Hello and welcome to the latest edition of Australian Conveyances Settlement Day podcast. I’m Angelique Opie, your host

and property editor from Channel 7 News Sydney. Today’s topic is safe as houses and we speak to three leaders in property conveyancing and finance areas.

We have David Simon who is the executive chair and principal adviser at Integral Private Wealth with which specializes in

wealth management and investment strategy. Hello. Hello. How are you?

We also have Nat Gordon who is the founder of Proper Holic, an independent property advocate advising real estate investors. Hello Nat.

Hi. How are you?

Good. We also have David Winning who is a licensed conveyancer and founder of your move conveyancing which has around 20 staff and three officers.

Thanks for having me. All right, David, we’ll begin with you. We have a conflict in the Middle East,

a fuel crisis, and the threat of a recession. How nervous are your clients right now?

Yeah, look, I think you’ve got to look at this in a few different ways, right? So, think about property as an asset.

It’s not something that you it’s not it’s not a sort of like a consumer good where like a like a you know card of milk or a loaf of bread where you sort of you know you consume it and then it’s

done. You know property is a really long game. So, you know, you’re going to see a litany of disasters, whether it’s whether it’s inflation, whether it’s,

you know, unfortunately war um you know,

or or things that sort of come out of out of the blue like like um like CO did. These things um are very difficult to plan for. But fortunately, property is a really long-term hold. And I think

what we’ve got to do is think about the the factors that drive property prices,

which is demand, right? And in Australia, we’ve got something that’s relatively I mean, not completely unique, but it’s quite rare, you know,

the makeup of the Australian property market here. So, that starts with immigration. So Australia is very much reliant on on immigration. So it’s bipartisan as well. Both parties do

support immigration. It’s a primary driver for economic growth in this country. We don’t do too much apart from um you know servicing raw materials or

or um or resources. So you know we’re not sort of value adding. So the one way we can sort of produce or you know create a level of productivity is through you know immigration just having

more people come to the country. Um that in itself you know drives growth. Um and it’s quite quite sort of it’s surprising when you think about the statistics. So

30% of people in Australia are not born here. They’re born overseas. And actually 31.5%. And if you look at Sydney for example, it’s closer to 43%.

So these are significant statistics that drive property because, you know, let’s face it, it’s a primary need. You know, it’s sort of, yeah, sure, it’s fancy,

you’re emotionally attached, but you’ve got to live in a property. You know, um hopefully most people can can afford to.

Um so, you know, so it’s a we’ve got to look at it from that point of view.

There’s really constant demand and how do you sort of supply and service that demand? And that’s a difficulty, right?

So it’s very hard to sort of you know build compliant properties that’s that sort of keeps in pace with these people that are coming into the country. So we’ve had I think almost 2 million

people just over the last couple of years that have come in. So it’s almost impossible to build property at at that that pace. The other thing is which is good for us but not so good for it

actually is good for the property market is that you know um we’ve got I think the fourth largest or fourth highest life expectancy in the world. So every Aussie is expected to live up to about

83.7 years which is long. So I think you’ve got Japan and then Korea and um I think Switzerland and we’re sort of just nestled after that. So again that sort

of puts a lot of pressure on property because it means we’re living in properties for longer and that sort of help that’s really um you know hinging the um inhibiting the the next generation that sort of to come in. So,

you know, whether we buy property today or not, I think you’ve got these driving factors that, you know, are really unequivocally um, you know, a burden for

the property market in a sense that it really does sort of act as a barrier for people to enter, but it’s really good for people that are that are currently owning property. Yeah.

What do you both think about those driving factors and how they’ve influenced the property market up until now? And also the state that we’re in,

how is that influencing the property market given there’s so much uncertainty right around the globe right now? The uncertainty around the globe is a factor

for the domestic market obviously. Um I mean it’s driving inflation, interest rates. Consumers are concerned in the

market. Um it’s it’s a natural it’s a natural thing when when there’s economic uncertainty as David mentioned but

obviously you know we look at how consumers can benefit from market conditions and obviously there are

pockets that are more affordable. Uh so there are areas where consumers can benefit and obviously we look for

affordable pockets. We look for um options for people to upgrade properties and really benefit from times when the

property market might be less affordable.

Yeah. So, do you think property is still a great investment and whereabouts are those areas that you’ve mentioned that

might be really good to buy into right now? Well, I mean it’s specific to the individual and obviously we look at things on a case-by case basis, but you

know certainly people with the impact of co are working less from the office and more from home. So we have people who

are able to decentralize from the major cities or in fact relocate into other cities. So, you know, we’re seeing people move into um other major cities

like Canra and Melbourne, which are more affordable than pockets like Sydney and and now obviously Southeast Queensland,

but also into the regions and you know,

we did see that big shift through co and obviously many regions are still booming um such

as Newcastle, the Central Coast, um even Wllingong. So obviously those areas are still popular for people because of the

shift from co.

Yeah, I definitely agree with that. Uh particularly during co we saw a huge volume of our clients relocating out of

Sydney primarily affordability but as you touched on also just the ease of being able to work remotely and in different locations. We uh a fair

segment of our client pool is made up of um individuals and families that are located in Sydney predominantly on you

know lower northshore northern beaches and you know they’re growing families and just we’re simply priced out when

well hang on I don’t have to be close to the city anymore. I can work remotely. I can you know have the lifestyle that

I’ve always wanted being close to the beach or whatever it might be and that doesn’t have to be in Sydney. So we saw yeah quite a quite a number of uh

particularly younger generations and growing families just pick up and relocate further north predominantly.

Yeah Newcastle is definitely one of those regions too.

You’re nodding away David. What do you think?

Yeah I agree with that. I think it’s you know it’s really um it’s quite interesting you think about the younger generation as well. So it drives a lot of efficiency as well um because you know if you are driving like if you’re

working digitally it can actually be really efficient. We’ve maintained a lot of the the co um practices in terms of working from home in our office. So we still come into in the office a couple

of days a week but but largely we do are spending more time at home working from home than we are in the office and that’s also having a factor on on property prices. We see that in

commercial property in particular um where rents are not going up by that much because that’s that’s sort of the demand isn’t there and I think um but it sort of accentuates the demand for

residential property because if you are going to be working from home ideally you’re going to have more space you know if your partner is also working from home then you have to have your own sort

of private pockets and that is another driver for property markets especially in regional um areas.

Yeah. So how important is space then when looking to purchase property? Do you will recommend a house over an

apartment? um you know over a new build apartment. Can you walk us through your thoughts on the property type?

Yeah, look I guess it comes to affordability as first way. So affordability is a really big factor here but but ultimately buying property in terms of lead that’s that would be

key because land is is scarce um whereas the buildings they decay over time. So you know whereas you’ve got less exposure to land if you’re buying an apartment um and you’ve got more

exposure to the building which decays over time whereas with with um with house with land then obviously that’s appreciating due to due to the fact that it’s scarce. So as demand continues to

rise and there’s not you know you can’t build more more land obviously that price will should go up higher than or quicker than um you’ll find with an apartment. That’s generalizing and

obviously it’s due to it comes down to affordability as well. But generally speaking that’s um you know a house on land or even a townhouse or even a little it could be a stamp like a land

anything that’s that you own land that’s a big factor in play.

I mean we’re even seeing people who are buying into smaller apartment buildings with that in mind. Obviously, the land

value is higher for a smaller a smaller apartment building where you obviously have a greater lot entitlement and that’s that’s obviously it it helps

people get into the property market or move into a location that they might not otherwise be able to afford. High-rise developments are still popular

obviously. Um they have their place and obviously that that place is you know affordability but also having people in

locations that are geographically better perhaps or more more aspirational than people than would otherwise be available

for those sorts of those sorts of consumers.

So you’re not against a new build apartment?

Not per se. No. Um, but having said that, I mean, if we’re looking at maximizing your value over time,

obviously having a land holding would be more beneficial. If you’re looking at an apartment, obviously an apartment in a

smaller building would generally be more beneficial with that in mind.

How have buyers habits changed over the years with obviously budgets, but then also what they’re looking for, what they

need? People are becoming more space aware. So we’re finding people using their space more efficiently. Um so

where people are working from home, you know, they might not be able to afford the luxury of having a separate study area.

Um so you know that they’re I suppose upscaling their technology to enable them to work in a dining area or their

bedroom or other areas of the home because they might not have the space that they once did um or that traditionally they would have. So people

are becoming smarter with regards to prioritizing what they need based on simply a price per square meter.

It’s more expensive to have more property. Um if if you can’t afford it,

you just simply can’t. You have to evolve.

So David, if you had a buyer who’s looking to say a smaller apartment, what would you say to them and what tips would you give them? Well, I think sort

of speaking to Nat’s comments um around the affordability aspect um is a is a huge component. We see a lot of uh you

know, and I’m using sort of the younger generation example um here that have been brought up in you know, let’s say sort of like more affluent areas than

than what they might be able to afford themselves. and they might have growing families and, you know, if you’re in an apartment, it’s not necessarily an ideal

position to be in to, you know, have a a growing family um in a smaller apartment. So, you might be looking at areas outside of your sort of ideal

location to be able to provide the comfort and needs of a growing family.

So, I think f first and foremost, we we would be saying to our clients, so what is it that you’re actually wanting to achieve? you know, do you want to be

close to the amenities or closer to the CBD or is having a backyard important to you?

Because they’re the sorts of things that I think longer term um play like a really important part of the I suppose

like the um the lifestyle that uh you may be able to achieve as a family. So, the smaller apartments um yeah,

look, you know, we’re looking at um a whole broad range of things for our clients. uh we don’t necessarily get bogged down in terms of the financial or

investment decisions that people may you know may make. There’s a lot of things that go into the decision to invest or or buy a property and the you know the

conveyancing is one uh clogging the wheel so to speak but you know certain things that we’re looking out for. Um you know how like what are the amenities

like you know what’s the upkeep like uh you know what are the levies look like compared to uh what it is that you’re actually getting. you know, do you need

a 24-hour concierge? Do you need um seven lifts in a in an apartment block and a resort style pool? Were you actually going to use the gym? You know,

those sorts of things that um have a huge impact on the ongoing financials of uh the ownership of a property as well.

What I’ve seen in our in our sort of client base, and it’s really clear,

obviously it’s anecdotal because the the sample size is quite small. It’s just my client base, but I’ve seen large moves into different states. So rather than sort of being moved, you know, into different sort of suburbs further away,

um people are moving to Melbourne,

moving to Brisbane, moving to um you know, so I find that quite interesting because it’s quite a bold move and do you find that parents are actually following the kids which is really quite

you know quite interesting but um there’s definitely a theme there.

There’s definitely um um like I see that happening on on a regular basis and it’s um and it’s more frequent.

Yeah. And I think um employment opportunities have a have a big impact on that as well. M um affordability is a

a huge um aspect and if you’re working for you know a national or multinational organization you’re getting paid the same amount

um to live in you know say Melbourne which you know on paper is um you know more affordable than you know the likes

of Sydney. Uh so you know if you can elevate you know your lifestyle and uh be able to have um you know a growing

family in in an affluent area in Melbourne compared to that not necessarily being the case in Sydney then a lot of people will choose that option. Yeah,

but you know, you’ve also got to look at um your networks as well, you know,

particularly around uh family and um you know, I keep saying, you know, growing growing families and uh you know,

where’s the support network going to be?

Um they’re they’re really sort of long-term um decisions that need to be properly thought out before Yeah, that’s a really interesting point you make about like the support network.

You know, I grew up in Sydney Sydney.

I’ve been here my whole life and um you know the the sort of your neighbors were a big part of your your sort of fabric of your support right so and I think um

that’s fair that’s been detached to some point and so moving into state or moving different areas you’re no longer sort of held within that community that’s sort

of dialed down I see like I again it’s anecdotal but I sort of I see that happening across my client base and certainly within my own space as well. M

yeah definitely I mean having um having social media and having alternate forms of communication does help with that sense of community

for people who do relocate. Um, so that’s obviously something that we didn’t have, you know, several decades ago.

And that’s, you know, that’s enabled people to, as I said before, decentralize with less of that, um,

missing community impact.

Shifting away from sort of those family buyers to more property investors, where should they be looking at the moment?

What are the hot spots and where may the bargains be found? uh at the moment. I mean, obviously, uh David can speak more

to um investment patterns, but we’re seeing um people looking for high higher

yields as as has always been the case with investors. Less probably focus on the capital growth prospects because

obviously there’s uncertainty regarding what property values may do over the next um the next few years, particularly

with regards to the upcoming budget. But we’re looking at people um in capital cities particularly again you know

focusing on Canber and Melbourne they have much higher yields than you know the more traditional investor markets like Sydney. Having said that obviously

investors have been impacted by some of the land tax issues in those areas. Um,

so that is a consideration for for people. That has probably contributed to

um the lack of price growth in Melbourne um particularly because a lot of people have steered away from that and to some degree in in the ACT.

Having said that, the yields are in general much much higher in those areas. So it’s sort of an offset for investors.

What do you think, David?

I think it’s really interesting. And I think that the fact that um you know you’re looking at specific properties that drive you know specific outcomes I think that’s really impressive you know

so it’s it’s an example of of guy I guess um you know tying an investment to the needs of um of of your particular clients and I guess you know um I guess

if we’re looking at clients that have got you know a um a plethora of income they’ve got surplus then we probably look at an asset that would drive more growth so be more sort of land focused

and that’s a long-term play right um but I guess it comes down to like your point you know whatever whatever the sort of the opportunity is whatever the need is

you sort of align it to that. I think look, you know, looking at like the properties that have um the properties that always cost more, they tend to sort of be they cost more over time as well.

So looking at gradea properties or assets in general is always key because that’s they’re assets that have have got continued demand, they’re typically

close to amenities, they um you know, so they’re accessible, they’re close to work, um you know, universe, education facilities, um shops, you know, um

communal areas. So you know, it’s um these are sort of the aspects. So rather than sort of focusing on a particular property in a particular area because there all these micro micro markets

within the greater economy anyway. So you know really looking at the um at the at the sort of the what the oper what the offer is what are the amenities what

are the um you know what are these sort of are the future opportunities where council is investing in these are the certain areas these are the things that you know um investors should be looking

at in order to you know have value created as they own that property. Um,

one big question on the minds of a lot of investors right now and Australians is what will happen in the May budget?

How will capital gains tax changes come into effect and what impact will there be on the property market overall? What do you think is going to happen here?

Um, look, it’s hard to speculate. So, I know there’s a lot of um news out there that capital gains um concessions are going to be reduced and potentially negative gearing will be limited. Um,

look, I guess we don’t we don’t know.

We’ll be speculating. So, um, I guess look, I think there’s room for um for greater sort of look, I think at the end of the day, we have to create a market

where it’s more fair for first time buyers. You know, if you’re in an economy where you’ve got young people that are aspirational, that are educated or not, but work hard, they should be

able to buy property. That shouldn’t be a problem. So, um, the fact that it is here, it needs to be fixed.

So, um, if there’s if there’s reform and change, well, then I’m very supportive of that. so that you know we have a good foundation in the economy which definitely supports all the different

layers of the economy as well. If you’ve got a poor foundation then the economy itself won’t be strong. So we need to support um young people that that um that you know um that work hard and and

you know they should be able to buy property. So any concessions or reform that supports that well then I think we should be looking at it.

And do you think there’ll be changes to negative gearing as well?

I think there’s potential. Yes. So I think these, you know, in order to sort of level the level up theum playing field, you know, if those policies are going to are going to level it up and

make it more sort of affordable or even fair for for new entrance, then I think it should be looked at for sure.

Are your property investors feeling a bit fearful about what’s ahead?

It depends. Um, obviously there’s some talk as to whether the CGT changes will be grandfathered. Obviously people in

who are currently in the property market, if that’s the case, that won’t affect them as much. It really just depends on the investor. Um, obviously

people will still look at property as a good asset generally um, as a long-term investment particularly and and in a in an uncertain economic climate obviously

there’s less opportunities for people to invest in other assets.

So, you know, people may steer away from shares where there’s volatility or uncertainty. So, people naturally

gravitate more towards property in those times. So yes, the changes may have some impact. Um and and yes, of course,

people are naturally nervous. I mean,

this is a major proposed reform. um and particularly in respect of um negative

gearing. If those changes do come into effect, and obviously there’s there’s some discussion about what those changes might be, it it will have a very

negative effect on investors as a general rule, but maybe not as much as they might think.

And also rental supply as well, right?

That I mean, what what will that look like? Well, this is this is it’s the sort of property balance. Um,

you know, where rental supply is affected, people and and yields are high, people will look at becoming first

home buyers or or um home buyers. So,

and you know, there’s been a lot of talk, again, going back to Melbourne,

there’s been talk about how it’s cheaper to buy in Melbourne for an apartment dweller than it is to rent. And with

yields, you know, sitting around a net 6%, you can kind of see why. And that’s something that can happen as well. You

find a lot of people who were previously tenants fall out of the rental pool and become first home buyers in these sorts of markets.

Yeah. Great. And speaking of first-time home buyers, what do we think of the government incentives on offer at the moment?

Well, for a lot of our clients, um, dare I say it, they actually don’t really benefit from it. Um, particularly sort of being focused around, um, I suppose

sort of, uh, higher property price areas. um there’s not a huge opportunity for first home buyers um generally to

benefit uh from the concessions or the um or the grants that that may be available in New South Wales at least

that applies up to a million dollar purchase. Uh you get uh a certain percentage of the of the stamp duty um

taken off. So there are still some uh benefits available for first home buyers here uh in New South Wales. that is the

other jurisdictions I’m not too sure of in terms of what benefits may apply there but we yeah it’s as as a general

rule of thumb um particularly those that are looking sort of around the uh you know Sydney CBD areas and even some

regional areas they’re they’re already priced out of any of the benefits that may actually apply anyway so yeah David’s right in terms of um the

state based grants but there’s a very very recent um federal grant that’s come in it’s called the help to buy scheme or something like that help to um and it’s where the government the government the

federal government contributes 30%. So the government will actually buy 30% of the property and the assets. So so the property prices or the limits sorry in terms of where the government will step

in. They they they differ depending on whether it’s um a capital city or regional and then obviously the state.

So I’m not going to quote the but the the exact numbers but I know the city’s obviously the most is the highest and then it sort of slides down. Cities around 1.3 1.4 million something like

that but you know it’s it’s um it’s decent. It’s sort of it’s sort of roughly close to sort of the median price when you look at sort of all the different property classes whether it’s

a a unit, townhouse, um or house. So it’s I think it’s sort of nestled around that the median there. But it’s um it’s where the government contributes 30% of

the value of the property or 40% if it’s a new property. And um and what they do is so they don’t pay so the um the purchase doesn’t pay any interest to the

to the government. However, when the property is discarded or disposed of um the government then calls back their percentage. So for for instance, if you buy something for a million and the government contributes $300,000, well,

they’ll expect $600,000 returned if they sell if the owner sells it for 2 million. So they they retain the the proportion. Um, and it’s um it seems to

be quite popular as well. It’s quite innovative. Um, but the problem with with this is that it sort of it sort of rises the that entire segment. So the

real beneficiary here is the land owner um or the property owner. That’s they’re the real beneficiary because these price ranges are quite because they’re so supportive from the government. it brings a lot more sort of competition.

So, everyone gets everyone’s got access to the same benefits. So, the the net effect isn’t great. Well, it’s not completely reflective to the to the

buyer unfortunately. But still, you know, it’s quite innovative that the government’s come up with the help of buyer scheme and it’s certainly attractive for for first home buyers,

but again, it’s more of a band-aid. You know, we need something more structured and that’s where reform is required.

We’ve also seen all of those homes under the threshold for the 5% first home buyer scheme go up so much. Yeah.

Um, what do you think now? What do you think are some good incentives out there?

I don’t know that I mean, as David mentioned, I’m not really sure that any of the first home buyers incentives are

in fact helpful. Um, because as David alluded to, it bounces the property market up. It makes it much more

difficult from a price point for first home buy first home buyers to get into the market. And unfortunately that is

true of any incentives without sounding you know like a doomsdayer that is just how it goes. So obviously um you know

governmental help um in regards to um helping people get their deposits get to

a level where they can actually you know seek to purchase a property is helpful. um anything beyond that is

actually sometimes detrimental long term. Yeah, yeah, completely agree with that.

I think as you see the es and flows of the um incentives uh being extended or wound back or then applying to different

segments of the market, uh you just see that flow on effect almost from day one. Uh you know, all of a sudden, you know,

they’ve got an extra 15 $25,000 to to play with. Uh, and it goes just straight into the um the capital growth of the of

the property that they’re looking to acquire.

Completely. David, we might switch gears a little bit. How important is due diligence in the market at the moment?

We’ve really seen the pace of the property market intensify a lot. So, how is speed affecting, you know, compliance responsibility?

Yeah, I’d say it’s um the it’s a double-edged sword. you know on on the one hand uh we’ve seen you know the

increase of technology broadly being able to facilitate the transaction of real estate uh to you know a speed that

we haven’t been able to achieve previously and and that’s likely going to get better you know in the long term anyway the increase of um use of

technology and and what have you there may be some flow on benefit as well in in terms of aspects of the due diligence

in New South Wales We have a broad range of disclosure documents that owners are required to include in their contract.

Things like a title search, zoning certificate, where the sewer main lies,

things like that. But that’s pretty elementary when it comes to, you know,

what a buyer should be looking at um as part of their overall due diligence package. It doesn’t talk to the quality of the building. doesn’t talk to

particularly if you’re looking into um Estrada property you know the um underlying issues that may be uh you

know may come to cert you know to surface with um ongoing you know owners corporation and strata related issues

you know talking about new builds in particular that can uh yeah certainly rear its head you know several years after a building’s been completed um

we’ve seen you know very highprofile cases in in Sydney of um some new builds that have gone incredibly wrong.

Yeah.

Um there have been some changes in the uh building code and the government has um made some improvements in the way in

which defects can be rectified. The introduction of the the building commissioner as well I think was quite a

positive move to be able to dispute the validity of an owners uh of a occupation certificate I think that was quite a

quite a positive move. So there there are some positives that have come about with particularly with new builds in the last few years, but overall uh yeah,

that’s definitely sort of, you know, an amber flag, I suppose, that um anyone that’s looking at new builds should be,

you know, going in with their eyes wide open, the quality of the developer, the builder. actually had a funny conversation with a buyer’s agent um

probably about 12 months or so ago now and we were talking about a pretty well-known developer and I said I would you know I would

never buy a property off then it’s they’re just horrendous the quality of the builds are rubbish and they said oh well at least you know it’s going to get built

and I thought is that that shouldn’t be the baseline is that what we’ve come to you know it’s a scary thought yeah that oh well you

know you’re guaranteed at least will get built I Oh my gosh. Like, you know, when you’re buying um you know, you’re buying off the plan, you’re buying a concept,

and of course, you know, the broches are going to be very glossy and, you know,

it’s going it will look fantastic on paper, but when it comes to the actual quality of the build and and what you get as a consumer at the end of that, it it is a really big gamble.

Are buyers asking for enough reports?

And are they aware about all of the issues that could come about? I think there’s a level of naivity with buyers

um that you know that there’s always someone that’s looking after them and yes you know obviously that is the role of the um conveyancer and and other

stakeholders that might be involved in the transaction but I think that there uh should be a lot more scrutiny from

buyers. You know you you know you spend more time looking at at a car to buy it than you do um you know buying a million dollar asset. You know you take it for a

test drive. you know, you um kick the tires, you know, you take it to a mechanic and um you know, they do a once over and then a few days later you might

decide to buy it or not, you know. But with um with real estate and particularly with the fast pace of the market, um there’s almost an expectation

that you’re ready to sign a contract the the you know, the first day that you see it. So yeah, there there is definitely

room for there to be a little bit of a a push on the brakes in that respect. And that’s where people like conveyances and solicitors come into play. And you know,

for better or worse, we are sometimes seen as a little bit of a handbrake um in deals coming together. But we are really sort of the last pillar of

someone potentially making the worst decision of their lives. So it’s important that we are um softly educating buyers in that process. Uh and um you know, for one of a better term,

telling them the things that that could potentially go wrong uh before they put pen to paper.

Yeah. Do you both think there is a sentiment of needing to rush into something or a fear of missing out among some particular buyers?

There definitely has been. I mean, the market’s been very fast-paced in the last 5 years or so. Um,

the pressure has probably come off to some degree now. Um, obviously with two interest rate hikes and uncertainty in

the market generally. So obviously we’re seeing a lot more caution from buyers as a general rule but obviously having the

right team around you is critical for anybody and that will you know ease your concerns if you are looking in the market.

I mean obviously there’s the rise of buyers agents and they do obviously help buyers. They sit on their side

and you would deal with a lot of them and their role is quite critical but not everybody has a buyer agent. I mean, you know, even though there’s an argument

that, you know, 35% of properties are sold off market and they’re being sold by way of buyers agents, that doesn’t

mean that everybody wants to have a buyer agent and and has that um I suppose that additional resource and

that um that person who can assist them with the due diligence, which is obviously why the conveyance or a solicitor is so important.

I think there’s a real danger in um in thinking pricing property just goes up like every market has a cycle.

So they have up cycles, they have down cycles like every market and I think there’s there’s a real education gap there. So um you know especially sort of it tests people’s when you see property

prices grow at the rate we’ve seen in the last few years. You expect it just to continue going up and that property prices can’t fall. But that’s a dangerous sort of um concept to think

about and accept. So prices will go up and they will go down. So, it’s important for for investors not to sort of rush um and make sure their own circumstances are right and ready to go rather than sort of just, you know,

having a fear of missing out. It’s so hard and so because so tempting to to participate when you think you have the means, but you know, understanding

cycles is really important um and making sure that you’re ready and you’re fit before you do anything rather than just,

you know, having that fear of missing out. And to your point, you know, is really clear that you’ve um you know,

you’ve got to be very careful. You’ve got to get good advice all the way through. So, um you know, it may cost you money, but you know, I would be comfortable. I’ll be very confident to say you’ll get at least that return back

to you of whatever you pay because quality advice is essential you know these areas and really it’s an education piece as well especially for younger buyers where they haven’t sort of been

around for long enough to sort of experience these cycles. So, um they’re pivotal for a any successful investor to sort of sort of um go through the the um

triumphs, but also go through those those periods where you um you know, the assets, you know, reduce in value and um and be prepared to have contingency planning to make sure that you’re you’re

ready for those types of when that that that thing happens so that as you come out of it, you not only do you survive,

but you thrive, you know, and really take advantage of those opportunities that come when markets fall.

So, um yeah, like getting on ongoing quality advice is really really important.

I mean a lot of factors are pointing to that we may be in a lull over the next 6 to 12 months. So a lot of people may argue okay great this may be my time to buy. What would you say to them?

Look I think prices you know may get cheaper maybe cheaper but they could get cheaper even even more. So we saw that occur back in 2008 you know through the

GFC property prices actually did really well in Australia um in the latter part of it but the initial part say 20067 leading into eight it was really bad. So

property prices really fell. um there’s nothing to say that won’t happen again.

So um like any market, there’s always going to be good times and there’s going to be there’s not going to be great times. And that’s with any asset that’s not um not certain like cash. So

anything that’s not cash um you’re going to get different prices every day. And sort of the share market is quite transparent. So the the share market is effectively auction every day and like

you know throughout the day whereas property sort of only gets auctioned at the point where they where the lender the vendor wants to sell. So it’s not on a regular basis. But certainly if you were to price property on every single

day and have an auction, it’d be just as volatile as as shares. It’s just it’s just property prices or properties only sold at different periods of time like

longer periods where you’d expect that the assets to grow over that sort of 10 year 15 year period or whatever is the average um um sort of buyer holds their

property for before they sell it. I was just about to say whilst buyers might think that there’s a great opportunity to buy in this market and that is true

potentially it’s also important to remember that you can’t always pick the bottom of the market and and in fact very rarely can you.

People fall into that trap where they think let’s hold on let’s wait for things to get worse and

sometimes they just don’t. The property market is very volatile as you say. So you can’t simply just say we’re going to

wait for things to get worse before we jump in.

And it’s important for investors to remember that too because particularly if it is a long-term hold, the property market will almost always increase over that period.

So way.

I think the other point to make there is that a lot of the data that we receive is, you know, several months out of date. So true. you know, the market’s

already moved by the time people are reading about um es and flows in the paper.

So, you know, it really is true. You you know, picking the bottom of the market is just impossible um because the the data is just so delayed.

Yeah, absolutely. Completely. On another topic, David, AMLCTF reforms, how are they affecting your business and how do

you feel about the looming July one deadline?

It’s certainly um yeah, topic of the town. it’s coming at us like a freight train and there’s nothing that um you know we can do to prevent it. In saying

that you know from our perspective our organization uh we’re you know as ready as we can be um we have employed a consultant to help

us uh you know navigate the complexities of it. Um our uh client base is quite diverse. We have a lot of you know

clients that aren’t individuals. They might be overseas or playing through complex trust structures as well. So there’s a layer of additional due

diligence that’s going to be required particularly for those that might be you know flagged as medium to high-risisk um individuals or or corporations. It

really will change the way which conveyances have thought about their relationship with their clients as well.

I think a lot of the a lot of conveyances and and property professionals have quite an intimate relationship with their clients and the

other stakeholders that are involved in that.

And the new sort of regime will really require conveyances and other property

professionals to have some sort of level of um skepticism I suppose around who it is that they’re working with, the reason

why they might be you know acquiring an asset. uh the means that they’ve got to actually acquire it, where it’s coming from. So there there are quite a few

layers that um may need to be you you know thought about. I’d say that for the good 80 odd% of the clients that anyone

works with um it will be one or two extra questions and that’s it on top of the you know the verification of identity that everyone’s already doing

now. But for those that are working with um more complex structures or like I said overseas uh people as well it the

burden will be quite significant and the cost um as well you know the there’ll be a significant cost to actually go through the required due diligence for

each individual involved in a transaction. Yeah David you are familiar with AMLCTF.

So what would you pass on words of wisdom for David particularly around the cost side of things. Yeah, difficult with a business.

Yeah. Oh, having a process is really important. So, having a process and using technology if you can to embed it within your own CRM. So, no doubt you’ve got a a process where you’ve got all

these different steps. So, you take to a board a client or what have you. Putting that getting that part of it um getting that instilled within that process as quick as possible is really important.

That’ll manage your cost, but also ensure that you’re actually doing the work and that’ll become a habit. So, um,

you know, making sure that you you you open your process up and then wherever the wherever, um, you that fits, make sure it’s in there, and then, um, and then sort of, um, I guess, um, you know,

educate, train your staff, um, and make sure that’s sort of an ongoing basis from day one. That’ll definitely, um,

um, maintain costs as well, but also they’ll become very familiar with the process and it’ll become sort of just part of the nature as well.

I think the trick will be uh, in making it as frictionless as possible for the consumer. Yeah,

there’s likely going to be uh a scenario where consumers will have to do the same

level of anti-money laundering um counterterrorism funding due diligence um at quite a few different stages along

the way and trying to be on the front foot to enable uh that to be as frictionless as possible for the consumer will be will be key.

That’s why putting it within your process. So you definitely have to get like a current ID at all times, right?

So you have to always have a current ID for example and that’s just one part of it but making sure when you have your touch points embed that within your existing touch points because it is a

burden on on clients to sort of you know continue to be like answer questionnaires and some of some of the questionnaires are really complex. So you can maybe do that when you’re sitting down with your client and having

a sort of a review or have an update with their process with their with their overall scheme throw that in at the same time so that it um so it’s sort of not an over burden just for the just for the

the AML part sort of embedding it within the existing framework would be really really effective. Yeah, spot on.

How do you think your roles and responsibilities as a conveyancer will really amplify over the next year or so?

Well, I think if we look back over the last, you know, say 10 years, um the role of the conveyancer has changed dramatically. Uh we’ve had you know

several regimes that have been brought in by different tiers of government that have affected both buyers and sellers and and the burn of that complexity or

the requirement for the output of the regime has been you know more or less forced onto the practitioner to

maintain. I mean, if we think about um particularly sort of foreign ownership,

uh that was a big political issue, you know, 10 or 12 years ago and the government, the federal government at the time said, well, you know, we really need to get better at monitoring, you know, who uh owns property in Australia.

And so they went to FIB and said, okay,

well, you know, give us the data. And they said, well, we don’t really have the data because it requires the individual or the company to to tell us to apply for it. So they said, “Okay,

well, you know, states, you now need to tell us who are the foreign buyers that are purchasing property.” And they said,

“Well, we kind of don’t really know either.” So then they brought in a regime that required the practitioners to scrutinize their clients to uh provide declarations and what have you.

And then uh as a sort of result of that, uh the government said, “Well, hang on.

If we’re collecting all this data and we now know that there are foreign buyers purchasing these properties, we can tax them along the way. So, you know, the

yeah, foreign buyer search charge came in particularly New South Wales that had a very big effect on on industry hu it’s it’s still ongoing um for practitioners.

Conversely, on the sales side, um you know, the ATO’s got a lot uh smarter, I suppose, about how they track uh the

proceeds of sale being sent offshore before they’ve had an opportunity to tax them. So, every single owner of real

estate in Australia has to apply for a clearance certificate from the ATO to determine that they are an Australian

resident. And if you aren’t able to provide that certificate, then the buyer is now required to withhold uh a certain

percentage of the sale proceeds that goes directly to the ATO uh for the owner to then try and make a claim for

down the track when they lodge tax return. So the yeah there’s there’s levers either side and um the effect that that’s had on the practitioner and

particularly the relationship that they have with their client as well has changed a lot because you know you do find that um you are seen as somewhat of

a box ticker or like you know the the compliance person that you know is uh burdened with having to carry out um the

day-to-day regimes that have been brought in by different tiers of government.

So, would there be any sort of tips for buyers or anything that you’d like to say to potentially new clients about

your role and um what they should expect and and know about?

Yeah, I would say for a lot of our uh clients, they’re already pretty pretty savvy with this sort of thing. You know,

you go to a bank um you know that you’re going to have to provide certain levels of um identification to open up an account or do anything really um over

the counter at a bank. it won’t be that sort of dissimilar um in that respect. I think you know common pitfalls that we

see um with our clients are particularly around identification um you know those that might be have different um you know

names uh you know they might go by their married name they might have maiden name um identification that’s always a little

bit of a pitfall to get around or even um just mis mismatch of like passport um information as well. So having I I would

say getting the um identification documents ready before you know you’re starting the transaction will just

create one less hurdle down the track when it comes to doing you know certain things like complying with verification of identity and anti-money laundering and other bits and pieces along the way.

Um it’s you know if you you said to someone, oh well um because you don’t you know you don’t have a passport or you know it’s not it’s not valid um you know need to get your birth certificate.

Most people would have no idea where their birth certificate is. Um so you know the process of getting that renewed or a replacement is quite extensive.

Look I think that’s all we have time for today. We covered so much ground. Thank you all so much for chatting with me and um that was the latest edition of

Settlement Day. We hope to see you for the next episode. Bye for now.