, make more retirement. I've got to take action, right? Like, because I have no idea how my life's going to be in 20 years time.

I've got to build wealth because I'm going to need it one day. Like, money's not going that far. And so I think that's encouraging a lot of people to unlock a lot of equity and their borrowing capacity to invest. But yeah, obviously there is a cohort that have leveraged up to,

You know, you can even see that on the survey. I think there was only a small number of the people selling, you know, have got multiple properties. And I think that cohort obviously went through a bit of a tougher time because they leveraged up hard in 2020, 2021. So they can't really invest.

The longer term investors usually tapped out. It's more these new investors entering that have equity in their home just, you know, and they're not upgrading as well. They're like, oh... To get an extra bedroom in a garage and parking and on a better street, it's an extra one, one and a half million.

I can't afford that. Let's just live here. So they've almost squashed a lot of their aspirational home upgraded dreams as well, because they just can't see a world where they can make that upgrade happen. So if you're not upgrading, what are you doing? Well, you might as well invest.

And so I think that's driving a lot of new investors in the market as well.

I think that some of those comments are more relevant, say, to Sydney and perhaps Brisbane, where the home values are a lot higher and obviously the cost to upgrade is a lot higher as well. But, you know, it's interesting to see a lot of investor money coming out of Perth.

When you look at what the Perth market did for, what, nearly 14 years of nothing prior to this latest boom and now people have got equity. They've got something to do with it. Yeah, that's another point for sure.

And so for them, you know, it might be driven by different – maybe upgrading to them is not so attractive –

And Brisbane too, yeah, right? Exactly. So if your house has gone from one to two and your mortgage was $600 and now that's, say, $400 with low rates, you're like, oh, we're really on top of our mortgage.

But if the house is still worth a million, you'd be like, oh, I still want to get it paid off. There's this feeling of extra wealth is, I think, in Brisbane for sure. Melbourne, obviously not so much.

No, but that's where they're buying. A lot of them are actually taking that money and putting it into Melbourne.

But I think they'll upgrade first. I think the market down there, you know, time ticks on. People are just getting this pent-up demand. They're like, oh, you know what? If I don't upgrade now, I'm going to regret it, right? And a lot of people have the same home bias, right?

So a lot of people are down there, love Melbourne. They'll probably want to buy down there, but they're anti-Melbourne. So I think a lot of people living in Melbourne will try to put it into their house because it just hasn't run. You know, that next house hasn't run on them.

They can make that jump.

Well, also, I think Melburnians are more pessimistic around the state of the state economy and the state of the state government and the interventions of that state government as well into the property market. They're feeling it, whereas people from other states aren't quite as sensitive to that and they're not really recognising that.

They're quite much happier to put money in Melbourne. And there's this sort of positivity that revision to mean idea that it's got to go up. It's undervalued. There's this opportunity and got to get in before it takes off.

I think there's a lot of recency bias around that because you've got that has happened in Perth and Adelaide and Brisbane, for example. Well, that's going to happen in Melbourne now. And it might. It might. But just because it did elsewhere doesn't necessarily mean it will there or when it will. Who knows?

So I think there is a bit of that happening. And that probably does go to why there's a lot of positivity from people from outside of Victoria versus those within. We did talk about rent vesting as well. I mean, can we measure an increase in rent vesting?

Is it easy to do that or do we need to wait for a census?

Personally, I think it would be amazing to get some census data on it. I mean, we can obviously put out surveys like the PIPA Investment Sentiment Survey. We can do just sort of like consumer advocacy type surveys through some of those big groups.

But personally, I think it would be really, really great to see some of that data come out of the census. I think that given housing is such a

Well, it's a fundamental right, of course, but it's at the core of the DNA of Australians and it has been for decades and decades and decades.

And now we're in this situation where housing is potentially one of the most hot one topics, maybe except for, I mean, especially was blowing up the news at the moment with the net zero all around carbon emissions and environmental awareness. Housing is probably the next biggest issue getting around Australia.

And I think that coming into the next census, I think if the federal government is really smart, they will take a really good hard look at what questions are being asked around property and housing and try to collect some extra information, like, for example, rent vesting, because

I think we see it all the time, whether it's especially federal or state, there's always one political party at any point in time is coming out and trying to come up with plans about something that's going on. It could be liberal labor. It doesn't really matter.

And often it is really not coming from a sound underpinning set of data, right? It's a lot of advocacy like what we've talked about. It's a lot of grandstanding. It's a lot about political positioning.

But I think if there was really good, hard census data in there, it would make all political parties have to on their toes and making sure that they're putting forward policies that actually make sense, not just what are politically savvy.

That would be nice. In the survey, Lachlan, were there any findings in this year's survey that surprised even you?

Were there any findings? I think that if I was going to pick out a couple, it would be that first looking at the reasons why people would be looking to sell.

I think as I was talking about right at the start, I find it particularly interesting that those top five things which were around federal reforms, compliance costs, the land tax, government charges, rent caps and tenancy legislation.

The vast majority of those, I look at a reduction in autonomy and a reduction in free market principles of what investors would like to see and the control over their assets. I find it really interesting.

I did find it interesting to see that they were the top ones and they were pretty much all of the things that were related to that kind of idea of autonomy. But I think in a more positive light, I was actually really happy to see

what we were talking about before in terms of where people are getting advice and saying that it's not centered around one group in particular, because I think that that's dangerous. Regardless of what group it is, I think it's really, really good to see it's spread.

And also that PIPA obviously has the Qualified Property Investment Advisor program, QPIA. I think it was also really, really good to see that program is being utilized and that 94% of people

are supporting formalized training. Like to me, that I think just says everything about the property investment community, which is that there might be problems going on, but at the end of the day, one thing everyone can agree on is that training and education is so important.

And I think that at even a government level, and I know we all have, we especially may have talked a lot about government, I think it really can speak to the idea that maybe there does need to be some more formalized training getting around all the states,

federally, whatever level you want to talk about, but you're not really going to find anybody that doesn't support that.

Lachlan, have you got a property Dumbo to finish this off with? Please, mate.

I certainly do. It was actually a client of ours very, very recently. We negotiated for a deal for them on a Friday afternoon, very explicitly said to them, if you get sent the contract, do not do anything until it is reviewed by the solicitors.

Agent was told, do not send it to the client, send it to us so we can make sure that nothing goes wrong. And it was sent to the client and the client signed it. And the client calls us all excited on Monday morning saying, guys, I'm so excited. The deal's done.

And I said, we said, mate, did you send that on to someone? We were going to obviously help out with that, you know, refer you on to somebody. And oh, no, I didn't. Fortunately, it was reviewed after and there was nothing bad in it.

But that was the property Dumbo for us was signing a property contract without it being reviewed. Yeah.

Wow. Ouch. I would hazard you should get the review done before you make an offer, but that's just in my process. Thankfully, nothing wrong with that one. But yeah, it's interesting. We interviewed Jenny Tono as a conveyancer a few years back.

And because we don't buy with a cooling off period, and look, this legislation changes. Every state and territory is different, by the way, but in New South Wales, you can sometimes get a five-day cooling off period. Because we very rarely do because we're in a very auction-oriented area.

I actually didn't realize until that interview with Jenny that you can't necessarily expect to have any contract changes agreed to once you're in the cooling off period in New South Wales, that is.

A lot of agents will say to a buyer, Dory, you can sign it and then you've got a five-day cooling-off period and then send it to your solicitor then and get any changes negotiated. The fact is, that's not a given.

So I didn't even know that because it's not something that we did very often. So it's a minefield out there, isn't it?

Legal advice. Yes. So important. Very important.

Lachlan, thanks for coming along. Great to chat with you and good to hear the insights from this year's PIPA Property Investor Sentiment Survey. And if anyone does want to, I mean, I am actually on the board of PIPA.

If anybody does want to check out PIPA advisors who have a QPIA qualification, then go to pipa.asn.au. PIPA, P-I-P-A dot A-S-N dot A-U. All right. Thank you.

Thanks a lot, Glenn. Thanks, guys. Thanks for having me. If you have a question that you'd like us to answer in an upcoming Q&A episode, you can send us a voicemail or written question via the website, theelephantintheroom.com.au, or you can email us directly at questions at theelephantintheroom.com.au.

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