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How to pick the next up-and-coming suburb

How to pick the next up-and-coming suburb

by Demii Kalavritinos | January 15, 2018 | 1 minute read

Starr Partners CEO Doug Driscoll reveals his thoughts about the property bubble and whether or not it will burst in the near future, as well as how he feels about the balance and stability of the Sydney market and his views for 2018.

Doug Driscoll, Starr Partners
January 15, 2018

Doug also chats to Phil about how the real estate market has been impacted because of the property markets, what you should be looking for when thinking of investing in a certain area, and how infrastructure is impacting the property game.

They also reveal how to spot the next big suburb through gentrification of big retail brands and how to understand these markets.

You will also find out what good practice for an investor really is, how to find the right agent to help you and why you should be detailed in your research.

 

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SUBURBS MENTIONED IN THIS EPISODE:

Sydney

Melbourne

Liverpool

Campbelltown

Brisbane

Perth

Badgerys Creek

Leppington

Miller

St Mary’s

Rouse Hill

Marsden Park

Riverstone

Narellan

Ropes Crossing

Minchinbury

 

RELATED AREAS OF INTEREST:

 

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Getting a good grasp on understanding property markets

Expert shares the state of the Sydney market

The hottest spots investors wanted to know about in 2017

Announcer: Welcome to the Smart Property Investment Show with your host, Phil Tarrant.

Phil Tarrant: Phillip Tarrant here, I'm the host of the Smart Property Investment Show. Thanks for joining us today. I might get a couple of real hate mail from some of our listeners today because I think we're going to be a little bit Sydney-centric, so guys, I apologise. I do try to cover every market across Australia for good reason because you shouldn't always be investing in your own back yard. You should be looking outwards from where you are.

            Sydney, as a market, is one which has performed very well over the last four or five years, and if you pick up any paper or listen to any podcasts or turn on any type of TV show, you'll hear a lot of noise around property bubbles, bubbles bursting, and most of the time it relates to Sydney. Sydney is the largest market in Australia in terms of houses, number of residential properties, potential growth. Melbourne's catching up, no doubt, but we're going to have a good chat about Sydney today. I've brought somebody into the studio today that's got his finger on the pulse on the city market. It's Doug Driscoll, he's the CEO of Starr Partners. Doug, how you going?

Doug Driscoll: Very good, Phil, very good thank you.

Phil Tarrant: You're going to share in some of the hate mail as well, because a lot of people get angry if I don't talk about other markets.

            I know that you are Sydney-centric, mainly, and obviously some other parts in New South Wales. ut we'll touch on some of the other states, but let's get into Sydney right now and see what's going on. Before we start, mate, made a quick reference there to this property bubble, and you're living under a rock if you haven't heard about this property bubble, which is about to burst.

            I'm a property journalist, finance journalist, a journalist of some order whether you say, talking behind a microphone is a journalist these days or is writing stuff. I speak to the people across Australia, large and small, experts, investors, and this bubble thing always pops up. I just received a book, I get a lot of review books from Harry, Henry Den, Harry Dent, who's been talking about this bubble, and Sydney's ... Australia's market being overpriced by 40 plus percent and it's all going to unravel at some point.

Doug Driscoll: Mmm

Phil Tarrant: So, mate what's your, what's your take on this property bubble thing. Is there a bubble? Is it going to burst and when's it going to burst?

Doug Driscoll: Yeah I mean, look what is a bubble is the first place I would start.

Phil Tarrant: Mmm.

Doug Driscoll: It's an interesting question because I have yet to see a definitive economic definition of what a bubble actually is. And I get asked the same question, and you know, it's something that I have to talk about on a regular basis. Um, but from my perspective, I don't think there is a bubble in Sydney.

Phil Tarrant: Mmm.

Doug Driscoll: You know I think that the market has kinda started to correct itself. You know, certainly slowing, it's starting to plateau. If we would have continued on the, you know the upward trajectory we were on, then I think we could have been in a lot of trouble. But ...

Phil Tarrant: Mmm.

Doug Driscoll: Ultimately, Sydney is dependent on a number of factors. You know, there's a number of factors that drive the market um, there's still very, very strong demand in Sydney at the moment. You know, it is naturally plateauing, so I don't believe that there is going to be a bubble that bursts. Now having said that, who knows what's going to happen on a global scale. Um, you know there's a few politicians at the moment with ah certain agendas and perhaps itchy trigger fingers, so you just don't know what's going to happen there.

            But from what we do know, from what we do understand, I think the markets corrected itself, obviously we've still got record low interest rates, we've still got you know, an under supply, we've still got a burgeoning population, so yeah I don't think there is a bubble.

            Now I said obviously Sydney is dependent on a number of factors, if we um rather contrastingly look at somewhere like Perth, obviously that was almost a perfect bubble.

Phil Tarrant: Mmm.

Doug Driscoll: Because it was dependent on really just one factor and that was natural resources. You know, and we saw the market moving exponentially there, and as soon as the mining boom was over, it was naturally going to have ramifications elsewhere.

Phil Tarrant: Mmm.

Doug Driscoll: So that was kind of a perfect bubble, but if you look at Sydney, it's a far more balanced and far more stable market.

Phil Tarrant: Mmm.

Doug Driscoll: So, I hope these aren't famous last words, but um, I can't see a bubble bursting any time soon.

Phil Tarrant: Don't worry mate, we're recording it and we'll play it back.

Doug Driscoll: Alright, okay ...

Phil Tarrant: And we'll play it back in a years time ...

Doug Driscoll: Well let's hope I'm right.

Phil Tarrant: Is Doug right or wrong and ah, I know Doug quite well. Doug's a good friend of Momentum Media um, if you're not aware of his business Starr Partners. You guys are really strong out western suburbs, south west suburbs.

Doug Driscoll: Yes.

Phil Tarrant: Of Sydney, and you have some, some um, offices closer in to town. But um, ah when you think of the mortgage belt ...

Doug Driscoll: Mmm-hmm

Phil Tarrant: Of Australia, so I think a fifth of all Australian's all live in the, the sort of suburbs of Sydney these days right.

Doug Driscoll: Yep.

Phil Tarrant: So I know you guys are strong out there and you travel a lot and you connect and engage with ah, with your franchise owners.

            I always trust your insight into the Sydney market, particularly those markets cause I know you're on the ground and you get it and you see listings coming through, you see, um are they up are they down, are people shifting property, are auctions moving, is there an appetite for people to sell, is there an appetite for people to hold. You know these are all the different dynamics which influence property markets ...

Doug Driscoll: Mmm.

Phil Tarrant: And whether it's going up or down. Sort of the last year or so 2018-2017, what's been your read on the Sydney market? Have you seen that activity, is it, has it been as hot as what everyone's been talking about, or is it just the market.

Doug Driscoll: I think you're right, you know.

Phil Tarrant: Yeah.

Doug Driscoll: They say you can, from an agent's perspective this is the advice I always give them, You can control the sails, but you can't control the wind.

Phil Tarrant: Mmm.

Doug Driscoll: So you just need to deal with what you're dealt. Certainly we've seen the market cool. Having said that, perspective is needed.

Phil Tarrant: Mmm.

Doug Driscoll: You know, we've just transitioned out of what is not just once in a generation, but once in a lifetime market. Um, you know we talk about 'oh the market's doing this, that and the other and it's Armageddon'. It's not. You know, if you compare it to a ten year average, it's a still very, very strong. But from the coal face, and you are right I do keep my finger very close to the pulse, I like to speak to our Principles, you know almost on a daily basis, they are still reporting good numbers across open homes.

Phil Tarrant: Mmm.

Doug Driscoll: You know, they are still you know reporting a number of offers per property. Um, okay, not as many as you would have seen maybe earlier in 2017 and 2016, but it's still a strong market.

            Now what has moved however, is that um, the level of competition has cooled slightly, which basically means that there's not a stampede for every home at the moment. Agents are needing to work a little bit harder to put deals together, um I always used to say that up until recently, agents didn't sell homes, people used to buy them, and that's very true if you think about this.

Phil Tarrant: Mmm.

Doug Driscoll: So, from that perspective, agents are having to work a little bit harder, they're having to negotiate, they're having to go back to basics. It's not just a case now of sticking it on realestate.com or domain and waiting for the phone to ring, they're having to turn a few stones to find buyers. Um, but that is a normal market is it not? Whatever that may be of course.

            So, look we are finding it a little bit tougher.

Phil Tarrant: Mmm-hmm.

Doug Driscoll: Um, certainly we are starting to see a few more listings come on, which is good. I know this is obviously about investors, this podcast, but if you are an owner occupier, I think now is the best time to buy. You know, there are more listings coming on, there's slightly less competition, you know and rates are still at record lows.

Phil Tarrant: Yeah.

Doug Driscoll: Um, so, you know, what's stopping you?

Phil Tarrant: Mmm.

Doug Driscoll: Investing however, obviously different proposition altogether.

Phil Tarrant: Yeah and I've bought a lot of stuff out in the western suburbs of Sydney, um not recently, but sort of, sort of four, five, six years ago, and I benefited considerably from the growth out there.

Doug Driscoll: Mmm.

Phil Tarrant: Um, that growth's sort of come off a little bit, and I haven't been investing in those western suburbs of Sydney, purely because there's better opportunities elsewhere at this point in time. Um, but, that said, there will be a time when investors will shift back to those areas where you guys are strong.

Doug Driscoll: Mmm.

Phil Tarrant: At a point in time. What should you be looking for in terms of the dynamics of markets to indicate whether it is a good time to be investing in those markets, and I speak primarily round those western suburbs of Sydney ...

Doug Driscoll: Mmm.

Phil Tarrant: Where you guys are.

Doug Driscoll: Well I think for me, looking at it, there are a number of kinda criteria, but I certainly would look at you know at major scale development, and infrastructure projects. Um, I mean there are a number of them out in in Western Sydney, um at the moment and when you're talking about major infrastructure projects I'm talking about, you know the north west rail link ...

Phil Tarrant: Yeah.

Doug Driscoll: For arguments sake. You know, you've got a new station on your doorstep, naturally it's going to be greatest demand, that has a knock on effect to increase in values. The things like Badgerys Creek, no one couldn't ignore Badgerys Creek at the moment. You know the ground work has started there, ah a lot of those kinda older, more traditional suburbs in and around there such as Leppington.

Phil Tarrant: Mmm.

Doug Driscoll: Are starting to change beyond all recognition. So, you know if I was an investor looking to buy now, certainly areas like Leppington would be areas that I would look at, um in fact if anything arguably perhaps you could even be a little bit too late there.

Phil Tarrant: Mmm.

Doug Driscoll: Also, gentrification, you know there are a number of these kind of um, sort of true blue, kind of Aussie suburbs out in the west, slowly but surely, there becoming more cosmopolitan. So if you can find one of those, um that's on the cusp, a good example of that is somewhere like Miller, um now most people wouldn't know where Miller was, it's not you know too far away from Liverpool.

Phil Tarrant: Mmm.

Doug Driscoll: Again, there's going to be an element of that kind of Badgery's Creek factor, um but's also getting um, a new station going in there supposedly, um but if you go to Miller, the average price there I guess would probably be probably under $700,000 at the moment.

Phil Tarrant: Mmm.

Doug Driscoll: You know, and in Sydney that's almost unheard of. But you just that get feeling, you just get that sense that it's about to turn. It's about to become more gentrified.

            So, St Mary's would be a good example of that. You know, if you went to St Mary's two, three years ago, it is what Miller is today. So if you get there at the right time, and as I said you can start to see change, and that could be anything as simple as the likes of Coles and Woolworths moving in ...

Phil Tarrant: Yeah.

Doug Driscoll: You know.

Phil Tarrant: Or Bunnings or an Ikea.

Doug Driscoll: Or Bunnings or Ikea, these kinds of guys because, they do extensive feasibility studies on these areas, you know. They do significant due diligence. They don't just go 'oh there's a shop corner, let's you know stick a supermarket in there'.

Phil Tarrant: Yeah.

Doug Driscoll: They spend hundreds of thousands on research, um and they normally base it on population growth and popularity.

Phil Tarrant: Mmm.

Doug Driscoll: And these kind of things. Um, which works side by side in tandem with you know, with property investing in my opinion.

Phil Tarrant: Yeah, well you think of say the Ikea's of the world right in Sydney I think there's two or three.

Doug Driscoll: I think it's three now.

Phil Tarrant: I think there's three now.

Doug Driscoll: Yeah.

Phil Tarrant: The third one just want out towards Rouse Hill.

Doug Driscoll: Marsden Park.

Phil Tarrant: Ahh okay. Which is out towards the ... on the new um rail link right?

Doug Driscoll: Yep.

Phil Tarrant: So, so obviously Ikea's gone 'hang on a second, we're in the business of sellin' stuff' ...

Doug Driscoll: Mmm.

Phil Tarrant: Soft furnishings, you know I've done the walk through there on Saturday morning as everyone has done buyin' stuff that you don't really need, but you for some reason buy. If Ikea's setting up shop somewhere, there's a pretty good indicator that ...

Doug Driscoll: Absolutely.

Phil Tarrant: That they're expecting a lot of people moving into those areas and buying up home wares.

Doug Driscoll: Absolutely, and that's always been something that I have looked at. Look it's a bit of a lazy way of doing it for investors.

Phil Tarrant: Yeah.

Doug Driscoll: But it, it is a telltale sign.

Phil Tarrant: Yeah.

Doug Driscoll: That's a great example Ikea in Marsden Park. Because look at Riverstone, you know ...

Phil Tarrant: Mmm.

Doug Driscoll: I mentioned St Mary's is an area where it's you know, it's kinda gone through a metamorphosis recently.

Phil Tarrant: Yeah.

Doug Driscoll: Actually Riverstone which is closer to ah, to Marsden Park, that has also gone through a significant redevelopment phase.

Phil Tarrant: Yeah.

Doug Driscoll:            So again, someone buying there a couple of years ago, would be quid in now, because the areas almost changed beyond recognition.

Phil Tarrant: I remember ten years ago, out at Riverstone, you know there wasn't even any curb and gutter right, it was just a bit of bitumen down a street and ah, you know open gutters and big blocks right?

Doug Driscoll: Yep.

Phil Tarrant: With ah, red bricks sittin' on them.

Doug Driscoll: Yep.

Phil Tarrant: And they're all shifting now. Everyone's either getting sliced up or there putting completely new developments out there. Huge, huge growth.

Doug Driscoll:  Absolutely.

Phil Tarrant: Yeah.

Doug Driscoll: And obviously, that's one of the things we've gotta be very careful of when we look at numbers, you know, you talked about the fact that I like to talk to my offices on a regular basis. Because, like I get the macro stuff. I get the numbers cross my desk, and more often than not, they don't tell the whole picture.

Phil Tarrant: Mmm.

Doug Driscoll: And by that, I think it was Benjamin Disraeli said you know, 'lies, damn lies in statistics'. And if you look at some of the numbers for some of the suburbs at the moment, they're saying well it's 10, 15% growth. But actually the suburb itself has changed beyond all recognition.

Phil Tarrant: Yeah.

Doug Driscoll: So if you looked at somewhere like Riverstone, you may it see climb 20% over two years, well you know all the old fibros have been bulldozed and all these McMansions have taken their place. Of course you know, obviously the prices for that suburb are going go through the roof.

Phil Tarrant: Yeah. So there's a story.

Doug Driscoll: There is a story there. And that's why you can't just base your decisions based on the numbers alone. Because there is always a story behind those numbers. And that's where you've gotta drill down deeper, you've gotta be forensic bordering morphological in that respect ...

Phil Tarrant: Mmm.

Doug Driscoll: ... In that respect

Phil Tarrant: So, as a scenario, if you're a property investor and you're looking at these areas of potential growth and you, either you fly into Sydney or you live in Sydney and you jump in a car, you're gunna do a trip out west, um for a Saturday morning, what would you do if you were that person and you wanted to get a feel for the place, you wanted to understand the market, you want to see the dynamics and as part of a process to help frame investment opportunities in those areas, would you stop by one of your agents offices, knock on the door and say 'hey, what's going on out here?' Is that good practise for an investor?

Doug Driscoll: I think so. Yeah, I think so.

Phil Tarrant: Yeah.

Doug Driscoll: Yeah. I think so. I mean look, you know, the internet, the internet's a wonderful thing ah and it will give you a plethora of information, but sometimes nothing beats that on the ground local knowledge. You've obviously got to speak to the right agent.

Phil Tarrant: Yeah.

Doug Driscoll: Who themselves has their finger on the pulse. But, um certainly just ask a load of questions, of a load of people.

Phil Tarrant: Mmm.

Doug Driscoll: You know, and then you'll form a more measured opinion on any one marketplace.

Phil Tarrant: Mmm.

Doug Driscoll: But, you know again, Badgery's Creek I'm cannot promote enough what that's going to do for that general area.

Phil Tarrant: Ah, so this whole Badgery's um, Creek precinct. So you know as an investor they have been talking about a second airport for, I don't know how long it's been earmarked for, potentially that as a site for decades now, and it's, is work actually underway out there?

Doug Driscoll: They've started the ground work yeah.

Phil Tarrant: They've actually started...

Doug Driscoll: They've actually owned the land since, I think 1983.

Phil Tarrant: Yes so it's been in the pipeline for a while and it's all been affirmed and, and there's now work underway to create this new airport out there and there's a lot of business precincts going in and around, so it's going to be a hub. I know Defence and I think in particular Northrop Grumman is investing heavily out there in terms of building a Defence precinct. There's other industries which are going to really gravitate around this new airport, this new economic zone, and as a result of that, what does that mean, it means jobs growth.

Doug Driscoll: Mmm hmm.

Phil Tarrant: It means jobs creation, it means wage growth hopefully, it means infrastructure growth, it means all the associated amenities that are supported or go in hand with an influx of people into an area and therefore we should see price growth right? That's the idea.

Doug Driscoll: Absolutely. Well those people need somewhere to live clearly.

Phil Tarrant: Yeah. Yeah.

Doug Driscoll: Um, so absolutely, that's why I keep earmarking it as an area. Now there's also a case of being too close of course.

Phil Tarrant: Yeah.

Doug Driscoll: You know, I often joke that you don't want to be so close where that you can kinda smell the petrol and see the whites of the pilot's eyes.

Phil Tarrant: Yeah.

Doug Driscoll: Um, so you've gotta be very strategic.

Phil Tarrant: Mmm.

Doug Driscoll: You want to be close enough, but far away enough.

Phil Tarrant: So don't want the aeroplane noise, but you want all the benefits of being close to an airport.

Doug Driscoll: Absolutely.

Phil Tarrant: Yeah.

Doug Driscoll: So, again we talked about being detailed in your research.

Phil Tarrant: Mmm.

Doug Driscoll: At this time it's going to be very difficult to determine flight paths for arguments sake.

Phil Tarrant: Yeah.

Doug Driscoll: So you might you know, look at a map and go 'well let's look at 18 kilometres from the, you know the epicentre'. Well that's going to be fairly difficult ...

Phil Tarrant: Mmm.

Doug Driscoll: Because how do you know whether the planes are flying you know, north, west ... South or east. So um, that's the kind of level of research you really need. Cause if all of a sudden you hedge your bets and you put cards on any one area, and then all of a sudden you find the main flight path goes directly above it, well you may not see that growth.

Phil Tarrant: Mmm.

Doug Driscoll:So it really is as I said very detailed and you might be worth just waiting a little bit longer to get that decision right.

Phil Tarrant: Yeah, you don't need to rush into it, it's going to be a long term build, a long term play and the build up phase is gunna be decades as well right.

Doug Driscoll:            Oh yeah.

Phil Tarrant: Did you have a an established office out that way. Which would be the closest to Badgery's, would it be sort Camden or Liverpool.

Doug Driscoll: No so, ah probably we've got Liverpool, we've got Miller, we've got um, Minto, we've got Campbelltown, and then Narellen and then obviously to the north you've then got places like St Mary's, Ropes Crossing, Minchunbury ...

Phil Tarrant: Okay.

Doug Driscoll: Um, so again, it kinda falls in the middle of no man's land.

Phil Tarrant: Mmm.

Doug Driscoll: Um, you know the sheer fact that you can actually build an airport and everything that goes with it, means you've got a fairly big bit of dirt.

Phil Tarrant: Yeah.

Doug Driscoll: Um, so there is kind of just this void in between kinda sort of the western spine and the south west ...

Phil Tarrant: Yeah.

Doug Driscoll:            And that's exactly where the airport's being built.

Phil Tarrant: Hmm, interesting.

            So let's have a chat about um, real estate terms and um I'm probably guilty of this sometimes as a journalist to use some of these, I just you know, flippantly talk about different stuff that real estate agents use or use all the time or property investors use all the time, um a lot of them just don't make sense. You know, I listen to a lot of people talk about real estate and think, you're full of jargon.

Doug Driscoll: Mmm.

Phil Tarrant: Right, so let's have a chat about this jargon. It's a cooling market. What does that mean?

Doug Driscoll: That normally ah is um, parlent for the market's falling north, normally.

Phil Tarrant: Oh okay.

Doug Driscoll: You know, when agents sort of say use the term, I mean I'm culpable myself, you know ...

Phil Tarrant: Yeah.

Doug Driscoll: Cooling market, transitional market, it basically is a nicer, less frightening way of saying that perhaps prices are coming down.

Phil Tarrant: A softening market.

Doug Driscoll: Same kind of thing.

Phil Tarrant: Exactly the same.

Doug Driscoll: Yeah, softening.

Phil Tarrant: So cooling, softening, transitioning. So it typically means ... because when you're talking about real estate softening, cooling, transitioning ... transitioning could be up or down, but softening, cooling says to me it's going backwards right ...

Doug Driscoll: Yep

Phil Tarrant: And in real estate that's a bad thing.

Doug Driscoll: Yep.

Phil Tarrant: Yep. You don't want things to go backwards, you want things to go forward.

Doug Driscoll: No and again, you asked the question about the bubble at the start.

Phil Tarrant: Yeah.

Doug Driscoll: It is interesting

Phil Tarrant: Yeah.

Doug Driscoll: Because certain quarters of the media they talk about boom or bust.

Phil Tarrant: Yeah.

Doug Driscoll: And they never identify that massive area in between ...

Phil Tarrant: Mmm.

Doug Driscoll: And that's exactly where are at the moment.

Phil Tarrant: Yeah.

Doug Driscoll: You know, I mean I think for the year to date I think prices in Sydney climbed 3.4%

Phil Tarrant: Mmm.

Doug Driscoll: You know, so again if prices start falling by the same measure they were climbing ...

Phil Tarrant: It's a bubble burst.

Doug Driscoll: Yeah, that's kinda ...

Phil Tarrant: Yeah.

Doug Driscoll: Yeah, that's certainly not softening, transitioning or cooling.

Phil Tarrant: So what's, what's a hot market then? Is a hot market listings or a hot market sales? Or hot market prices, or a hot market everything?

Doug Driscoll: Ah, it's everything really.

Phil Tarrant: Yeah okay.

Doug Driscoll: Again, it's in context ...

Phil Tarrant: Yeah

Doug Driscoll: But if you're talking in terms of prices, I would say a hot market is where you're kinda talking, if not exceeding double digit growth.

Phil Tarrant: Okay.

Doug Driscoll: Um, sure that's hot. You know 2015, 2016 we had a white hot market ...

Phil Tarrant: Yeah.

Doug Driscoll: And then perhaps this year we've seen a red hot market.

Phil Tarrant: Yeah.

Doug Driscoll: So, again it's just difficult, it's all ...

Phil Tarrant: And an adjective here ...

Doug Driscoll: It's just all jargon.

Phil Tarrant: Or verb or whatever you want to call it.

Doug Driscoll: And then there are nuances in amongst the market, you know there'll be some suburbs that'll grow faster than others and again we have a propensity to throw a whole city into the same basket.

Phil Tarrant: Yeah.

Doug Driscoll: You know, there's five million people living in Sydney.

Phil Tarrant: Yeah.

Doug Driscoll: A ... A ...

Phil Tarrant: Sydney's a hot market.

Doug Driscoll: Hundreds, hundreds of suburbs.

Phil Tarrant: Yeah.

Doug Driscoll: You know, and obviously we just throw everything into the same basket you know and at the moment in the inverted commas, I'm smirking when I'm saying this 'transitioning market' obviously there are some that are continuing to grow.

Phil Tarrant: Yeah.

Doug Driscoll: And there are some that are starting to fall.

Phil Tarrant: Yeah.

Doug Driscoll: And the vast majority are probably going sideways.

Phil Tarrant: So it's just noise really.

Doug Driscoll: That's all it is, white noise.

Phil Tarrant: Yeah.

            Listings are up, listings are down, what does that mean?

Doug Driscoll: Again, it depends on who you're listening to.

Phil Tarrant: Yeah.

Doug Driscoll: So you'll hear agents individually talking about listings up, listings down.

Phil Tarrant: Yep.

Doug Driscoll: If you want the true measure on that, look at people like Core Logics data.

Phil Tarrant: Mmm.

Doug Driscoll: They'll tell you know whether or not there are more listings on the market. Um, again you've got to look at the fact that the population is growing, there are, you know, hundreds and thousands of new homes being built every year.

Phil Tarrant: Yeah.

Doug Driscoll: Of course listings are inevitably going to go up.

Phil Tarrant: Yeah.

Doug Driscoll: Um, so you've gotta, you've gotta be careful of who it is you listen to, but if you want facts, you've gotta look at people like Core Logic, you know ...

Phil Tarrant: Yeah.

Doug Driscoll: Who, well that's their job, let's face it.

Phil Tarrant: Yeah.

Doug Driscoll: So they normally ...

Phil Tarrant: It's good data? Yeah.

Doug Driscoll: Very, very good data, absolutely.

Phil Tarrant: What about when I hear, days on market have blown out. What does that mean?

Doug Driscoll: That's another cracker. Yeah.

Phil Tarrant: Yeah.

Doug Driscoll: I mean look, the average days on market the average days on market in Sydney, again I'm generalising ...

Phil Tarrant: Yeah.

Doug Driscoll: Is 30 days at the moment ...

Phil Tarrant: Mmm.

Doug Driscoll: Um, you know, into next year I anticipate that going up to 35, maybe 40, but hey people, let's maintain some perspective again, if it takes you kinda 40 days to sell your home, that's not exactly that long is it? Let's face it.

Phil Tarrant: Yeah.

Doug Driscoll: Compared to other markets across the country where it's kind of 120, 150 plus.

Phil Tarrant: Mmm.

Doug Driscoll: You know, so ... yeah, I don't believe days on market is blown out across Sydney at all, and anyone who says that is talkin' out their you know what.

Phil Tarrant: Yeah.

Doug Driscoll: I mean 35, 40 days ... it's 30 at the moment if it goes to 35, 40 that's a very short time period to sell your property.

Phil Tarrant: Mmm.

            What about prices are spiking?

Doug Driscoll: That means that essentially that the ... you know, whoever it is that's talking senses that the market has kind of peaked.

Phil Tarrant: Okay.

Doug Driscoll: Um, you know, I mean that ... spiking would be a, an accelerated rate of growth, but you know spiking, I don't think we've certainly seen that in the last 12 months.

Phil Tarrant: Yeah. Price spike.

            So let's have a chat about how to deal with agents, cause I know you've got good agents, and I've spoke to some of them. Um, think I'm looking out the Seven Hills way, but um, working with a real estate agent as an investor is an interesting relationship. I know a lot of ... there's a real science to it I believe, and you can do it really well and you can do it not so well. And, my view with anything whether I'm buying or selling is to ah, create the best relationship with the people involved in it to make it a much easier process and hopefully a better outcome for myself and also the person on the other side. It's a true negotiation right.

            Ah dealing with a real estate agent, um a lot of scenarios come in and if it's a hot market, a softening market, a cooling market, a transitional market, it's all going to change the dialogue you're going to have with an agent over time right? What the agent wants to do is sell a house as quickly as possible for the most amount possible for the vendor.

Doug Driscoll: Correct.

Phil Tarrant: Pretty much. But at the same time, keep you sweet as a buyer, because you might be a seller at some point in time, or hopefully you might choose them to manage your investment property. So they've got skin in the game on both sides, right.

Doug Driscoll: Mmm.

Phil Tarrant: What have you seen the best investors do dealing with agents. What sort of attitude, temperament, um, ah, communication style, or skills makes, makes for a good transaction that satisfies everyone?

Doug Driscoll: You touched upon it earlier, you talked about obviously okay you just landed from Mars ...

Phil Tarrant: Mmm.

Doug Driscoll: Um, you know, you're looking at say western Sydney as an area you know what do you do? You talked about you know, do you go speak to a local agent, absolutely.

Phil Tarrant: Mmm.

Doug Driscoll: I think there's, there's a habit of now ... with all the information on the internet of just sitting behind your keyboard and tapping away and all of a sudden becoming a maven, well the reality is, if you go out and actually start liaising with agents that would be my first piece of advice.

Phil Tarrant: Yeah.

Doug Driscoll: To actually get to know them. Um, make sure that they know who you are, so as and when a new listing that fits criteria comes on, your front of mind. You know, they pick up the phone, um ...

Phil Tarrant: So a good agent'll call you and say 'hey guess what, I've got this do you want it?'

Doug Driscoll: Absolutely.

Phil Tarrant: Yeah.

Doug Driscoll: But in the first instance it's down to the investor to actually go out and get known.

Phil Tarrant: Mmm.

Doug Driscoll: Because irrespective of what the market conditions are now, it is absolute fact that there are still new buyers for every home ...

Phil Tarrant: Mmm.

Doug Driscoll: Across Sydney.

Phil Tarrant: Mmm.

Doug Driscoll: So, as an investor, um you know, by the time you might find out about it, it might be too late. You know, you might get the headstart on somebody else. They might even phone you before they even list the property on realestate.com.au or domain.

Phil Tarrant: And that's the holy grail, right?

Doug Driscoll: Absolutely, you know a good example of that is a friend of mine back in England he's a serial investor and ah, he, everyone knew him by name and he was a bit of a pain in the you no what, because he would constantly be onto agents.

Phil Tarrant: Mmm.

Doug Driscoll: But guess what? Every time they had a new listing, that ticked the right boxes, they literally get straight back to the office and straight on phone to him. In fact, they wouldn't even wait that long, they'd phone him from the car.

Phil Tarrant: Yeah.

Doug Driscoll:Um, so that's probably one of the pieces of advice I'd give. Um, you know make sure they know who you are. You know make sure that they're on your ... the hot to trot list. So when they think about who should I call, you're absolutely front and centre and as I said, you could actually be their secret weapon. You could be that person wherein that when they're actually fighting for the business in the first place, they could actually be saying to the vendor, 'listen, I think I've got someone for this, um, rather than actually take it to the market, um what about I actually just invite this one person round and see if they're interested, see if they'll make an offer, then you save all the effort, all the aggravation, all the marketing costs, so getting to know the agent ...

Phil Tarrant: So that's like being a true broker, then the real estate agent.

Doug Driscoll: Absolutely, and then ...

Phil Tarrant: Linking the buyer and the seller.

Doug Driscoll: And, I think that agents are going to have to start getting back to basics as I touched up earlier.

Phil Tarrant: Yeah.

Doug Driscoll: They're gunna have to um, start working with buyers a lot more.

Phil Tarrant: Mmm.

Doug Driscoll: Whereas they've been spoilt for the last five years.

Phil Tarrant: Yeah.

Doug Driscoll: Literally, spoilt. So they'll start needing buyers all of a sudden.

Phil Tarrant: So that's where you start seeing the good agents compared with the great agents.

Doug Driscoll: Correct.

Phil Tarrant: Yeah.

            So just for our um, our listeners who have never sold a property. Let's have a chat about that process, how that happens. So, ah, I'm selling a property whether I'm an owner occupier or an investors and I go I want to sell my property. I typically get, unless I go to a for sale by owner website, or I go down the cheap path of like a Purple Bricks or something or rather right. Okay, I'm going to get three or four agents in and they're all going to come in and tell me why they should be the seller of my property.

Doug Driscoll: Mmm hmm.

Phil Tarrant: So that's a pretty competitive process isn't it.

Doug Driscoll: Yep.

Phil Tarrant: Yeah. So what you're talking about before hand is saying that if you're a good agent and you've already got a ready supply of investors that you can walk into a listing pitch and say 'hey, I can get this sold for you cause I've already got someone ready to go'.

Doug Driscoll: Correct.

Phil Tarrant: Um yeah.

Doug Driscoll: And the, the vendor would have got the three or four agents round.

Phil Tarrant: Mmm.

Doug Driscoll: As you alluded to, ah they'll have a very firm idea of you know where the price point should be um, and as a good agent if you've made the relationship with the right buyers whether it be investors or owner occupiers, um and you feel confident that they're going to pay that kind of price guide, or that range, um as I said that's an up your sleeve. Because what owner, you know wouldn't want to, maybe eliminate all the hassle, the aggravation and the marketing cost, of course they would. You know, it goes without saying.

            And even if that buyer, that investor isn't interested or doesn't come up with the goods in terms of the right money, nothing ventured, nothing gained, they've lost half and hour of their life. But no vendor that I know, would give up that opportunity if that person was confident enough that person would end up buying it.

Phil Tarrant: So how do you be that investor that agents like, rather than that investor that is just a nuisance?

            Do you know where that line is? Where you just go 'this guy again, leave me alone' or is it, you know ...

Doug Driscoll: I mean, at the end of the day, if you're a serial investor...

Phil Tarrant: Mmm.

Doug Driscoll: And you're buying property, every agent's going to love you.

Phil Tarrant: Okay.

Doug Driscoll: You know.

Phil Tarrant: So that's just reality right.

Doug Driscoll: Yeah absolutely.

Phil Tarrant: Yeah, okay.

Doug Driscoll: You're going to be their best friend if you're that investor that's kind of um, maybe one day, those kind of things, then the reality is they're going to see you as a bit of a tyre kicker.

Phil Tarrant: Yeah.

Doug Driscoll: Now that may not be a fair reflection ...

Phil Tarrant: Mmm.

Doug Driscoll: On your intentions, but actions speak louder than words. So if you've bought one or two and they know that, you're going to be their best buddy. If you've spent two years looking and gone to all their opens and phoned them, and wasted their time, or at least that's how they would perceive it, then again it's gunna be a bit more difficult.

Phil Tarrant: So the agent represents the seller and they need to add value to that relationship, but also to try add value to the buyer as well.

Doug Driscoll: Mmm hmm.

Phil Tarrant: Because as we spoke, the benefits, so if you're the big, hot shot and you're always like ' yeah call me, call me, I'll buy it, buy it, buy it' Then you're hard work to negotiate with, you're unreasonable, you never get to the price point, you never buy, you're going to get yourself off that list pretty quick aren't you?

Doug Driscoll: Pretty much.

Phil Tarrant: Yeah.

Doug Driscoll: Yeah. And you've gotta be realistic, I mean I go back to you know, a friend of mine back in England, he was a mad man.

Phil Tarrant: Mmm.

Doug Driscoll: I mean a mad man. He used to do a whole manner of all different things to make sure he was, top of the list. So much so, that he even went and bought like coffee coasters with his details on them and went and handed them around local estate agents' offices.

Phil Tarrant: Mmm.

Doug Driscoll: You know, I mean so every time they had coffee…

Phil Tarrant: Was he buying for himself or was he a buyers advocate?

Doug Driscoll: No he was buying for himself.

Phil Tarrant: Oh really.

Doug Driscoll: Yeah. So ...

Phil Tarrant: Wow.

Doug Driscoll: But again, he got to buy property. He got to view and purchase property before it even came to the market.

Phil Tarrant: So he got all the best deals. Often as an investor the best deals are, um ones which don't hit the open market.

Doug Driscoll: Absolutely.

Phil Tarrant: Um, and it's normal distress or divorce or death or debt or all this sort of stuff.

Doug Driscoll: Mmm. The four d's absolutely.

Phil Tarrant: Yeah the four d's. Which is like, as an investor often the best buys are at a time when it's probably a real negative for the vendor.

Doug Driscoll: Mmm.

Phil Tarrant: Right so there's some sort of pressure, which means that they need to shift stuff quickly.

Doug Driscoll: Yeah.

Phil Tarrant: Um ...

Doug Driscoll: Especially with debt and divorce.

Phil Tarrant: Yeah.

Doug Driscoll: You know, um I think sometimes we lose sight, certainly when we are talking about investing in property, um it's a very non-emotive process. You know.

Phil Tarrant: Yeah.

Doug Driscoll: It's really numbers, and returns.

            Whereas if you think then from the other perspective from the person selling, if it's certainly debt or divorce, there's a lot of embarrassment there, there's a lot of awkwardness so if they can avoid airing their dirty laundry you know to all and sundry ...

Phil Tarrant: Mmm

Doug Driscoll: Then they'll almost certainly take that option. And I think people lose sight ...

Phil Tarrant: And a nice quiet sale.

Doug Driscoll: Nice and quiet, no one really needs to know,

Phil Tarrant: Yeah.

Doug Driscoll: The only time they realise it when the removal truck rocks up.

Phil Tarrant: Yeah, yeah, so you want to be that investor.

Doug Driscoll: Yeah and look it's possible, but again I think we have a habit or propensity now of wanting to basically do all our research behind a keyboard and there's some amazing facts and figures ...

Phil Tarrant: Yeah.

Doug Driscoll: And all this information. But if you really want to be you know, as I said the head of that queue,

Phil Tarrant: Mmm

Doug Driscoll: Then you're really going to have to start making relationships and probably up until very recently, forget it, you know agents weren't interested because they were spoilt.

Phil Tarrant: Mmm.

Doug Driscoll: However, now it's a different dynamic, it's a different paradigm, agents need you.

Phil Tarrant: Yeah, and that's a really good point because we talk about the reality of being on the ground, or ground truth and you'll find a time in every market and speaking with buyers agents and other sophisticated investors, there is always a point where they become the person who never gets phone calls returned to the person who is getting hounded by agents and that is typically the point in time when you know markets are really changing.

Doug Driscoll: Yep.

Phil Tarrant: You know, where you get a transitioning market so.

Doug Driscoll: Yep.

Phil Tarrant: So when, when agents aren't returning your calls it's probably because they've got plenty of other people who will buy and who will probably spend a lot more on it than what you would.

Doug Driscoll: Absolutely.

Phil Tarrant: Right?

            But at a point in time when agents are hassling you to shift stuff you know that it turns into a buyers market, rather than a sellers market.

Doug Driscoll: Yep.

Phil Tarrant: And that's a really good point so ...

Doug Driscoll: I had to chuckle, I was talking to one of my agents yesterday.

Phil Tarrant: Mmm.

Doug Driscoll: And um I did genuinely laugh cause he said to me 'I'm trying to get hold of this buyer at the moment and he won't bloody well return my phone calls' and I kinda thought the irony there is just fantastic.

Phil Tarrant: There you go.

Doug Driscoll: You know, I mean two years ago it would have been the exact opposite.

Phil Tarrant: Yeah.

Doug Driscoll: So absolutely spot on. So that's the difference in the market now it has softened. It's neither a buyers nor a sellers it's kinda somewhere ...

Phil Tarrant: The market.

Doug Driscoll: In between that equilibrium if you like.

Phil Tarrant: Mmm.

Doug Driscoll: But everyone needs everyone, you know what I mean, and that's a good market. That's actually a healthy market, you know ...

Phil Tarrant: Mmm.

Doug Driscoll: You know the market we just moved out of was probably unhealthy.

Phil Tarrant: Yeah.

Doug Driscoll: You know, it was going up too quickly, too aggressively. So it was just interesting to see, but those relationships are absolutely essential, their imperative, because at the end of the day the agent does ah wield influence and power in terms of process.

Phil Tarrant: Yes.

Doug Driscoll: So being their best friend, their buddy, the person that they go to, is essential.

Phil Tarrant: So if you're struggling to get an agent to return your calls and it's taking a long time and stuff, you can assume he's probably got a few people.

Doug Driscoll: Yeah.

Phil Tarrant: Buying for it. You're probably need to make your decisions with more authority and speed.

Doug Driscoll: Yep.

Phil Tarrant: So you need confidence around ... this is my offer, this is what I am willing to pay, take it or leave it, if not I'll go to someone else, if he takes it you know the price is right for the vendor, the price is right for you, deal done. That's beautiful real estate right?

Doug Driscoll: It is.

Phil Tarrant: Just get it done.

Doug Driscoll: And also put something in writing ...

Phil Tarrant: Yeah, okay.

Doug Driscoll: That's the other advice I would have.

            Again, what then happens is then there's a trail as such ...

Phil Tarrant: Mmm.

Doug Driscoll: Rather then 'oh you didn't say that', 'yes I did', 'no you didn't' ...

Phil Tarrant: Yeah.

Doug Driscoll: It's in black and white you know. So that's my advice as well. You know, not just making a phone call, leaving a message, actually send them an email.

Phil Tarrant: Mmm.

Doug Driscoll: You know, that way, if in the event that it sells to someone else and you weren't even given a look in, well clearly you know there's something wrong there.

Phil Tarrant: Well there's someone doing it better than what you're doing is what's happening.

Doug Driscoll: Correct. Correct.

Phil Tarrant: It's exactly what's happening.

Doug Driscoll: But the good agents will always return phone calls.

Phil Tarrant: They should do. Yeah.

Doug Driscoll: Yeah.

            For motivated buyers, I mean crazy not to right?

Phil Tarrant: Well, well the thing is also, if you miss out on property X, you know there is going to be property Y and Z at some point, so you might be top of that list.

Doug Driscoll: Absolutely.

Phil Tarrant: Subsequently, but when agents are returning calls really quickly and they're over communication, well maybe I've got a bit of an advantage here ...

Doug Driscoll: Yeah

Phil Tarrant: I could probably start low balling stuff. So this is the psyche of real estate.

Doug Driscoll: Correct.

            And you get a feel for that.

Phil Tarrant: Yeah. You get a feel for that, it's fun.

Doug Driscoll: But again, you gotta be careful because if you start low balling you may just be dismissed out of sight.

Phil Tarrant: Yep.

Doug Driscoll: So clear and precise vocabulary is needed, not just from the agent but the investor themselves.

Phil Tarrant: Mmm

Doug Driscoll: Because, if you are low balling someone you've got to make it clear to them that in the event that that's not enough, I want the opportunity to potentially to increasing...

Phil Tarrant: Mmm.

Doug Driscoll: But by doing that, you're sharing that you've got more in the tank. So it's a very difficult balancing act. But ...

Phil Tarrant: Yeah.

Doug Driscoll: That's all part and parcel, that's the fun of it really.

Phil Tarrant: That is fun, it should be fun.

            Should be fear in every single buying experience.

Doug Driscoll: Of course

Phil Tarrant: I love it. It's really good.

            I guess the key measurement ... we're going to have to wind up cause we're running out of time, but the key measurement I'd take from this amongst ... don't get caught up in all the terms around property investment, or in real estate, is you need to get on the ground and dirty shoe leather, whatever you want to call it, and in property it means jumping in your car, and looking at the individual streets, looking at the individual properties, but importantly go and speak to the real estate agent ...

Doug Driscoll: Hmm

Phil Tarrant: And send ah ... I'm sure your guys will be happy for investors to be banging on their door asking questions around 'tell me about X', 'tell me about y', 'show me what you got' that's what they do ...

Doug Driscoll: Yep, and if they don't return your phone calls, then you get onto me and I'll ...

Phil Tarrant: Sort them out.

Doug Driscoll: And I'll get onto them (laughs)

Phil Tarrant: (laughs)

Doug Driscoll: So, but at the end of the day, yeah look just absolutely right, get out there, get talking to agents, build those relationships and that's where there magic will happen.

Phil Tarrant: I've done it beforehand where I would, you know buy an agent a coffee and say 'hey mate you got ten minutes, I'll take you for a coffee' and just pick their brains, and it's cool.

Doug Driscoll: And why wouldn't it be.

Phil Tarrant: Any good agents, beautiful advice, you get so much more than ... if I can spend ten minutes extracting someone's years of experience in a market, versus sitting on a computer looking at data, I'd much prefer to do the former rather than the latter.

Doug Driscoll: Absolutely.

Phil Tarrant: So go and do it and the guys at Starr Partners I'm sure they will help you out and it's not a free plug, it's a good operation and we know Doug well and he's got some good guys out there. So give them a call.

            That's it for us Doug.

Doug Driscoll: Yep yep. Absolutely, and thank you looking forward to a very interesting 2018.

Phil Tarrant: Yeah.

Doug Driscoll: It's going to be certainly an interesting market but you know it's been a fairly positive one.

Phil Tarrant: Yeah. Can you give me a good headline for 2018, something that's really spicy that we can stick up and people can go hey here we go.

Doug Driscoll: Ah let's ...

Phil Tarrant: I'm going to hold you accountable as well.

Doug Driscoll: Okay, ah, that's a difficult one isn't it. I should probably get advice from my lawyers before making these statements.

Phil Tarrant: Probably.

Doug Driscoll: Okay, just a market trend, I think you'll see far nuanced market, pocket to pocket will be dramatically different. I also think you'll see far less auctions next year. I think that people are fearsome of actually seeing it fail, so you'll see less auctions and you'll probably even see a slightly lower auction clearance rate.

            Um, but I think more people will probably opt for private treaty next year over auction.

Phil Tarrant: There you go, you heard it here first.

Doug Driscoll: Well we'll see.

Phil Tarrant: Thanks Doug, good one mate.

            And we'll be back you know, I hope you are enjoying this period over Chrissy and new year. Thanks for investing your time listening to the Smart Property Investment Show I hope you're doing it over a cool beer or wine or whatever you like to tipple, we'll be back, we'll keep doing what we're doing through this whole period and we do enjoy you tuning in.

            We enjoy putting the show together myself, the rest of the guys like Adam and Sam who make all the magic happen behind the scenes. We do appreciate your feedback so please get in touch with the team [email protected] if you would like to come on the show, email that as well and you don't need to be CEO of a real estate network, you can just be a investor who is thinking about buying your first property we like stories from all over the place. So get involved, get connected, join the community and let us know what you're up to. If your not getting our daily morning market intelligence, be the first to know about what's happening in property and you get the headlines like what Doug just told us, auctions down in 2018. Smartpropertyinvestment.com.au/subscribe if you like to get your information on social media just search Smart Property HQ. Keep those reviews coming on iTunes, we do appreciate them.

            Until next time, we'll see you then. Bye bye.

Announcer: The information featured in this podcast is general in nature and does not take into consideration your financial situation or individual needs and should not be relied upon. Before making any investment, insurance, tax, property or financial planning decision you should consult a licenced professional who can advise whether your decision is appropriate for you. Guests appearing in this podcast may have a commercial relationship with the companies mentioned.

 

How to pick the next up-and-coming suburb
Doug Driscoll, Starr Partners
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