Episode transcript
Parag Dixit
Hi Mudit, how are you?
Mudit
I'm doing well, Parag. How are you?
Parag Dixit
I'm going very well now. Thank you very much. How are things? How things been?
Mudit
Things. Oh wow. I don't know. This last few weeks, this last few months have been, I think, amongst the biggest changes we have seen in the long term in terms of banking and economy and legislation changes. So interesting times. I would say a lot of changes. People forced to rethink their strategies in a lot of ways. That's that's that's been the biggest thing. Yeah,
Parag Dixit
nobody would have imagined so much can change in two or three months.
Speaker 1
Yeah,
Parag Dixit
and maybe not even two or three months. I think it's about two months where everything is dramatically changed, and what people used to think about wealth creation is going to change, and what people used to think about how they are working is going to change. There've been every kind of thing thrown at us at the economy, you know, the wars and inflations and everything. And I'm and actually that's the reason why I'm really, really looking forward to today's discussion because we're talking about something that that's affecting almost every Australian household today. Whether you already own a property or whether you are trying to buy your first home or you're an investor or you're simply just renting, you know, and and we're talking about cost of living crisis and more importantly how it's changing the way Australians make property decisions. Has the cost of living crisis changed the Australian property dream? That's it's all about. You know the earlier times. You know those classic. You know the quarter acre block you could just purchase, and then a lot of Australians think that's that that dream's gone. It's just it's it's just archive now. You know, 10 years ago, you know, backyard conversation, you'll you'll talk about and get a fixer upper or get a flipper or something and build a quick equity. But today, it's all about survival tactics. How do I pass a bank serviceability test when my grocery bills have doubled? You know, you're seeing a massive psychological shift among investors. They are moving away from FOMO or fear of missing out and moving straight into fear of freezing. Sitting on cash because we are all terrified of a 6% mortgage rate. You know, eating into our disposable incomes alive. You know, every day it's just eating on ourselves, and we are talking of cost of living crisis, and more importantly, how it's changing the way Australians are making decisions. It's important to understand that over the last few years, property has been rarely been out of the headlines. You know, every week we are hearing about inflation, about interest rates, about mortgage repayments, about rental shortages, insurance premiums going up, power bills increasing, groceries costing more, and obviously the property affordability-that's everywhere. And you know, it's everybody. You have to notice it. You have to understand that. You know, five years, 10 years, 10 years ago, when I used to sit down with clients, very different conversations. I can tell you about it. People will ask, "How much can I borrow? Should I buy a four-bedroom house instead of a three-bedroom house? I'll renovate now, you know, or should I do that later? Or you know, which suburb is going to double? Where can I buy? But today, I don't hear those conversations. Today, it's about you know the first question maybe can I actually afford to buy something, and a completely different mindset. You know, it looks like as if we we we're not dreaming anything anymore. The dream's gone away. I don't think so. It's gone away, but it's definitely evolved. You know, you know for generations on, Australians believe that if you work hard, save a deposit, stay disciplined, eventually you you'll reach, you get a home, and then you pay that down, and that's all good. But today, the path is so much harder now. You know, many Australians are young ones are wondering, you know, whether they'll ever own a property. Parents are helping their children to enter into the property market. The bank of mom and dad is active. Investors are rethinking their strategies. You know, families are delaying major life decisions. Then many people who could never imagine renting long term are finding themselves renting well into their 30s or 40s or something like that. And that's what exactly we are talking in today's episode, and it's not about creating fear amongst people. It's all about understanding why the market feels so different, and more importantly, how some successful buyers are adapting. You know, it's it's not that despite all these challenges, it's not that people have stopped buying. People are still buying properties.
Parag Dixit
There are people who are still building wealth, there are people who are still becoming financially secure and wealthy. They are, and but they're just doing it differently. And today we are going to unpack, and we're going to talk exactly how that is happening. What what are those guys doing that is changing the way they think it thinks, and they're changing the way they are actioning. About cost of living, right, and still existing in these times and wealth between wealth in these times, right?
Mudit
No, no, absolutely, Parag. I think these are not the easiest of the times we have seen, and it's it's become every day's everyday conversation. Let's, I mean, let's start about something interesting. Okay, if you look back 10 years,
Parag Dixit
yeah,
Mudit
how often did you hear people talking about cost of living? It was not that often. Correct. Okay. Of course. I mean, there were complaints about prices going up, diesel prices, electricity prices, but cost of living was not the dominating conversation topic or newspaper headline yet today. True. It's just impossible to avoid.
Mudit
Every news bulletin, every discussion, every barbecue meeting, everybody is discussing this, and and it's because it's being felt by every every Australian. It's being felt every day, every time, everywhere.
Parag Dixit
Yeah, yeah, true.
Mudit
It's just not that one expense is increasing. It's about everything. Everything is going up. When electricity goes up, when groceries go up, when fuel rises, transport becomes more expensive. Businesses they increase their price. Tradies start charging you more. Construction costs go up. Insurance premiums go up. Childcare expenses. You name any cost, and you will see that every single cost has gone up by so much that the ability to save money has gone down significantly. Just forget about saving; just managing day-to-day expenses that has become so hard. So together, all these expenses going up, they have just completely changed household budgets.
Parag Dixit
Yeah, yeah, yeah.
Mudit
And when your weekly budget,
Parag Dixit
yeah, yeah, it
Mudit
goes up by hundreds of dollars.
Parag Dixit
Yeah, yeah.
Mudit
It's not easy. It's not comfortable living on a daily basis. You can't save much money.
Parag Dixit
You can't save much money. 100% and 100% And that's why you you're so right. That's why I think when when you say all this, it just gets the context that that actually brings housing to the center of the conversations. You know, it brings it in front of everyone, and it's it's unique because it's it's the biggest financial commitment any Australian will ever make. You know, you you you're right. See, if my groceries become expensive, I can okay change my brands. Okay, I may lower down my brand preferences. You know, fuel becomes expensive, I maybe change change it to an electric car. I may just drive less. I may use public transport. Restaurants become expensive. I'll start taking a eat at home or starting a tiffin to the office or something. But housing, I can't stop paying my mortgage. I can't stop paying my rent. The housing cost follows me every damn place. You know, whether I'm buying, whether I'm renting, whether I'm investing, I'm impacted. It's following me. That ghost is following me all the time, and that's why housing affordability has become one of Australia's biggest economic discussions. And it's no longer about owning a home right now. It's more about what do I do financially? How do I financially survive in this environment? And that's why when I look at it, and when I talk to clients, when we talk to people who want to take our help into buying, or want to take our help into mortgages, or anything else, they will come back and say, "Okay, I am not searching anymore for a luxury home right now. You know, post COVID used to get those ads. Okay, this five-bedroom luxury house and 10-bedroom house, eight-bedroom luxury house, and this and that and pool and sauna and heated flooring and all that stuff you used to talk about. You don't talk about them renovations. I'm. I want to build another bedroom. I want to have another bathroom or I want to renovate my bathrooms and I have different stuff there. Those conversations have moved to housing affordability, cost of living. Can I afford the house right now? My conversations, which I see right now, have changed from an aspirational level conversation or survival level conversation. Absolutely
Mudit
right, absolutely right. I mean, earlier it used to be about buying bigger. Let's say so. Simply like it was about okay, how how much can I get? Can I get instead of four bedroom? Can I manage a five bedder house if I was looking for four, right? But today it's about not about buying bigger. It's about can I buy at all? Can I just get my foot in the door? There's a complete mind shift, mindset shift from let's say 10 years ago to now. 10 years ago, people would talk about maximum leverage, capital growth for investors, right? If I was buying a house to live in, then it was about luxury, like you're saying. Today's focus, people are very getting very defensive. I mean, when the living pressure is so much, the cost of living pressure is so much, the cash flow that has become the center of discussion instead of instead of capital growth and how much can I how much can I borrow more and more.
Parag Dixit
Absolutely right, and it it's very clear. People understand that I am now looking at a 30 year commitment, which is a very high commitment. And this is when my disposable income has gone down, when my living expenses have gone really up. And as an owner occupier, I say, okay, can I do this month on month? It it disturbs my peace. It doesn't let me. Sleep well at night. I want to sleep well at night, even if I am an investor. You know, as an investor, I'm hesitant. I'm saying, okay, I'm really scared of taking huge debt when when holding costs are unpredictable. I really don't know what's going to happen now. There are government costs which are changing all the time as well. I don't know how it's going to impact me. My priority has aggressively changed now from how much this property is going to grow to can I safely afford to really hold on to this if it gets worse.
Mudit
And on top of it, one is the the changes that you're seeing plus some big change like a legislation change comes in between. And you had done some calculations that this is how my tax will be. This is how my negative gearing will help me. Suddenly, everything is gone for a toss.
Parag Dixit
But gone for a toss because in a 30-year time frame, you don't know how much will change, and those realizations are now very active. Yeah, yeah. They are very active in people's mind, and they they see that okay, I am now I am now into this, I'm committed to some doing something like this, and when I'm committed doing something like this, it's it's it's going to be a very different ball game. You know, in 2010, let's say let's say if I have if I if I'm if two of us are there, or maybe we have two two different people. You know, one guy James, he's got a house in 2010, and you know, and Sarah she wants to buy a house now in 220-six So James would say, "Okay, I've saved my deposit for say three, four years or something. Interest rates were all right, 2% 3% Grocery bills fine. It's all good. Insurance is lower. Electricity was cheaper. Childcare, I don't know. There's not too much of equation. It was there, but it's not too much in the equation. Mortgage was significant commitment, but enough enough room there. You know, you could still save good amount of money, and you can still try and pay the mortgage off faster, or do something, or you just enjoy and get a holiday. But Sarah, 22,026 she must be paying substantially more for groceries. She must be paying a very high insurance premium. She would be paying very high luxury costs. She would be paying high rent when she was renting, and she couldn't save much. Large deposits are now needed for that same house which you want to buy, which the James would could buy it much with a much lesser deposit. Property price has gone up. Lending lending criteria has become worse. It's become much tighter. You know, she she may even if she earns more than what James does or did at that point of time, but her money is not stretching her that far. It's not taking her there where it could have taken her, and that that pinches you. And that's why today's buyers they feel that they're working harder, but they're moving slower. You know, you're not keeping pace. Your wages are not keeping pace with with what house prices are moving or what living expenses are moving, how it is happening around me-it's-it's a problem, and this is not a perception. It's actually the financial environment which has changed dramatically, and that's why this question keeps keeps on coming in. Why has affordability become so tough right now? Why is it so difficult right now? Why is it so hard right now on all of us at this point of time? Right?
Mudit
Absolutely, it is. It seems that affordability is is just becoming harder and harder. And and let's bust a myth. Bust a myth right now. Okay, so today's buyers are not struggling because they just buy too many avocados. Okay, if you do the raw math, okay, in 1995 it took like three to four years of solid savings to get a 20% deposit. But now, if you were to save for the same milestone, it will take 11 years, 1011, years. So your milestone has gone farther away. It is people are feeling as if it's gone further away, and it's just running away from them.
Parag Dixit
Yeah, it's running away from them.
Mudit
When when inflation goes up, your borrowing power it takes you a double hit, right? First, RBA increases the interest rates, and then secondly, the banks look at your expenses. They say, "Okay, you are spending so much, so much. Your grocery, your wage, your expenses have gone up. So your maximum loan that you can get or borrowing, it also comes down by by $200 extra weekly expense. Your mortgage, the borrowing affordability goes down by 70,000 $80,000 straight away. Yeah,
Parag Dixit
yeah, yeah, and it's it's a brutal act, right? It's it's a big ax to cut on on someone who's wanting to buy their first home, who's wanting to buy their first property, and they're looking at seven, $800,000 and then suddenly you find that you're now down to about $600,000 or something. So your your your suburb where you want to buy is gone.
Mudit
Yeah,
Parag Dixit
area where you want to buy is gone, or the kind of an apartment which you want to buy is gone. The kind of a house you want to buy is gone. Now you have to jump back a suburb. Yes, you have to jump back areas, and that's that's challenging and that's heartbreaking. And we don't want to be in that situation, and that is why buyer behavior is changing. We are people are getting cautious. We are very very worried. We we just we we are asking different. Questions there, they are they are understanding. Earlier, I have now had so many questions about people were asking. Okay, what's my debt going to be? What's my liability? What's my repayment? But today, there are very serious conversations about what is going to be my loan, what is going to be my monthly repayment, and how am I going to afford this monthly repayment? I don't want to do a. I don't want to drive Uber at night to be able to afford to do this, I don't want to do a secondary job. I want to live at peace and play with my kids on the weekend, and I want to do all of that. I want financial security, but that that that that naturally brings us to a lot of other questions. It's the most important question. Maybe I should put across to both of us is: Is it is it simply that house prices are higher, or is it something much bigger which is happening? It's just not the house prices, or something more than that. And but I don't, and I personally really believe that it's not the house prices which is higher. It's not only the house prices which is higher. It's a combination of a lot of other stuff which is coming together, and it's coming together for a number of years, and now it has become a demon, which is there in front of us. It's a monster in front of us. Where you, when you try and work out and put these all these factors together, when you say, okay, let me put them, club them together, then I feel that okay, most of the Australians will feel okay. I am working harder, but it's getting further and further away from a home ownership. It's it's it's a big misconception. You know, the affordability is only about a house price. Okay, just because the house price has gone up, that's why I'm not able to buy. It's not like that. It's it's it's it's it's. Let's say there are there's a lot of changes which happen in the budget right now, and then some prices are falling, some prices are staying stable or whatever, but do you think that's made the house somebody suddenly affordable? Not really. It's not made. It's if it was 1.2 million earlier, then I can if I can buy it for 1.15 million, I can still not buy it. I can still not buy it. It's not necessarily it because affordability is made up of a lot of things put together. When I look at affordability, I look at a house price. I will look at my household income. I will look at the interest rate which I am paying. If I look at a property as an owner-occupied property, paying 6% plus rate of interest by borrowing capacity that looks so squeezed that I pity myself. And what am I trying to get out of this inflation that's eating up everywhere on from my gym expenses to my coffee to my groceries to my vegetables to my whatever I want to eat to my going out everyday living expenses are getting squeezed right now. My deposit requirement, which I need to put in to buy that same house, it's going up. It's getting tougher, and all that stuff is happening. The cost of owning a property, let's say if I somehow manage to do all of this, and then I buy this, then my cost of owning, keeping the property, this just sustaining that property is also getting higher.
Parag Dixit
There are council rates is going up, water rates are going up, insurances are going up. Cost of affordability is becoming a such a damn jigsaw puzzle, you know that it's it's house is just one part of that puzzle, one small part of that puzzle, and each and every piece is becoming expensive, and that whole picture starts looking so bad, so murky, and it starts paining you. Right? That okay? Where am I? What I was better off 20 years ago. Oh yeah,
Mudit
absolutely. I mean, 20 years ago versus now, it's a huge difference. I mean, the great divide. I don't know. You can call that. Yeah. See, if you if you were just to compare somebody, let's say 19 mid 90s, right? Maybe 30 years ago. Okay, a buyer at that time. Now at that time, of course, house prices have definitely gone up. We know that. So the in fact, instead of house prices, let's say the price to income ratio, house price, as a as a multiple of your income, right? So, it was at that point of time three to four times annual income. The annual incomes were a bit lower. Let's say somebody earning $60,000 the house prices were 250 300k in that range. So, three to four times of your annual income. Today, the national median. So it is today. It's eight to nine times of the national median income. So three times faster growth in house prices compared to income. Compare to income. That is definitely one factor. But that is not the only factor. Second, the time to save deposit. Because whenever you're looking to buy a property, you have to put in some deposit from your side. It would take three to four years that time. Today it's taking 1012, years to save for deposit on an average income, because the house prices have gone up and your costs have gone up. So you you can't you you're squeezed to save. If you compare once you've bought a property and what kind of mortgage as a as a percentage of income you would give, so it used to be in the range of 20% 20-5% of your income is these ratios, right? Right. So 2020-5% of your income is going into the mortgage. Today it's come to 40-5% Wow! It's almost like half the income going there. So then you're squeezed, completely squeezed. And
Parag Dixit
your wages come and then they go away. Half of it goods disappeared.
Mudit
Just disappears there. Interest rates. Of course, interest rates are higher there, but just because the overall mortgage amount has gone up, the cost of the inflationary pressure has put so much on the living expenses. So your overall your the the deposit itself has become out of your reach. So it's a very very different scenario for somebody 30 years ago versus now, earning more, but affordability has gone down.
Parag Dixit
Absolutely right, and I pick up one important point which you said. It's such a true thing that when I look at my wages and my wages growth in this 30 years period, and when I look at house prices, and in most of the parts of Australia, house prices have grown much faster than the income. So incomes have lagged behind. Incomes have not grown, and it's not only the house prices. Everything else, all my expenses have really, really grown much faster. But house prices, three times what the wages have grown, they've grown. So obviously, I keep on feeling that I'm behind. You know, I keep on feeling I'm not reaching there. I'm not going anywhere. I'm not. I'm just kind of lost in the whole universe wherever I am, and I'm not able to go to any point of thing. And it's because these wages and the expenses have become like this. It's really crushed my borrowing power as well. Whatever I I could borrow earlier, what you rightly said that I it could used to be 1/4 of my income used to be my mortgages. Now it's half of my income is mortgages. When it is like this, then then it's then it's all eating into what I can do, and it's it's just and it's also a big role has also played by inflation in all of this because I have not been able to save and I've been not been able to do anything. Borrowing power is also getting crushed because of inflation. Because when I am looking at that, it it is it is that inflation is getting inbuilt into the bank calculators. They calculate something called as M, that household expenditure matrix. When they start looking at and living expenses, that would they would say okay, they will buffer much more expenses into a loan application. They will, and they're not wrong. That's what they follow. That a lender will slash your borrowing power by 1000s of dollars, hundreds of 1000s of dollars before even interest rates come into play.
Mudit
Yeah, correct. Absolutely right. And in fact, overall, as a society, we have become a bit more dependent on debt, right? So, and that is something that eats away the borrowing power even more right. So other debts. I mean, people have more credit cards today. There are personal loans, car loans, the hex. A lot of the younger generation coming up to buy the younger population Aussies. Most of them have taken some kind of hex loan, right? Then the like him, the all these the interest costs, right? So the long, the larger amount of loan that you're taking, all that once you add, and the buffer that banks build in because of the assessment rate buff, assessment rate, right? So what if the rate goes up by another 3% And this what if is not just a hypothetical scenario; it can actually really happen, right? Because
Parag Dixit
related scenario as well through the regulator, so you have to take that, and then you put in your dependents, and you put in your 30-year term or a 40-year term, and put in the interest rate, the
Mudit
borrowing power gone, gone completely, absolutely,
Parag Dixit
it's gone, and and you don't even know, and you think that okay, and it's a very interesting thing which I had read somewhere, it's you think that okay, I can afford the repayment, but because of all these things coming in together, you find that bank is say no, no, we don't believe in it because we've got an assessment trade buffer and because we're doing all this, and it really creates a stress onto me because inflation is changing everything right now, and inflation has been a big killer all all these last few years, and I think RBI has been talking about this a lot of times. That inflation is the biggest killer, and it's it's it's it's not a it's not just a it's just not just a data point which we see on the news, or it's not a conversation point which you talk. It affects everyday life for each one of us. It is it it kills us. Food makes food expensive, makes fuel expensive, electricity expensive, insurance construction cost expensive. Everything. I remember when these electricity bills had gone up a few days ago. Fuel prices had gone up. In fact, a few days ago, because of the war, the first of the first messages which I got was from my swimming pool cleaning guy. This guy, they said that boss, we we just can't do anything. I have to increase my cost by like by by this much of amount of money. And they were not wrong. And my my guy who mows our lawn, he came and said, "I have to increase. What do I do? I have to travel to you, and the fuel is now like this, and I have to increase that. Businesses have to increase. Households have to now cover up. They have to cover up, and they have to cover up by cutting everyday essential expenses somewhere they have to cover up, right? Get the money from.
Mudit
No, no, absolutely right, and that's one of the reasons why RBA is also forced to increase the interest rate. So this is a this is a self. What should I say? I mean, you because inflation goes up, so RBA is forced to increase the interest rate. Interest rates goes up. It all becomes expensive. It all becomes more expensive. So your mortgage repayments go up. So your ultimately, as someone who's looking to save money, which everybody is likely to do, it goes down.
Parag Dixit
Goes down. My purchasing power goes down. Such a real concept and real point to think about. My when I'm, it's not because I'm earning less. I'm still earning good, and my income is pretty nice. I I think I'm I'm proud of my what I'm earning, but I feel that okay, my the dollar which I'm earning is not doing as much now. The dollar is not giving me that benefit what I it used to give to me because everything around me has become so so expensive now. Yeah,
Mudit
and that is why for especially when you look at buying a house, you're looking at saving money for that. So you're looking because you need to save that deposit. Now, a lot of first home buyers they think about 10% 15% 20% 30% kind of savings. But today it is so. One is saying that 10% 15% But in terms of dollar amount, it becomes a large sum of money. Saving, let's say, like we were saying, 20 years, 30 years ago, if you wanted to save 20% deposit for a $300,000 property versus saving a similar amount for a million dollar property, there's a huge difference.
Parag Dixit
Huge difference. Talking
Mudit
about four 3x 4x kind of saving that you need, but the wages have not gone up that high. The inflation has killed your savings. So how do you reach there? So is property out of my reach?
Parag Dixit
Yeah, yeah.
Mudit
First home buyer or investor, everybody's asking this question, right? Yeah, yeah,
Parag Dixit
yeah. And and you know there are some good schemes and all which the government is provided. But again, even if you're buying a in a Sydney, if you're there and if you have to buy a million dollar house and you have to even get a 5% government scheme, but then you have to also get a 4% stamp duty and a conveyancer and blah blah blah blah. And then all that you reach $100,000 straight. If you have to get $100,000 and if it's going to take me seven years, 10 years to save $100,000 then that price has already gone to 1.4 1.5 I'm I'm always feeling I'm behind. I'm
Mudit
always chasing that. I'm always the milestone is going ahead. Just keep on running away from me.
Parag Dixit
It's it's a carrot dangling in front of me, and I'm running after that, and I can't reach that. It's a it's a pretty it's a pretty hard situation right now. It's it's and it's not only there. You know, lucky guys who've been able to buy and a lot of guys, not lucky, but a lot of guys are able to buy. They manage. They do good. They they save more. They maybe they cut their coffees or whatever they do, but they save more and they buy that. But affordability doesn't stop there. It's not that. Oh, Eureka! I've reached the line. That's not the finishing line. That's the starting. Starting line. Yeah, that's where you start find. Okay, my affordability is not finished here. I've got the house keys. Nice. I'm getting in. I'm doing a good housewarming, and I'm have enjoying, and I'm going to be in my own thing, and I can do what I want to do. But then, the ongoing costs hit you, then you start talking of a mortgage repayment, and talk of rates, and then water rates, and then house insurances, and then maintenance comes up, and then utility bills come. They're there when you're renting as well. But then in your own house, you do stuff in your own way. Your strata comes in if you were renting earlier, but you don't pay strata. The landlord pays it, but now you do pay that startup. That comes in. You so much comes in. If you're an investor, then property management fees will come in. If you then regulatory fees comes in, and then so much of land tax comes in. So things come in which you don't even know they existed,
Mudit
right? And these are all fixed costs. Yeah, these are all fixed that you have to have to pay. Doesn't matter whether you have a job, you have income. Doesn't matter, and on top of it, there could be some unexpected expenses. Something may break down, which is natural. I mean, we have too many things in the house, too many moving parts. Something eventually breaks down, and then you have to account for it. Not account for it.
Parag Dixit
And when you look at all of these 2030, things in accumulation, it feels so much harder that I am. I feel that my affordability to do anything is gone. All these small, small increases in small, small costs are really paining me, and they're telling me that it is. It is. It's. It's not nice, and it's culminating into a conversation where a property conversation is conversation is now more about more than house price. It's more about can I really manage this punishing financial ecosystem around me? You know, it's it's it's a it's a it's it's a tough gig. It's a tough gig. But again, it's it's a tough gig. But as we said, there are a lot of Australians who are who are able to manage it. You know, Australians. We are we are naturally we are we are a bit resilient. It's not all so so dark. We we know that when my environment changes, we have to adapt. We we can adapt. We can adjust. We can rethink our strategies. You know, we people are there who have not stopped buying property. They're doing something good. They're doing something different, and they're doing something nice. And that's the biggest shift in we've seen in the Australian market in the last 20 years. And that's where it starts becoming nicer. That's where it starts becoming a bit more sunshine comes in there. When I say that this shift is telling me, okay, there are a. Affordability pressures, but I will still buy. And they are changing what they will buy. They are saying, "Okay, I may not buy the same house which my grandfather used to live in, in that same area which my grandfather used to live in. We are seeing a massive wave of wave of substitution of the assets which we could buy. Earlier stuff is no more than that. Earlier, my house, I'm not buying a house. I may buy a townhouse now. I I'm not. I don't want to buy a townhouse. I may buy an apartment right now. You know, I'm. I'm saying I. I don't need a 700 square meter land. I'm happy with the 250 square meter land of some stuff. You know, land every entry point. My borders. I'm defining. I'm sitting. I'm. I'm. I can be sitting in a rental in Sydney, but I can say, okay, I I can't buy 20 kilometers or two hours from here. I can't buy, but let me just drop it. I'll get an investment property in Brisbane, in Adelaide, in Perth, or I, I, geography cannot restrict me right now. Distances cannot restrict me right now. So I'm I am eval. I am evaluating what my options are, and I am evolving into doing something better because I don't want to fall into a constrained environment. I know the challenges, but I also know that I can come over there. I can overcome those challenges, and I can do stuff which is going to allow me to be able to put a foot in the door right now.
Mudit
No, no, absolutely right. I think one is changing the type of the nature of property itself, right? So the substitution effect generally, right? So buying a smaller property, buying a different kind of property, not not buying a house, but buying a townhouse. Do I really need a large backyard? Do I really need that bigger land? That is, these have become, and even from a regulation perspective, the bylaws are also changing. Allowing smaller houses has become the norms are also changing. So I think the ecosystem is also kind of helping in the sense in that way. That is one thing. Buying a unit, do I really need to live in a big house? So one is that type of property. Second is where do I buy? If I'm not able to afford here, not near the CBD, I can be I can be 15 kilometers away. Work from home is becoming more popular. I can I can work. I can live a little farther away where it is more affordable, and I can buy something there. Another thing, interstate investment. So okay, I I I don't. I will not be able to buy in a suburb where I want to live. It is becoming more unaffordable for me. But I still want to live here because of the lifestyle I want. I want to live here. I have my work around me. I have my friends near me. I like this location. I like the views. But then I will invest somewhere else, I like you said that borders is not something which is gonna constrain me. I can go some other capital city, some other if not if not there a regional city, non metro city. So there are so I mean people are adapting to what is affordable, what can be done under current pressures.
Parag Dixit
Yeah, they they're not giving up. Who knew this term borderless investing? I suppose a few years ago, that was never there. I think after COVID, this term has become more prominent and more more mainstream right now, where people are fine. Okay, I'm there, and and it's it's not only this. It is not only that I'm buying interstate or I'm buying further away or I'm doing two days work from home so I can be further off, or I can live near my lifestyle locations. It's also about sometimes just delaying it. You know, I I just fine with it. I'm I'm I'm happy and contented by renting for long term. That that European stuff is my lifestyle is coming here as well. You know, and people are saying, okay, I I can I can put off my buying right now, I can maybe still stay with my family, still stay with my parents. A lot of kids are now staying with parents, and it's no more a bad thing. You know, it's it's pretty okay, pretty cool right now to stay with them, and it's okay. The my my financial strength and my financial health and financial well being is more important for me. My my I'm saying it's good enough. You know, there's I don't need to get the get everything today. It's good enough that I can get a small property. It's good enough that I take my first step, which is a nominal step. I don't need to buy a mansion in my first step. I can buy a small apartment. It's it's a it's a much healthier mindset which I am living with right now. That okay, you know, I don't need to get the picture perfect thing right now. I don't need to get the Instagram kitchen right now. No, you know, the dream home
Mudit
may not be the first property I buy. It can come later. Yeah, right. But can I start get started? Can I move towards it? Can I build a strategy of moving towards it? Correct. And that can start with something which is more affordable. I because that is something which can be done, not just not just a hypothetical or just a dream.
Parag Dixit
Yeah, absolutely. And I'm seeing people are no more saying that my first home is my eventual home. They say, okay, let me get into me me and my partner, or I'm just single and I'm happy with an apartment, with a one room apartment. Bedroom apartment. I can be anywhere, or I can be near the CBD, or I can be somewhere where I can afford. And then, two years, three years, four years down the line, I either make it as investment, or I just sell it off and buy something bigger somewhere else. And and and that's that's changing the way I'm approaching stuff. And not only for owner occupier, for even for investors, investors are changing as well, investors are changing as much as maybe even more than what owner occupiers are changing. And in fact, I think they are investors are in particular bit more disciplined than owner occupiers because they can they can understand that okay, those days of you know casually just having a property that that that I have to pay from my pocket about 500 bucks a week or something. That's gone. That's that's dead. That that kind of an investment is no more there. That's a pretty old style investment right now. With such holding costs, with such kind of inflation eating up on so much of there, we've got layers of costs of insurances and rates and stuff in which we're already speaking about. They are saying, okay, I need cash flow. Cash flow is important for me. If the property is not going to give me rental yields, if it is not going to cover my mortgages, I don't, I don't care about it. You know, rent wasting is a good alternative. That's come through. It's a nice alternative, but I want something with a good rental yield, I want something with a good cash flow. I want something in an X type of an area. I'm living where I'm living, but I want to have this that that era of saying you know I love negative gearing, and you know this let it be negatively geared. I'll get some tax rate and I'll absorb the losses and I'll just wait for capital growth. That that kind of dead. That's gone. That's no more there. I don't have those conversations with. We don't really have those kind of great conversations right now. You know, all these holding costs, which which are there, they've kind of too painful to carry for long. Even if you carry, we can do it for a year or two or three. Investors have become intelligent. You know, I don't. I don't want to do that. You know. Go ahead.
Mudit
I think you're absolutely right that investors probably are little more disciplined in that sense because I think just by the nature of it itself, as when you're looking to buy your own house, the decision is less financial, more emotional. More
Parag Dixit
emotional. The
Mudit
moment emotions come in, then the mathematics a lot of times goes for a toss, and when your financial mathematics is going for a toss, and not going for a toss, but really you are stretching a bit more. You're always like, okay, I don't want to have conversation with my wife in the in the over coffee in the evening. That why did I buy this? Why did we compromise so much? We could have bought a little little bit more extra, right? So because of that, it just becomes. While on the contrary, an investor will be like, okay, the return on investment
Parag Dixit
it has to come. It
Mudit
has to come first. That second, I the cash flow for me. How does it look like? Can I manage it? If I if not, I'm buying a property to make money.
Parag Dixit
Yeah,
Mudit
that's the investment thesis. If I cannot make money, whether by growth or by rental yield, then what is the point of investing? I would rather not invest. I would rather invest somewhere else or keep the money against my owner occupied in my offset. So, so that it just builds more discipline because you're looking more critically at every expense and being more financially aware of your decision.
Parag Dixit
Absolutely right. You're treating that investment as a business which you are getting into it, we all realize, and all investors realize that the that those times of cheap money are dead. Yep, those are gone. You know, they they were those 2% rates. I I don't know if I'll ever see them again in in these things, but they are gone. They understand capital growth has to come in, but not at the cost of cash flow. the The yields are rental yields, is is becoming very critical now. Cash flow is becoming the king again. It's going to be a big king again. Those 2% rates are gone. Investors are saying, "Let me get a good cash flow. Let me get a good borrowing capacity. I want to hold this property for long. I am not here to flip in a year or something, but then I should not set myself up for disaster from day one. I want to get into something which I can hold, and I want to create a buffer which will allow me to hold that property for a long period of time. And that's the best habit which I've seen in investors night right now. They most investors come have now started saying, "I don't want to move into something without a strategy. I don't want to just randomly go and buy something. I used to remember 10 years ago when we used to talk to people. Suddenly, somebody will come and say, "Oh, I went to an auction. I bought this. I don't think so. I see those kind of people there now. Very rarely will I see once in six months somebody will come and say I just randomly walked into something and bought in an auction. They are pretty calculative right now. People are understanding that there are lot. There's lot more dynamics than just getting a house, and there's not more than a mortgage. Less lot more than just a house property price. It's too much. Besides that, as. Which is important, and that's where there's a phenomenal pivot into strategy, right? Which has come in corrections. Yeah, no,
Mudit
absolutely. I mean, the the big pivot there is that let's say 10 years, 15 years ago, the strategy was more about maximizing the capital growth. Maximize capital growth for that. You would take as much debt as possible. Figure out where the capital growth is about to happen. Your people would be okay with negative cash flow. Manage it for some time because it was manageable, right? Yes. And and rely on 100% on the capital growth. Yeah. Not worrying too much. I mean, there was a worry about can I sustain it or not, but it was not in their head all the time, right? Because it was more manageable. Today, that has pivoted to completely that I need a a balanced approach. I need I need growth. Of course, I I'm not running away from capital growth, but it has to be balanced. I need the yield as well because if I can't sustain the property for 510, 15 years, then how will I see the growth? I need to be able to sustain that, so I I have to take lower debt as whatever possible, which whatever can allow me to buy, because the interest rates are high, the costs are high, so I have to take a little lower debt. I have to build in all those costs, the investment related costs, whether it's about consol rate or insurance or property maintenance or property management, all of the costs I have to build into my cash flow, and I want-I mean, positive yield, neutral, neutrally geared property. I want all of that. Of course, how much of that is possible in which sub suburbs? There a lot of research is required, the kind of property, the kind of location, but capital growth plus cash flow, both of them put together has become the the norm now, the norm instead of just chasing the capital growth. So I think that we are seeing more and expected that we are going to see this more and more in the company. More and more, and
Parag Dixit
that's why it's it's that borderless investing, it's that interstate borrowing, it's that interstate investing has become such a cool thing right now. Who did who who was so cool about it five years ago? But it's pretty cool. You know, you just buying and you. I want to buy in Darwin and I want to buy in Perth and I want to buy in Hobart and I want to buy in Lawson or I want to buy in areas which I have never even heard of. And people come back and say, "Oh, this is a this is a good place. You go. Why don't you go and buy? Okay, all right. And then you look at the data, and data is so freely available right now. Very important strategy. That important of strategy also has come in through data, which is so easily available. Where I, as a smart investor, I don't need to take too much of a risk. I can I I can take good risks. I can take intelligent risk. I can take informed risk. I can take smarter risk. They and that's why people are able to ask questions to myself. You know, this can after doing all of these analysis, after looking at data, after looking at stuff which is all around me, after looking at what suits me, does this property fit in my long term plan? If it doesn't, I'm not into it. Can I comfortably hold it for 10 years? Gone are those days where someone will come and flip it over. They say 810, years, 15 years. I want to hold on to it. Can I? Can will it impact my or maybe strengthen my overall portfolio which I am creating? Am I have I done some kind of research or I'm just shooting in the dark? I don't want to just live on hope. You know, some such critical, important questions. Good investors and good even owner occupiers are asking themselves and saying, "I am, I am, I want to not go blind into stuff. I don't want to be an I don't want to be an idiot. You know, I want, I need to do the right stuff. Correct. I need to do the right things. Correct, and that's what's differentiating two different kind of an investors, two good kind of investors. No,
Mudit
no, absolutely right. I think those are big changes that are happening, and more and more investors are thinking like that. So, I mean, like you're saying, two different investors. So, if you compare, let's say, an investor A who goes and purchases most most expensive property, okay. Something, whatever possible, getting money from last bit of resource, stretching the mortgage, taking as much money as the bank is giving, and that is one investor. Second investor is that okay? Let me just buy something which is more affordable. Let me keep some buffer. I don't want to stretch and take the loan till my till my head, and and do a more bit more research to find a location which which can give better rental return along with the capital growth, right? So why so that the mortgages are more manageable. Now, with every interest rate increase,
Parag Dixit
yeah, yeah, the
Mudit
first investor is finding it more and more difficult to manage that property, and if by chance, if you have two or three such properties where you are stretching, and now you stretch completely with two interest rate increases, if your mortgage payments have gone up by $500 a month, it is just too much pressure. So investor A in this case would be pressured and will feel the pinch of. Every small increase in inflation, every increase in the interest rate, and we are seeing that a lot of people who are stretched so far, they are sometimes forced to sell some of their investment and get in the market. And it doesn't matter whether the market is good or not good. Then you have to accept what you're getting as the price of it. So not, I mean, it's it's not about that person who borrows the most gets the best deal. No, it's about smarter investment. It's about planning it better. It's about keeping some buffer for any day and making sure that you're not stretching thin.
Parag Dixit
Yeah, it's the man in the best dressed. You know, the who's best planned, who's best organized. He's the he's the guy who's getting into it, and and it's it's it's it's that that's that's so true. And I think a large part of role into this this metamorphosis or into this changing habit and mindset and changing approaches also because people have now learning leaning more into onto their families and taking advice. They're leaning more into their extended families, like their friends and their circle around them, their circle of influence around them, and they are talking to them. Okay, I I'm getting into this property. What are the mistakes somebody else has done? What have they done wrong, or what have my parents or grandparents done the right stuff, which I can copy from them? And I'm saying, okay, I want to change my strategy, and this this bit of a class of people, which is a bit different now from the last 1020, years, which is which is the family which is coming in. It's the family decision which is coming in has started influencing, you know. And I've seen in a lot of times, and it's it's not not it's increasingly becoming popular. That it's becoming a few generations coming together and talking through. Okay, let's. I will help you buy into a next investment view. Why don't you continue to stay with my with with your parents and then you buy a couple of properties as investment in various states. You don't need to go out. You don't need to do all of these things. You know. You know earlier, like like you said, 30 years ago, if they were there, it was the two people, the couple in the family, or the or the or the males and the female will, the family and the husband and the wife, or the partners in the family will say, okay, let's let's decide and we'll buy a house, you know. But it's no more there. I will talk to my parents. I have seen people talk to their grandparents as well, and they will come back, and then they will they will they they also very open to talk to professionals. They're open to talk to a financial planner. They open to talk to a buyer agent. They're open to talk to solicitors and accountants and mortgage brokers. Obviously, it's becoming a team effort right now, and there are complex products and complex opportunities also available. You can buy your personal name, and you can structure into a trust. You can structure into different different kinds of trust. You can do self-managed super funds, and you can you can do so many things together. And that's why when you take help of family, when you take help of bank of mom and dad and family guarantees and all that stuff, it's it's it's becoming more helpful, and it's becoming more reliable for people to be able to do something and still try and manage out what they want to do.
Mudit
Absolutely right. So the family coming and helping the let's say the the younger next generation parents, grandparents, pitching in either as helping on the deposit front or using their property to be used as guarantors. That is becoming more and more common. There are government support. I mean, there are a lot of government schemes available for first home buyers for buying a house to live in. That is also playing a big role because that is helping minimize the deposit needed upfront. Yeah, that helps. That is helping. Having said that, of course, we are not saying that the deposit is still very less. We are still talking about somebody would need probably 80,000 90,000 100,000 kind of dollars to be able to buy despite the government scheme because there's stamp duty. But if you're buying an entry level property, yeah, you may be able to buy with only 2030, $40,000 because you will get. You can buy with only 5% deposit instead of 10 or 20% You can buy with help of the stamp duty waiver schemes where you may not have to buy any, have to pay any stamp duty. So those concessions are definitely helping. But overall, yeah. So there is an ecosystem of family, parents, grandparents, the government support, the professional advisors, which is kind of helping people make a decision which otherwise would seem so much more difficult, and you would feel so much more helpless otherwise.
Parag Dixit
Yeah, absolutely right. So when when the situation is becoming overwhelming, these kind of supports are coming a bit handy to be able to do that, though that it puts a bit of a risk back into the onto the parents. You know, you know, you you putting your property at risk. You're putting your property because there's a joint financial commitment right now. But if the child is not able to, the children are not able to complete their commitments. Fall back, falls back as guarantors on the parents as well. It puts puts it puts a bit of a risk, but still, I think it's an opportunity for for the younger Australians to be able to take that advantage from their parents and from their loved ones. And obviously, it's not an expectation, but it it comes through when the when the parents are helping. It's always good, and when when it's always good, it's it's nice to be able to lean back to it, but then every if you don't have and maybe if if a young student or if anyone who's a migrant who's come in and they don't have that kind of an access to these kind of pathways and parents helping them, then there are so many other pathways which are coming through for someone who wants to invest, and it's such an interesting time today, where you can say, okay, what should be, what can be the alternate ways which I can take support, or maybe take and take advantage of something which is available in the market where we can, I'll be able to buy and I'll be able to step into the housing market or step into an affordability market, and and we we all know it's it's true that you know the it's it's understood that the old stuff has gone away. It's it's the newer stuff is complex. It's you know game of chess. You know right now that you if you want to buy a property, you you maybe sometimes you may start thinking that I'm better off buying one in Queensland, one in WN, one in Victoria, and one in South Australia before I buy something in Sydney, or before I buy something in the place where I live in, but and that's that's that's how a successful buyer has started evolving their thoughts. A successful buyer has started thinking, okay, what can I do different? I don't want to carry an ego that I have to buy the first property in that X suburb, which has to look this way. They're saying, okay, let me buy something which is more realistic. Let me get into into the property journey, get and get some equity built in, and or maybe sell this one and then get another one, or use the equity and buy another one. That old bit of a road, that's that linear road. You know, they know save a deposit and then get a house in some nice suburb and then pay it down and pay it off and then maybe sell that and upgrade. That kind of a that that kind of a pathway has changed. That is no more the pathway.
Mudit
Absolutely. I mean, people are finding like you're saying different paths. So five years ago, 10 years ago, rent investing was not even a term. Now, now it is it is such a common thing. A lot of people are talking about it. So you rent a unit where you want to live in the inner city, wherever. But then you say, okay, I can afford and a property in some other completely different state. Let me buy it there so that I can start. I just enter the market, use parents' help or whatever savings you have, so that's one. Next step could be that buy a holiday house, maybe with your sibling, with your friend, and then use equity from this property or from the second property, and then eventually buy your home where you want to live. So use equity, use the growth from here. If you have to sell one of them or both of them, you can do all of that. So the paths have become different. Okay. It is no more that linear straight path. That yes, go on like this. the The formulas, the the age old formula is not applicable anymore.
Parag Dixit
And I think you know one good point which you put up. It's because these investors or these buyers are now flexible buyers. They are not saying I just want to go this one road. They are saying there are there are few roads, there are few dirt paths, there are few rural roads, there are few different roads. But I will I'll I'll make a destination. I know the destination, but I'll choose the path which I can choose, which I can really walk. I'll walk that road. I'm not going to fall in love with a particular type of a property, a particular type of a financial structure. I will say, what is something which I can evolve with? And one of the this is one of the biggest. I think the qualities we see in successful buyers when who are still getting into the journey and are still doing very well. You know that's adaptability. They are able to adapt. They are like resilient Australians. We are able to adapt. We can do that. They are they saying that okay, does this property make me closer to my goals? Is there you know or or is there any other location which is giving you good value? I don't mind a Perth or an Adelaide or a Victoria or a NSW or a Darwin or a Hopat. You know, I can buy anywhere. Can I buy an investment before I upgrade my own house? Can I, can I maybe say, okay, I have a 10-year plan. It's not a short-term plan which I am doing. Can I make long-term plan? People are getting more and more and more flexible, and they are saying, "Okay, let me be innovative. Let me make a open strategy. Let me find which is the best thing which suits me. Let me talk to my near and dear ones. Let me talk to professionals. Let me talk to people who can guide me. But I want to go and walk the path which is. Long-term path, sustainable path. No, absolutely
Mudit
right. I think that understanding that it's not a it's not a sprint. It's it's a marathon. And property is you don't invest. It's not that you buy in the mo buy in the morning, sell in the evening kind of thing, right? You can do with crypto. You can if if that's the nature of that's your personality that you want to be actively trading every time, then property is not the right asset for that part. You choose some some other asset which is suitable for that. This is and people are understanding that people have an understanding that it's a marathon. And another thing is that one understanding that it's a marathon, but one I see a mistake that a lot of people do there is that they start comparing that. Okay, my friend bought did this, so I will also do this. I mean, that's something that understanding of marathon is there. But then, some common mistakes that we see is that people are replicating somebody else. I think that that understanding that I should not be replicating somebody because somebody else's journey, somebody else's financials, circumstances, the goal, the strategy, everything can be different. So there are multiple concepts that need to be cleared about how, what strategy suits my financials, my circumstances, and what is the right path for me. That can vary from person to person. Yeah, completely depends on how your families, how your financials are, how your savings pattern is, and how your circumstances are, and where do you want to go?
Parag Dixit
Yeah, 100% You know, the glass, the grass can look greener on the other side, but it rarely is. You know, you can start thinking, okay, oh, those guys, they knew everything what they were doing, and they they got it all figured out, and I am the one who's lost out. But they don't realize how much of sacrifices they would have done, how much of planning they would have done, how much of saving they would have done, what how they went through that journey we don't know. You just see them in the middle somewhere, and you start thinking, okay, I want to start in the middle somewhere. But there's a lot of stuff which goes behind it, and good successful people understand that property wealth is not built overnight. You know, it just can't happen. You can be lucky once when you can't be lucky all the time, and you won't be lucky for 30 years all the time. You know, it's one good decision at a time, and you have to keep on walking that path. One good decision which you have to make because the future is very different. It's if you don't adapt now, if you're not flexible right now, if you don't really think that okay, I am going to do things which are going to be better, that future is going to be very, very, very different. And if if I if I think of it, I think, and if I were to talk of what would it look like, so I think it's it's going to be a fundamentally different landscape. 10 years ago versus now is a different landscape, and I think 10 years from now will be a further different landscape, which is going to be. It's it is it's not going to be everyone can automatically think that I can buy a property or I will be owning a property worldwide. It's changing. Australia will not be far away from there. We will see fractional ownerships coming through. We will see two families coming together, siblings coming together, and buying a property. We will see that Australian dream will be changing. We will see an evolving Australian dream which will be coming through. It's not going to be the same same bit which is there, right? The if I just just 10 years from now, 2036 if I were to look at this, I I definitely definitely feel the European style, you know, long term renting is going to be there. We are already seeing governments are and and various states are inviting build to rent corporates to come in. We are going to see so much of those developments, and I'm saying, okay, fine. I don't need to bother about anything. I just have to pay one kind of a rent to a. It goes to a corporate, goes to a this individual as a tenant. I don't care. I'm just enjoying. I'm just being there where I need to be with the least of the responsibility on my head. Home ownerships may dramatically change in the under 40s. It's definitely on the horizon that is going to change in the under 40s in the coming future in 10 years 2036 maybe right.
Mudit
No, you are right that the ownership structure of how people are owning properties that is definitely like 10 years. I mean the world is changing so fast. 10 years suddenly looks that so much can change in 10 years. I I'm sure that smaller homes will also become a norm. It is already becoming more and more popular. More and more popular. A lot of bylaws in multiple council have changed, where they are allowing smaller homes, subdivision, duplexes. These were not there like 30 years ago. These are new concepts. More townhouse units, vertical development. All of that is going to be even more norm, then I think another thing that you said that parents, grandparents, so everybody is coming together as a family. So they living together, multiple generations, nuclear
Parag Dixit
families.
Mudit
Huh? Yeah. So living together, and then the new the new generation they investing somewhere else, but living. Together with family, that's. I mean, this was this was something which was which used to happen earlier, and then there was a time when everybody started living separately for privacy and all of that. But I think the way the economy is changing, it is going to come back. It will come back. Yeah, it's going
Parag Dixit
to come back. It's going to come back. But I think one maybe the one unintended consequence or a flip part of this would be our retirements are going to look different. Retirements are definitely going to look different because my mortgages will be extending into later, later years, right? So my retirement planning will dramatically change from where we are today. It will, and that's that is what is important, and that's why intelligent and smart investing will be important because you will have to factor that in. You will have to know that okay, this is what I'm going to do. So my wealth planning, my all my planning, my property investment planning has to happen with that in mind. When I'm saying I want to rent till 40s, then I should know how will I do work on my next 20s years as well. So all of that will have to do that. But again, we we spoke about this. I I am a firm believer that technology will completely change how we are going to transact a property, whether we are going to buy, whether we are going to hold on to it, the way we are going to buy, the way we are seeing data, we are seeing research, we are seeing so much of information available to us, so much of an analysis which is available to us, all that happening, it's changing the way I am looking at a property. I can easily buy today something in in Geraldton in Western Australia, or if I want to buy in Lawson in Tassie, or if I want to buy in Cannes in Queensland. Pretty easy. I know exactly how buyer sentiments are moving there. I know exactly how what kind of properties are moving there. What's happening there? Which suburb is going good? Which suburb is going bad? Just sitting in my room today in Sydney, I can do all of that. That's all easily available. I can do a virtual inspection there. I can do a I can do a digital home loan application there. I can these PEXA settlements, electronic settlement. I don't need to move a finger. Five years ago, all of these, all the solicitors and conveyancers used to rush to one place in CBD and sit across table and exchange checks and exchange properties and titles. No more. I don't even see people looking at each other. It's going away from various states. A lot of things are happening now. Fractional ownerships are coming up into play. These are such a thing which is becoming a norm today, right?
Mudit
No, absolutely. I think information, like you said, I think information has availability of information at your fingertips has just completely changed and transformed so many industries. Anything and everything has has. I do. I can't think of any anything in our lives which has remained untouched from that. I mean, small kids can just ask Google or Alexa for any kind of information, right? So there's a there's a huge negative to that as well. That are we there's so much of information is is our thinking also getting outsourced to to that? But definitely in in the context of property, there is so much more data available, so much of analysis available. You can do your own analysis. That it has become easy for somebody sitting sitting in one city to comfortably think about buying in anywhere else in Australia, which was 30 years ago. This was 20 years ago. This was not even possible. At that those point of time, you would remember that mostly people who would buy multiple properties, they would invest in the same city where they were living because that is the only information that was available. That I know how the city is. You wouldn't even imagine. Okay,
Parag Dixit
three through
Mudit
2000 3000 kilometers from where I am, I don't know what will happen. Yeah, I don't
Parag Dixit
even know. I don't even know how to do that, right? And today it's so easy. It's so so so easy, absolutely no, and fantastic. No, this is it's a good conversation, you know. But but when I when I look at it at the end, you know, I I when I really think of it when during during this conversation, I've been I kept on thinking of it. I I don't really believe that our Australian dream has died, you know. It's not gone anywhere, you know. It's not gone down. It's not optimized. It's I think it's it's a mature dream right now. It's changed now. You know, it was a different dream which my parents had. It's a different dream which I have. It's more flexible. It's more financially secure dream which I have. My kids would have a different dream as well. You know, I. It's still a lot of my friends. You know, they still believe that their family home is with a backyard. For me, maybe for us, a family home can be an apartment. Somebody, it's more important to have a portfolio. For somebody, it's more important to have children, leave something for their children. Leave some legacy. Leave some have freedom to travel, or so just go around the world to have be on a year-long cruise. I've heard there are year-long cruises as well. I didn't know that. Okay, you can do that. Okay, my my dream is not one-size-fits-all. It's an evolving dream, changing dream for a lot of people.
Mudit
Absolutely right. So earlier, I think the dream was, or the success parameter was, was limited to just owning a property and owning your house and dream home and all. But I think, given given the way the world has changed, the the definition of success, the parameter of success, or the dream, some very rightly. I mean, just my lifestyle itself is something that I don't want to compromise on. I'm okay not not living in my own house, but this is I want to have the view of this river, and that's where I want to live. And I like the I like the vibe here. That's where I want to live. Whether I can afford to buy this property or not is a separate question. But I like living here. I can afford to pay the rent here. I will live here, and in terms of owning a real estate asset because it has the potential to grow, I will invest somewhere which is more affordable.
Parag Dixit
I'll invest somewhere which is more. It's not. It's not an impossible dream about buying a property right now. It's just a. It's just a. My old style will not work right now. It's a new style. It's a new way of working stuff. Buying a mansion is no more a strategy. It's it's no more there. You know, it's there is no right time. There is it's just about getting opportunities and getting your right opportunities. It's not about copying others. It's not about copying somebody who I know who's done very well. It's it's it's understand. It's understanding what fits my circumstances? What decisions should I take which suit me? I think people understand, and good successful investors or people who are buying properties understand. Property is a long-term game; it's not a short-term one anymore. That has not changed. What has only changed is the pathway which they are taking, and I think that's my takeaway from today's discussion, that the pathway has changed and that pathway is becoming important, and that to recognize and understand that that pathway is going to be a different pathway, I think that's a bigger answer to housing affordability and home affordability questions, which are coming in. And rather than being thinking that I'm shut out of the market right now, evolving our plans and evolving the ways we are going to do stuff is going to be an important one today. That's an important one for people right now. Absolutely,
Mudit
and and given the way saving for something, saving for a property to buy, and then thinking about given how the interest rates are, how the the cost of living pressure is, what are the costs involved in maintaining a house or investment property, and how will I afford it? How will I sustain it? Cash flow is important there, so I think those are ideas that people are building into. And if if somebody is not, then they should. But but that is becoming more and more important, and a balanced approach towards how do I buy something which grows. Plus, I mean, I can sustain it for long term, having that buffer because of the increasing pressures. I think that has become even that is becoming more and more important.
Parag Dixit
Absolutely right. Yeah, I think I think if this this this conversation gets gets me a good understanding of what are the challenges in today's market and what should I do and it's the the goal is not to you know find out how which turns and twists and turns are happening in the market. The goal is to build a good strategy which fits us, not a copied strategy. A strategy which fits me, which is right for me, and which is and whether we're buying our first home or you're investing for for your future, getting your kids in the market, whatever you're trying to do, we just need to stick to what do we, what's right for me, what's going to be a good strategy for me, and just go with the flow.
Mudit
Go with the flow, and if required, I mean, of course, it will be required, I'm sure. That keep on working on the strategy, revisit it, tweak it if required, because things keep changing. It's not that I have written; it is written in stone today. So that flexibility of that, I will, I will find a way. I will navigate. That is important.
Parag Dixit
Absolutely right. No, thank you very much for great conversation, Modhit. Thank you very much for listening to us today on our property portfolio podcast, and I'm pretty sure we'll come up with a fantastic new topic for you next time. Thank you.
Mudit
Thank you.