Episode 183 | The Secret to Capital Growth | Jeremy Sheppard, Select Residential Property

What makes prices go up and what data sources can you use to predict the movements?
Jeremy Sheppard is the Head of Select Residential Property. Before joining SRP, Jeremy created a suburb scoring algorithm called the DSR (Demand to Supply Ratio). The DSR has been featured in Australian Property Investor magazine and Your Investment Property magazine.

Jeremy is a regular contributor to the major property investment publications in Australia and has over 50 articles published, as well as other blogs and has been quoted in major newspapers and appeared on prime-time TV news.

RELEVANT EPISODES:
Episode 180 | Are buyers agents worth the cost? | Cate Bakos
Episode 177 | Australia’s Economic Recovery | Carlos Cacho
Episode 167 | Infrastructure & property prices | David Tucker

LINKS:
https://gooddeeds.com.au/buyers-agents-sydney/sell-my-investment-property-now/
https://gooddeeds.com.au/investment-property/should-you-sell-or-hold-investment-property/

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 June, 2021.

Veronica Morgan: What is the secret to capital growth? Can data give us the answer and if so, what data

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 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 forecast report, which experts can you trust to get it right? The elephant in the room.com did I use

Veronica Morgan: Today? We're exploring big data to see if we can uncover trends and patterns that will help us pinpoint exactly where to buy in order to increase the probability of investment success. I must say this sounds like the holy grail we're joined by Jeremy Shepherd, the head of research at select residential property. And before joining SRP, Jeremy credit, a suburb scoring algorithm called DSR, which is demand of supply ratio. As we all know, demand and supply really is fundamentally what drives the property market more recently, he's been working on decision-making tools, such as location scores, growth, and buy and hold. Jeremy is also a property investor. And one of his claims to fame is it seven properties in his portfolio were bought sight unseen based, purely on data. Now I must admit to being a little skeptical about how good these properties are. So stay tuned as we will ask you more about that through our discussion. Thank you for joining us today, Jeremy, we're really looking forward to hearing about the underlying secrets of capital growth or

Jeremy Sheppard: Thanks very much guys for having me on your show.

Chris Bates: Awesome. Jeremy, thanks for coming on. I guess capital growth is, is probably one of the hardest things and the most important things to sort of peak longer term. How do you sort of think about it in terms of, if you think about it long-term do you think about it short term? What's your sort of goal when you're thinking about property investing? 

Jeremy Sheppard: Well, for me personally, I do think about it over the short term. I think one of the, the great forgiving things about property investment over the long-term is it's, it's great. You, it's very hard to make longterm mistakes in property. It's time is a, is a great leveler. The more distant your mistakes are there, the less relevant they are. But my focus is definitely over the short term and that's because I've access to some relevant data that helps me make good investing decisions. When I was first starting out, it was drummed into me by all the books and mentors and experts of the day that you buy and never sell. And I think that's, that's a great fallback. If you CA, if you fail to target a market that is going to have excellent capital growth, just stay the course and sooner or later, you'll, you'll go through a boom. But nowadays with more advances more data in this information age I believe it's getting a lot easier for investors to actually trade property. If they know what they're doing, you can get better gains from, from trading property. You can recognize this has been a great boom that have had, it's now leveling off, possibly correcting. I want to exit the market and find the next market. And I think that's something we'll see more prevalent amongst investors into the future, but, but right now it's sort of pioneering days.

Veronica Morgan: There's massive costs involved in getting in and out of property though, I guess, are you sort of anticipating that a broad based land tax is going to make this activity more appealing and more, more actually lucrative?

Jeremy Sheppard: Well, when I saw this announcement by new south Wales state government, that they were going to change how they address stamp duty. My eyes lit up, I thought, oh, that's great. That's going to make trading easier. But, but even in the case where stamp duty is, is preserved in its current form, there's still the opportunity. It really comes down to looking at the numbers. You've got to assess how much am I going to lose by selling this property? I've got to pay capital gains tax. I've got to pay an agent, their commission there's legal fees. And then when I reinvest those funds, I've got to pay stamp duty. There's more legal fees. Can I actually recoup? Those is the opportunity. And I'm missing out on really bigger than the cost of those transactions. And that's where estimating the capital growth forecast of the current properties, Joan versus the alternative you're planning on replacing it with a that's, where it comes in really important.

Jeremy Sheppard: And it's so difficult for investors to estimate that, that it makes perfect sense to just sit tight and at hold for the longterm, but the technology to, to forecast capital growth at least over the short term is improving. And we are at a stage I believe right now where we can do those sorts of sort of estimations. I mean, a great example was Sydney's boom, which sort of ended around the end of 2016 started 2017. It started in, in 2012. So it had about a five-year massive capital growth gain there, but the ideal move for investors at the start of 2017 would have been to sell up out of Sydney and move those funds into Hobart. And you would have been better off now. And the data was certainly indicating that Hobart would have that sort of double digit growth. It was also indicating around the same time in early 2017, that Sydney was going flat. But it would have been, I admit a brave investor who would have sold out of Sydney, paid a huge amount of capital gains tax and move their money to Hobart. And I think it's probably a case of investors seeing this sort of technology over the years to come and gaining confidence with it. But, but we are moving towards this in the data age.

Veronica Morgan: Hindsight's a wonderful thing. Isn't it? I mean, because the thing is that those buyers that held toes owners that held tight, and if they're selling now they, I think the numbers would show that they'd be better off holding because the growth here is better than in Hobart, right? The minute. And they wouldn't have incurred all those costs. And I think too, the fact that you then have to pay capital gains tax. And so then you reinvesting less money as opposed to having all that money, that tax liability effect effectively leveraged. You know, so there's, there's, there's those additional costs as well.

Jeremy Sheppard: Yeah. I mean, it, it all comes down to, to come up with actual figures for those costs rather than just thinking, well, I've got to pay capital gains tax. So, so let's, let's just not do it. What is the capital gains tax? What is the stamp duty? And it's all I've, I've put together those calculations. And there are definitely circumstances around the country where investors would have been much better off selling. So I got involved in property investing with the ardent belief that I should buy an and never sell. And so only because I've seen since then, that there have been definitely times where I would have been better off if I had sold and I've calculated the numbers. And I mean, person, other example towards the end of 2015, demand withdrew from that market because of the downturn in the resources sector.

Jeremy Sheppard: And it didn't really matter where you owned property in Perth, you would've been better off shifting your money elsewhere, unless you had, let's say you'd own property for say 20 years. And then we're talking about a massive capital gain and you capital gains tax would, would be significant enough to knock that concept in the head. And that's why it's a case of each individual circumstance you've got to calculate. What is the capital gains tax that I'm going to be spending I've owned the property for more than 12 months? Therefore I get a 50% CGT discount straight away. My marginal tax rate is blah. Therefore I'm going to spend this much in capital gains. So it is never as much as a quarter of the capital gain that you've got, because there isn't a, a marginal tax rate above 45%. So it it's a case of doing the numbers rather than just having a broad sort of opinion about a strategy. This will never work. There are circumstances where it, it definitely does work.

Veronica Morgan: Is it different to hotspotting?

Jeremy Sheppard: Oh, I think it's, it's exactly hotspotting. And and I think that that technology is improving in the past. We've we've been burned. I've been burned myself by, by picking a hotspot and, and had prices go the other way. And you look back 20, 30 years. And the amount of data that was available back then is, is insignificant to, to here, here we are in the data age. I mean, yields, don't go back prior to the turn of the century. So we've got no idea on things like auction, clearance rates, vacancy rates, yields, percentage stock on market, even bedroom counts and things like that. We are privy to an enormous amount of data now, which simply wasn't available decades ago, and that is revolutionizing investment and suburbs selection. So

Veronica Morgan: What are the things that, and I'm guessing you're using AI to sort of find out really what the drivers are. Is that fair to say? Or you actually, yeah, so, so what is, I guess, what are the surprising things that are throwing up, that's throwing up for you?

Jeremy Sheppard: That surprised me was wages and wage growth. There's been a belief that if you target suburbs with high wage-earners, that you will outperform the benchmark of say the national national average growth rate and actually historical data looking at household income data from census is conducted over the last couple of decades, show that there isn't that relationship that low income earners can actually be in suburbs that outperform high-income earners. And if this is the only data that you've got to make a decision about wages and wage growth, historically, it has shown that it's, it's a misleading indicator. It won't actually help investors. And

Chris Bates: With that point though, I mean, if you had a choice of two suburbs, one with low wage growth and people in that suburb were not getting pay rises and people who were buying properties were on average or lower incomes versus a suburb where you've got people moving to the suburb on higher incomes and a borrowing, being able to borrow more money, like longer term, fundamentally the demand is different because their capacity is different.

Jeremy Sheppard: Well, that's what you'd think. But, but the data suggests that that wouldn't have helped you in the past. And I think the reason behind that is because the people that are actually living in the suburb aren't necessarily the people that you want to know their, their wages. So who is actually buying a property can be from outside the suburb. And it's their wages that are more important. And we just simply don't know what their wages are. All we know is the wages on census night for this particular suburb was X, Y, Z.

Veronica Morgan: Okay. So guidance just need to cut in here. I just, in the news this week, this is interesting because there's a correlation here for me, there's a federal government funding change to private schools and private school funding has been previously tied to the incomes of the location, like census data that comes with the location where the school is located. And now they're arguing that they're actually going to base it on the incomes of the parents, of the students that go to the school, which probably don't, or may not leave anywhere near the school. So it's effectively what you're saying is the same thing that if there's an area where there's a lot of absentee owners, a lot of investors, then that is actually something that's money attracted to an area by investors rather than the intrinsic desire of people with higher incomes to live there. So they're two very different drivers, aren't they?

Jeremy Sheppard: Yeah. And the other thing is that, I mean, I'm speculating on the cause. All I can do is look at the correlation in the data, but what I'm thinking is this, some other driver of demand, which attracts a suburb to buyers, and if the prices have gone up significantly than the only buyers, and I'm talking about owner occupies here that can't afford to buy, have the wages required to buy there. And then they move into the suburb. And that indicates wage growth that comes up as the wage growth, but it's not people getting a pay rise. You don't come home from work, honey, I got a pay rise, ring up core logic and say, Hey, my property should be worth more now, simply because I've got a pay rise. There's something else in the suburb that is appealing to buyers. That's driving, demand prices are pushed up. And from then on the only people that can afford to buy, obviously have higher wages. So it could be that price growth is pulling up wages, not wages, pushing up price growth.

Chris Bates: Well, it's the people at the auction who are desirability and the tractability of that suburb to those say that market. And I guess that market, you would ideally want it to have high income. So you wouldn't really want it to take one income. You want it to be double income. You'd want it to be double high and common. So if a suburb attracts a high income, double income family, even if say we're only 5% of the properties are selling each, but that 5% is selling to that market. It doesn't really matter what the other 95% of people in that suburban Ernie, because those properties aren't for sale. It's just, if there's any five properties for sale and there's 10 high income, young families wanting them, then arguably that suburb's going to get more high income young families because that's, who's buying these properties and maybe the suburb isn't getting wage growth, but ultimately it is an apportion, those five that are selling or selling to people that are earning more than the current suburb incomes.

Jeremy Sheppard: And where, where do those buyers live or where did they live on census night when the data was recorded, they might not have been living in that suburb. It might've been an adjacent one or might've been on the other side of the city. We just don't know, but that, that would be probably a lead indicator is what, what are the wages of the people that turn up at the auction, but nobody's measuring that

Veronica Morgan: Oscar out. But I mean, the thing, what you're talking about affectively is gentrification that, so in gentrified in examples of gentrification, rising wages are a lagging indicator, right? And then they become a lead indicator.

Jeremy Sheppard: Well, I mean, if you're an investor and your picking a suburb, you're going to have a look at this sort of data. If you believe that this information is, is views. So the only way you can get this disinformation or the income of occupants or residents of a suburb is from the census data. And it's only published once every five years. And all I did was analyze this historically, going back to the census from 90, 91 96, et cetera, and to see if there is a correlation, have they had outperforming capital growth if they had above average wages and the data says, well, no. So if this is the only data we have available, then, then that's what we've got to use. And we've seen that it doesn't work interesting.

Chris Bates: You can also argue that some areas have higher percentages of self-employed, which potentially on paper can have lower wage growth assets in business owners and other trusts and things like that. Yeah.

Jeremy Sheppard: What are you going to put on the census? Maybe you don't want the ATO to know where your real really Covey's

Chris Bates: And then what are some of the other things that you think that a lot of property investors focus on that may not be a good idea?

Jeremy Sheppard: The, the real obvious ones is population growth and, and this is relevant at the macro level. So by Macron Maynard, Australia wide, or even a major state capital like Sydney, Melbourne, when we have international migrants, obviously not having many at the moment, they don't bring with them a house where he lands. So they require somewhere to live and that places pressure on housing accommodation. So there is an increase in demand at the macro level, but at the micro level, like a suburb, a local government area or postcode people don't move into the suburban and wander the streets, looking for a place to live. They don't live in a cardboard box under the freeway bridge. They move into an already vacant dwelling. So there's an oversupply if there's a vacant dwelling. So all that demand is doing is it's matching supply when they move into that property and population growth at the, at this micro level of a suburb is, is not a lead indicator of demand.

Jeremy Sheppard: It's actually more likely an indicator of supply. And the best example of that is these population growth forecasts. You've probably heard someone saying, oh, this the population is, is due to grow by 10,000 more people over the next five years or whatever. And this is a, I'll call it a growth corridor, but why would she come up with those forecasts is council and, and developers. They have plans for development of new properties. It's, it's really a case of if we put two and a half people in each one of these extra properties that we're planning on approving and building, then the population will grow by X amount. So it's, the forecast is purely based on supply and supplies, the enemy of capital growth. So this does want to avoid those sort of what they call growth corridors. They really supply Quora corridors.

Veronica Morgan: That is, it's a nicely explained we've we've discussed this on the show before that you know, if an agent or a developer saying higher growth area, then run light clap.

Chris Bates: It's really interesting point because if it has to have high population growth, it has to have high supply growth because otherwise the people are going to be, you know, unless moving movie with other people, there's no way for them to live. And so to get high population growth, you need high supply growth. And like you said, Jeremy, that's the issue with any type of property. Investment is high supply growth is high risk. If there's no cap on supply, then how is there a shortage and how are you going to get price growth? So is that sort of what your research shows is that high population growth leads to high supply growth, which then leads to low capital growth?

Jeremy Sheppard: I'm the researcher I just need to point out is, is a little difficult to do with the sort of Greenfield of states because you know, picture fringe suburb, where there's some houses on really large blocks and you might sell off some of those to developers, they divvy them up into extremely small blocks and then sell them. So you might have a, an old house selling for 400,000 and then income, these new brand new double brick on tiny blocks selling for 500,000 because they knew it looks like the median has grown by 25%, from 400,500,000. But the old properties are still selling for 400,000. The new properties is still selling for 500,000. There's been no capital growth at all. It's just an anomaly in the median. And it's very difficult to calculate the capital growth to these high population areas based on meetings, you need to look at repeat sales. And that means you've got to wait until one of those new properties sells again. And so it becomes very difficult to get an accurate read on them.

Veronica Morgan: Oh, true. And yet, yet the developers are saying high capital growth, 25% median house price growth, and you go, oh my God. So sad. It's not a lie, but it's not the truth either.

Jeremy Sheppard: Yeah, that's right. It's, it's been it's median growth. If they say that it's medium growth. Yes. It's it's spot on, but it might not be capital growth. So you can have massive meeting growth and zero capital growth

Chris Bates: Negative. But what you do water have those that is a population growth at a society level or a city level, but then no supply growth in your area. And that appeal to a certain subset of that population growth. You know, if Sydney's population goes from five to 10 million, that's 10 million, more people buying things, running businesses. And part of that, there'll be more people who are subset that are doing well financially, and that's potentially out 50% than what it was before or stop it. But they're all wanting to live in certain areas where they're not building any more houses. And so population growth is needed because there's no sort of population growth and no you'd still get population growth through, you know, just families, kids who had no zero today in 25 years' time. They want to buy a house. So you still get that demographic growth, but you do need population growth to support and longer term demand for, for property.

Jeremy Sheppard: Yeah. Yeah. Yeah. And, and the thing that I do when I'm looking for well, avoiding those sort of the risks of those growth corridors, and this is really easy for investors to do you just jump on Google maps, switch to satellite view and, and look for vacant blocks of land. If you buy a house in a built-up area, then there's very little risk of, of over supply. It's those French suburbs. Or if you buy units, units can pop up anywhere. There are, there's always a risk of oversupply at some point in the future. Even if you go to the council website and you, you can categorically state, there are no development applications lodged with council. So over supplies, an issue. And then next month, there's a, there's a development application sitting with council. And within a few years, there's there's oversupply. But if you can see from a satellite view, this is just houses, they're all built up. There's, there's no vacant land, there's no Greenfield estates. And it's a house that you buy. Then you have effectively avoided that risk of over supply. And that's a really easy piece of research that investors can do.

Chris Bates: So we've got population growth at a suburb level is dangerous because of supply growth. You said wage growth is a bit of a hard indicator to sort of measure. You got to be careful with the ones who are actually at the auction. So what are some of the other things that you find investors chase grabbed the wrong road 

Jeremy Sheppard: New properties. This will, this will antagonize a lot of developers, unfortunately. And those that get paid commissions from developers new properties have been shown to underperform older properties. And it's because of the depreciation. I mean, it's amazing that that in the industry we can view there can be a term called depreciation benefits. There's nothing beneficial

Veronica Morgan: About the appreciation.

Jeremy Sheppard: What we're after is appreciation the complete opposite of depreciation. So I think that investors get really mucked up. They, they read the glossy brochures from developers. They should definitely steer clear of new if you've, if you claim $10,000 in depreciation in a year, and let's say you're on a 40 cents in the dollar marginal tax rate, then you're going to pay $4,000 less tax, but you're not better off by $4,000. You're actually worse off by $6,000. So you've actually incurred a $10,000 loss, but after tax, it's only as bad as a $6,000 loss, but investors are looking at that and thinking, no, I'm getting $4,000, but you're not, you're, you're actually worse off by 6,000. So yeah, my advice to investors steer clear of new they have been shown to, to underperform, but eventually new properties become old and they start to perform in the same way as, as older properties. Do,

Veronica Morgan: Have you done research on how long that takes you? I mean, you already talked about your capital goes, timeframe really is sort of 1, 2, 3 years. You know, we're talking decades really before that happens, particularly when you've got new subdivisions after new subdivisions and endless land supply.

Jeremy Sheppard: Yeah. Although the, the, the data that I'm looking at is, is to try and identify property markers. So we'll have good short term capital growth. I have done a significant amount of research on, on long-term. And unfortunately, because I was saying before that we're in the data age now, long-term the only data I've got to look at is, is fairly limited. And there's really only three things that I've come up with for outperforming the national average over the long-term. One is the S is don't buy new. And that is an examination of new properties, how they have resold, how much capital growth they've had. And again, there's limited data available for that. The other thing, as I mentioned was you buy a house, not a unit because houses have outperformed units by about 0.9% per annum over the last 30 years. And the other thing is to avoid vacant land, where there can be additional supply.

Jeremy Sheppard: And that's really all there is to it. In fact, when people ask me, Jeremy, I don't have the access to the database that you have, what sort of research can I do as a, as a novice? I think the best bang for buck you can get. The easiest research you can do is ask yourself, is this property I'm thinking of buying new? I mean, it's so easy to see you just look at it. And there you go. That's, that's going to give you a great start in property investing if you simply avoid buying anything new.

Chris Bates: But I mean, is that enough if that's your sort of goal that you're aiming for don't by something that you knew by sight, buy a house and don't buy in an area where they're building off the houses. Like, surely we can go deeper than that. I mean, sure. We can go to areas that have great lifestyle benefits or great schools, or have, you know, very limited sort of development of apartments, which could be, you know, you could have better streets versus other streets. Can't we go a lot deeper than that, right?

Jeremy Sheppard: Yeah. Great question. And, and the problem with something like lifestyle is it's, it's subjective. So I can't look at a database and plug in some numbers and see how that would go. So that's not saying that it would be irrelevant. It's just means that I can't do any research on it to see whether it is a long-term indicator, but can't the bot do that. Well, there, there just wasn't a lot of information 30 years ago, in order to, to assess that,

Chris Bates: Could you just live in the city, like go like in Melbourne, you would say, what is the best place to live in Melbourne? What's going to be, you know, around the east, because all around the bay side, because you can get access to water, you've got Parkland, easy access to the city, and you can pretty much do that in any city. Like just through the livability of knowing where's a great place to live.

Jeremy Sheppard: Some research that I did a couple of years ago on proximity to amenity. So you close to good schools or transport hubs, selects, train stations and beaches, beaches, a great lifestyle attractions. Yeah. So it was schools, beaches, train stations, shopping centers, and airports. Airports can be quite a negative, but it's the same sort of concept. And I was looking at this outperformance over the longterm. So I examined all the train stations in Sydney that have been there for something like 50 years, at least 50 years. And compared the growth of those suburbs with suburbs that don't have a train station. And over that 30 year period, there was no difference. And I did the same with beaches and the same with good schools, particularly in Melbourne and time and time again, there was, there was no difference. And I suspect the reason why is because let's say you've got a draw card to a suburb, like a beach.

Jeremy Sheppard: Well, how long has that beach been there for? Because there's a very good chance that the benefit of that amenity is already well and truly factored into the price of properties and Queensland university of technology did this excellent study on the expansion of Brisbane airport to, to go international back in the mid eighties, they wanted to see how did the new flight path negatively impact the capital growth of property markets under that flight path. And they found that over the four year period from the start of that a new flight path, there was reduced capital growth in those suburbs, understandably because of the aircraft noise. But then after that, from then on it, capital growth was business as usual, just like the rest of the city. So it took four years for a negative amenity to adjust prices. But from then on, it was business as usual. And this is the same with train stations, beaches, schools, all of these sorts of amenities. If they have been there for a long period of time, it's unlikely that they will affect capital growth because it's already factored into the prices. If it's a new amenity, however, then that might impact capital growth. I haven't done research on that.

Veronica Morgan: If you like, what you're hearing here, please share this episode with others, you feel would benefit. And while you're at it, why not leave us an iTunes review five stars, please. Every review helps make it easier for other people to find us and hear what our amazing guests have to say. We love hearing your questions and we're planning more listener Q and a episodes. Please send your questions in. You can send them via the website, which is the elephant in the room.com today. You or directly via email to questions@theelephantintheroom.com.edu. Okay. So I've got two questions here. So first in compounding, right? If you're starting off with a larger value property and the growth rate is the same, you're going to do better right over time. Then if you buy something cheaper with the same growth rate, right. Because the benefit of compounding. So if it's already priced in then and growth is somewhat the same, then that's still a good investment decision, but you're talking short term, right? So therefore, does your research sort of highlight those areas that are about to be negatively impacted by say a big infrastructure project that you know, that after four or five years or whatever is going to come out in the wash and so buying when it's sort of underperforming effectively sort of value investing, you know, it's like it's under undervalued, that's the time to buy. And then you, you take some of the upswing and sell. Is that some of the things that you're talking about doing th that's

Jeremy Sheppard: That's a separate topic. I mean, the research that I did was over the long-term long-term proximity to trains, train stations, shops, and so on. How do they impact things? But just on that thing about the compounding, if you buy a million dollar property in one suburb, and it has 6% per annum growth over the next 10 years, that's exactly the same as having two, $500,000 properties that have exactly the same growth rate.

Veronica Morgan: But it's not the same as buying a million dollar property in a different suburb with only a 5% at annual gross rate. That's

Jeremy Sheppard: Right. Yeah. So over the long-term I was trying to see, is there a benefit in buying in these better suburbs suburbs that have more amenities, like train stations, shops, and schools, and there wasn't anything that showed up in the data over the long term that they'd outperformed,

Veronica Morgan: Sorry, I'm just curious on these because ESI, you had 500,000, you know, and you, you couldn't afford a million dollar property. One of those properties, it's going to go up 6% per annum and you had your 500,000, are they really suburbs that you can go on and spend a hundred thousand dollars in and get the same growth rate because of the actual lesser, you know, the values, as you said, it's built into the price already. Are there areas where it's not built into the price? We can actually get that same growth. Yes.

Jeremy Sheppard: But for it not to be built into the price already, you would have to assume that it is a new amenity. So it takes time for people to realize, oh, there's a bridge over the river. Now I can get to the other side. Why don't I, I live on the other side, it takes time for home buyers to realize that sort of thing. So there can be infrastructure projects that, that affects capital growth in, in suburbs. But after a while, it's going to be, become factored into the price of properties. And then the capital growth will just revert back to the, the main, the normal,

Chris Bates: If that humanity though becomes more desirable as in more people want it. And there's only limited amount of supply, then that potentially hasn't been factored into prices over time, more and more people want it. So it says there's five chairs and now 10 people, one of those four chairs, well, those five chair get priced on the five people. Who've got the most money. And so even if something's factored into prices today, it doesn't mean it's always going to be fascinating at the same degree, because if the mains of a population grow and there's limited supply, then things could keep on getting more expensive. And so for example, things can change demographics, lifestyle preferences can change. You look at regional areas, you say the beaches, you know, central coast, or wouldn't go work from home that wasn't factored in, but now he's got to do that.

Jeremy Sheppard: That's right. Yeah. So, so what we're talking about then is you're trying to forecast people's perception of a particular amenity in the future. So, and, and that's relevant, that's relevant for picking a good location, but in the past, all we could do was look at this is the amenity. How has suburbs performed based on, on having that amenity? So it, it, it's a little bit of crystal ball gazing to say, I believe the beaches are going to become more popular in the future or proximity to CBD is considered beneficial. So that's why property is a more expensive, closer to CBD, but have people valued being close to the CBD the same 20 years ago, 30 years ago, 40 years ago, as right now, will they still value it the same degree in the future? So it's not a case of, I am close to CBD. Therefore I'm going to have better capital growth. I have a beach, therefore I'm going, it's, you've got to somehow forecast how perceptions of those amenities will change in the future in order to benefit from them.

Veronica Morgan: So if population growth, not the lead indicator you know, if all the things, you know, wages, aren't the lead indicator, if you can't predict lifestyle, because basically you're taking a view on what the future demand is going to be. And also there isn't enough rich data going back far enough to be able to sort of look at past patterns. What are you using?

Jeremy Sheppard: Yeah. Great question, Veronica. It all comes down to supply and demand. So that's the only, the only two things that affect price changes is supply and demand. Now, rather than try and forecast what demand is going to be in the future or what supplies I'm trying to identify markets in, which demand currently exceeds supply because that's an imbalance. So property markets are much like homeostatic organisms, like our skin, sweat, swimwear, hot to try and release heat and bring us back to a constant temperature or we'll get goosebumps. And we'll thick and to protect us from the cold. So property markets are in this continual tug of war between supply and demand, trying to maintain balance. And the vast majority of property markets around the country are in a state of relative balance. As investors. We want to find markets that out of balance where demand is, is absolutely clobbering supply and the way in which the market rebalances is prices in those suburbs go up, they go up too far and that subdues demand and balance is restored to the cosmos.

Jeremy Sheppard: So what I'm trying to identify is markets in which demand exceeds supply. And I know that's only going to be short-term. I can't pick anything over the longterm because there's no historical data other than don't buy units, don't buy new and avoid vacant land. But over the short term, I'm just trying to measure things like auction clearance rates, fakes to rates, percentage of stock on market. How many open inspections are auctions going, real crazy, that sort of thing is only going to give me an angle, an edge over the short term and over the long-term the only other three things I can fall back on is houses rather than units and nothing new and away from bank and land.

Chris Bates: Can you give us an example of a suburb or something that you, you would think any investor should look at now and I'll pick a budget, let's say we got 500 or whatever. What budget would you prefer to use? I mean, can you give us an example? We can just talk through like how this would actually work for someone.

Jeremy Sheppard: Well, for, for a price of 500,000, you're limited probably to right now some suburbs to the north of Brisbane. Oh, there's, there's also some elsewhere around Brisbane, but I think Adelaide would give you the most options, especially if you needed some sort of margin for error. They're not everywhere in Adelaide, but there are loads of suburbs where demand exceeds supply. And by that, I mean, auction clearance rates very high selling times are very fast. There's very little discounting. So a, a vendor would, would perhaps not need to be negotiable in order to get a sale. You've got very little stock on market. Vacancy rates are chronically low. A lot more properties are being sold by auction rather than private treaty, because there's so much demand. There may be a large percentage of open inspections rather than, Hey, book an appointment if you're interested. So there's about 17 metrics that I look at to try and gauge demand and supply for property market. And those are sort of bundled up into that demand supply ratio that you, you mentioned in my bio Veronica. So investors can use that as a gauge to see, Hey, is there something going on? It doesn't tell you what's going on in that suburb is just saying, demand is exceeding supply.

Chris Bates: What's the strategy there. So let's say we go buy these places. I'd load. It takes all the metrics are 500,000. What would you consider to be an adequate growth rate or oversight? And what period are you aiming for you and me for three years or five years, or, and how do you decide to sell?

Jeremy Sheppard: Well, deciding to sell is, is looking again at that demand of supply ratio, because if it has come back to a balance point where demand is supplier are equal, then you wouldn't expect much in the way of capital growth from then on. And then you would be at other suburbs around the country, anywhere else that you could move your money to. If you sold, you, figure out what, what's your sale proceeds, that's the deposit stamp duty to buy an alternative or replacement. And then you've got to somehow forecast what the capital growth is going to be in the alternative. And if that capital growth would greatly exceed the market that you currently invested in by a larger amount than the cost to transact, then, then there'd be an argument to sell and buy elsewhere. But even if you just hold so long as you enter the market, get some good capital growth up early, then you've got equity to buy a second property, assuming that you can serve as an additional mortgage.

Chris Bates: So what, what sort of growth rate are you wanting to? Like, whatever, what period

Jeremy Sheppard: Now? I don't think it's too hard to find double digit growth around the country because we've got such low interest rates and we're in the middle of a boom. But I, I believe that almost any time in the last 30 years has been a good time for property investor to buy somewhere in Australia. And it's, it's about finding those locations. I think that if investors are getting anywhere close to double digit, that's, that's pretty good to hang on to that for say three years. There you go. You've got your, your equity for a second property. And so that really helps

Chris Bates: You. So let's rewind that. So let's say 10% double digit over three years, let's say 30% over three years. Now, there might be a compounding benefit. If we minus off 10% for transaction costs. Now we're down to 20%. Then we Monticello 25% for capital guys dice was do 20. So that's another 4%. So now we're down to six to 8% a mat on your money potentially if it grows 30%, you know, cause of cause of costs. And yeah, well, if

Jeremy Sheppard: There is a, I've done these sort of calculations before, and if there is a difference of around about 12% or more in the, the capital growth over that period of time, say three years, then there is an argument for, for selling and buying elsewhere. It really comes down to how long have you held that property for prior to coming up to that decision to sell? Because if there has been a 20 year holding period, you are paying a phenomenal amount in capital gains tax, then, then that would be triggered at well, not just, just keep holding that one. Don't worry about that. But if you've only owned it for say three years, and you've got your say 33% capital growth, you're not paying a huge amount in CGT. So first of all, you've got your 50% CGT discount. So you're down to 16 and a half percent, then there's your marginal tax rate applied to that. And the actual out of that 33%, you might only be paying 67% in CGT. What's the end game though? Well, I guess it's financial independence that comes up to, you know, dependent on every investor. That's what you mean for the individual. Isn't it Veronica that the

Veronica Morgan: End game, what we haven't been told him as a risk risk, that the next one you buy doesn't do that well risk that the market actually, isn't very nice to you and actually launches for another 10, 15 years, you know, as people who might've invested in person, it would be, you know, ruining the fact. Yes, sure. They should have sold. But at some point they bought with hopes, you know, and they probably bought with data and all sorts of reasons why investors buy in areas that they don't know. And also, I mean, the very fact that you've got to pay tax and that means that money isn't actually then invested in growing for you. If you've got a good asset. And I guess the other question I've got for you is does it matter what they buy? You

Jeremy Sheppard: Mean the, the type of assets?

Veronica Morgan: Yeah. You know, like as long as it's not new and as long as its not near vacant land and as long as it's not an apartment, does it actually matter what they buy?

Jeremy Sheppard: I th I think it probably does, but it's very hard to, to measure by how much, especially over the long-term, but, but this whole approach about trading property it's, it's not for the faint heart and you would need a lot of experience in interpreting the data. But if you try and time entry into a property market and things didn't work out as planned, then you can always just fall back on the long-term hold it's, it's really the decision to sell. And if you've been sitting on a property for five years and it just hasn't moved, it's a little bit easier to, to make that decision. It might be harder if you've seen excellent capital growth. And you're wondering, well, is this really going to try a loss? Is, is there going to be a flat period? Can I capitalize elsewhere if you've got it right? The first time you'd have more confidence in, in selling and buying elsewhere just by using the same approach. But if you, if you got it wrong, the first time you can always fall back on the long-term hold,

Veronica Morgan: Assuming that you bought a decent asset. That's the problem though. We're not actually talking about asset quality here. We're just talking about location choice, but the seven that you bought on scene, I'm curious, do you still own them?

Jeremy Sheppard: No. I've, I've sold all of those.

Veronica Morgan: Yeah. We traded all of them. And what metrics did you use to choose a property without seeing, and were there any things I guess, you know, things that you would do differently next time?

Jeremy Sheppard: Definitely. There'd be things I'd do differently. The metrics that I was looking at back then, and we're going back to 2006 there were six properties that are bought and they were in New Zealand, actually all houses in the same suburb and I've, I've sold all of those, but there was, there was one in Western Australia that I bought. Actually, I can't remember when that was. I paid a visit to New Zealand and I did look around and I, I went with a real estate agent to look at an enormous number of properties. And I said, I don't like this. I like this. I don't like this. Then when I came back to Australia, they had a very clear idea of what I was looking for. So I was able to buy site on scene, but I had visited a lot of properties previously to make it clear to the one real estate agent that I wanted to work with.

Jeremy Sheppard: Here's what I'm looking for. So it's a little perhaps a little misleading that it was entirely sight on saying I did buy properties without ever visiting them, but I visited the location and I visited very similar properties. Yeah. But the, the one I bought in Western Australia, I D I didn't even go there. And that wasn't really a good one. The Dumbo you've saved up for us. I've got heaps of Dumbos. I've got a Baker's dozen of Dumbos that are mistakes that I've made in the past. Do you want me to go onto Dumbos now?

Jeremy Sheppard: Seems like a good time. Yeah. Okay. So, so that one in Western Australia was all about the, the financing. I thought I was really clever here because I was able to get an 80% mortgage from a lender and 20% from the vendor, the person selling the property was going to lend me the other deposit. So all I had to pay was stamp duty and legal fees. And I calculated that that property only had to grow by 4% per annum because of the extreme leveraging. It would be my best performing asset, but it didn't grow by 4%. It went backwards by 14%.

Jeremy Sheppard: That's all I needed. Yeah. And yeah, that, that was, that was not one of the the better investments, but those ones in New Zealand were fantastic. They, they, they were growing by about one and a half percent per month for a good, good 18 months or so. And this leads to one of my other mistakes because I was always buy and hold and then just move on to the next. I took my eyes off properties that I already owned, and I had no idea what was going on in various markets. And some of those markets tanked, and I would end up with negative equity if I've refinanced and then they've gone backwards. And that's never, never a good position to be in. Especially when the GFC hit, my cashflow was strained and I had to sell properties, which had since come down. And so I've learned to keep my eye on property markets that I'm exposed to. And, and to never believe that I should always hold for the longterm, or if I do plan to hold for the longterm, set up a significant cashflow buffer so that I can wait out those bad times and not be in a position where I'm forced to sell,

Veronica Morgan: Being an active investor. That's what that's all about. Really isn't it, as opposed to a passive investor, which is that whole set and forget, buy and hold is often the case. But then if you are selecting a great assets in our grade locations, you can relax a bit, you know, so if you're actually aiming for short-term capital growth, you definitely can't relax. And I, and I guess, is that what you're saying there?

Jeremy Sheppard: Just on those, I, I'm not entirely sure when you say great, everyone has a different idea of what is a, an a grade, but core logic. They produce this report every now and then it's a, they call it a decile report. And what they've done is they've, they might split an entire city up into 10 groups where you've got in the first decile, you've got the real cheapies, and then the 10th decile, you've got the most affluent and most expensive suburbs. And it's interesting to say at different points in, in various growth cycles for that city, you can see affluent areas and how they have performed versus the cheaper areas. And historically the more expensive affluent potentially A-grade areas have greater volatility in the good times they tear up. And in the bad times they plummet. Whereas the cheaper areas are far more stable.

Jeremy Sheppard: And looking over the last, say, 20 years, there have been cases where some of the lowest decile, the cheapest areas haven't actually had negative capital growth. They've been so stable. They haven't had fantastic positive growth like the affluent areas, but they haven't had the negative growth. So to suggest that it's more risky buying in those outer areas or cheaper areas, historically the data suggests the opposite that you can benefit from buying in these cheaper A-grade areas, but you might actually be better off selling once, once they're boom has, has come to a close, you certainly don't want to be in a position where you've got to sell during the bad times, because they are the ones that, that fall the most

Veronica Morgan: We got, I think it was one of a very early episodes in the thirties, even Frank Gilbert from his Oxford economics. And he talked about that. And I remember that, that he's talked about the volatility of the upper end of the market can triple and then crash and then triple again. Yeah.

Jeremy Sheppard: And volatility is a, is an indicator of risk certainly is. That's how they look at it in the share market. Yeah, yeah,

Veronica Morgan: Absolutely. But when I talk about a grade, I'm not talking about most expensive, you know, I'm talking about, you know, areas where we're high demand, high, consistent demand for quality property, that regardless of what market's doing, and that there are definitely areas that will perform like that. And, you know, they do tend, tend to be expensive areas relative when you compare it to lower socioeconomic areas. However, they're not the upper echelon. It's not, you're not, you've all clues. Your point pipe is more spins. Those it's not, not those sorts of suburbs, but that's fundamentally what you're talking about though, really is it has to be an active strategy because you're talking about capital growth, but really, I, I, yes, it's is growth of the capital, but in my mind, I think capital growth is a much more of a long-term view when you're buying property rather than trading. You know what I mean? So it's using words, but in the words, I guess, take on different connotations depending on how you're applying them

Jeremy Sheppard: Howard investor to, to tried property, because I just don't believe that the technology is sufficient at this stage to do that well, to do that easily. But there are cases where I'll have a client come to me and they've bought something that's, you know, an off the plan unit. And I know that there's going to be more of those units over coming years things aren't going to improve and they should exit, and they will be better off for it. And I do the analysis, I try and forecast the capital growth and even factoring in a significant margin for error. They're actually better off selling. So there are definitely cases to sell, but I would say as a general rule, investors should probably just, just buy and hold.

Chris Bates: All right. I mean, I guess there's definitely, you know, there's a 1.5 million property investors out there. And I would argue that most of those should be looking at their investment properties and saying, is this really the right decision for me long term, should I sell it? Should I buy something else? Because you're right, Jeremy, a lot of them have bought assets that haven't got the right fundamentals long-term and they could do something better with their money, even just paying off their mortgage or putting money into super. But I was confused. I thought that your ultimate view was for other property investors that is to buy hold for three or four years, make your 30% potentially lose, you know, 10, 15% of that in tax and costs potentially only make 15% at the end of it. And then try to buy on another market and make another 15%, which is it's very difficult to do because you need significant growth at all times.

Chris Bates: And you may find it in strong markets with a collapse in interest rates and a very positive 20 to 2023, maybe. But, you know when say the GFC or where there's the nine 11, or when there's a credit crisis, or you may lose, you know, four or five years where you can't do this trading strategy. And so yes, it can work at certain points in the cycle, but you then have to minus off the growth you would have got if you just went and bought something and held it over 10 years because you didn't have to trade.

Jeremy Sheppard: Yeah. And I, I think that for most investors that they would be at significant risk of being worse off if they were to, to trade. I think that it's, it's more than just an advanced strategy. It's something that's probably out of reach of the vast majority of investors, certainly at this stage anyway. And there's, but I, I see in the future that it will be quite commonplace and that might be more than a decade away, but it's, to me, it seems inevitable. And that's because of the information, age and better ability to analyze that data.

Chris Bates: I think if costs go down, so if stamp duty goes and we moved to land tax, if the real estate agent costs go down, if you can potentially do renovations cheaper and you can potentially buy a property, renovate it and sell it with very minimal costs. Absolutely. I think trading becomes much more desirable, but the current situation where you still got to pay agents, you still got to pay stamp duty. Renovations is definitely not cheap. It's hard to trade and make money because you need 30, 40%. It's very hard to get that because that type of strong environment, you need all the fundamentals behind you. You need low interest rates, you need super high confidence. You need a real scarcity people not to be concerned about their jobs. And so that those markets aren't always, you know, it is at the moment, but it wasn't saying in 2018. And so it's hard to continue to try it. It's just a certain point in certain cycles.

Veronica Morgan: I think actually reign a stepping stone strategy workshop with Megan and your first home buyer guide the other day, actually. And you know, that's when you using the stepping stone strategy to buy your first property, you know, you're thinking basically I can't afford my dream home first up. So whatever I buy now, it has to get some good growth in it so I can build my equity and then I can actually upgrade, get closer to where I want to be ultimately. And certainly when you're not paying out any tax, when you sell a property that makes this idea of trying to choose a short term capital growth play much more sensible, you know, certainly it's, that's something I think that they should definitely look to. You've got to look to an area that's going to have potentially a greater upside than other areas, but even then it's risky. You know, you gotta be happy that you're going to live there because you might get stuck. But certainly from that point of view, the risks are a little less because are you going to live in it? And B you're not going to be paying CGT when you sell

Chris Bates: And potentially no stamp duty. So a lot of first-time buyers, you know, there is stamp duty concessions. There might be, you know, no that is price limits. And you know, there might be changes, but if you don't have to pay stamp duty, you don't have to pick up what or gains tax and your costs and dramatically lower than you've only got selling costs. And then you got the rent saving versus the interest cost. So then your cash flows may be not much different. And so, yeah, absolutely. So those sort of first-time buyers potentially then doing nothing and leaving the money in the bank, maybe the stepping stone works, but for investors it's even harder when you sort of take care of capital gains. Hmm.

Veronica Morgan: Interesting stuff, Jeremy, we really appreciate you coming along. And I know I've been quizzing you because of course there's some many things we agree with you on obviously the new and the oversupply and everything, and some, the other stuff we're sort of quizzing you on, but ultimately you've come out and said basically what we sort of think to be a good way to look at investing property. You've actually said, look, you really should be looking for the long-term anyway. So sort of an interesting, interesting circle we've taken here today. Yeah. Well, I mean

Jeremy Sheppard: The use of the technology was really just for those people who have probably questioning whether they've bought the right asset to begin with rather than trading. That's just for me. I mean, I assumed you were asking me. Yeah, I don't advise others.

Chris Bates: I think the sell versus hold is a question that most investors, unfortunately just take the hold because it's all a bit too confusing, the fear of making that decision wrong. So same as shares where you get these anchoring bias and they'll go, oh, does if I sell it and I should have kept it. And so what people do is just like canceling and subscription to something that you never use. You don't cancel it because you think, oh, maybe we'll need in the future rather than just cutting the cord, making a decision and moving on to something better. And so it's up to give a sort of data analysis to that and then provide, you know, real accurate information around future supply the problems with demand and stock on the market and clearance rights. And the costs is super valuable. Yeah, absolutely.

Veronica Morgan: In fact, you know, going back to our first ever episode, we interviewed behavioral scientists, Simon Russell, and he talked about loss aversion. And I went off and did quite a bit of research on that and wrote an article on it, which I'll include in the show notes because it is about that whole idea that people will hold and they're sort of fingers in the ears loud. I don't want to know about it. If you don't actually sell it, you're not realizing losses. So you're not then feeling the loss. But the reality is you are experiencing a loss. You just haven't noticed it. Exactly. It

Jeremy Sheppard: Takes a lot of character. Doesn't it to, to say, all right, I've got it wrong. Where to from here,

Veronica Morgan: Especially with property, because you know, at the barbecues and everyone's running around and telling you they've their success stories, no one's running around telling you how they lost money on property.

Chris Bates: I think the danger though is once you've lost money, though, your natural tendency is to want to make that money back. And so what ends up happening is you end up compounding your problem because you end up taking a higher risk strategy to get that money back, and then you can potentially even lose more money. And that's a common financial mistake that people make is they're always looking for short-term returns because they always feel like they're trying to play catch up rather than sort of accepting that the past is the path right now, but to make a good decision for the next 20 years, I don't want to repeat my mistakes and whether it's shares or whether it's, you know, other high risk investments, you know, that, that compounding of trying to K catch up time.

Jeremy Sheppard: I pride myself on never making the same mistake more than half a dozen times.

Veronica Morgan: We did buy half a dozen properties in one suburb in, in New Zealand, just say one street, but it doesn't sound like it was a mistake. It sounds like you actually did that very well. Oh, that one worked out. Okay.

Chris Bates: Awesome. Jeremy, I really appreciate your time for coming on. And I've got all your links in the chat.

Jeremy Sheppard: Thanks very much for having me on the show guys. It's been, thanks, Jeremy,

Chris Bates: You a better elephant rider and this week's elephant rider training is

Veronica Morgan: Let's talk a little bit further about some of the things that Jeremy was talking about, you know, commonly understood to add to capital growth in, in areas or make an area, a desirable area. And you talked about the research he did on train stations for argument's sake or shopping centers and airports. And, and I guess the thing that I would want to add to this conversation and to have you thinking about is that you do need to drill down further and to say, well, does the suburb have a train station? Has that impacted its capital growth over time? Because the reality is it's think of the north shore of Sydney, right? It's commonly known amongst real estate agents that is east side walk station. It's, it's a little acronym they use because that side of the suburbs, as they run up north shore line are more desirable than the other side west side.

Veronica Morgan: On the other side of the Pacific highway and buyers will pay a premium to be on the better inverter commas side of the tracks. So if you're looking at it, there's suburb data, then that's all going to be blended into an amalgam of all the suburb data and not going to be specifically pointed out or targeted at the specific areas and points within that suburb that actually do very, very well as a result of having that transport. Same with a big shopping center, you know, like you don't really want to be in the shadow of the big shopping center, you know, with all the hassles of parking and traffic, et cetera, et cetera. But if you are further away from that suburb, you know, but still within walking distance, that may impact on your prop, your your capital growth potentially, or the desirability of your property.

Veronica Morgan: So it really is about understanding that, you know, the, the broad brush statements are on a train line, you know, do their suburbs do better or not. Well, Balmain, for instance, in Sydney is in a west, doesn't have a train station, but it is commonly seemed to be the most desirable in west suburb. You know, so it's true that these these generally hold concepts need to be challenged, but I think we also need to drill a lot deeper into the suburb itself before we sort of make calls on whether these things are valuable and contribute to capital growth or not in the long-term, particularly when you're trying to aim to get an a grade.

Chris Bates: Yeah. I think the real challenge is if you can look at the data at a macro level or you plug it in is not deep enough when you're looking to buy one asset, one property, one straight in one suburb, and then hold it for a long period, fundamentally you, yes, you want a certain sort of rules to sort of in and whatnot to buy, but then what to buy. That's the real challenge. And that's that local area knowledge, the things that people in that area are going to desire more than other things, you know, and that's access to lots of different things. You know, I believe you got to go super deep rather than sort of super macro. And maybe on those macro numbers, you could say, you know, these figures don't prove that that works well. Absolutely. If you look at a micro level and you look at some of the better properties in better suburbs over longer term, that gap how much more expensive they are than the other property gets bigger and bigger. And so you've just got to be super careful, sort of taking a broad view and just buying something on the numbers. I just think that's an extremely dangerous strategy.

Veronica Morgan: The other thing too I'd want to add is that, you know, the macro data is very important in installing it process of really sort of narrowing down where you want to buy a particular as an investor. But certainly it does come a point where you do need to have developed that sort of really deep, local knowledge as we're talking about here, but the location it's sort of commonly accepted in property circles that does 80% of the heavy lifting, right? It's not enough all by itself because you can buy in a location and lose money, even in a good location. I've seen people lose money over periods of time, and others have made money in the same location. So that begs, you know, what is it that somebody who made money did differently and to the person lost money and, and the obvious thing people will say, oh, well, they, they must've overpaid.

Veronica Morgan: You know, the person lost money, must've over paid. It's not necessarily the case. It's what they bought. It's the actual property they bought. That makes a difference. And that's really where the, the cherry on top is. You know, that really is what makes the difference between your capital growth. It's not the entire suburb because that's saying a rising tide lifts all ships. It's not true. There is vast variety of capital growth and performance from one probably to another, in the very same suburbs. So it really, really does pay to understand those nuances because that's the difference between a successful investment and an unsuccessful one, assuming you've got the location right in the first place, so that that data will help you get to the location. But beyond that, you've got to go deeper. Please do episode. We're doing another Q and a.