\nAre the property prices going to go up? Are they going to come down? Is it affordable? What about that grand Australian dream of everyone owning a property? Today we talk with\u00a0Michael Yardney<\/b> from Metropole Property Strategists.
\n <\/p>\nTranscript:<\/h4>\n
Kevin<\/b>:\u00a0 There\u2019s so much talk about what is happening with property prices? Are they going to go up? Are they going to come down? Is it affordable? Michael Yardney has actually made the statement that he believes Australian property prices will remain where they are, if not climb even further.
\nHe joins me. Michael, what are the reasons behind that statement?
\nMichael<\/b>:\u00a0 Kevin, I think it\u2019s the way we live and the way we\u2019re going to live. Property prices keep going up for two main reasons: supply and demand \u2013 in other words, our population is going to keep growing \u2013 and also affordability. By that, I don\u2019t mean cheap properties, but the fact that Australia is becoming and will remain a wealthy nation, and we\u2019re prepared to pay a premium to live there.
\nKevin<\/b>:\u00a0 We\u2019re living largely in several major capital cities. Do you see that changing much?
\nMichael<\/b>:\u00a0 Kevin, that\u2019s one of the reasons prices are high. No, I don\u2019t see it changing much, and I can\u2019t see it decentralizing. One of the reason house prices are high in Australia is that, in general, we live in six major capital centers, and each of those other than Hobart actually boasts in excess of a million residents.
\nIt\u2019s surprising. If you actually look at other countries, other than Japan and Hong Kong in the sample,<\/b> there\u2019s no other country as urbanized as us. The fact that we\u2019re dense and urbanized but in cities that are quite wide and big \u2013 big, big cities \u2013 spacious and expanding <\/b>is another reason our property values are high.
\nKevin<\/b>:\u00a0 That expansion is really what the government has been trying to do \u2013 isn\u2019t it \u2013 trying to regionalize us by bringing in major infrastructure. Is that the answer?
\nMichael<\/b>:\u00a0 Kevin, what\u2019s happening is most people still want to live close to where the action is, close to the CBD. Interestingly, most of the economy in our country is now very much a knowledge-based and service, and IT industry. We\u2019re no longer a manufacturing country. We no longer live off the regional and rural Australia and the sheep\u2019s back. Our economy comes from the big capital cities.
\nMost of the jobs are close to the CBD. Most people don\u2019t want to commute that far, and so many of us are prepared to pay a premium to live close to where all the action is, where the jobs are, where the entertainment is, where the universities are, where lifestyle is.
\nKevin<\/b>:\u00a0 Given that\u2019s the case, are we better off looking at smaller houses and having more infill?
\nMichael<\/b>:\u00a0 More and more of us are swapping backyards for balconies, and not necessarily smaller houses \u2013 maybe smaller lots. In Melbourne and Sydney, there are more townhouses being built.
\nIt\u2019s happening a bit in Brisbane and Perth, as well, where the old houses are now past their use-by date. You pull them down and build two, three, or four townhouses where you have a modern spacious home on a compact lot. That\u2019s the way of living for a larger percentage of our people in the future, Kevin.
\nKevin<\/b>:\u00a0 We\u2019re all getting richer, though, too. I\u2019ve heard you say that, as well, Michael.
\nMichael<\/b>:\u00a0 Well, the rich are getting richer, but in fact, all of Australia is getting richer. We\u2019re a wealthy nation, and every year when the World Wealth Report comes out, we come amongst the top. This year, again, we topped the world, and because of that, we can afford to pay a premium to live in these bigger properties \u2013 and Kevin, we have big homes, don\u2019t we?
\nKevin<\/b>:\u00a0 We do, indeed. Well on that point, aren\u2019t we better off regionalizing more because we have so much land?
\nMichael<\/b>:\u00a0 That\u2019s what the government has been attempting to do: paying incentives for people to move there, moving industries \u2013 including their tax departments \u2013 out of various regional locations, but most of us don\u2019t want to live that way.
\nAs our city matures, more and more of us want to live where the hustle and bustle is. We\u2019re not as much a country of living in big open spaces like we were before. We want to be where the action is.
\nKevin<\/b>:\u00a0 What about that grand Australian dream of everyone owning a property? There are some great tax incentives offered now.
\nMichael<\/b>:\u00a0 All of us aspire to own a home, and in Australia the homeownership rates have really remained much the same. I remember when I first started investing, it was just over 70% about 40 years ago. People said by the turn of the decade, which was 15 years ago, ownership would drop to 50% because our kids would never be able to afford a home.
\nInterestingly, ownership rates have remained very much the same \u2013 just under 70%. If you look at property ownership rather than home ownership, a lot of young people are investors but still rent. It\u2019s in our blood, and the tax system encourages us. That\u2019s another reason why it\u2019s working so well and house prices are going to remain high, Kevin.
\nKevin<\/b>:\u00a0 Compelling reasons there, Michael. Thank you so much for your time.
\nMichael Yardney from Metropole Property Strategists. Thanks, mate.
\nMichael<\/b>:\u00a0 My pleasure, Kevin.
\n <\/p>\n","protected":false},"excerpt":{"rendered":"
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