BOOM - Did the Federal Budget Just Blow Up Our Property Markets?????

本站添加: 2026-05-15

[00:00:02]Hello everybody. Welcome to the Market Room Live episode 1 sponsored by Metropole. I'm your host Brett Warren. Hopefully I'm coming through loud and clear. If you've got an opportunity if you can drop a hey or a hi or a a thumbs up in the chat box.

[00:00:17]Um just so I know that um that you're on board and everybody's listening.

[00:00:21]Welcome for the first episode. Um looking forward to getting through.

[00:00:24]Today is all about uh I guess the property market, but also all about the budget, right? Um everything was kind of smooth sailing and dropping along there. Uh now all of a sudden uh the federal budget's come into play as well. So the feature of these kinds of events are going to be simple. It's going to be a 10-minute or 20-minute discussion. It's going to be fast-paced. I'm not going to mess around, but I'd also love to have some questions to answer at the end. So ideally a 20-minute format with some questions thrown in at the end.

[00:00:51]Chat box is moving along nicely there.

[00:00:53]Pleased to hear everybody can hear me.

[00:00:54]Welcome along. If you're playing along at home or you're watching the replay on this, please also put questions in the chat box as well or further down in the comment section and I will do my best to answer those questions.

[00:01:06]With so much happening, um there's also a lot of uncertainty and a lot of gray areas at the moment, but that will unfold over the next couple of weeks and more clarity will be known. In fact, I'm actually going to get two experts on board next week if I can work out how to share the screen and and bring people into uh into the fold and they're going to talk a little bit about the property market, which is going to be Michael Yardney and how things are going to affect that, but also Ken from a finance and trust perspective as well. So really looking forward to having them on board next week. But let's kick it off.

[00:01:35]Um let's start talking about and with the federal budget or if you're a fan of the Courier Mail, the front page of the Courier Mail yesterday um called it Jim's Guide to Lying. So um we'll we'll let that one sink through, but there is a lot of anger out there and and from my point of view this is certainly a divisive budget. You know, I truly believe that this is an attack on the aspirational middle class and we're in a we're in serious danger here in Australia of dividing our classes into the rich and poor. The rich are are going to get richer richer under this and unfortunately the poor are going to get poorer and I'll explain a little bit about that as we go. But those in the middle class, it's kind of our job, right? It's our job to invest and improve our circumstances and do things for our our family to to improve at the end. It's also in the best interest of the government cuz if we can do that, by the time we retire, we're going to be less reliant on them, but they seem to overlook that. So, I'm actually quite disappointed on this.

[00:02:28]But anyway, I could do a whole session on my disappointment and attacking the government, but let's let others comment on that.

[00:02:34]So, to start with let's just quickly gloss over and walk through some of the points that have that have come out of I guess the the last couple of days and and and some of the changes and I'm not going to get into too much detail here, but I'm going to share my screen.

[00:02:48]Let's start off with the capital gains tax.

[00:02:52]And again, this is not enough to be a game changer or or don't invest. It's it's just another hurdle that we've had to overcome, but again, the anger here is not just about the property market, right? Because this also falls into property, shares, business. And as I said before, whatever you're doing to get ahead, it kind of attacks that, which is against what our government should be doing.

[00:03:11]So, as of the 1st of July 2027, the existing 50% discount is going to be replaced by what they known as a cost based indexation system, which is quite complex. At the end of the day, you then only pay the tax on the profit, which is above the rate of inflation since you purchased the property.

[00:03:28]Again, a lot of gray area about how they're going to control that and work through that as well.

[00:03:31]There there could be an opportunity there to have more of a discount or less of a discount, but the minimum tax of 30% will then apply from then on.

[00:03:38]So again, that's the capital gains tax.

[00:03:40]Not it's not a game changer, it's just enough to be annoying and be a thorn in your side.

[00:03:45]The next one, which I don't want to get too much into because I'm not a financial advisor and we'll have Ken on next week to discuss this, but the new tax rate of 30% in discretionary trust is going to kick in from the 1st of July 2028.

[00:03:58]Um so, let's work out how we do that, and let's have a financial advisor that can give us the information what that once that comes to hand.

[00:04:05]The next thing to understand is it's not going to apply to fixed trust. So, super funds, keep that in the back of your mind for a moment. Deceased estates, charitable and disability trust, they're not affected, and that's fair enough.

[00:04:15]But potentially a real option there in super funds. Again, I'm not a financial advisor, um but I can tell you what I've done and what we've helped our clients do. That could still be a way to get into a market in a high capital growth market where you're not going to get negative gearing benefits and stuff anyway, or capital gains tax. So, keep that in the back of your mind, also.

[00:04:32]Finally, the big one for me, and I think the game changer that's um that is going to happen is is the negative gearing. I mean, that's just a change in the balance of power. So, let's go through that, and I'll explain what I mean.

[00:04:42]Existing properties that are purchased before 7:30 p.m. on budget night, and and after budget night, can still claim negative gearing, but once we hit 1st of July 2027, we lose that negative gearing benefit for established properties.

[00:04:56]So, bit of a risk if you don't you're you're looking at negative gearing for 12 months out of a 30-year loan. I think the banks will probably have something to say about that. So, that could be an issue that we need to overcome at some stage.

[00:05:06]Um and the second thing from then on, only new builds and government housing can continue to claim negative gearing after this point.

[00:05:14]So, a couple of things that I I want to get back to that balance argument because at Metropole, we've never had a a tax strategy drive a a property strategy. So, if we come back to what we're doing now, we've always had capital growth um on one hand uh it with established properties performing better, but we've also had the benefit of negative gearing.

[00:05:31]On the other hand, we've had newer properties that, granted, there's less capital growth, um but there's also depreciation and slightly better rental yield, and they kind of balance out. If if you can borrow a thousand a million dollars for each, it kind of balances out, right? But now we're not comparing apples and apples anymore. We're actually comparing apples and oranges because if you take out the ability to negative gear, um there's a whole there's a huge shortfall of cash flow. So, there may be an element there of buying new properties will be a beneficial because you're getting slightly less capital growth, but that's supercharging with higher rates, depreciation, and still claiming negative gearing benefits will be advantageous. So, I'd suggest 70 to 80% of investors will probably swing that way. The other 20 to 30% still have the ability to buy high capital growth investment vehicle type of properties um with those negative gearing elements change a little bit, I guess. So, let's work out what that kind of looks like.

[00:06:20]Um and we won't know more about that until we go, particularly around finance and things like that as well.

[00:06:25]So, just when you think you know what's going on, the the rug gets swapped swept out from under us, and the and the whole world changes. So, what I want to do before I get into how it's going to affect our markets, let's look at the status quo um as of Monday before the budget came out, and let's take a quick walk around the grounds, and I'll give you my thoughts on um I guess exactly where our property markets are sitting at this point in time.

[00:06:49]So, to start with um look, I certainly believe that Brisbane, Perth, and Adelaide are getting close to the top of the cycle, and I think in the next 6 to 12 months, if this hadn't kicked in, um I really believe that those markets probably would have hit their peak. They've They've a grown at more than 100% in the last 5 to 6 years, and that kind of growth can't continue. I think affordability would have brought that to a stall and an end, and I think it still will.

[00:07:12]Um I think Sydney's in a bit of a two-speed market at the moment. I really do. I think houses have done exceptionally well, and they're probably up closer to Brisbane.

[00:07:19]Um but I think apartments there are probably down closer to Melbourne. I think there's some real opportunities in the city market for investment grade apartments, and that's not going to change. Um and finally, there's Canberra, who's probably down the bottom a little bit as well, and probably not a market we get heavily into um for for various reasons. So, at the moment, I think that's that's probably the status quo, and I I stand by those those recommendations, but I just think for the next 2 to 3 months, there's going to be a pause on our markets. And I think it'll just fast-track the affordability scape and just completely change our markets um at the end of the day. Um and we'll we'll talk about that in a moment.

[00:07:54]Um and what what investors are going to want next.

[00:07:57]The next thing I want to talk about is interest rates. Um very interesting start to the year with interest rates rising, and we've had I guess out of the big four banks, two of the banks are suggesting there's going to be no further interest rate changes, and the other two banks are suggesting two interest rate rises. So, that's a very interesting environment. Clearly, by the letter of the law, inflation's going to stay high, and if it doesn't fall within that band, the RBA will have to raise interest rates to bring that down. So, it's going to be an interesting juxtaposition now as those those demographics and other things play out um versus what's going to happen at the back end. And I guess, from my point of view, I see the um Reserve Bank pausing for probably a month or two until they understand how these type of effects are going to affect the market.

[00:08:37]But again, if inflation continues to run away, um then that's going to be a an easy decision that's kind of taken out of their hands.

[00:08:44]So, in terms of that that market and what the banks are doing, um that's kind of what I see happening in that space there as well.

[00:08:51]In terms of the outcome, adding to this now for for the all these kinds of changes, in terms of pricing, look, um the Grattan Institute has suggested prices are going to drop between 1 and 4% over the short term.

[00:09:02]That's not a price drop. That's just a I guess a pause in the market. The emotion comes out of the market. People are waiting to see what's going to happen.

[00:09:09]If you think about it, guys, if you think about the long-term fundamentals, we still have a record amount of people coming to this country and not enough housing to supply them.

[00:09:17]So, I wouldn't be surprised if the market drops a little bit, and then after that, people will figure out a way forward, and and things will move forward as is. I think the big one and and probably the thing that's been overlooked is rents.

[00:09:28]Um you know, I think if you think about it and just use logic, apply logic to this situation, if investors are going to keep buying new builds in the outer areas and outer locations and things like that as well.

[00:09:39]Who is going to supply housing for tenants in the inner to middle ring suburbs? It's not the government and I think in Brisbane a couple of weeks ago we had a hundred people lined up to go through an apartment in the in the in in the suburb of Windsor.

[00:09:52]So, what who solves that problem? What happens there? You know, that's a real concern. So, I think last time rents and and things like that went up 30% over a couple of years in those kinds of locations. I don't see that happening now because there's going to be some pressure release with those outer areas. However, in the inner to middle ring suburbs, if you've got a property investment property there, you can still negatively gear that's absolute gold. Absolute gold. Hold your property and and and maintain it for the longer term.

[00:10:18]So, rent's going to be a problem. I see it going up. Look, people have suggested that the modeling suggests that it's going to go up only $2 a week. Doesn't sound like a lot, right? But, that's a hundred dollars a year and that's half the tax break that the government's giving people. So, they're going to go straight on their rent. So, rents are going to skyrocket in these inner middle ring established locations and I believe the market in those locations will still be incredibly strong because investors don't buy with their in their heart, they buy with their calculator. In those inner to middle ring suburbs, in owner occupies are still going to be able to fight it out and still pay 50 grand too much for a property they love. So, those kind of fundamentals haven't changed.

[00:10:56]Finance is also going to be the big one because if we remove negative gearing, yes, we can still keep buying new properties, but you could end up having two type of borrowing capacities and I think that's really important to understand.

[00:11:07]Once the dust settles, maybe you understand what your capacity is to borrow a new established property with all the benefits versus sorry, a new build with all the benefits versus an established property without some of those benefits and and and work out what those numbers look like. We can also manufacture growth of properties, right?

[00:11:22]So, a renovation can bring in depreciation, better rents. So, as we go, there's going to be strategies and ways around that so we can still capitalize on capital growth.

[00:11:32]Boy, lots happening. Lots happening.

[00:11:33]Lots of Lots of work through. Hopefully, everybody stayed with me there. I know we've got a couple of questions in the chat box.

[00:11:39]Um the first question I can see here is um how will CGT come into play if you bought off the plan a month ago but settlement happened until quarter two?

[00:11:47]My understanding um guys is that the the the date of the contract is always from the date of the contract. Um and I know from my point of view, we had a a client sign off a contract at 7:29 on Tuesday night. Um the the cut-off date was actually 7:30 when the budget started. I don't know how they're going to manage that. But to answer your question, it's going to be that that that date of that particular contract and and potentially down to the time, which is quite astounding.

[00:12:15]What is classified as a new build? Um Adrian, that's a really great question.

[00:12:18]Um first of all, from my understanding and we're still getting waiting to get a bit bit more clarity here. Um a new build is not a renovation.

[00:12:25]Um and and interestingly enough, it's also not a knockdown rebuild. So, you think if you're knocking down a property and rebuilding and it's brand new, you think that would be okay, but from my understanding, it's not improving the the supply of housing. So, it needs to be at least to two properties. So, a subdivision will then be able to claim negative uh sorry, capital gains negative gearing benefits. Two, three, four onwards, that that's fine if they're new build. And they cannot have been lived in from that period of time as well. So, hopefully, that answers your question. Another one about new builds.

[00:12:52]Um yes, you can purchase directly from a developer.

[00:12:55]Uh again, as long as it's not been lived in or rented.

[00:12:57]Um what happens if an established owner-occupier made investment, can we deduct negative gearing from personal income? That's probably a question um for your accountant. Um but if you've had the property beforehand, if you've lived in the property in a year's time, you move out of the property and you put it into um an investment opportunity, you've owned that property from before 1st of July 2026, so you should still be able to claim negative gearing benefits.

[00:13:20]But don't don't treat that as gospel because there's a lot of changes happening at the moment. That's certainly my understanding.

[00:13:27]Next one. What are the recommendations that Metropole would be making for those who want to continue to invest in property? Great question. So, really important to understand that the rules of the game have changed, but the strategy and the end goal has not changed. We can still help people create wealth through property. I think what you need to do right now is take a take a step back and as we say at Metropole, don't react, strategize. Put a strategy in place, take a step back. The first thing to understand is what are people going to want? They're still going to want to live and breathe and and and work in the same locations, but you need to take a safety-first strategy. And what I mean by that is don't go buying off the plan or a house and land package in the middle of nowhere. Metropole's strategy is still around capital growth, buying in well-established locations. Um not where there's an abundance of land or where there's 200 apartments in the complex, etc., etc. So, we'll talk more about that next week with Michael Yardney, but from my point of view, um let's stick to the fundamentals that have made Metropole so popular and so strong. And just maybe buy a suburb or two out, but infield product, boutique suburb complexes with strong land values are still going to be incredibly important.

[00:14:32]If you can currently hold a development site, now's a terrific opportunity to develop. Absolutely, great question, Greg. If you're buying a development site now, you're going to actually get the negative gearing benefits for the next 12 months. So, that's a huge advantage because in 12 rating months time, once you've developed the property, then you can actually factor in and claim all the negative gearing benefits and the depreciation. So, the big winners out of this are the people who have got development sites and want to develop straight away. Land again, land's always been king, but it's just going to take it to the next level now.

[00:14:58]So, good question there, Greg. Um hi Greg, any idea what will happen to the six-year rule? Um no mention of the six-year rule. What what that is is if you've lived in a a home, you get that capital gains exemption for six years.

[00:15:08]At this stage, I'd imagine that would stay where it is. Um but again, we're finding out more and more information and perhaps that's something that may come out, um we can address next week.

[00:15:17]I would say to say that properties held in um SMSF are not being factored.

[00:15:21]Absolutely, I think that's a hassle.

[00:15:23]Yes, there's no mention of SMSF, but we're talking about a government here who needs money.

[00:15:30]They're already talking about high-level super changes, so they're going to find a way to tax your super. Don't worry about that. It's just a short-term short-term thing for the meantime. So, that will obviously happen. We've got a couple more minutes to work through. If super is not impacted and SMSF income tax rates and capital growth tax rates are not impacted, that would seem comparatively more attractive. It certainly would.

[00:15:50]My advice is obviously we've helped a lot of people purchase in super. I've purchased in super myself. I found the ability to leverage into a higher-grade asset into an amazing location, and I haven't had to worry about the negative gearing or those kinds of things, but I got the right financial advice. I got it ticked off. There's a lot more hurdles to jump through. There's actually a lot less banks that offer um of loans for this type of thing as well. So, there could be some changes there, and if you haven't been following some of the um trust changes also happened before this where a lot of banks aren't actually lending to trust now. So, you've got to be careful of that, but that's a very good question.

[00:16:24]Would you expect as investors to offload property as a result of increased supply and and price drop? I don't think prices are going to drop. I think they Let me rephrase that. In the right areas and right locations, prices aren't going to drop. They're just going to pause. I think the big losers here are going to be areas like regional areas where people have bought established properties, and they're going to lose that negative gearing and and secondary types of locations. If you think about it, 80% of people who move to this country and the immigration has been cut. So, 80% of the 500,000 that are moving in, which is 400,000, are moving to Melbourne, Sydney, and Brisbane. Those fundamentals aren't going to change, so you need to be in those types of markets and follow those long-term fundamentals. So, good question there.

[00:17:05]Would you expect Oh, sorry. What about prices in regional towns? I've just explained that. I would not touch regional locations or areas. It's too risky. Remember, the best form of offense right now is actually defense.

[00:17:16]Go back to the fundamentals. We don't know what happens next. We could go out and buy a townhouse and buy a brand new property in the middle of nowhere and in 12 months time that the the opposition actually stops stops negative gearing or something changes. So, you know, follow the long-term strategy. It's really really important.

[00:17:32]As a result of this, do you think investors will enter the market with price drop due to less competition? Not in the good areas. Again, it's particularly in areas where I'm focusing on next. In In fact, at this point, investors are going to want two things, safety and they're going to want value. All those markets that have been overheated for the last 5 years, there's no value left in those markets. Areas like Sydney apartments and Melbourne um Melbourne are certainly locations where you should be going to into and getting value. And it's going to be home buyers that drive those markets. Home buyers do not care about um capital gains tax um negative gearing benefits. They want to buy it and when they start buying, you cannot beat and stop that momentum.

[00:18:08]Parliament will pass these laws. Again, who who knows? Again, we've just got to deal with what we know. I'd like to think they don't. The opposition have come out today and and said they're absolutely against them.

[00:18:17]Um but again, I think they have the majority in most cases. So, it's likely it's going to get through. But interesting they've given it a 12-month window there. Um so, maybe potentially that's a a fallback position or or or something that could change there.

[00:18:30]Again, how likely it will through Parliament? Um how long do you think it will take for the market to shake out the nervousness? That's a really good question. I think there's a lot of nervousness around.

[00:18:37]It's actually astounding to understand that the um the consumer confidence is actually lower now than it was over COVID and what's happened in COVID.

[00:18:45]That's absolutely amazing. So, um Gary our confidence and and it's it's absolutely shattered at the moment. And I think this is going to take a little bit longer. But um there's a massive opportunity. Those who can overcome and react, you're going to be buying properties at a discount. I can tell you that right now. So, don't rush in, pull back, take a step back, wait a week or two for all this information to come through. But once you know the plan, the strategy, you've got the ability to get through this and you can do it with confidence act. Because I likely think um it'll probably be 2 or 3 months before everybody starts to catch on and change as well.

[00:19:20]Woo, I need a breather. Um there lots of great lots of great questions, guys. I'm sorry I can't answer all of them. Um but I will do my best next week to get through most of these. We'll know more information next week. We're going to have two guys with over 100 years of experience uh in the property space, one in property, one in also trusts and structures and those kinds of things that are we can break these things down and get into these kinds of questions as well. So, I'm really looking forward to talking about that. Um that's going to be on next week. Um if I can share my screen. Um next week we're going to be on the same time, same place moving forward once a week um on the market live. And as I said before, we're going to have Michael Yardney and Ken Race who can unpack some of those things.

[00:19:59]Um we've had over 260 people on today, so I really really appreciate your time.

[00:20:03]I really appreciate all those people that have helped me um get get to this point for session one. I also want to thank my Metropole fan club who are in the comments, too. Um thank you. Have a good week. Make it a good week.

[00:20:15]And we'll see you next week.