Why the property price drop you’re expecting may not be coming

Transcript

Michael Nasser 0:00
The information contained in this podcast is general in nature and is not to be taken as financial or personal advice. It does not consider your objectives, financial situation, or needs, you should consider whether this information is suitable for you and your personal circumstances before acting on it. Hi, and welcome to The Home Run, your guide to buying your first home in Australia. On the show, I’ll walk you through the home buying process from every angle. We cover the steps to take the pitfalls to avoid, and the answers to all your questions you’ve been dying to ask. No matter what stage you’re at, you’ll learn everything you need to know about buying your first home. I’m your host Michael Messer, and I’m a mortgage broker at Lendstreet. And I really love helping people buy their first home. Today, I’m joined by Kent Lardner, the director of Suburb Trends. Suburb Trends is a property research firm, trusted by some of the biggest names in Australian property. With Kent’s background in statistics, they produce a powerful tool, which can rank the top 20 streets in every suburb of Australia. In today’s episode, I’m going to draw on Kent’s experience, to learn about some of the trends he sees in the market right now. You’ll hear how things have changed following the recent Reserve Bank changes to interest rates, what this all means for first home buyers, and Kent shares why the price drop that some people are predicting, may not be coming. Lots to get through. So let’s jump in. Hi, Kent and welcome to the show.

Kent Lardner 1:32
Oh thank you, Michael, it’s a pleasure to be here.

Michael Nasser 1:34
Very excited to talk about all things, Suburb Trends. So I guess to get us going, can you tell us a bit about your background, and how you got to where you are today.

Kent Lardner 1:42
It started out back in Lenders Mortgage Insurance in the late 90s. One of my functions there were I was managing the valuation side of it to add, several 100 mortgages coming through a day and part of it was looking at valuations and back then, it was all facts based. And then there was one company out there with a couple of companies, one of them was APM, Australian Property Monitors, the other one was Residex. And we were just looking at the best ways we can analyse and understand market risk and property risk. And they sponsored me, that company GE, they sponsored me to go back to school and study stats, and from there, sent me off to Canada and the US to learn from some rather experienced gents. And then I came back to Australia, and then moved on from there and started a company with, well, I was one of the founders with a company called Price Finder. So I designed the Price Finder estimate system. So the whole intention there was to give people the ability to interact with comparable sales and determine if they were better or worse than the subject property to come up with something that was as close as possible to a valuation, but in the hands of anybody who learned and understood the system. So that was a few years that took five or six years to build up. And then we sold that business to the Domain Group. From there, I went over to core logic, and I was heading up their banking analytics product team. And then I had a stint in China. So I was up there for about a year, one of the things I did there was one of the largest banks, if not the largest bank in the world, designed an automated valuation model for them based on Chinese property data. And that was fairly big, it was interesting to go into these big old, very large government compounds and have an auditorium full of 200 staff that all worked in the risk department. It was just mind-blowing. The scale, everything big. So that was China. And then from there, I came back. And I’ve been working for the last several years on my own business called Suburb Trends.

Michael Nasser 1:53
And I guess that’s a good segue into Suburb Trends. And obviously, what I can hear there is a lot of data analysis. I imagine that you’ve been computing with Price Finder and tools like that. And that’s the new Suburb Trend. So what is Suburb Trends can you tell us a bit about that?

Kent Lardner 3:44
Yeah, so I was originally very focused on creating property-level analytics. So it was all about valuing a property. And what I saw was a bit of a gap in what people were doing in terms of crunching numbers, and interpreting and then presenting the findings at a suburb level or market level. I found that that was a few people doing a reasonable job. But by and large, it was done poorly. So what I wanted to do is really focus on how could I grab suburb data, make it meaningful, build some models around it. So, suburb trends is really built around a product called the Suburb Map, which is a subscription product and it’s icon-centric, so search for a suburb, click through the different icons. And the objective there is to give a user an insight into that suburb as quickly as possible. So I go through the trends information, I go through neighbourhoods, and then do your shading of the neighbourhoods based on socioeconomics. I do elevations, and I do top streets is another thing. So we ranked the top 20 streets and present that on the map. So there’s quite a bit in there, but the whole idea was how do I empower people? So the Price Finder objective back in those days was how do I empower people to appraise and value of property as accurately as possible. With Suburb Trends, how do I empower people to analyse the suburb and market as quickly as possible?

Michael Nasser 5:08
And you mentioned there that it’s map-based. So I guess it’s a very visual tool. And a lot of the data is passed on in a visual representation.

Kent Lardner 5:14
Absolutely, yeah. So there’s one thing I’ve got in there, that’s a text-based description. So some people prefer that. So it’s a summary of the suburb market. But most of it is very snapshot, very snappy. There’s charts in there. So for example, you’ve got a price segmentation, that’s my favourite. So you effectively break up prices into 100k bands or 200k bands, and present at a sub-level. How many properties have sold in each of those price brackets over the last 12 months? And that price segmentation I think gives you a probably a more powerful insight, then a chart displaying how the median has grown. You’d rather look at the distribution of it. And that tells you so much about the summer. So that’s one of them. The other thing I present is the charts or the trends but zoomed out to what I call an SA3, or what the ABS calls an SA3, Statistical Area Three. Rather than use the suburb to project or present price trends, I zoom out to a cluster of suburbs called an SA3, and there’s about 350. That’s what I define as a market. The suburb is generally too small to present meaningful median price charts.

Michael Nasser 6:23
And what solution does Suburb Trends provide for buyers?

Kent Lardner 6:26
Yeah, so for buyers, I think the key is it helps you understand a market before you jump in very investor-centric, but not limited to. For example, if I’m a buyer, I’d like to know what the socioeconomics are of the suburb before I buy. I would like to know is the price range I’m buying in at the top end at the middle at the lower end. So I’d like to know that I’d like to know the trend of the overall market, not just the suburb because sometimes that can be deceptive, I view the area trend as the tide. Very hard for you to swim against the tide. Sometimes you can, some suburbs do. But by and large, most suburbs struggle to swim against that tide, they are part of that same area, so they contribute to that price stream. But there are some suburbs that bucked the trend. And there’s some suburbs that jump before other. And then the top streets, that’s the new thing that we’ve done. So what we’ve created is an analysis of every house in the street using an AVM or Automated Valuation Model. And what we do then is we wrap those up and come up with the median or look at the median of the street price, median street estimate of those automated valuation models. And then if it’s got more than 10 in the sample, I take the median or rank them. So then I’ve got an overview of based on that methodology with all its constraints and limitations. What are the top 20 streets? And that’s good, because you put that on a map, you can see where the golden triangles are, as people like to call them. Where’s the hot spot? Where are the best prices? Or are you in or near those streets? Yeah,

Michael Nasser 7:55
Sort of that Golden Mile concept. So where’s the Golden Mile of that suburb?

Kent Lardner 8:00
Yeah, exactly. And I wish I knew that. So to answer your question, as a buyer, what are the mistakes I’ve made in the past? And you know, there’s a catalogue of them. And we’ve all made mistakes, right? How could I empower me in my younger days? And you know, if I had some of these tools with this knowledge back, then, would I be in a very different position today? Oh, yeah, I’m in a good position. But gee, I would have been much better off if I had tools like this, right?

Michael Nasser 8:23
Yeah, I guess being exposed to all that data. And it seems pretty powerful, how you can construct it, and then help you make that decision, I guess. And they always say power is knowledge. So it’s something that I’m sure you probably feel familiar with or not. Yeah, that top 20 streets in every suburb. That sounds fantastic. And that’s awesome. Thanks for explaining how you rank the streets, because that was gonna be something I wanted to ask. So you beat me to it. So, with all the bits of data that Suburb Trends can point to what would you say is your favourite piece of data in the reports?

Kent Lardner 8:49
Inventory is the biggie that I always like, that’s my go-to. So what is inventory, inventories and analysis of – what’s the average amount of listings, what’s the average amount of sales per month, and you combine those in a ratio expressed as months of stock. So for example, if you’ve got a suburb with 20, properties on average for sale, 20 houses for sale, and five are selling on average per month, 20 divided by five, four months of inventory. And what that tells you is two things, what the inventory level is today, and what was it through time, and the time series analysis, all that trend line is a really strong indicator. So for me, the favourite thing for me is looking at the time series analysis over the last 12 months of how many listings there are, what the inventory is and what the price is, and looking at the way those charts interact or how they move and how they move in sync or slightly out of sync gives you a really instant read on the market. So I can understand whether a market demands soft or demands high. I can see the correlation between inventory movement and prices straight away. And I can see if the market might be at its bottom, which is more relevant to today. And this is probably the hottest thing right now is the headlines are still saying prices down, prices down, prices down. But there’s a new headline that’s just about the surface. And that new headlines going to be here are markets that have hit the bottom, and they are coming back out. So for me, understanding the nuances of those charts, seeing them in one snapshot and getting a feel for it, that’s the biggie for me, because I think right, now we’re going to find a number of suburbs are going to start to bounce off the bottom, and potentially muscle memory stalled, jump back to a price point that they were sometime in the last year or two, relatively quickly. So to my hypothesis, because this is what’s happened in other markets in the past. And so what it does is it bounces back as if the dip never really existed, but then it will flatten out because of overall market conditions. But what we’ve done is we’ve proven how strong the market is and what price point it’s capable of achieving. And my theory is it’s going to bounce back to that. So looking at these charts, you can see what it’s likely to bounce back to peak to trough or trough to peak year.

Michael Nasser 11:09
So it’s looking at the cycle almost in a different perspective to gain insights as to where we are currently at based on the data.

Kent Lardner 11:15
Exactly, yeah. And it’s very unlikely that this market is going to rebound even though prices might level out. If inventory still high or building, it’s not going to be thrust out of that low point rapidly, until inventory levels start to drop.

Michael Nasser 11:30
Yeah, and I guess there are so many factors that make up the market. And that’s a positive thing with a tool like Suburb Trends is, if you know how to use it properly, you’re really gonna be able to pick up on things that other people perhaps won’t and gain a perspective, as you’ve alluded to, that other people won’t have just listening to the mainstream media and the headlines that we get from them, which is generally either doom or gloom and nothing in between.

Kent Lardner 11:48
Yeah, exactly. And the nuances of talking stats and the assumptions and all that boring stuff that the weasel words that you have to attach to a statistics report. They’re not going to get into the newspaper.

Michael Nasser 12:01
No, no.

Kent Lardner 12:02
So you can put them in there, but they’ll be ignored every time

Michael Nasser 12:05
Not gonna go far. You’ve mentioned some references there to the current market. And I guess we’ve seen some big changes recently with the Reserve Bank of Australia with lifting rates. Before we dive into the trends based on these changes, what changes have been made that you can see from the RBA, and that using them as a focus point.

Kent Lardner 12:23
Yeah, what we can see is the market was driven by people’s ability to borrow. In your space, you’d see that as clear as day. So income drives rent, and the ability to service a loan is what has been driving house prices. What this has done for me, is really paint a clear picture of how much mortgage affordability has driven all this last boom. And the other key things I’ve seen is the wave that’s happened. So if you divide up, say, Sydney, divided up into, say, five quintiles the top end of the market, right down to the lowest quintile, they’ve all behaved very differently and have behaved differently at different points in time. So it’s this broad stroke here. But effectively, the lowest quintile has been the last to feel the effects because of affordability. So my view on that, my theory on this is that people who have been squeezed out of buying it, the $2 million mark went down to 1.5. And then the next round of interest rates went up and those squeezed out at 1.5 market, and now chasing the 1.2 market, etc. So as a result, that ripple effect has left, the more affordable suburbs relatively unscathed. At this stage, you can’t say will last forever. But in that ripple effect of these interest rate rises, you can see the first impact was the upper end, the last impact is not impacted at all really at this stage is the lower end, specifically when analysing a market like Sydney. So that’s given me a newfound appreciation of the ripple effect, because we always think of the ripple effect as geographical. I think it’s geographical because of price points. I used to just look at it as wave on a map and only look at the geographical component. I think it’s more a price component.

Michael Nasser 14:20
A term that you’ve probably introduced our listeners to for the first time is quintile. And so I guess for our listeners who may not know, can you explain what a quintile is?

Kent Lardner 14:29
If you line up all your prices from high to low, so if you take all your suburbs and rank them from the highest price down to the lowest, the middle one is the medium, so that’s the simplest one, so we split it into two halves. But, if we split that into, say, five different then your top 20% is your first quintile, and your lowest 20% is your fifth quintile. So you’re effectively ranking prices from high to low and how many slices you apply to it. Half gives you the median, above and below the median. But if you split it up into 10th, their deciles. If you split up into five, it’s quintiles and by quintiles is a really neat way to slice and dice the city.

Michael Nasser 15:13
So it’s five categories effectively based on price point. So you’ve got your first, your second, your third and your fourth, and is the top one, the most expensive and the fifth, for example, the least expensive?

Kent Lardner 15:22
That’s all relative. I mean, sometimes you can call them the first quintile, or the fifth quintile and swap them over. But generally, the first quintile is the highest as a standard, but that’s neither here nor there. It’s really price brackets.

Michael Nasser 15:33
Yeah. And something I’m thinking of that you mentioned earlier was SA3. And I know a lot of the suburbs or the data that you’re pulling in this regard is because coming from the abs, the Australian Bureau of Statistics, and is there any relation between an SA3 and a quintile? Or are they two separate things?

Kent Lardner 15:48
Two separate things. So the Australian Bureau of Statistics, I’ll just call it ABS for now. What they’ve got is their own geographical structures. And then they also still report on stuff in non-ABS structures, so suburbs, and postcodes, etc. But in the old days, what we all used to do is use local government areas. And what happened is Brisbane turned into the blob. It turned into the monster and just kept on growing and growing and expanding and amalgamating. So now Brisbane is one big LGA, which is too big to use. And so we needed an alternative and one of the alternatives was using SA3s. So the ABS have created, the smallest unit that they will divulge their census information without worrying they’re telling too much about you is called an SA1. So an SA1, give or take, a couple 100 times. They feel comfortable displaying demographic information, income information, etc. At 200 homes is not so granular that it’s kind of impede on your privacy. So that’s the essay one and like a Lego that plugs into an SA2, and then the SA2 is plugged perfectly into an SA3, and there’s about 350 of those around the country. When you get into the more densely populated areas, geographically, it’s a little bit more compact. When you get out into the rural areas, your SA3s a little bit bigger. Might take you an hour or two to drive across. But you know, in the inner city, an SA3 might take you three minutes to drive across.

Michael Nasser 17:20
And I guess for data collection, that is just a different point that’s used for this purpose.

Kent Lardner 19:02
It’s just the suburbs and how you group them. So typically, what you do is you take all the sales, and one of the benefits of using an SA3 is if it’s normally distributed, which most of them are. Most of them look like a bell-shaped curve. The great thing about that normal distribution is if you’re measuring something like a median, you can look at the median last month and the month prior, and the month prior and not worry that it’s bouncing around because of some spurious measurement issue. It’s a good reflection of what the prices are. So the SA3 does that better than a suburb. Suburbs can bounce around all over the shop because if you’re in a beachside suburb, you’ve got $3 million properties, and if you’ve got $1.2 million properties and everything in between and the median can be determined by what’s for sale and what’s selling. If the rich people in the suburbs say, “bugger this, I’m not selling because the market’s down,” which is what’s happening, they pull off, they pull out, and suddenly your median plummets. Well, is the price has fallen or is it because the composition of what’s for sale and what’s selling has changed radically? And by and large, we’re seeing a lot of that right now. Whereas that same problem does exist at an SA3 level but is less exaggerated. So an SA3 is pretty good, and the great thing about it too is you can capture agent advice sales, you don’t need to wait 2 or 3 months for it to come through the government. You can capture enough agent advice sales that come through daily to measure the median before the government stuff and do it reliably.

Michael Nasser 20:22
And how does that work so an agent will notify data at what point and when does the government generally normally pick it up?

Kent Lardner 19:02
They call it agent advice sales. So an agent advice sale is something that is generally published by real estate agent the day it sells. And then what they do is they push it out and it goes out through the real estate portal. Iin the old days before, the real estate portals really dominate this now – ,auction results, sales results. But in the old days, the setup section of the newspapers on a Sunday, were all the property sales results. And it was a great read. It was fantastic. So a lot of people buy the newspaper, the Sunday paper, Sunday Telegraph, whatever you’re wherever you’re from, and the center of it was this fold out of all sales results. Brilliant, right? That’s kind of gone to the wayside now because it’s just published online. But the impact of having it all in one view was amazing. I’m showing my age.

Michael Nasser 19:48
Yeah. I think I might remember I’m not sure when they stopped but it sounds familiar now that you mentioned

Kent Lardner 19:53
They still might do it. We just don’t buy the newspapers anymore.

Michael Nasser 19:57
Yeah. And I guess the ability of it being online. It does make it a lot quicker.

Kent Lardner 20:00
It does. But typically it’s presented at a suburb level. Whereas it’s wonderful to be able to view them all in one big pullout for the whole city.

Michael Nasser 20:08
You mentioned some trends that you’ve currently seen. I guess to get a little bit more insight into that. What trends are you currently seeing in the market based on suburb trends and the things that you’re picking up on the portal? And are things changing? Or are they stabilising? Or where are you seeing things currently?

Kent Lardner 20:22
Yeah, the biggest trend I’m seeing at the moment is how many months post-peak we are and how many markets are starting to level out. We got a lot of markets that are 12 months plus that their peak was 12 months ago. But by and large, the average is about seven or eight months at the moment. So depending on when this podcast comes out, it might be nine or 10 months, right? But so effectively, every month that passes, it’s getting closer to the end of that downfall. And the evidence is stacking up in a number of areas. Now, where are we seeing the month-on-month decline starting to reduce. So for example, it might have been a 1% per month decline for the last five months, a lot of areas now half a percent, a lot of areas are actually moving to 0% or even plus 1%, very early days to call. But when you stack that up and then wired up with evidence to say, what do the other data points tell us? Is inventory declining? Has inventory turned at the turning point where that tells you all things equal? That demand is picked up in response to those lower prices? Suddenly, now people sitting on the sidelines waiting for the 10% fall or the 15% fall? Are they coming back in? And the data indicates that a few of them are there’s not a wholesale rush in. But it only takes a handful of people to jump in and say now’s the time, because so many markets have listings down. Because a lot of smart sellers have said, “I don’t need to sell, bugger that I’ll hold.” So when you’ve got fewer listings and demand starting to creep up, it doesn’t take too much for market conditions to look solid again. Now what I can’t say these could that lead to a rush in listings? I can’t promise that I don’t know. But I can look at the current trends. And what I can see is that, a lot of markets are at the turning point or just about there.

Michael Nasser 22:16
Yeah. What would these trends mean for a first home buyer? And how would you guide them through this particular market? Based on what you’re saying?

Kent Lardner 22:23
If you’re a first home buyer, and you’re thinking, I read the headline that prices are coming down by 30%. And you’re thinking, Oh, it’s down? 10%? I’m going to wait for the other 20%. It’s a big gamble. It may happen. But you want to look at the evidence and say, Is it still falling at the same rate as it was last month in the month before? Because if it’s starting to shallow out and go from minus 1%, or minus 2% to minus half percent, then the chances are you waiting for that magical 20% drop, that chances are starting to look pretty ordinary for you. So if I were a first home buyer, I’d make sure that I identify the suburbs I’m keen on, drill down and become an absolute expert on these and get ready. Get ready now! I can’t promise you they may not drop another two or three or 5%. There’s no guarantees there. But you’re taking a risk. If you’re sitting on the sidelines waiting for that 20% drop or the 30% drop that you were promised from the headline six months ago, you might find yourself falling short of that suburban this for suddenly having to find the cheapest suburb.

Michael Nasser 23:30
Then then prices up all sudden back on the rise again, depending on what may happen.

Kent Lardner 23:34
Yeah, and my view on it is and this is just a theory, my theory is that the prices may jump up to some point, maybe not quite the peak, but somewhere close to the peak of where that where it was, and the dip will disappear. And then it’ll stay flat for some time. So what you might well find is, for example, the suburbs established itself it can handle a median of 1.3 is dropped down to 1.2. Now, where is it likely to bounce back to and be comfortable? It’s going to probably be comfortable up somewhere closer to 1.3. Again, will it take a month or two or three to get there? Well, I think it’s going to find its way back to that point pretty fast. What it will do is I believe it’s probably going to stay flat for some time though. And a lot of that’ll be driven by affordability loan serviceability.

Michael Nasser 24:22
Yeah. Okay, which we mentioned sort of at the top of it when we’re talking about the current trends. Now you’re definitely an expert in terms of analysing data and putting it in a way that we can construct some meaning out of it. And so I wanted to ask you for some general tips for our listeners. The first one is, if you had a million dollars to buy in Sydney, where would you buy?

Kent Lardner 24:40
Oh, if I had a million dollars in Sydney, I love the Blue Mountains. I like Helensburgh. I like the Blue Mountains. These are areas that typically have pretty good social economics are near reasonably good train lines, good access train lines, and our offer housing stock so I’d be looking at Helensburgh or the Blue Mountains. If I were to try and get closer in, I’d be looking at townhomes, good quality townhomes, new rail or light rail, or walk up if you can get high quality walk up style apartment on one of the train lines always Sydney’s right. You got to be near the train lines. But I’d favour that traditional walk up style blocked, not something too large, and something really close to transport if I’m going to get in closer, but if I’m going to be thrust out, I’d probably still focus on the Blue Mountains or Helensburgh.

Michael Nasser 25:29
That’s a really interesting take, I wouldn’t have thought of the Blue Mountains at first instance. Now you mentioned it, and then you let them for as well. So it’s pretty accessible by car and is not too far with rail and things. So for a million bucks, that might not be a bad idea. How should a first homebuyers property strategy differ? If they’re buying as an owner occupied versus buying as an investment property?

Kent Lardner 25:48
It is interesting because I’m living in one of the properties we bought for an investment and to rent out, we didn’t really at the time, buy it to live in it. Now we live in it. And I think for a lot of people, though, they can’t help themselves. They buy the investment property with a view to it being suitable for them to live in. And I think what you’ve got to do is you got to think like a renter, you’ve got to think that how do I get maximum cash flow? Is it in a good area, etc, etc, but not really worry about the color of the carpet. Another thing as well is maintenance is always one of those things, too. One thing I’ve always found is I’ve always liked the properties that had lower maintenance and less bushes and whatever the swimming pools I hate swimming pools with rental. So yeah, just think differently. If it’s a property to own as an investor, there are different attributes of play, and you’re buying it as a business. You’re not buying it to live in it.

Michael Nasser 26:40
Yeah, I think you’ve hit the nail on the head there, I think which it’s an investment property definitely got to treat it as a business sort of transaction, less emotion as possible. You mentioned you hate swimming pools can’t. What’s the specific reason for that? And is there anything else you hate when it comes to investment properties?

Kent Lardner 26:54
Anything that’s not an essential feature of the house, for a renter, typically a swimming pool, a lot of maintenance costs, a lot of risk could impact your insurance, especially if you gates a new security side of it. So you need to obviously have the inspections done to make sure that the gates are safe and secure. So it’s a very expensive feature for a rental property that I don’t believe offers anything in terms of yield or adding to your yield.

Michael Nasser 27:19
Are there any other items specifically? I mean, one thing I’ve heard of is elevators, for example, I mean, yeah,

Kent Lardner 27:24
yeah, that’s a given with a lot of the apartment blocks, so gyms and elevators, all that excess stuff, that luxury stuff, whereas a lot of the old school valuers love the walkups, and they’re low strata fees, there’s a lot less can go wrong. So if you’re looking at a strata, obviously, you don’t want expensive strata fees, you don’t want things to break and go wrong, which they do, especially in low quality build. So obviously, with a lot of new units stock, there have been some construction quality issues. That’s no secret at all. And I don’t think they’ve been resolved. Whereas something has stood the test of time for 50 years or longer. That is a walk up, there’s not much else that could go wrong. It might be some maintenance or tucking the bricks or whatever. But for a free standing house, it’s almost like the nightmare scenario is something that’s got a swimming pool and hedges everywhere. And a big yard that needs to be maintained and urinate, the Blinken the maintenance issues become very, very significant.

Michael Nasser 28:19
Now they can all add up, I guess. So that makes total sense. In terms of metrics, is there anything in particular owner occupier would look at as opposed to an investor? Or do you say for the owner? occupier? It’s not as important?

Kent Lardner 28:30
No, no, I think it’s really important. So obviously, when we go from the data and analytics, that’s the science bit, and then you’d almost say is the owner occupied? I think it’s 50% Science 50%. Art. So starting with the data and the science, but you’d like to know what the neighborhoods are like, what are the socio economics? What’s the education ranking of the area that’s all freely available? So you know, I’d like to know what the neighborhoods like get to know the neighborhood get to know the street and on or near a main road? Look at the map. So look at the prices on the street, what’s the highest price? am I buying a record price for the street? Well, that’s not going to give me a lot of room for growth. I’d rather buy something below the top end at top price. Am I near the top street, am I buying in that golden circle or the Golden Triangle?

Michael Nasser 29:17
For a first home buyer that first purchase can be critical to the next property purchase to which invariably does happen generally upsizing or what may be but I think that first purchase is a critical one. So the more you understand about the nature of the purchase, and the location and the neighbourhood, and that golden triangle, I think it’ll only help you with your next property, whether it be an increase in equity, all that sort of stuff that you need to pivot to your next property. So quite critical there. And last of all, what would be your number one tip for first home buyers trying to get into the market today?

Kent Lardner 29:48
Crawl, walk, run. Don’t worry about buying a unit as your first stepping stone. I wouldn’t over commit I’ve seen a lot of LMI claims of people who over committed through everything into To the loan applications so that they could borrow absolute maximum, borrow within your means. And I would say units are not going to give you the same capital gains as houses. And traditionally, they’ve been close to half. But with that pipeline supply being so low, with the number of overseas visitors about to arrive and come in, in bigger numbers, the demand on units is going to creep up. So I would argue that units are a lot different in terms of an asset class right now than they were a few years ago. And that might change in a few years, but they’re not a bad option. And if you’re buying them near a train line, et cetera, et cetera, and you can afford it, get in, build up some asset and use it as a stepping stone.

Michael Nasser 30:43
I think it’s a great point. I mean units maybe a stepping stone to consider. The general sense from this is the land content component of the purchase that will have the capital growth but I think with the few other points that you raised there, units definitely something to consider especially if it’s close to a train line, or amenities, or the location that’s in specifically.

Kent Lardner 31:01
Yeah. If you got a million-dollar budget, there’s a couple of suburbs there that we’ve listed that you could buy a house or potentially stay there forever.

Michael Nasser 31:08
Yeah. People want to get to Suburb Trends, how can they find it and what’s the access line?

Kent Lardner 31:13
Yeah. If you just Google Suburb Trends or pretty much ranked up at the top there, so Suburb Trends is one word or if you want to go straight to it, suburbtrends.com.

Michael Nasser 31:21
Ok. Great, fantastic! And we’ll have those in the show notes, in any case. If anyone listening wants to check that out, feel free to check out the show notes, and the links will be there. Thank you so much for your time, Kent. Today’s been great! I really appreciate all the insights you’ve shared.

Kent Lardner 31:32
Oh, terrific. Thanks for the opportunity, Michael.