Episode 162 | Houses vs Apartments | Stuart Wemyss, Prosolution & Investopoly

What types of Apartments can stand on their own foundations and compete against houses?
Welcoming back Stuart Wemyss to chat shop on the importance of differentiating between types of property and how this comes into play when location, location, location matters most. Stuart Weymss is the director of Prosolutions and host of the Investopoly podcast. Stuart recently released a report Performance Review of Investment Grade Apartments which goes into lengths on the future of apartment ownership, comparatively to house and land ownership. 
Here’s what we covered:

• What is the long term impact of COVID on desire and affordability?

• Expats moving back to Australia, how might this impact the property market?

• Is land value restricted when sold next to prestige homes?

• What are viewed as investment grade locations in Sydney?

• Why did the Melbourne apartment market fail and what will it take to rise from the depths?

• Why do some apartments in certain areas outperform houses in certain areas?

• How has COVID interrupted the downsizer market?

• What will the next wave of property developments look like?

RELEVANT EPISODES:
Episode 136 | Owen Raszkiewicz
Episode 126 | Stuart Wemyss
Episode 39 | Stuart Wemyss

GUEST LINKS:
https://www.prosolution.com.au/report-investment-grade-apartments/
Buy Stuart’s book Rules of the lending game. And use code ‘elephant’ for a discount plus free postage. 
Buy Stuart’s book Investopoly
Subscribe to Stuart’s blog

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 January 2021

Veronica Morgan: It's commonly accepted that houses make better investments than apartments, but is this a fair comparison? Should we be challenging the assumptions that underlie that claim? And if we do so, what factors should we be on the lookout for

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, full or forecast report, which experts can you trust to get it right? The elephant in the room.com did I use Stuart Williams has recently released a report called the performance review of investment grade apartments. And he's joined us today to share his research and insights into what the future could hold for apartment owners.

Veronica Morgan: Now, Stewart is a financial planner with a really good understanding of property, and he has written numerous books about both finance and property, as well as being a regular contributor to the Australian. He also hosts a podcast called investor Billy. One of his books has the same name and has a particular gift for explaining financial concepts in a way we can all understand, but I love the fact that he always looks to the evidence. Now this isn't the first time we've interviewed Stewart. You can, or you can go back to listen to episodes 39 and 126 and Stewart. We are thrilled that you're back to talk to us again today. Thank you.

Stuart Wemyss: Thanks for the invitation guys. Great to be back with you.

Veronica Morgan: So tell us how actually have units in Melbourne underperformed

Stuart Wemyss: Just in terms of capital growth. That's, that's where the under-performance has been 

Veronica Morgan: Relative terms to houses. How

Stuart Wemyss: Poorly have they done? Well, maybe you'd be lucky to get 2% per annum in terms of growth over the last seven, eight, nine, 10 years depending on that, that sort of period of time. So, you know, people that bought something for, I don't know, 500,007 years ago, it might be worth five 50 today. So in real terms, if you, you know, take into account inflation, there's probably no real growth. And certainly if we look back, you know, if we had a crystal ball seven years ago, and I said to you, you can buy this and it'll be worth 50 grand more in seven years, time, you'd go, no, thanks to, and I'll do something else with my money. But you know, the other thing too is and Buffett talks about it a lot, you know, PA patients doing nothing and just sitting with an investment is sometimes the hardest thing to do.

Stuart Wemyss: But the people that that do it and do it well or a good at, you know, having that patience that's where the returns go. So we know that, you know, property moves in spurts at same with houses you know, that they don't, it's not a straight line, a sort of return. So there's going to be periods of time that you don't get a lot of growth in both asset classes, sub-asset classes. You just hope that, you know, when you first invest, you invest at the beginning of a growth periods, you don't have to wait, you know, eight to 10 years to see any growth, but unfortunately, no one really knows, but now I think probably they fall, you know, I'd have clients in all of those categories. I wouldn't say mostly it's because of budget. And so therefore making a comparison against an apartment versus house is probably a little unfair because if a house was on affordable, when we made the investment, well, then maybe the, the fairy comparison is apartment versus share market, for example, is two alternative.

Stuart Wemyss: So although maybe you wouldn't get to the same level in the share market that you would in property. So again, it's, it's a bit theoretical the comparison, but really what I wanted to arrive at is we've got this asset. We made this decision, the decision was based on long-term fundamentals and long-term returns has the market permanently changed or or will these investments work and we just need to hold on to them. And I guess, you know, it's really difficult thing to do because if you've held an investment for eight years, it is absolutely rational and reasonable to expect to some decent returns over that time. Yeah. So it's then very difficult to say, no, just hang on keep the faith. And you know, that when we say has the market permanently changed, I'm always cautious to believe that. I mean, you read the paper and, you know, that's all I write about is everything has changed and tomorrow is going to be different.

Stuart Wemyss: But the fact is that things really change, you know, and if they do that tend to take many, many decades to change as these overnight changes tend to be quite rare. So, you know, we gotta be conscious of, of that as well. At the end of the day, we've got a, a growing population, a finite amount of space houses are becoming more and more expensive, so less attainable and we all need to live somewhere and most people want to leave where there's, it's close to the CBD and there's good amenity. And we can talk about work from home and how that impacts. But you know, there's a lot of other considerations other than where am I working that got us where we want to leave. So, you know, the old supply demand economics is still present, I think, in, in the property market, particularly chip locations.

Veronica Morgan: It's funny that you say that a couple of things, one one of your podcasts episodes recently, it was all about basically, I can't remember what w what the episode was called. You'll be able to mention it, and we can even put the link in the show notes, and it was the right, you know, we keep talking about these unprecedented things that happen. You know, the GFC was unprecedented, September 11 was unprecedented. You know, obviously a pandemic is unprecedented, but what isn't unprecedented is the way we react to this. And the other thing that our read recently was like an article written by an, or commentary written by Ross. Gittens about why economists get it wrong. And it's when they're focusing only on the metrics and not in modeling a mathematical side of things rather than actually human behavior. And I think that's, that's really, if we focus on human behavior is fundamentally, what's going to give us some clues as to what will happen in the future. And so I guess that's what, you're what you're touching on this you're right. Yeah.

Stuart Wemyss: And I've always thought property is part art, part science. We can sit here. And that's why I don't like some of the analysis that people do. That's very data driven. Yeah. Because you can end up in the wrong place. You know, the data, the data can tell you the wrong story. What you need to do is have both and an equal weight of both. I think you need to get a good sense of the market, the types of property, the types of people that are, that are occupying or, or purchasing those properties and their trends and desires and those sorts of things. And then you can look at the data, but the data is mostly macroeconomic riots or eats at a state level. And, and even if you then go drill down into sort of suburb data, you've then got a question. How reliable, how big is the data set? How reliable is it? So data has challenges. I guess, if we're making some macro economic, common you know, we're commentating around macro economic changes, it's, it's useful, but I don't know if that's that useful when applying it to property decisions, because if I'm going to go and buy a an apartment in Bondai or an apartment in Hawthorne you know, what, what what's happening at a macro economic level in the Australian economy, Australian property market doesn't necessarily inform me what's happening in Bondai or what's happening in Hawthorne in Melbourne, for example,

Veronica Morgan: It's nice and complicated, isn't it? So Stuart though, you know, you also, your report is about investment grade. And let's talk about that for a minute. Cause you can have investment grade locations, you can have investment grade property within those locations. What do you define investment grade as?

Stuart Wemyss: So I think this is a really important distinction because there's a lot of apartments out there and most of them aren't investment grade and they're rubbish and never going to work as investments. And so my, my report and analysis, it doesn't doesn't address them. Of course. I'm just really talking about investment grade. So investment grade would have a high land value component. And obviously people say, well, it's an apartment. Doesn't really have any land, but it's got an attributable land component. And typically older style units, you know, there might be six to 10 in the block and they would tend to sit on a very valuable piece of land quite often, if they were constructed in the 1960s or earlier, they would have constructed the block almost in the middle of the, the block of land, you know, so there'd be quite a bit of land around it.

Stuart Wemyss: Not necessarily not what they would do today, where they build completely to the perimeter. And so the oldest I'll at, if they have some architectural significance like art deco you mentioned Veronica, great type of property. It could because it's scarce, no one's building sort of art deco anymore. And they have a history, a very long history of performance. So, you know, if it's art deco building the, in the thirties, well, we've nearly got a hundred years of history in terms of price growth and change over that time. And that, and that goes to, you know, supporting evidence. You know, if you're going to form a view that everything's changed and apartments don't work, what you're sensually doing is ignoring the last a hundred years of evidence that suggests they actually do work which isn't, which might be okay, it's okay. Things can change as I said, but you want to, you know, you want to be cautious. I think about adopting that view,

Veronica Morgan: And this is something we've interviewed, you know, Eliza Rowan, a number of times, and also other data data's economists and data specialist. And one of my frustrations is it's really difficult to separate out the data in apartments to be discerning in terms of what you measure, because all apartment data gets lumped into the same bucket including exactly anything Strada is lumped in the same bucket. So particularly when you talk about macro data, it's impossible to make informed decisions by looking at that and you really gotta be able to, yeah, you got to take a scalpel to it and understand what you're actually looking for. So it's sort of interesting that you've carved it up this way. How did you identify or isolate the properties to actually to look at

Stuart Wemyss: Not with any science and I don't for a minute think that I did it accurately. I ha I focused on suburbs, but this is where and, and of course not every apartment in Hawthorne for example, is a good quality apartment, particularly it's been constructed over the last 10 years. But I guess the the thing is that's where the art versus science comes in to it. You know, I know how apartments have performed in Hawthorne because I look at it every single day, you know in terms of clients, scenarios, clients coming to me that bought an apartment 10 years ago. And how has it changed and what did they pay and what is it worth today, et cetera, et cetera. So if you're doing something every day, you build a sort of anecdotal picture in your mind about what is happening in the marketplace.

Stuart Wemyss: And then you hopefully go to the data to confirm that, and it, and it does confirm that I guess that there's no evidence, there's a complete absence of evidence that in investment grade apartments have outperformed non-investment grade apartments. So I can't find any data to demonstrate that. And that's exactly what I believe exactly what I've observed over the last 10 years. They haven't, they're both done really poorly, and that doesn't make sense because you've got one that's predominantly building value, that's brand new that has no history that has no scarcity. And then you compare that to the other asset and investment grade apartment that has a long history of growth that has a strong land value component and is a scarce asset. And they're both performed the same. That is no growth. That just doesn't make sense. I mean, that doesn't stand to logic, I think for, for most people. So something's gotta be wrong, what's going wrong. Why isn't it working?

Veronica Morgan: I mean, some daughter around that's shown in particular, the actual proportion of brand new properties or brand new apartments in Melbourne that have on sold at a loss. In particularly I think B's Oxford economics did a report sort of between 2011, 2016. There's been other data that's come out since then that showed a bit like almost two thirds of resales of brand new in that period sell at a loss. So that's definitely less than year, 2% per annum growth. But you know, you sorta got to pull out different types of reports and different types of research to try to get to the bottom of that. But I would, I would hazard that, that sort of under-performance is, is really been a massive anchor on, you know dragging the chain effectively of you know, performance of these investment grade properties.

Stuart Wemyss: Yeah, that's right. And, and, and the other thing to take into account is human behavior, right? Most people that they bought something off the plan, it's a brand new apartment. You know, they paid four 50 for it. It might be worth 400 today. And they say to themselves, I'm not gonna sell it now. I'm not going to sell it at a loss. And they think that they have lost money because they haven't sold. So there's that reluctance. So, you know, understanding that. So the data will tell us, you know, the bright people that realized it was about asset and have solid, real loss. But really what it doesn't show is actually that whole segment has fallen in value. We're seeing a little bit of it, but not a lot. We're still seeing people that plan to upgrade to a blue chip suburb or upgrade within the same blue chip suburb that, that had those plans before COVID and is still implementing upon those plans in the main every, I could probably count on a hand, really the amount of conversations I've had, where people are contemplating, well, do we stay in the city or do we go down by the coast or somewhere rural or, or so forth.

Stuart Wemyss: The, there have been some of those conversations, but they're not material. There's not a big difference. And I'll look, I wonder if it's, you know, if you look at houses in really great suburbs in Sydney compared to Melbourne, this is a big difference, right. You know, some you know, a high end purchase will be 20 to 50 million in Sydney in a great suburb in, in Melbourne. It's rare for it to go above 10 million. So I think, I think from a house perspective in Melbourne dare, I even say it houses are still relatively affordable relative to Sydney. And maybe that's why we're not seeing the same change. Whereas whereas in Sydney, if you've got a a finite budget, you know, you've got to move further away from the CBD, you might be an hour or so, maybe more away from the CBD.

Stuart Wemyss: That's not the case in Melbourne. You can still, still relatively affordable within half an hours sort of commute or drive from the Bay day. So we're not really seeing a massive change in that regard. And look, I, I wonder, you know, w we can all I was speaking to a friend yesterday, who's a CFO at a, a large industry super fund. And he's saying most people don't want to come back into the office. Like they're using excuses are, I don't want to take public transport and et cetera, et cetera, they're quite happy being at home which is great. I think they're mostly happy being at home because, you know, we went through a pretty ordinary lockdown in Melbourne that persisted for a long period of time. And so any kind of freedom feels like good freedom at the moment, still almost kind of new to go to a restaurant.

Stuart Wemyss: And, you know, there's, there's a normal amount of people in there. But I, I really question whether people will continue to want to work from home and or whether there be side effects like culturally, how do you build a culture within a business? It's a little bit more difficult if you're your workforce is very fragmented and there's not a lot of face-to-face contact. And then the, you know, there's a lot of economic studies that demonstrate that people come to work mostly for human contacts and relationships rather than economic benefits. And and so I think, again, Melbourne's been through kind of a unique situation where sure we've been locked in our homes now we're allowed out. So it's still a little bit unique. But we'll, we'll a large proportion of people be quite comfortable sitting in their spare room working away 365 days a year with very little human to human contact. I just don't know. I'm just not sure that that's really the longer term trend. Yeah.

Veronica Morgan: Yeah. And certainly we've had that discussion with a number of the people that we've had on the podcast. And, and it does seem to be the consensus that, you know, that there will be a movement or in terms of flexibility. So that may be less going into the office, but in terms of taking people out of the office permanently, you know, it's a bit pie in the sky. And I think that's a good example of the pendulum going from one extreme to the other at the beginning of COVID. And so I think some people are taken advantage of that in terms of where they're located. It does allow for that flexibility, but it does create limitations in other areas for their careers and certainly culturally and visibility learning and all those sorts of things. So what we've seen in Sydney certainly has been that there's been that initial knee-jerk reaction.

Veronica Morgan: Oh my God, you know, apartments on the nose, nobody wants to be in apartments anymore. Houses going crazy, certainly since coming back after Christmas already, we've seen interest in apartments resuming, but a bit more a bit more what's the word a bit more discerning. So the one bit is really, there's not a lot of reason to look at a one bedroom anymore, you know, because, Oh, if I'm going to work from home and I've only got a one bedroom, that's it, you know, and I think that there's a lot of people looking at them as an affordable option and now seeing the problem with one bed it's. And so that's sort of interesting, and I'm not sure what that'll mean long-term for anybody holding a one bedroom, but certainly the larger one betters and, you know, with the study and all two betters are starting to actually get buyers at them. Again, agents have been telling me they've got 30 people through an open, whereas the end of last year, they might've had 10, if that, so it's interesting just to see that coming back. So I think, you know, I think the whole COVID reaction there'll be some permanent change, but potentially we'll go back largely to the way things were, you know, that's sort of my guess at the minute.

Stuart Wemyss: So I think there's always been trends in property. You know, if I think back to 2002, when I started pro solution investing in positive cashflow was a trend, you know, regional area, buying a property with a yield of 8%. And because the yield was so high, you know, the, the property was going to give you $50 a week in terms of net cashflow. And all you had to do is going to buy 20 of those properties or more, and all of a sudden bang you're, you know, you're close to retirement, but that was a phase, you know, it just didn't work. It didn't have any fundamentals. So I think that there's always going to be trends in property. What's popular at a particular point in time. Whether the apartments in Melbourne are relatively unpopular compared to houses working from home, or, you know, going to a rural sort of sea change tree change location might be a bit trendy at the moment. But at the end of the day, I think we you know, cities people congregate in cities all over the world. And that hasn't been that that's not just a train, that's been something that's happened for hundreds of years.

Veronica Morgan: It's funny. Sorry, because you're so right. Sorry to interrupt you there. I mean, that's absolutely, it's human nature is going to do a human nature. Does and know there's all these sort of, Oh my God, I've got to go and chase this latest gravy train.

Stuart Wemyss: Yeah, yeah, that's right. And it's not, you know, we haven't been congregating in cities because the absence of zoom, for example, zoom is no longer, you know, just going to change everything CDs and that they've accumulated and amassed over hundreds of hundred for very good reasons. It's separate to being able to work from home. So I think it's important to, to separate what's a trend, cause there's always going to be trends. Not only in property. I think in all asset classes, technology is a great trend or healthcare in the U S is a good trend at the moment as well. You know, separate from training versus fundamentals in the long run fundamentals is what's going to drive returns in the short run trends, drive returns. But then aren't persist very few trends persist, which is probably something for people to really think about.

Chris Bates: I mean, I guess I mean now I, I, it's kinda, I sit on the fence of this a little bit, just watching how dramatic the human behavior has been changed. You know, in the last six to 12 months, you know, the number of buyers that would have moved to the central coast, we spoke about it lots of times over the last six or seven years. And even though it was much cheaper, they couldn't get their head around leaving their friends and family and having to do a commute five days a week. But then in the last say, eight months complete, you know, flip one 80 where buyers are saying I'm willing to do that. I'm willing to make that compromise because I can get a house and the commute can work at the same thing with our clients by down South coast and Bauer or blue mountains.

Chris Bates: And I do think that one thing has been stopping and making that shift is literally the commute. And if you change that sort of dynamic then when you people new people will start moving to these areas, then the community in those areas start changing and then there's more people like them. And then there's new friends and networks and your friends moved there and then they go there. Do you think that that's going to happen? Melbourne's is definitely a city city. You know, like what's driving city, Melbourne is, you know, the bars, the cafes, the restaurants, that inner city culture, whereas Sydney, it is more around the sort of lifestyle on the beaches and things like that. So maybe it's a, a city change. But I don't know, I guess wonder, especially when people get to that sort of family formation phase, you know, the, the restaurants and the inner city doesn't matter as much now, a case it's more about the local community schooling, parks, nature, et cetera.

Chris Bates: So maybe, and that's where generally a lot of the higher income buyers are going to be. So do you think that that's going to play out in Melbourne and that's going to impact the people who potentially would have bought apartments, we'll now shift to monitoring potential or Jolong or Bendigo or Dallas-Fort or kind turn, or, you know, there's so many beautiful pockets just outside Melbourne where a lot of those buyers, if they can't afford Brighton or, you know, Camberwell, they're going to go, well, I don't want an apartment in those prime suburbs. I will go to a regional area.

Stuart Wemyss: Yeah, look, I think, I think it will occur. And I think there's always going to be people that sort of fit that fit that mold, but not every sort of occupation or industry lends itself well to working home permanently. I certainly think a lot of people will will adopt a more hybrid model and certainly in our business, that's, what's been happening, you know, three days in the office, two days at home, for example, gives you a really good balance. But between those two things but look, I've got, we've got my wife and I've got a house in fair Haven, which has just passed Anglesea along the coast, about an hour and a half drive from, from Melbourne. During summer, we, we used to spend quite a bit of time down there. We might be down there for a full month and we'd go mad.

Stuart Wemyss: Like, it's just not the same. We couldn't live there permanently. It's th th there's nothing going on down there. You know, there's some decent restaurants, but they're not th th they're limited, they might be one or two decent ones. It's just doesn't offer the same vibe, the same entertainment opportunities, you know, just the same, you know, standard of living. Now, we couldn't do it. If you had young kids schooling would be a challenge challenged, and their schooling really rural is a bit of Russian roulette. I mean, you can find some really good schools, public schools, but you know, it can be difficult. I just don't. I think there's a lot of, I think it's a trend. I think people like to talk about it, but whether it's something that really they can live with you know, I I'd I'd invite people to, well, what I, I tend to try and ask clients to do is go and rent in that area and just try it out before you go and commit to buying and paying stamp duty and entry and exit costs and all those sorts of things go and go and rent there.

Stuart Wemyss: It might, and it will suit some people. Some people will love it. It'll sit there much better, and it's the best thing for them to do. But I don't think it will suit as many people as, as we might think from a practical perspective. I think there might be some challenges with it, but look, I could, I could be wrong. But the, but by taking that view, adopting will, this is a permanent train. That's going to significantly change demand levels for inner city property. I think that's a, that's a pretty brave, brave view.

Veronica Morgan: It's sort of interesting. The renting thing. I've been advising people to do that for years ever since I, you know, we're filming location, location, location, and relocation relocation. It's like, it's, it became very obvious to me that people were chasing the impossible dream in many cases. And they're hoping life is going to be different for them. If they sort of ditch the city and the demands of their job, et cetera, et cetera. And yes, life will be difficult, but often they still take themselves. You know, you can't escape from yourself. And if you're trying to, to do a CEO tree change, because basically dissatisfied with the life, often you take that sense of dissatisfaction with you. And, and then a year later, you think and so if you bought into that area or you've managed to buy in a part of the area that, that actually isn't the patient, ultimately you want to be in, because now, you know, better, you would buy differently, then you're stuck.

Veronica Morgan: And the problem is, of course at the moment, is it that these rentals is just not, there is a real shortage of rental stock outside of the capital cities. And and so that does make things for challenge. But I think the problem is that when you're chasing trends, you chasing short-term solutions and property cannot be a short term play. It just can't. And so therefore it goes back to you, you know, the fundamentals stay the same, the trends will come and go, that people are feeling like this is going to be a long-term trend. And you look, yes, maybe it is, this is the first uptake, and there will be generally better performance in re regional or more stable or consistent performance in regional areas and has been in the past. But it's, you still can't base your knee-jerk decision on, on that belief, because that's quite as that's quite a daring belief to think that it's, you're going to miss out if you don't do something now. And I think that's one of the challenges that people have. They feel like they're on the cusp of, Oh my God, it's going to get out of my grasp. And if I don't do it now, I'm going to miss out forever. And FOMO is just, the FOMO is taking off everywhere. And this is, I guess, interesting because it's not at the expense of the inner city. But it may be at the expense of apartments to a degree, you know? So I guess it's, you know, back to our topic of apartments,

Stuart Wemyss: You know, one of the things that I talk about in the report that, that you have to kind of wrestle with, if you sort of comparing apartments to, to property is that if property values have risen, and if we're going to assume in the main that those price increases having occurred, because of improvements to the dwelling, of course, there's been renovation and new construction so forth, but if you're saying the main driver of those value increases is the underlying land value, then how can apartments not have changed in value, particularly older style, investment, grade apartments that have more than 50% of land value component. We can't say that land has changed on this book because there's a house, but the block next door that has six apartments on it, it hasn't changed in value. Just doesn't make a lot of sense.

Veronica Morgan: It comes back to this thing that, you know, and everyone says, Oh, land is what goes up, you know, the, the actual building doesn't, but the reality is that what is on the land is what makes the difference, you know, it's the optimal use thing. And so if you don't have what's in demand on that land, then the land value growth is going to be hamstrung by what, you know, the dwelling. Right. so I guess that's what that comes to. And so some of these red brick, three walk-ups, for instance, you know, maybe they'd be better. I've been knocking down probably one house and I'm kidding. I am actually joking about that. But that's the problem with focusing purely on land value and saying, Oh, it should have gone up because of where it's located.

Stuart Wemyss: Yes. yes and no, I think yes. In the short term. But in the longer term, I think fundamentally it's got to change. I think that's hand in hand, then you look at what, what is the other trends that have occurred over that period of time that my report looks like looks at, and just the, the supply of new development, new stock particularly aimed at non-residents that occurred over that period of time. So really to an uneducated buyer, maybe even a first-time buyer or even investor, but an educated one. You know, if they compare in an older style, 1960s, two bedroom apartment to a brand new apartment with stone bench tops and European appliances, et cetera, et cetera, with some depreciation and you don't pay stamp duty, et cetera. You know, when you compare those two and one has a marketing, a significant marketing budget, and one doesn't, of course, we're going to look at the shiny object and that's where our money is going to go.

Stuart Wemyss: So that's been the trend and that's why that, that those older posole apartments, the on that are unpopular because, you know, too hard to sell something that looks old or, or a little bit worn compared to something that is completely brand new. But then if we assume or understand that, okay, will that new stock just that particularly that price point and at that finish quality, the poor quality just won't possess because now they've tightened rules for, you know foreign buyers and the amount of foreign ownership in any one particular development. If we understand what has occurred, then we say, well, that new shiny stocks no longer going to, or at least there's going to be low volumes of it. Anything that's been built over the last 10 years will wear and take considerably, you know, a developer is only worried about one sale.

Stuart Wemyss: That's the first sale that don't care about resale. So it's, they're either going to body, corporate's going to spend a lot of money on upkeep or which is more likely going to happen that property will wear and tear and look terrible. And I think then those older style that are typically double brick built really well, higher ceilings, you know more room, we'll start to have a bit of a Renaissance. And I think that those sorts of properties will then start to sort of come in their own and people will start to discern the difference between living in something that's 10 years old, that now that very paper, thin walls, low ceilings, just doesn't, it's lost its shiny new appeal. And all of a sudden, I think as everything goes in cycles those older style apartments will become trendy again. And that's when we'll get to enjoy the intrinsic value of the land component. That's appreciated over that period of time.

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Chris Bates: I do a great, it's going to be at some point where that becomes the option for people, because what's going to push up the process as apartments is an investors buying them. Isn't, you know, singles it's once you start to get that affluent sort of higher income, you know, couples and families can not afford it. There's no other better alternative. And they, you know, their best alternative is buying an apartment, an older apartment in a premium suburb. But I think the thing that has been holding them back from just my observations with Melbourne, comparing it to say Sydney is there's not many options for that, that couple of family in Sydney, the, you know, the houses are just out of reach. And they don't want to go to those middle and outer ring suburbs because they lose all the lifestyle benefits. But in Melbourne, you know, you can still get a house in the inner West, for example, you know, that's still affordable.

Chris Bates: You know, there's still certain pockets that aren't too far away from the city that are still a good lifestyle benefit where people young couples in Melbourne will say, well, I prefer to buy that than buy the apartment. The other problem, I think in Melbourne is that even in these middle and entering suburbs, there is going to be this proliferation of new townhouses. You know, you can already see it in certain suburbs. And so while they, you know, the apartment would be the obvious choice, I think that even if the houses get too expensive, you still gonna have to battle with these sort of T you know, you know, lots of new townhouses sort of coming to market as well. So I dunno, I think it's, it's when those, those couples and high income families say, well, I can't afford a house anywhere in the, around the city. I can't afford a townhouse. And so now the best option for me is buying a two bed apartment. Like that's when you start to see, you know, serious price growth, but I just wonder how long it's going to be two buys a forced to make that decision.

Stuart Wemyss: So one of the trains are looked at in the report. I compared the capital growth rates of apartments. Of course, this is just median prices because there's no better data than that. Since nine 80 for Melbourne Sydney and Brisbane. And it showed particularly in Melbourne and Sydney, that capital growth over that period of time has been between seven and seven half percent. So over that sort of 40 year period, but it showed very distinct periods of time of seven to 10 years of very strong growth, 12 or 13% but also period equal periods of time of seven to 10 years of very little growth. And that's not different to houses. I did the same chart the year before for four houses. So we have to understand, I think that the chances of straight line growth in property, irrespective of the asset that we're buying is unlikely.

Stuart Wemyss: What's more likely is that growth will come in spurts and that's not that's not a unique thing. It's not unique that we've not seen any growth in apartments for the last seven to eight years. It's in fact, just a repeating a long-term trend. And the townhouse thing creates a, I think, you know, if you're looking the, and I'm talking about sort of prime suburbs, like South yarrow paraben Hawthorn Elwood in Melbourne, they don't really tend to lend themselves to, to townhouse developments. 10 house developments are happening more in secondary locations because the land values are just too expensive in those locations. So it really is a case of, for someone contemplating a, a property decision, particularly if it's someone that's a first or second home buyer that doesn't yet have a family, that's got, say six to 800,000 to spend the decision is to really either go to a secondary suburb in the outer area or buy an apartment.

Stuart Wemyss: And if they if they know it's not their long-term home, if it's like, I'll buy this property, I'll live in it. And then at some point I'm going to get married and start a family. Then one of the things they really need to think about is do we keep it as an investment and how's it gonna work? And what's the how is that asset going to perform over time? So what I would be saying to those sorts of clients is while you're actually better off to take an investment lens to that decision by a, by a property that would otherwise make a good investment. And then if you, and then if you're able to buy something, that's also going to have enough amenities for you to be able to live in it for that period of time, then you'll be well served.

Stuart Wemyss: And in the end, it's going to be a long-term investment for you. And I think they're going to be better off doing that than going so 20, 25 Ks out getting a house on a, on a 500 square meter block of land that might suit them from a an immediate lifestyle perspective, but it's, we all know it's not going to make that it's not going to have the same returns, or at least if we look at the last 40 years in terms of returns, it's unlikely it's going to give them the same sort of capital growth rates.

Chris Bates: Yeah, I guess it's, if you're talking the target market for this property is that sort of start a couple. Ultimately they're still, careers are still developing. Their incomes are still going to be restricted. Their actual cash they've got, there is always restricted. It's just human nature in your twenties and you haven't got much cash and your incomes are still growing. So if that property always only suits that target market, and it doesn't hit that thirties, forties sort of couples and families, how has that asset going to become the growth of what that next, where you've got hiring comes in, you know, reinvested wealth, you sell one property and you buy another property. And I think you want to hit a property that hits that other target market, you know, the high incomes and families, because they're the ones with the cash. And I just wonder with apartments besides the downsizer market, you know, the downside of the market typically is also a good, if you're going to buy an apartment, it should sort of appeal to the problem with the downsides of market.

Chris Bates: Isn't it, there have been freaked out with COVID and, you know, have wished they have been so glad they've been in a house, a lot of them rather than living in apartment through this year. And so and also the way that the tent, the pension works with the CJT, you know, it's better just to keep the house. They've also seen it's, that's their best asset. The kids want to keep them in the house as well, for those reasons you know, and living in a single level and is much more common in Melbourne rather than it's not that Healy really. And so a lot of people can stay in their homes. And so I don't think they're part of the downs. Downsize is going to push up apartment process, but also wonder, you know young couples and families aren't going to push off apartment process.

Chris Bates: And I also wonder whether investors are going to go back to buying apartments. The reality is, you know, investors are very fickle, you know, they don't buy countercyclical, so they wouldn't just look at apartments in Melbourne and go, well, they haven't grown for our seven years. So they're a great investment and investors go where the growth has been, and it's just human nature. And there's been a lot of headlines around apartments, not only through COVID, but building issues, et cetera. And so investors, aren't going to come back to apartment in a hurry because they're going to be like, well, until I see growth. So it's a chicken and egg problem. So I just wonder, what's going to push up apartment process from a demand point of view. And then I guess on the other side of the coin, we don't know about future supply yet.

Chris Bates: We just don't know what's going to get built in the next 20 years. And I look at, I guess, a lot of developments and what's getting built and the quality has to improve because developers have to up their game. The reality is you have to offer a better product because it won't sell. And so it's my belief. I guess the development that we've built in the last 20 years are going to be, you know, chalk and cheese to what we build in the next 20 years. And I just don't think the Manhattan effect has really happened in Melbourne because the quality has been so poor. If you think about the next 20 years, you look at the, you know, the prices that some people are paying for apartments in say, Sydney and Melbourne, the top end that could easily filter to middle-market. So you could say three bed, you know, homes that have great quality start to be built all across all of Melbourne. And so I just wonder, you know, what's going to drive prices like what's going to push it up, like who is going to do it?

Veronica Morgan: You know, Chris, I love your you know, your what's the word positivity here, because idealism is the word I'm looking for, because you say that, you know, people aren't going to buy poorly built apartments, but people have in droves and governments are incentivizing people to buy poorly built apartments in droves. And so I can't see this sudden light bulb going on in the general public, the general buying public, that's going to say, Oh, I'm no longer going to buy crappily, built new apartments. I'm going to focus on not getting all my government grants and not getting my ability to depreciate, et cetera, et cetera, et cetera. And I'm going to focus on buying quality asset. I actually don't. I think we are all too short term in our thinking. And you know, and people don't realize the dangers, which is one of the reasons why developers do build this crap because they haven't, the demands have not been placed on them by consumers.

Veronica Morgan: Now, I love the idea of raising the bar and getting consumers, groundswell movement. I'm not buying that anymore, but unfortunately, most consumers aren't smart enough when it comes to buying property, which is why we have this podcast and why we have a Dumbo segment and why it could, we could have an entire Dumbo podcast because the stories I hear time and time again, being people buying this and not selling it when, you know, when they realize that, you know what I mean? It's this, this isn't going to go away. There's no, there's no greater force that is actually going to stop people longterm from buying crap.

Stuart Wemyss: And I think to speak to the, where is the growth going to come from? So if I think back 10 years ago in, you could have bought probably a house and get close to if you had a budget of say about a million bucks, that you'd probably find something 10 years ago. And at the same time, an apartment would cost you 600 grand. So, you know, Frank SRE, 400,000, you can go and buy yourself a house now in Hawthorne for a decent home. You know, you're going to have to pay 1.4, but you can still buy an apartment for maybe somewhere between six and 700,000, a decent or relatively decent apartment. What's going to drive the growth is demand to live in Hawthorne, cause that's a great place to live. And if I'm had the decision as a young couple to live in Hawthorne or go further out, we know, I know it's a guy that works in our business.

Stuart Wemyss: They did exactly that mistake was renting Hawthorne, bought further out and they're going to come back into Hawthorne because they they're young and they shouldn't be in the suburbs and getting very bored. So that's, what's going to drive. The growth is the, is the differential between houses and apartments and the fact that people won't want to compromise. I want to leave in that location. They want the amenity and they will be in a position to be able to pay for that apartments. Older style apartments are, I would say, affordable, relatively affordable today. They are a good proposition. 

Chris Bates: Yeah, that's a two bed apartment. Yep. So when they get to family formation stage and I, you know, I want to have kids, do they want to live in Hawthorne or do they want a three bed? And so what happens is that they get to the higher incomes and if, and then those higher incomes basically have to leave Hawthorne for that lower end, because for them, you hit until those apartments start to satisfy the family market, which may happen. But it's just, you know, it's a big compromise to give up on that sort of three bed, a bit of land for kids to sound, we're going to live in an apartment. So, and that's, that's when that apartment will go up, because until it, that demand hits that you're still gonna hit that affordability market, which is those couples that are still growing their careers, et cetera, but yet there's childless families and things like that. But you know, it's not that strongest demand

Stuart Wemyss: I'd argue apartments have never lent themselves to a family scenario, at least not with children that are kind of at walking age, toddlers and so forth. I'd argue that most people are living in apartments, a single young couples with maybe a baby or older people that are single living by themselves. And so I think that's always been the target market. And if we look at the growth between nine 80 in 2020 in Melbourne at 7.6% over that period of time, or we have to ask ourselves, what's driven the demand and growth for that asset class. It's not to my mind. It's not families. It's never going to be fun. There's always going to be a pool of potential purchases. And then if you have a look at the population growth in Melbourne compared to other capital cities in, in terms of projected population growth you know, th that, that growing swell of demand of people that either a single or young couple that want to leave, or an older single person that want to leave in Hawthorne, I can't see that demand reducing.

Stuart Wemyss: I would imagine that demand is going to be the same or greater than what it's been for the last 40 years. Otherwise w why, w w why would apartments exist over 40 years if, if no one really wanted to, to live in them? Yeah. I don't think it's a family. I don't think to my mind, it's not, I'm not relying on a demand from a family set or for, or demand from people that think they're going to buy this property and leave it for the, for the next 40 years. I'm not sure apartments have ever sort of played that role. But I think they still, you know, there's still enough younger couples out there that are in a position to pay more than six to $700,000 of that asset. That intrinsic value might be closer to eight or 900,000 today. And because markets move in spurts, you know, that spirit will come along and those prices will appreciate what I'm not saying. Will I expect them to,

Veronica Morgan: I think, I think Chris, you forgetting that not everyone has a nearly one-year-old baby.

Chris Bates: Yeah. I'm reflecting on our clients. Right. I'm reflecting on, you know, the difference of the way that they look at the world,

Veronica Morgan: But who's your demographic though, Chris, cause you market yourself, you know, particularly at sort of your own age group, you know what I mean? Like, so there is more people out there than just that demographic by property.

Chris Bates: Yeah. Well, that's true. But also, you know, that's where the, you know, ultimately the, what the means of that buyer is what drives the prices, hence why you'll see that how's areas, housing areas and things that do suit families in more established areas are worth a lot more. And so, you know, yes, apartments could have a good run because a lot of high income couples could go for them. But I also question whether they will see that, you know, especially if they're thinking for once they, for example, they incomes do a cry that they build a bit more savings. They're going to sell that apartment because they're going to want more space. And then they're going back to selling it to people who are still starting out and still, so you you've got to wait for that higher incomes couples to get the borrowing capacities, to build the equity.

Veronica Morgan: The same, the same process happens. Okay. So I started selling property in Balmain 20 odd years ago now. And it's the same principle, forget the apartments in Balmain, just look at houses. You know, people will buy a worker's cottage first, their two bedroom, and yes, they're on the ground level. So it's not as inconvenient as apartment trying to get up a lifter upstairs or whatever with prams and stuff. But fundamentally two bedroom cottage, worker's cottage, there's a, there's a limit to how many people can live in it comfortably. And what typically would happen first, baby would come along. That's fine. Then pregnant, we second one or second one's born and then bang they're out of there. And it's a, it's a cyclical thing and it, but it's the entry level house in Balmain. And it, what it is that fuels the flame under that market, you know, that people aspire to live there, it comes back to the Hawthorne ID.

Veronica Morgan: People will want to buy a, want to live in Hawthorne. They aspire to live there. That's what they can afford. Then they outgrow that house. They're forced to sell it. Generally usually to, in order to upgrade that then creates that availability for the next generation of person who is what they were when they bought it and so on. And I think the same thing can happen with apartments in these ease areas, but you've also got that added desirability amongst people who'd never desired to have children or aren't coupled up or are, you know even a single parent with one child, you know, so there's, there are other segments of the market that would that would see apartment as a good apartment as a suitable alternative, because they want to be in the area more importantly than they want to live in a house. And I think that's sort of what you're saying, isn't it?

Chris Bates: So the single there, unfortunately there's borrowing capacity restraints and probably equity restraints that divorcees exactly the same. And you know, and so that yes, they, other people could want it, but is that the demand that you want to own? It,

Veronica Morgan: This scarcity there's scarcity in these locations because there's inner city locations, you know, and I think that's, you know, so yes, you say that that masses can't get the access to the funds, but the enough people can that want to be there and that's sort of it, you know, then the lack of supply keeps that keeps a lid on that. I know Stuart, is that, does that line up with what your research has indicated?

Stuart Wemyss: Yeah. Bang on. I think, I think it's just the, the imbalance of supply and demand. I get what Chris is saying in the main, you know, that there, if you look at a general population, you know, that, that then you'd struggle to sort of draw, well, who's buying this. Why would we want to that? But that's not really what we're looking at. We're looking at we're considering firstly, investment grade apartment. So we're already only considering probably 5% of apartments that are out there. And we're not considering the wider Australian population. We're considering people that, for example, as a young professional single person earning $200,000 a year that wants to live in Hawthorne or a professional couple that have a combined family income of $200,000 and they want to leave in Hawthorne and there may be made a decision not to have kids or not to have kids yet, but they've certainly got affordability.

Stuart Wemyss: So that's the, that's the, and that's where I want to own an asset. I want to own an asset in a location where there's an there's more and more people that earn more and more money that, that are able and willing to pay more, to get into that area. And that's where, when we look at macro economic trends, that's where I think it fails us because we look at average weekly time earnings or average growth in wages and all those sorts of things. That's great. But you know, the hedge fund manager that came along to buy the apartment is his first home. He's going to be lost in that data. And that's the, that's the person I want to buy my property or, or be willing to buy my property, the hedge fund manager that works 80 hours a week. Ain't gonna want to see a, an hour on the train to go out into the middle of nowhere and live in is a three bedroom brick veneer home.

Stuart Wemyss: He wants to be in the middle of Hawthorne. And that's all she, and that's the that that's really the core market. And I would argue that's probably the core market. That's driven the 7.6% growth over that 40 year period. And I think it will probably repeat itself to that. The question then is really where's the money going. If it hasn't been attracted that apartment market. And I think if we look over the last 10 years because houses started off relatively cheaper than what they are today, I think people push themselves and got into a house. And then we look at the new supply. That's where I think we're being lulled into that as well. But I agree decreased. The quality has to come up, particularly as now, we can't build developments and just purely target overseas buyers. And that's going to push prices up too, right?

Stuart Wemyss: Because we can't build a two bedroom and sell it for five 50 that because of the finish and the cost and the risk and et cetera, et cetera, we're going to have to charge 700. So all of a sudden, now that's the new price point for a to better whereas that new stock was really pulling down the price to sell an older style apartment for 800, if a new one is selling for five 50, you just can't do it. It returns that growth. And that's been that that's not a permanent trend. W we can see that, that, that can't persist mainly because they've changed the rules around selling to overseas buyers. So we know that trends going to reverse and that'll push prices higher as well.

Veronica Morgan: So, Stewart, one of the things that you wanted to consider when you started this research was, you know, should people be divesting if they've got an investment grade and, you know, the answer is if you don't have investment grade, you should seriously consider investing vesting. But what was, what was your, your sort of decision on that? W what did, where did you land?

Stuart Wemyss: I landed at the, there there's been a number of events that have occurred over the last 10 years that are unique and unlikely to persist over the next 10 years that have contributed probably to the underperformance of that asset sub asset class. And so my view would be hang on and I've spoken to property investors, you know, that have, and we all had our own experiences with properties where you sometimes hold a property for 10 years, and you really don't see much growth and some you can buy. And within five years you've seen tremendous amount of growth. But what you really doing is buying an asset. That's going to give you perpetual growth on average, over the longterm. You know, I'm going to buy a property and we'll hold it for 30 years because I know holding it for 20 or 30 years, that's where I really get that compounding capital growth.

Stuart Wemyss: That's really where the money's made. So I'm not that concerned about the distribution of growth. What I'm more concerned is buying an asset. That's going to give me like a set over there over that 40 year periods, 7.6%. And that's just the median growth rate of apartments in Melbourne. And 7% in Sydney, you know, that that's just median stuff. I apply some characteristics. I'll outperform that median. And if I can get that on average, 7% plus growth on average, over the next 40 years, it's going to take care of itself. It's going to work just some investments need patients. And it's very difficult to do you really want that initial spurt of growth when you first purchased an asset, particularly if you're a first time investor. So it's really challenging, but we know property is a long-term asset, and we know it moves in cycles. There is a very observable trend with that. So we just have to have that patience.

Veronica Morgan: See it stay the course. Now, Stuart, if you got a Dumbo for us

Stuart Wemyss: One that well, one that we've, I guess we've been talking about already coincidentally, but something that, that have really driven share markets in my mind over the last a year or so. And it's the Mo it's the idea around investing with momentum or investing with quality going with what's popular or just going with what's a quality. I was reading a Bloomberg article this morning about sort of explaining, you know, they're saying the Robin hood effect in the share market in the U S that, you know, people's at home they can't go and do their normal activities to kind of locked down. So why don't we have a bit of a gamble that's gone by some Tesla stock just keeps rising. Why don't we participate in that? We get our checks in the mail from the government, although they, they they've Trump's sort of slowed that up a little bit.

Stuart Wemyss: You know, why don't we do that? And that there was a, if it's a, if it's a leverage trade, then what actually has to happen is there's gotta be more money. So I invest a thousand dollars, but maybe someone's going to invest 10,000, if it's a leverage trade anyway, that's what the article was explaining. And so you look like an idiot, really, if you had an investor in Tesla or a year ago, or after paying a year ago, you know, you look at that and go, Oh, what an idiot, you know, I could have, I could have made if I had to put a thousand dollars in, I would've had a 10 times return or something like that. So and that's, what's really driving the ma the, the share market. I mean, there's a lot of not, not at a total market level, but the other segments in that, in that market, they're driving a lot of those returns.

Stuart Wemyss: And you do see it to some degree in property, although, because the entry exit costs to it to a lesser extent. And and so the Dumbo is getting sucked into that. And to some degree we can apply it to the apartment or older style apartments sort of conversation as well about going with the trends or going what's fundamental. And there's a lot being written at the moment, or at least over the last couple of years about value investing is dead. It's not going to work anymore. You know, it's all about, it's not about anymore. You know, how much profit a company makes. Like that's not it's value really. Like it's more Anique. So you're going to get trends. There's always been trends. There's always an and the, the evidence and the, the commentary and the history around it is, is often very compelling.

Stuart Wemyss: We'll eat, wouldn't be working. If it wasn't compelling to, it makes you sort of question, is this really the right approach? Maybe I should, I should buy some Afterpay stock. Maybe it's going to go to $200 this year, or maybe I should go on buy in. You know, you can't, you can't find a property in a coastal location actually on the market in Victoria at the moment. So maybe it's going to go nuts and everyone's going to leave the, see you let's do that. But really the, so the Dumbo is almost go against what's popular. What's popular will drive returns in the, in the short run. What you really want to be interested in is driving returns in the long run. And that might mean that your decisions are relatively unpopular at times. But they tend to be the better decision

Veronica Morgan: Case in point mining towns trend. It's funny, there's been lots of them. Yeah.

Stuart Wemyss: And flow mining towns buying property in the U S you know, there's been, you know, almost almost every time over the last 20 years, there's been a trend but they've never persisted. And what's fundamental continues to sort of repeat itself over the long-term. But you know, there's, there's going to be periods of time where it underperforms.

Veronica Morgan: I think the problem we in property specifically where you got the, a lot of buyer's agents do this, they don't call them trends. They call them,

Chris Bates: I know we've had a few hours like granny flats was, it was a big one duplex. You know, that's a huge one. We say, I mean, just the quantity strategy, you know, the property clock is sort of laugh at that as well, because apparently we're all on the same clock and we all live at the same speed and everything's perfect. 

Veronica Morgan: Timing is the only thing that get the makes timing ever the G on the end is the only thing that makes a difference. It's like, Oh my God,

Chris Bates: That means you probably shouldn't buy and sell. If you follow a property clock as well, because you should buy the, you know, the down and sell at the top and pay stamp duty and pay sale in costs and pay capital gains tax. Yeah,

Veronica Morgan: Because also predictable too, really like it's over at bang,

Chris Bates: The stories around Robin hood, which is sort of a free share trading. And it's massive in the U S is completely true. I've heard through friends and you know, the amount of money that, you know, in the trading world, I can see that's coming from, you know, the small end of town, like the big endowment, the big investment funds, but it's actually people at home with not a lot of money and who potentially have got, you know, 50, a hundred, or even despite a thousand. And they're just literally investing and pumping up these stocks that it's not the big end of town that usually pushes up prices of good assets. So and it, they, they, they can't really control it because it's free trading. It's becoming like trading. So people are just literally coming in and out and trying to make short term gains.

Chris Bates: And yeah, it's, it's a really big impact on the market. Like Bitcoin was through the, the big rise and potentially again now. So yeah, you gotta be very careful playing this sort of greater fool theory because you don't want to be the one that is the full where you kind of keep chasing the returns. And at some point the light sort of hits and you're the one who's paid, you know, a hundred dollars for a share that intrinsically might be worth $10. It's a long way to the bottom. And it moves fast. Yep. Musical chairs. I do think that the one thing that I think is gonna personally save apartments, which I didn't mention before, which I've seen in Sydney. And I think it will happen in Melbourne is really the X pact impact where people who come to Australia, who aren't from Australia you know, and they move to a city like Sydney or Melbourne, you know, moving to a regional area, just isn't on the cards for them.

Chris Bates: You know, they, they want to live around the city, hence why, and I love the city and they love the culture. And you know, if anything's going to happen after COVID, I think that our migration will be extremely strong. And the government will, we'll take that sort of ticket because it's, it's a way to buy growth for the country. And you know, and so a lot of people on high incomes Australia is even more desirable than it was say two years ago, let's say. And so I think that's going to be, if anything's got kind of drive the apartment prices more than say, people who were born here, live here, particularly in Melbourne, given it so much better than Sydney. And it's almost like a big thing for a migration, right. A lot of it has had a fair share of three universities, and it's also got a bigger portion of the migration moves to Melbourne as a percentage. Yep.

Veronica Morgan: Right. Well, on that note and you know, I'm a fence sitter with that just quietly in terms of which is the better city. But I've never actually lived in Melbourne. So I haven't actually tested the side of me that thinks Melbourne might be better to live in. But I have to say we do have some pretty beautiful landscape up here and the weather is quite complete.

Chris Bates: How are you feeling about that in July Stuart or maybe August? I was prepared to leave.

Veronica Morgan: Thank you so much, Stuart, appreciate it. Always appreciate your insights. And we'll put the link to your report at the end of the show notes and you happy new year.

Chris Bates: Yeah. Thank you very much. A really enjoyable chat. Appreciate it. Thanks mate. Thanks a lot.

Speaker 4: Ask

Veronica Morgan: For next episode, we're talking all about smart homes. Are we really moving into the age of the Jetsons or up people getting all caught up in the latest schedule and it's all really, really useless and just gimmicky. And ultimately if you invest in things like smart devices and smart hardware for your home, does it add value? We'll buy as payment for it when you go to sell, join us. Next episode, we interview Brett Savile, CEO of quantify technology and make up your own mind as usual. If you're looking to buy your dream home or an investment property in Sydney's inner West Eastern suburbs or North shore, my team, and I can help you by without regrets, reach out by my website. Good deeds.com.edu.

Chris Bates: You need to buy your first time thinking of upgrading into a new one or purchasing an investment property anywhere in Australia. My team love to carefully guide you on this journey. And most importantly, get the finance right, reach out via our website, willful.com today. Thanks for joining us. We'd love to see you again. And remember,

Veronica Morgan: Don't be a Dumbo.