Episode 150 | What you NEED to know about the Brisbane property market | Meighan Wells, Property Pursuit

The tell all on the Brisbane market, what is hot and what is not?
Veiled behind a strong border defence, you can come out but you can’t come in. It begs the question: what is going on with the Brisbane property market? In this episode Veronica chats shop with Meighan Wells on the state of the Brisbane market, making note of the vast structural differences to other capital cities, how the WFH movement shifted more people into the city and asking the question will Brisbane boom or fizzle out? Meighan is a buyers agent and principal of Property Pursuit and co-founded Home Buyer Academy alongside Veronica.
Here’s what we covered:

• What's happening across the border in Brisbane?

• How has the Brisbane property market performed compared to Melbourne and Sydney?

• How has the work from home movement shifted more people to Brisbane?

• Why shouldn't you ever rely on the vendor's agent and how you can be misled?

• What is driving the Brisbane property market?

• How has the repatriation of Australians altered what's currently on the market?

• Are investors buying high maintenance old Queenslanders?

• What is it like to buy property in Brisbane?

• Why you should never 'hotspot hunt' for property.

• What is the current state of the rental market in Brisbane?

• What type of property goes off at Auction?

RELEVANT EPISODES:
Episode 145 | Lucinda Hartley
Episode 143 | Martin North
Episode 132 | Mark McCrindle

GUEST LINKS:
Home Buyer Academy - Workshop

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: https://linktr.ee/veronicamorgan

Looking for a Mortgage Broker? www.wealthful.com.au
Work with Chris: hello@wealthful.com.au

Send in your questions to: questions@theelephantintheroom.com.au

EPISODE TRANSCRIPT: 
Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…
This episode was recorded in November, 2020.

Veronica Morgan: Queensland has been all, but closed off to the rest of the country for most of the past six months, but that hasn't diminished its appeal as a holiday destination, but we can't have right. And certainly hasn't stopped people wanting to move there. In today's episode, we're going to find out what's happening on the ground in the Brisbane property market. Who's buying there, how they're buying and what they're buying.

Veronica Morgan: 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 co-host of Foxtel's location, location, location, Australia, and author of auction ready.

Chris Bates: And I'm Chris Bates mortgage broker. Before we get started, I need to let you know that nothing we say on here can be taken as personal advice. We always recommend you engage in the services of a professional.

Veronica Morgan: Don't forget that you can access the transcript for this episode on the website, as well as download our free fall or podcast report, which experts can you trust to get it right? The elephant in the room.com did I? You

Veronica Morgan: I'm joined today by Megan Wells buyer's agent and principal of property pursuit, which is based in the inner Brisbane suburb of Paddington. Megan is also my home bar Academy co-founder and we've been working together over the past few months to create an online course, a mentoring program for first home buyers, which we're both very excited about. Megan also has a property management business and we'll be discussing what's happening in that space too. And I'm particularly keen to understand which segments have had the highest and lowest vacancy rates. Great to chat as always. Megan, thanks for calling me a week ago that inquiry has taken off wings, just gone through the roof, Veronica.

Meighan Wells: Um and, and I know that we're not the only ones, you know, as a buyer's agency, we're not the only one seeing this increase in buyer activity. It's a really interesting time in the market and I've probably only seen this level of inequity between the demand from buyers and the supply of property is this really unequal equation, probably four, four times in the last 17 years. Um and when we see this, this is what's really starts that upward pressure on prices.

Veronica Morgan: Yeah, because I mean, of course Brisbane didn't experience the boom that Sydney and Melbourne experienced in that sort of very famous five years between 2012, 2017. Are you sort of seeing signs that you might be poised for one?

Meighan Wells: Yeah. Look, I always say that Brisbane is a bit, if you think of, you know, use analogy of, of horses Sydney and Melbourne are like these, you know, racing, gildings that just go hell for leather for awhile. And then they break down and Brisbane's a bit more like a Claude style clubs at the Lords Long, pretty steady. It really doesn't have any of those significant apps and dramatic drops in prices like we see in Sydney and Melbourne. So there's a bit more consistency and steadiness in the mind that Brisbane grows over time. We S we tend to see these little green shoots of, could this be the next boom every now and then, but you know, something always did. The X factor always seems to come in, as Brisbane starts to heat up, you know, in February there was a huge amount of demand and there was a lot of transactions and a lot of of that green shoots of upward pressure on prices and then COVID hit. So I think what we're saying is just that pent up demand that has been unsatisfied in the period between when demand really started to take off. And now that people have had that period of time where everyone was waiting to see what was happening with jobs and the economy and where things were going to go, they've all kind of rushed back into the market.

Meighan Wells: And on top of that, we now have our beautiful Southern cousins. And as you said, have discovered the beauty of being in Queensland and that is when shot the border, keep ourselves safe and and also enjoy the sun while we're doing it. So there's a, there's this pent up demand that wasn't satisfied earlier in the year, plus this new demand that really is starting to skyrocket from Sydney and Melbourne. As people are starting to realize that they can actually work from home, which means that they don't have to have an incredibly high paying job in Brisbane, they can commute to to their jobs and work from home the other days.

Veronica Morgan: Uh well, I mean, I've been hearing anecdotally that people are keeping their Sydney based or Brisbane SRO, Melbourne based jobs, and actually moving to Brisbane and working completely remotely.

Meighan Wells: Yeah, that's what we're saying. We don't have a lot of those high paying executive level jobs up here. We don't have a lot of headquarters or internationally based organizations. And that really has been, you know, in my view that has been the major thing that has done significant growth in Brisbane house prices, because we don't get that influx of, of higher earning individuals and families and households.

Veronica Morgan: Yeah. And I mean, if you look at the investment fundamentals of a, of a location, obviously you've got to look at, you know, the employment opportunities, incomes you know, the general economics of the area, all those sort of feed into that, but also population. So I guess all those arrows are pointing in the right direction. I, that you don't, you're not geographically limited in, in order to be able to earn good incomes or being employed. So that, that is rather interesting. Is it much of a knee-jerk are you finding that people are because of course the borders are being shot and in order to know, look at a property you need to quarantine for 14 days, are people buying sight unseen?

Meighan Wells: Yes. It scares the bejesus out of me. It just, it's frightening to think that there are people who are buying and we're talking two, three, $5 million properties based on the agent's listing information and photos and video walk-throughs. Now that I'm, you know, we, we buy thought unseen for, for people on a regular basis, whether they be ex pats overseas or people in the state, but we're engaged by the buyer and we're representing their interests. And we're looking for all the issues and revealing them and making sure that the, the buyer is really, really well aware of everything that could be wrong or right with that property. But if you're relying solely on an agent to reveal all about a property, it's a really different environment in, in Brisbane. There is very little seller disclosure, and I know this makes you laugh your head off when you talk about this, but there it is.

Meighan Wells: It is, it is the ultimate Cavium tour. So the buyer has to do their investigations. There is no rely, you cannot rely at all on the seller or the agent to reveal anything about the property. And what that, what that means is you have to know what questions to ask who to ask how to interpret the information, how to dive in a little bit deeper, what effect that will have on you and the property and your livability and your potential for growth and what might be happening in the area. So if you're relying on the agent who, whose fiduciary fiduciary obligation it is to represent the seller and to sell the property for the highest price, that is their legal obligation. If you're relying on them to reveal all about a property, and you don't know what questions to ask, you are not going to know all of the information about the property and the area and the issues and the livability and the neighborhood. And what might be built behind you or beside you.

Veronica Morgan: Now, I have to say it's sort of interesting because when I was filming the show and we were buying property around the country, and I was pretty blessed, really, because I knew obviously new South Wales legislation back to front when it comes to buying property and Bryce, however, had worked, he'd operated in Queensland, also in WLAN in Victoria. So I could sort of lean on his knowledge of those areas and didn't have to worry too much. And it, it, it didn't ever seem to make sense to me. And he used to look at new South Wales and said, that doesn't make sense to me, but obviously you and I have put together this course for first home buyers, and we've gone through the difference in legislation. And I have to say, I, because you've always said this all, we don't have much disclosure, I'm the same surely can't be.

Veronica Morgan: And I have to say, when we went through that specifically on the East coast, you know, Victoria, new South Wales, new South Wales probably has the highest level of disclosure. Victoria has a fairly good level, but there's still loads that buyers do not get disclosed and do not realize that they need to know in new South Wales. And that's where the high level of disclosure, I was shocked at how little the vendor needs to disclose in Queensland. And honestly, I'm amazed anybody would buy without a buyer's agent because.

Meighan Wells: So different than need to research and unveil and do due diligence is so vastly different to buying in Sydney and Melbourne and our clients give us that feedback all the time.

Veronica Morgan: And so therefore, anyone buying from a Southern state, I mean, it's bad enough in Sydney side client, for instance, we think, well, I bought a property once or twice in my life. I know what I'm doing. And then if you're buying in the same state or the same city that you bought before, but when you apply that same sort of, I know what I'm doing to buying in Queensland, it's another planet. And just to give it, just to give an example in Victoria and new South Wales, the seller has to disclose is the thing called a title certificate or or deposited plan, right? Deposit a plan is a good example of what that is. It's not a survey. It's basically saying though, that, you know, in the, in the plan of the neighborhood, this bit of land and, and what's on it is what you're buying. You don't have to declare that in Queensland. No, it's one of the solicitor searches, which is done after the contract. Do they have to do it? Yeah. Well, the solicitor has to confirm the solicitor is required to get you to confirm that that is the piece of land that you purchased after you purchased it.

Veronica Morgan: Right. It's after you've got the contract on it. Like, what if it actually, you got to hang on a minute, no it's M square. And that one's triangle, what's the wrinkles out.

Meighan Wells: It means that the fence has, haven't been built on the boundaries and you have no recourse, no recalls. And unless you re realign the fences to the boundaries. So it's a very, very few people do survey plans when they're purchasing which means that you're aligning on the location of the fences to be accurate. And, and we all know that that's not going to be the case. And I've seen people who have, I can think of a specific example in red Hill where the neighbors had built a shed that encroached on this particular property. It wasn't one that we purchased, but I was asked for some advice from the people who were purchasing the block that had the encroachment on it. So I shared was built on a and the fence line was then run behind the shift. So the block that these people were purchasing, there was actually another about 80 centimeters by 40 meters 

Meighan Wells: That the fence needed to be moved over, but the shed was there. So there was this whole class or around, you know, relocating the shed and realigning the boundaries and getting the survey done, all that sort of stuff. But they only found that out after they purchased and they went to put a pool in. Oh, wow. Yeah. So, and it could go the other way too. It could be that you have a piece of a already improvement or a shared, or a part of the house of the carport that encroaches on the neighbor's house. And you would have to make good or remedy that if someone was to buy and do a survey. So it's, it's quite alarming. I mean, that, that is a risk in new South Wales too, but certainly not to that greater extent. So, so that sort of speaks to this idea of buying side-on st.

Veronica Morgan: Purely on the basis of what the agents, the sales agent is telling you. And also, you know, I've spoken to not recourse.

Meighan Wells: If there is miss Rosette misrepresented property. So if you ask specific questions and they know the answer and they haven't given you all the answers available to them, the owner has told them, and they don't reveal that to your specific question. That's misleading. However, if you don't ask the question.

Veronica Morgan: And also how do you prove that they knew it anyway? I mean, like, so it's, it's a difficult path to go down, but yeah, absolutely. It's about knowing the questions to ask and most buyers just don't know what they don't know. So how would they know and what are they going to do with the answer, Oh God, sorry, had an interpreter. And it's mortifying to think of people spending millions of dollars on property.

Meighan Wells: We ha having someone independent, look at it,

Veronica Morgan: Obviously with little supply and increased demand, as you said, it's upward pressure on houses, but I'm presuming this is not across the board. I, I, I mean, the unit market is moving back quite yet.

Meighan Wells: Yeah. Units. Yeah. We know that there's still a strong supply there. And you know, that that's typically the product of interstate investors and first time buyers because of the affordability factor. So, so that demand is probably really being driven only by first home buyers and the apartment market at the moment. So there, there is downward pressure on there's certainly no upward pressure because there's not multiple offers and multiple people competing for apartments. So, you know, there's potentially what could on the surface look like good buying opportunities at the moment, but a good price on a bad property still is not a good investment. There's no bargains on bad properties, what you pay for it in the future.

Veronica Morgan: Well, that's yeah, bargains is a whole issue there at the COVID cliff that everybody's talking about. And I would suspect well because I mean, that's fair. I haven't been in Brisbane for a while. Nobody has, if you don't live there. But what, how many, four, we are free to do what we want. Stop it for how many, how many cranes in the Sky though?

Meighan Wells: There's really not many at the moment. And it's interesting you say that because you remember it's the Joe in the the Joe, when he was at your house, the economy, he used to look out the window and count the crime, pretty good his analysis, but there are many crimes in the sky at the moment and certainly not a large amount. So a number of approved complexes have been shelved. But those approvers still sit there. So at some point in time, they may come to the market and continue to do and supply to the market.

Veronica Morgan: Yeah. So I guess you know, from a property point of view, less cranes is a good thing. But not for the economy potentially.

Meighan Wells: Well, there's other stimulus for infrastructure projects that is probably soaking up some of that construction industry supply now.

Veronica Morgan: If you're getting, you know, increased demand from interstate and it's presuming owner occupies on investors, we would normally run in, in property pursuit.

Meighan Wells: Our client base normally runs around 45% investor, 55% owner occupied at the moment. We're sitting at 85% owner occupied. Yeah. The same number of clients that we would normally work with, but they're, they're just the investors just, aren't strong in the market at the moment.

Veronica Morgan: Yeah. And it's pretty much the same in my business as well. I mean interestingly enough, in my business, the investors that I've got pretty much all cash buyers. So, you know, it's just interesting to see. I've never seen so much cash wanting property. If you get my drift, it's an interesting change. So interesting. So the or is it just this saying an opportunity to, it's the best combination this everyone has a different you know, I've got one, one client that absolutely is sold out of shares. He's decided to do that.

Veronica Morgan: I think he was being a bit cynical and said, right, well, look, the share market's full of newbies. And I think I might just time to time to shift into something that he perceived as being safer. And obviously if you're going to do that, it has to be good quality property. Otherwise you can go from one volatile situation to another. Yeah. But what I'm interested though is, is from out of town is, I mean, we did the summary of trends episode. We, we interviewed Kent loud and a fall for Tober. And we talked about a suburb sort of in Brisbane on the outskirts of bismuth called Wentworth point. Right.

Veronica Morgan: Have you ever heard of, sorry, Wellington, Wellington, you make notes of it, right. I don't know this is way out of your area, but you know, the ID that Kent was looking at it as being potentially on the, on the cusp of maybe price because inventory is very, very low and actual, there's not a lot of rental. There's not a lot of days on market for rental properties there. So these sort of factors, a bit of a pre predictive indicator for price growth. So we were talking about that. It's a fair way out of town. And I wonder what Sydney siders and Melbourne is, look at a place like that and say, Oh man, that's fantastic. I would love to live there where a Brisbane may not particularly value a place like that. I mean, how, that's a good observation, what happens?

Meighan Wells: The housing style out in those areas like Thornlands and Wellington point, it, it appeals to southerners because they're their newest dollar property. So largely brick and tile, whereas closer to the city, it's much more traditional Queensland or timber and tin. So, so those sorts of areas appeal because the housing staff feels very familiar. They understand it and they can apply their, their Southern thinking to those types of properties. But also it looks on paper to be close to the city, comparative to Sydney and Melbourne. So when you're thinking about a commute, you know, maybe 50, 55 minutes in peak hour from there to the city, that's not a big deal if you're going to be on the base side. And the suburbs that we're talking about are on the buy side. That again, appeals because, Oh, wow, we can, we can be on the beach, close to this, not too far from the city.

Meighan Wells: The commute is not going to be that bad, but these are beaches in Brisbane because we have Morton Island that sits off the coastline that stops the sand and the waves coming in. So it is, it is a buy and it is largely mud flats, not sand. So, so what, what constitutes Bayside living in Brisbane is not what you and I would consider to be bedside living or even being on the river. It's not as attractive. So even up through Sean cliff and red cliff going North again only maybe a 50, 55 minute commute into the CBD during peak hour there is a bit more of a Sandy beach along there starting to get a little bit, not wave activity, but there's a bit in the sand. They're nice areas. And, and when we have this influx from the Southern States, often the prices in those areas have a spike and that spike is as people come in, I think this is bargained territory here.

Meighan Wells: And I purchased and they get in there. And six months later, they are pulling their hair out. The commute is horrific. Halal, just, and I end up saying, I can't live out here anymore. The attractiveness isn't outweighing the commute and, and not being around people like us because they're generally not your higher income type suburbs. And I sell a movie in and, and that, that rapid turnover often then brings the price grows back. So they have a little bit of a spark as demand is there, but then things come back because all the supply comes back on after people realized that's not really where they want to live at all.

Veronica Morgan: And this is the important thing, obviously about local knowledge. And I've banged on about this for many years. If you are going to make a major change, your tree change, see change or interstate change, you know, going live in the place and find out really if you had that local knowledge where you'd really want to live, because it might not be the same as you know, you think it is. And, and so the problem though, that leads into another problem, and that is a sort of high-level rentals are pretty few and far between right at the moment.

Meighan Wells: Absolutely. And a big part of it is that we've seen a massive repatriation of Australians from who were working overseas, who have moved back to Australia and have moved back into their own homes. So a lot of executive level rentals are not investment properties. They are homes that people have retained while they work and live somewhere else for a period of time. And they may have had a much longer term view of how long they'd be away from the property, but with everything that's gone on. And a lot of people returning to Australia to where the jobs have been affected, or they just simply want to get back to the safety of really one of the most amazing countries in the world that those executive rentals have largely left the property market.

Meighan Wells: And we've certainly seen it you know, in that thousand dollars a week pass range, a lot of those people moved back into their homes now, will they go and work overseas again? I think that, you know, if you're that way inclined and that's where your work is, and that's where you can maximize your income earning capacity for a period of time that that may return, but it's going to be a long time before we see those executive rentals come back onto the rental market. Yeah, it's interesting.

Veronica Morgan: And to Alyssa degree, I've sort of heard this similar story and anecdotally in Sydney that, you know, some of that, that level of rental property is being taken out of the market. So it does make it more challenging for people looking for a family home if they are renting. Yeah. And like generally speaking in the rental market, what are vacancies doing? I mean, because obviously there's a lot of talk or certainly in the CBD in Sydney, for instance, if I can see rights going through the roof units, there's a lot Of stock Airbnb stock, the overseas students, all that sort of stuff is sort of drivers impacting the Brisbane properly the rental market.

Meighan Wells: I think there's a couple of different sub markets and let's separate them out apartments. Yeah, they're doing okay. There's, there's still a lot of supply. As you say, the students, the international students, aren't here at the moment, so there's not a lot of demand for those more entry level apartments. I'm going to say entry level, maybe up to 400, $450 a week. So vacancy on those we don't manage a lot of those ourselves, but when I look at the supply, that's on real estate.com, you've got a bit to choose from. So there's not a lot of upward pressure on, on rentals in the apartment market, but when you move into the inner, and when I say, you know, let's talk 10 Ks from the 12 K's from the CBD, that's sort of your inner middle houses in that location we have found, and I'm talking quality versus rubbish.

Meighan Wells: We've been seeing multiple events, seeing large numbers of inspections, multiple applications, and offers above asking price, people, trying to secure properties. And what tenants are telling us is that they have so little choice at the moment that they will tie anything. That's good. They're prepared to put money on the line to secure it. Now in Queensland, it is illegal to conduct any kind of upward negotiation from a, from an asking price. And you certainly can't put people directly in competition with each other, but there's nothing to stop a person from offering more than the asking price, if they want to secure a rental. And that's what we're seeing in the market at the moment. So our properties that we're managing, which they're all investment grade properties and all properties that we've purchased on behalf of the people we're having no vacancies. So there's no time in between when one tenant moves out or the next one moves in with very few exceptions. There are a couple where prices, price might be a little bit of an issue. And in most cases where either getting the same range or an increasing range from what has been, you know, from 12 months ago when the last tenants moved in, so good property, well located know just all the fundamentals again, good property, well located, good facilities around it. Well-Maintained those are the ones that people are really putting themselves on the line to secure.

Veronica Morgan: Interesting. I mean, certainly there's, there's downward pressure on rents in Sydney still, you know, the sort of the more popular price bracket shall we say, but given that the stock, so, you know, the Queensland has stock, right? So a lot of weather board and tin, as you say, would you say timber team and maintenance is, is obviously an issue for those sorts of proper maintenance. Let's face it. If you have a house maintenance, an issue It's part of home ownership, Particularly with timber and tin, you know, there's a perception whether it's true or not that you have to be extra vigilant obviously regarding pests. And do you find though that that is the sort of stock that investors typically like to buy when they're sitting in for getting, you know, a lot of investors like to buy and not worry too much about it, you know, is, is that really the sort of stock that you are recommending to an investor at a bar?

Meighan Wells: Absolutely. Because if an investor is coming to us with a capital growth strategy, and usually that strategy is set in consultation with their financial advisor and we, we help select, we select the asset, but the strategy itself is set by their advisor as part of their overall goals and plans. And if capital growth is the strategy and that that's you know, we have a high yield in Brisbane is about 3.6% currently, which a lot of parents that are neutral from the income perspective after costs, which is, you know, we haven't seen that for decades. But if they're coming with a capital growth strategy, then the properties that are in most demand from owner-occupiers. So your future buyer being preferred, preferably an owner, occupied, not an investor are the renting character houses well located, good piece of land, nice aspect, good layout, functional flow those investment fundraisers, 36 investment fundamentals that apply to Brisbane uniquely.

Meighan Wells: It is generally a timber and tin house. Now the exception to that is perhaps where there's been a big block of land, you know, an 810 square meter block of land that has been split into two and a modern award, you know, mostly brick or more contemporary sort of style house that is still timeless and has all of the right attributes from a, an individual property point of view. If we can find one of those in a well-established character area, then those properties tend to perform quite well as well. They're quite good for investors because there is a lot of maintenance equation. The yield is quite good. Generally you get a slightly better return on the mobile places. And they have, you know, everything's in the right place. Queenslanders, everything's kind of not in the right place, quirkiness and you know, their own unique personalities and, and, and people just accept it. That's just how it is. But that, that would be the exception. So if, if growth is the strategy, then often to buy in, in low density character areas, you're going to mostly find a character. Queensland might have different teams

Veronica Morgan: On that. I mean, so many, it was so much of what has driven some of the parts of Brisbane property market. Recent years has been this idea of affordable investment and indefinitely a push from a lot of dare. I say it buyer's agents buying in Southeast Queensland in particular parts of Southeast Queensland. And of course, Brisbane, urban sprawl is getting water and water, isn't it. And there doesn't seem to be any shortage of land. You know, the Brisbane pretty much joined the gold coast, isn't it?

Meighan Wells: So there are tracks that are still to be released, but then lot of them are actually owned by some of the bigger developers. So, you know, those are going to be developed and released at some point in the next 50 years. And 50 years sounds like a long time, but you know, it's really, it's really not. If you have a continuous release of property, then that supplier's always going to affect your property. If you're in an area that's close to a Greenfield site,

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Veronica Morgan: And the podcast we talk about, you know, scarcity, we talk about avoiding over development and, you know, we talk about Melbourne being a hundred Ks wide and Sydney just continue to just ridiculous. Yeah. Yeah. It's just, it goes on and on our own. And, and, and obviously Sydney's, you know, push further West and put for the Southwest and Northwest. You know, we've, we've talked about Brisbane and Logan and then pushing out towards the sunshine coast and, and this idea of, you know, these, that all these areas have got to go well, because of all this building. And yet, you know, there's been whole areas where there's been nothing happening or a negative growth for the last decade. So I guess the fundamentals are exactly the same in Brisbane as they are elsewhere. And the idea that there are two or three or four or five or six speed markets, and I'm interested from your point of view that, you know, where do you see? I mean, and also Brisbane has a river that sort of snakes around so I can meet in a Sydney and in the Melbourne, but I can easily visualize in a Brisbane. So those sort of blue chip areas mean how do you, how do you determine blah, blah. My head just gets up in Watts, looking at Sydney easy. We're going to CBD in a Harbor, running through it as easy

Meighan Wells: People who are born in Brisbane have this real thing about whether they're a North side or a South side. There's only a couple of places that you can cross the river. Honestly, it's very, if you were born on the North side and it's funny because I was, I was born in new South Wales. So I, I live on the North side. I have lived in the South side in the past. But to your question, there are 189 mainland suburbs in the Brisbane local government area and what we've done over time. And we continue to collect, evaluate and raise. This is we look at every one of those suburbs, at least annually, if not more, depending on what new projects are announced and what's happening with infrastructure and so forth. And we assess each of those suburbs against our high level criteria. So around macro level criteria, and there are currently 88 suburbs that we will purchase in, but have investment grade whether it be around the demographics, the transport, the facilities, the density, the zoning all of those sorts of things come into that higher level assessments.

Meighan Wells: So all those ADA suburbs we've then matrix different property types. So whether it's a freehold house, the townhouse or unit and assessed in those each of those suburbs, what would we buy? And in what price ranges would we buy? Now, I'll give you just an example. A Stafford is a suburb that's about seven, six, seven, seven kilometers. It is a lower income area, a lot of its housing commission sell properties there. So very simple properties. It has a reasonably low median house price that is suburb that up to about $600,000. We would consider I freehold house there, but we certainly wouldn't invest $800,000 in that summit. So what's that suburb makes it onto the matrix. It is only in a specific price range that we would purchase in that suburb. Whereas if we were to purchase something in Clayfield we might happily spend up to 1.5, 1.8 million in, in Clearfield for an investor. So it's very specific in terms of how we have assessed and choose and, and have matrix the different suburbs. And that's our guide when we're talking to investors.

Veronica Morgan: And so in that light say, looking at, say, Stafford and you've got a price cap. So I guess, so you've got you talk to clients that have only a budget of 600 or 650,000 for instance, and say, well, this is one of your options. What, what is in a suburb where those Sort of demographic characteristics, what, what is it are you sort of pitching for, will ultimately given its proximity to the system, to the city, ultimately you know, the process will rise because of gentrification because of this, because of that. Is that what you're sort of pitching it at? Or are you pitching it?

Meighan Wells: Yeah, very much so. So, so often people, you know, you and I talk about the three pays position, property price. So people come to us with a fixed budget and whether that's a bank imposed limit on their borrowing capacity, or that is simply what they've allocated to that particular strategy there in their investment portfolio. So if they come to us and say, look, I've got about six 50 to spend, there might be eight, Oh no, actually there's probably only about four, four or five suburbs that we would buy a freehold house, or you can buy for your whole house and investment quality in Brisbane. So we then talk to them about those, those suburbs and what, what we're seeing in those suburbs and why some other suburbs aren't in the mix is that older houses. So I said, there's a lot of ex housing commission Stafford in Brisbane, housing commission is dispersed all the way through.

Meighan Wells: There was, there was not particular suburbs that were identified as as having a higher density of housing commission, except staff. So staff, it was one off Stephanie compare out to suburbs where there was a high percentage of housing commission, but the habit of hasn't has changed their strategy in the last 10 years, 10 or 12 years. And they're now much, they're now selling off some of the freehold houses in order to create and get money to develop more apartments in diverse locations. So when Corrina is another one, so there's a number of locations that we identified a while ago and those public houses are being sold, private investors and homeowners. And those probably this isn't homeowners are gentrifying and improving and extending and increasing the value of properties in the area. So that's why there's just two examples of a dramatic change that is happening over time and has continued to happen. And that's why we put a price on how much we would pay in those areas. So it is a capital growth strategy in, in those areas for those reasons. So the JJ dislodged gentrification, it's interesting,

Veronica Morgan: You know, cause gentrification is slow and, and this is the thing that a lot of people don't realize that when they really see strong evidence of it, it's, it's been in the wings often for a decade or so before then, you know, and they're the people that have made that they've been around and, and made that, that sort of commitment, I guess, into that market. And potentially when there's that big upswing, cause there's usually a point at which there's this quick upswing and, and then their levels off again, you know, and it's people in it for that, but you have to be in it for a long time to be there ready and waiting because you never know exactly when it's going to kick off. I know Emeric Phil in Sydney. Oh God. You know, I sort of looked at that. And I think that took about 20 years before that upswing, you know, sold twice over in that time three times.

Meighan Wells: So if you're too early, you're going to exit and if you're too late, then you've missed out on the growth. But as long as the grass is still there, so you don't really want to be on the back of the massive increase, but maybe it's then when it's starting to and you, and I hate hotspots height, hotspotting like the concept of it because you often have a really big peak. And then if the fundamentals aren't there, it just drops off again. Well, yeah,

Veronica Morgan: Particularly if, if of course the hotspot is just fueled by speculation from investors and it's like, it's actually, it's like a Ponzi scheme. It's, it's, They're Actually feeding them, you know, the frenzy and it's like, there's no actual substance to it. And that's a massive danger with hotspot.

Meighan Wells: Thanks. And then the demand drops off because that hotspot isn't hot anymore. Then the degree of decrease in prices and, and there's no one there to pick up the pieces.

Veronica Morgan: Yes. And also, I mean, this is a thing too, is this is the hotspotting makes a little bit of a, I dunno, it's a bit of a mockery of buying property because of course property is a long-term play and hotspotting is thinking with very short term view. And so it's like, there's an element of luck with timing and it's, there's no luck if you buy a good asset, you know, so,

Meighan Wells: And you know, sometimes it's just bloody boring isn't property, nothing that I can sprout about at the barbecue I invested in this area. That's so up and coming we'll know, sometimes it's just boring. It's good character. It's good layout. It's good location. It's quality, diet, quality, boring, but you know what, long-term, you'll outperform if you get all of those things.

Veronica Morgan: That's right. And how boring is that? I love that sort of boredom, you know?

Meighan Wells: Yes. We don't have a new, exciting strategy, fundamentals and quality.

Veronica Morgan: And so then sort of back to you, you, your comment earlier about sort of capital growth strategy. I mean, obviously I bang on about this and you know, I know that you obviously agree, so they've, well, we're not going to wax lyrical about the benefits of capital growth, but it's sort of interesting. You sort of said that idea of, you know, People can still cap whatever they might want to spend on an investment, but they've got a capital growth investment strategy. And I guess the problem is then often people are choosing their budget arbitrarily without fully understanding implications or buying sort of capping it at 600 or 800 or a million or whatever it is that they cap it at the standing that if you do buy in a lower price bracket and you can't buy an A-grade area, you can't buy an Agra property as consequence of that, then fundamentally yes. You know, you might still get some good growth, but you are losing an opportunity for better growth. If you actually looked at the asset first before you set your budget.

Meighan Wells: Yeah. I think that's a good point. And certainly when we're doing a property strategy with investors is very much about making sure that we open their minds first. So I talk about in different price ranges, different properties, how they're performed, what sort of demographic, you know, someone comes to us and says, I've got $600,000 budget, and I want an executive family to renters. There's a disconnect between their thoughts and reality. So there's this big conversation and we, and we have hard conversations with people all the time, but there's a big conversation that needs to be had about how you match your expectations of who your tenant might be. And what the drivers of growth and attracted us to that kind of person. And, you know, probably shouldn't be bought to choose a tenant or to have a certain type of tenant. But the, the conversations in the property strategy meeting are very much about this is this is where your budget sits. These are other types of areas where someone's comes to us and says, look, I really want to buy and Cooper route. And I know there's a lot going on with the, the the bus, why go through past there eventually, and that's going to improve transport to the city. It's been gentrified heavily. There's only a certain area that has the higher density. And then there's some other character areas and like everything. And, you know, there's five different areas of Cooper road.

Meighan Wells: If someone came to us and said, I've got, I've got seven, six 50 to 700 to spending Cooper, Ooh, you are going to buy a B grade asset in that suburb. So there needs to be a realignment. You either need to be around eight 50 to get a good quality investment there, or we need to be looking at another area if you can't do that. So it's really important for people not to get set in their own minds without local knowledge and without the understanding of the implications of choosing a suburb and a price range at the same time. And, and not really understanding what they can and can't get for that, that process and that stuff.

Veronica Morgan: Yeah. And you already touched on it too, particularly if these investors are coming from interstate, there's that idea of what they think is valuable in property versus what actually is, you know, the local Brisbane is going to value. I'm wondering too, how many to

Meighan Wells: Buy In. We've got to keep the eye on that future buyer demand because that's where that capital for growth innovation comes from.

Veronica Morgan: Yeah, absolutely. And so in the unit space, I mean, there's been a few conversations with about Brisbane over the years with various people up there saying that, you know, the down there's a, there is a downsizer market, there is a market. So the larger apartments, you know, three beds, three bedrooms and, and more is that still the case? Are you seeing families that, you know, particularly maybe tenants as well, if they're priced out, if they can't find a house to rent, would you know, is there a, is there a becoming an appreciation for a larger apartment in water across wider demographics?

Meighan Wells: Yeah, it's a good point because when we talk apartments often, what we're referring to is the two bed, two bath cookie cutter type apartment. But, but what you're talking about there is more of either downsizing kids have left or maybe they come back here regularly, but you know, people don't want to have these big yards look after the pool and so forth. They want to be able to lock up and leave and we will holiday again, although in Queensland we can go anywhere. But there, there is a, there is a strong market for three, four bedroom apartments, good size, good layouts, and in lifestyle precincts. So those, those properties are bucking the trend. They are in high demand and the prices are strong. And they do have the kind of fundamentals stand them apart from the cookie cutter kind of cousins that we would expect to see. And, you know, the proof will be in the pudding because this kind of property isn't really prevalent in Brisbane. It's just starting to become a bit more sought after. But in around those lifestyle precincts, maybe with a river view or a sea view, not necessarily right in the city those properties, we certainly see good demand for, and those prices are holding quite well.

Veronica Morgan: Yeah, it is interesting because I think that the developers is the quick and dirty turnaround is, is really pitching it to investors with negative gearing and first home buyers with all the grants

Meighan Wells: Heavily encouraged into those new products with the grants and the way that they're structured. Yeah.

Veronica Morgan: Modifying really it's an alarming and you and I both done quite a lot of research in that area, which is one of the reasons why we've launching home first, your first home buyer guide. But but you know, it's my personal vision, basically the buyers shun that stuff, you know, and they actually put, put pressure on developers to build more of the staff and design more of the the apartments that are actually got, you know, they've got more space and got better amenity, right? That's my vision,

Meighan Wells: You know, that, that, that, that beautiful feeling of space and light that comes higher ceilings, and that costs more money for the developer to do that. And they get less yield in terms of number of apartments, but it can absolutely return a good price. You know, it increased in value by having high ceilings, good size rooms, lots of storage, a better parking two rather than one. And side-by-side rather than tandems. So all of these little things make a big difference to a downsize when they're assessing the livability and the Moss style aspects of, of an apartment.

Veronica Morgan: I think the main problem there is that the real person that benefits from that sort of apartment is the person living in it. And then ultimately when they go to sell the developer, unfortunately has, has been able to you know, maximize or make more money by carving up into smaller spaces. And hopefully that, you know, that that whole pressure will change particularly with less investors in the market. But anyway, well, that's a term hope.

Meighan Wells: There's some beautiful, beautiful, architecturally, interesting complexes being built. Yeah. Smaller scale. So often maybe on the river around Nufarm full floor apartments with with reviews can command, you know, between four and $6 million. That's a lot for an apartment in Brisbane, but there is demand there for it.

Veronica Morgan: Well, it's a lot for apartments Sydney too, just for that. But interestingly enough, I'm, you know, I'm look when I looked at a full floor apartment in a building in sort of on the edge of the city near sari Hills the other day, and this is it, it was bought off the plan. It was an amalgamation of three apartments and it's the most terrible realization of, you know, so they basically bought it before it was feed it out. So they had opportunity to design it and organize those rooms and the ways that they could've done so much better job than what they did in bedrooms, orientated towards the big terrorists, rather than living it. I mean, it's all wrong and you think, Oh my God, other than the penthouse, it's the only full floor apartment in this building. It's such a missed opportunity to do something interesting with it. It's like, Oh really? Oh, no. But yeah, I mean, they're rare here too. There, there, there's not enough of the main built, but you know, I think it's a, they've gotta be built, but they've gotta be built well, and that they've got to be designed well, and they've got to have a nice outlook and, and all those things. Yes. Now, do you have a property Dumbo for us?

Meighan Wells: Well, what's interesting. In the current market, we are certainly seeing upward pressure on quality properties. I mentioned that earlier, and we do have we did experience for a client an attempt at doing something that he really shouldn't have done. And it had a really awful ramifications. So at the moment, and how we keep control of rapidly rising prices is we keep a register of properties that are sale. We do a data analysis on what we believe that property is worth based on previous comparable sales. So that being the comfortable sales methodology of working out what a property is worth in the current market and, and we record that, and then we record the actual sales price that helps us. And this is not just properties. We're purchasing that. We're doing this across the marketplace. That gives us real time data.

Meighan Wells: So we're not waiting for, for settlement and registration of information on, on court call logic. We're actually real timing it. So that gives us a real indication of what's actually happening with prices. And when we see an increase and consistent increase, not just, one-off not just occasionally, but, you know, consistently, if we are saying, Ooh, that went for a bit more than I thought, then we often find when we're recording this information on the, on the spreadsheet that we use, we're starting to see a pattern of what people are prepared to pay as a premium, to secure properties in the current market. And what we're seeing at the moment is a pretty consistent story of price increases. So we found this, this property we did the data analysis on it that said it was around the five, a 2.5, 2.57 ish sort of range.

Meighan Wells: So that, that was a lovely house, a good piece of land, a great location, family home suited the client really quite well. So moving into the negotiation, we talked to them about this data that we've been collected and why we believed that the property would probably end up selling for around 2.6. And that's where we believed the offer should be. And, and as a buyer's agent, you know, our jobs Ronica, we advise that the client decides that we can give them all the information under the sun. But at the end of the day, they, they make that decision as to whether they're buying and what price. So this, this particular family decided that because the data said that it was around 2.5, seven five, and they want it to be intelligent purchases of property. They wanted to buy it for less than someone else might pay.

Meighan Wells: So the offer was quite five, two. So remember data's two by far five by seven put in the offer they'll cash buyers. So cash is, is quite a strong position to be in a negotiation. It was a multiple offer. So it can to be quite sharp. You can make offers that are subject to conditions in Queensland. It's a very regular part of the process to be, to make a conditional offer. But in this case, they made an offer that was not subject to finance, but just subject to billing and pest. And that's very, very common and very few people will buy without that clause. So, so the offer goes in at 2.52, I think it was and there were four other offers and it sold for 2.6, Oh, exactly where our analysis of price movement would indicate that it would sell. And that was a moment that will rock to their core, that they didn't get that property because they really legitimately believed that their offer was based on cash.

Meighan Wells: The cash component was going to get them secure than the property, but all of the other offers offers to a cash as well. So just like what you're thinking, there are a lot of cash buyers around at the moment. So you can't rely on that advantage. You still have to pay the price that the property is worth in the current market. And they are still kicking themselves and shaking their heads because they could afford to pay 2.6 and were advised to pay 2.6 and they chose a different route. And, you know, that's just in the current market thinking that you can buy a bargain where there's lack of stock and a lot of other buyers competing with you that isn't Dumbo position to take.

Veronica Morgan: Yeah, it's sad, isn't it? Because the thing is that it's a lot of money and obviously having cash, you know, you, a lot of people think that this, this has got to give me some sort of advantage

Meighan Wells: Are the markets. It would,

Veronica Morgan: But sometimes I've been, I mean, I find that too people say to me, but I'm a cash buyer. And I said, yeah, but the thing is, if somebody else has actually got their finance in place and they've got good enough equity, they're not sailing close to the wind. You know, in terms of the LVR effectively, they're a cash buyer to the fund. You can settle in two weeks. That might make a difference if someone's really under the pump, but generally speaking, it doesn't really, nobody needs to settle in a shorter period of time than say for four to six weeks is pretty normal. And so the actual advantage of having cash isn't there. So it's really sad for them to think, well, I've got myself in a situation isn't, you know, I want to make ch in an advantage, but you sort of fighting alone war, aren't you? I mean, you're wedging,

Meighan Wells: They're in the same sort of position, but I mean, that goes to, that goes to negotiation strategy as well. Doesn't it? This is a whole other topic, but understanding your seller's motivations can, can have such a powerful impact on you. If you're in a, in a multiple offer situation and you can meet the sellers needs in a way that isn't increasing money. And that might be not, might be settling in four weeks, but letting them rent back for two months until their property is ready to move in, or it might be, you know, there are all sorts of other things other than cash that a seller might actually find more attractive.

Veronica Morgan: Yes. But sometimes, and quite often they don't, you know what I mean? So it has to be asked, this is you and I both talk about this in the course as well. It's like, you know, there's the, the good questions to ask and, and buyers so often will ask, Oh, why is this, why are they selling? And then they think, Oh, what am I going to do with the information when the agent says, Oh, just to move back to be closer to family. Oh, that doesn't help. You know, there's no where to go with it, but then asking that question, well, what's their ideal settlement date. That's actually really telling there's so much else that comes with that answer. You know,

Veronica Morgan: That's just such an interesting,

Veronica Morgan: Well, you need, in fact on that, normally we do the bootcamp and that's after you hang up. And, and Chris and I do the bootcamp together, but since Chris is, he's actually on holidays, by the way, he's got out of Sydney, he's in the bar in hinterland, how's this for weed though. I went away in the beginning of September. I think I smashed a, stuck it on Facebook where I was staying and he's come back and said, get this. I'm saying Zach, at the same place in October, that's was really weird. So it's a bit sort of odd, but so I know exactly where he is and it's lovely up there.

Veronica Morgan: The bootcamp. And so this is basically, you know, we want to make you a better elephant rider. So this week's elephant rider bootcamp. And I think what we should do, I'm just hitting you with it here. Megan, let's quickly, let's quickly run through the three P's because you and I run a workshop periodically which is the in fact, we're going to do one at the end of November. When are we releasing this? Yeah, actually what I'll do is, is, is I'll put the link in the show notes for the workshop, because basically by the time we launched, this is actually really thinking off the top of my head here and not plan. We will be running away to buy workshop and the where to buy workshop is around. It's not about giving people that you know, the, the top 10 suburbs to buy in, it's about taking you through this three-peat process that helps you understand where you need to be buying, because it's a complex triumvirate of of decision-making right, that you've got to, if you don't have the budget, right. If you don't have the property type, right, you can't possibly determine where you need to buy. So let's just quickly run through what those three P's are. Shall we let's do that? Do you want to stop? So we mentioned that earlier in the podcast the, the question around where to buy is, is probably the first one that we get as a buyer's agent. And it's one that is, there's just no quick, easy answer to that question, because the situation is so unique and it's very much around understanding

Meighan Wells: The three major areas that you have to compromise in when you're buying a property and that's price position and the property itself. So property type, the features, the bedrooms, or bathrooms or layouts, you know, all those sorts of things come into the property side of the equation. So what we do with that workshop, Veronica is we actually put people in the position of working out what they are, and aren't prepared to compromise in those three areas, but it also opens their minds up to if they did compromise in any one of those three areas, outside of their fixed thoughts on what they do and don't want if I were to compromise, what else would be out there for them. And that's such a powerful process to go through, because if you think that you're going to spend $2 million in Ascot, and you're quite set on that, but you haven't really explored what would 2.5 give me, or what if I went to Hendra? So it's, it's actually a process of going through a process of changing. You're challenging your own thinking to make sure that the assumptions that you've made are based on everything that you can think about. And then you're right, you're on your track, you know, you know where to buy,

Veronica Morgan: And this is a thing. And I think that a lot of people sit and so we take, and so, I mean, this is the, the where to buy workshop is the Genesis of that truly is in what we call a getting started session in my business, a good deeds. And so we should do it for clients and do all of the research. Whereas the way that bar we workshop is teaching them how to do it for themselves. And obviously it's all about understanding the possibilities for your search before you land on exactly what, where it is. You're going to be buying as you're saying there. And so by, by going through a very structured way of looking at that, but the very first thing is the budget, because some people's budget off the, they will just borrow as much as they possibly can. They work out whether they can afford or not.

Veronica Morgan: Then they'd just go out there and look, and you know, they're stretched and there's nothing you can do with that, but you can't add more money to that is maxed. But what sometimes people do is they will actually search for the needle in the haystack. It's back to you. So your guy, you know, that, that cash, there must be some value in cash. And so there might be borrowing, say $800,000. It's such a lot of money right there. The budget might be 800,000. Might've saved the deposit, et cetera, et cetera. It's such a lot of money. And then going, surely I can get what I want. Sure. Waging a one man war against,

Meighan Wells: But just could not coordinate. He just thought it was just outrageous Property. And we just had to keep sign him. It is what it is. You just need to get your head around.

Veronica Morgan: He said, he spent about five years fighting that war. And it's like in prices have been rising while he's been fighting the one man war. And it's like, you got to get over that hurdle. It's like, so you got to get over the hurdle of, okay. It is what it is. Or at times you got to get over the hurdle of actually limiting yourself because of your comfort zone, as opposed to, or because you want to avoid paying lenders, mortgage insurance, or, and this is something Chris talks about a lot in terms of this. Sometimes if you can leverage up into where you can sort of, you can actually leap, frog up into a better price bracket, which gives you better options and better long-term options of buying a better quality property or in a better quality area. But by, by paying a little bit of lenders, mortgage insurance, sometimes there's a case for that. And it's all about affordability and it's all about a whole other bunch of stuff. You've got to win on, encouraging people to spend more than they can afford, but, but by going through.

Veronica Morgan: Yeah. So by going through that exercise and understanding the risks, I mean, how much you borrow, it's what you buy with that money that you borrow, that's where the risk is. And so by limiting you know, limiting your thinking around that before you've actually educated yourself, you can, and often will shoot yourself in the foot and cost is a lot more money in the longterm. And so that's sort of, you know, that first P the price P is such a big hurdle you know, and, and such an important part of the process for anybody who's wanting to buy a property, whether it's investment or as, as their own home.

Veronica Morgan: Well, on that. If anyone wants to do the rest of the workshop, I'm going to stick the workshop link in the notes, because we, as I said, we will be running one at the end of November, and we're going to be releasing this episode sometime in November. So thanks for your time. Megan has been great to get a, of course, and a great to talk to you without actually seeing you. I, I love the podcast, but I, I really miss the the interpersonal connection and carry on the face. Well, because of course, for anyone listening, who hasn't actually tuned into our, we do a Wednesday night Facebook live, although we're not going to be continuing that forever. Cause you and I are going to start our own podcast just for first home buyers. But for the moment Facebook live on home bar Academy, Aus seven 30 Sydney time, Wednesday nights for the foreseeable future. There's lots of videos on there for people who want to jump on as well and have a look at our, our live Q and A's. Thanks for coming. Thanks for having me see you Wednesday night. Bye.

Veronica Morgan: Please join us for our next episode. We've got Amanda Farmer coming back to join us. Amanda is a strata lawyer. She's also at the odd class posts or your strata property. What we're talking about is pets in strata. Now recently, a new South Wales Supreme court. There was a ruling that a blanket ban on pests in strata is basically not allowed. So what does that mean? Does that mean that all pets are allowed? What sort of controls are owners, corporations, and strata committees able to impose when it comes to pets and other things for that matter because you're buying in a building, every building has bylaws, every building, there's a level of control in order to preserve harmony and a food environment for everybody. What is reasonable? What is not reasonable? And what are the implications for owners, corporations that do want to control what goes on in their building.