The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1400 - THE STEROID HIT FOR PROPERTY THAT JUST WON'T WEAR OFF
"The Steroid for Property" tackles one of the most overlooked factors driving Australia's property market skyward—compliance costs. While headlines focus on interest rates and housing shortages, this frank discussion between Billy Drury and property doctor Mark Novak reveals the hidden crisis unfolding behind the scenes.
Drawing a compelling parallel between property developers and farmers, we explore how those who provide essential housing services are being crippled by regulatory requirements. New building codes, sustainability targets, and layers of red tape aren't just bureaucratic annoyances—they're adding months to project timelines and thousands of dollars to development costs. The results? "We're gonna sit here and do nothing because it's too hard," developers are telling us.
The conversation peels back the layers of this complex issue, revealing how compliance has created a situation where building simply isn't economically viable unless property prices rise dramatically. This affects everyone in the market, but particularly first-home buyers, families looking to upsize, and renters caught in the squeeze of limited supply. With a specific look at conditions in the Northern Beaches, where stock levels have noticeably diminished throughout April, we provide context on why these trends matter to everyday Australians.
Most critically, we highlight the distinction between Class 1 (standalone homes) and Class 2 (units/apartments) building classifications, predicting fewer apartment developments in the future—a concerning forecast for affordable housing accessibility. Join us tomorrow as we continue this important conversation with a look at how land tax is affecting tenants across Australia.
The Steroid for Property. That will just not go away, how it's affecting rentals and sales. We're going to talk about it right now. Stay tuned. I'm the ringleader, billy Drury, the old man stuck in a young man's body. How are you Good?
Speaker 2:property doctor Mark Novak. Property doctor Mark Novak's 30 years of experience is very insightful for conversations like this. We have reached, I think, a point in the market where it's not just supply and demand driving prices anymore. It is the cost to create supply and we're going to talk about that this morning. We're going to talk about the farmers of Australian property, which are the everyday mum and dad, landlord and investor, and we're going to talk about the builders on the front line, what they're telling us well, it's all it's.
Speaker 1:I think if you put it into farming um aspects, you sort of you know you lay down the crops, you nurture the crops, you grow the crops, um, you know there's there's stuff that there's devastation that happens in farms from weather. You know property is very similar, it's got a lot of synergies to a farmer and today this morning off air, we were talking about the harsh reality of a builder and what a builder has to go through these days. You know building is a tough, tough business.
Speaker 2:it's a real tough business yeah, I guess the word investor generally refers to someone putting a dollar down trying to make a dollar, but, like a landlord, um is a property provider it's much more than just an investment. You're putting a roof over someone's head, and I think that's the same for a farmer, like you're feeding someone. It's not just about the money. Well, yeah, we're going to bring to you a bit of an insight as to what we're hearing in the market and and you framed it up really well off air. Not all of this is reported in the newspapers or the media, because it doesn't really read the same as the punchy headlines you get well, look, there's a not you know I I actually saw something genius yesterday on um donald trump.
Speaker 1:Love him, I hate him. But his latest thing I saw he was doing was water. You know how? There's the. When you turn your tap on, your water gets regulated so it only does half strength of what it would normally be and it saves water. Yeah, right, so in Australia we've made it mandatory to put these water saving device out.
Speaker 1:America that done the same thing. So they had plastic ones they had in taps and people kept taking them out. So then then they started welding debulators into the taps so people started using less water, saving water. And he's turned around and said, um yeah, no, look, when I wash my hair, it used to take like seven minutes and now it takes like 15 minutes. How stupid says like I'm using more water, I'm wasting water because it's taking time, because get get rid of that law. So that won't happen in australia, where all of this compliance that builders have been shrouded in to supply more properties to people in the market for rental, for sale, um, that compliance is not going to be wound back, um, and that compliance is what builders, developers and everyone are actually are getting suffocated by.
Speaker 2:At the moment suffocated and you might even ask what's the compliance you're talking about? It is new building codes, it's basics, sustainability targets and it's just a massive layer of red tape. And all of that red tape adds months and thousands of dollars to projects, literally have a laugh.
Speaker 1:Have a laugh at it. You know, look at the lollipop people on the street with the signs that are getting paid, what they're getting paid, and that compared to 10, 15 years ago. I'm just looking at someone on the street now where there's seven guys in high fields looking in the same direction. You know doing nothing. You know like it's one of those things where you know you have a laugh. I think that's so counterproductive. It's not productive at all. They have, like the machine on the side of the road that opens and closes automatically, but then they have six, six lollipop people standing around having a chat.
Speaker 2:You know that we laugh at this, at this being counterproductive, but it's just a way of life now yeah, I mean these are, these are sort of cost that builders are factoring in before the even hits the dirt, before they're even doing anything. Yep, you're paying for it. You know, developers getting stuck where they can't get projects up and running um, it creates this, this, this uh window where property values continue to grow and and that is like the steroid hit that we're talking about this morning, like material prices 20, 20 to 30 percent up in recent years. Labor shortages um, you know, there's a lack of trades where people are paying premium rates just to get the builders on site, and then the you know the delays equal time. The time equals money. The holding costs, um, is what's pushing things through the roof look, it's my, it's my job and I speak to these.
Speaker 1:I call we're calling them this morning farmers if you've just tuned in these developers and people supplying property, sometimes landlords, you can call these guys as well, but you know we are selling a lot of sites all of the times on the northern beaches. The northern beaches has 100,000 properties and it has a good appetite for developers to come in and develop. I speak to these guys all day, every day. All of them, every single one of them, are just going. We, we're gonna sit here, do nothing. We're okay, we're okay, but we're gonna sit here and do nothing because it's too hard. They're talking about class two being too hard. So the only way if this compliance stays which it will the only ways when it gets to an economical part, that's when property prices grow or it becomes so profitable that they go. You know what we can do this now, but there's going to be a gap Could be one year, could be five years before it actually becomes economical to follow all these compliance guidelines to build stuff.
Speaker 2:Yeah and it's really unfortunate because, in the meantime, the people that are hit the hardest here are first-time buyers. Entry-level price points shift people upsizing, and renters, you know, because there's a low supply and, relatively speaking, investors are chasing a yield. Yes, so where we're going?
Speaker 1:with this, billy Bob. So the bottom line guys and girls, if you're trying to work out what's happening with property, the way to do it is step back and look at the fundamentals of what goes of, of of you know what goes behind this. We would suggest finance. Yes, that's one thing that comes into buying properties. You know grants and savings for first home buyers. Yes, that's another thing that comes into property kicks through all price ranges. You may think a first home buyer doesn't affect your price range in a house. It does, because it knocks through price ranges when they start buying. But there's finance, but there's construction, but there's jobs and there's immigration. There's all of these fundamentals. You know the overall health of the economy. So there's all of these things. But something that's easy to ignore is compliance, and compliance is what we're talking about today in building yeah.
Speaker 2:So I think the forecast of property growth, it's um, it's there, it's right. It's right, it's right in the sweet spot now where there's, you know so certainly strong demand, uh, for supply stock levels have come down. Just to bring it back to dy and how this matters for northern beaches, stock levels have come down.
Speaker 1:Last two weeks, month of april has actually been quite a diminishing um stock level, um, and that's, you know, there's still a surplus of buyers, that's how that's interesting yep and I think I think, at the end of the day, strata, which is units is going to be, from what I'm hearing, is so much harder to build than a house, so they actually call it Class 2. So when you're building, you've got Class 1 and you've got Class 2. Class 2 is generally, you know, cluster homes. Class one is like standalone homes. Class two is so much harder to build than class one, so I think you'll see a lot less units being built. Um and and we are going to choose another topic over the next week which I want everyone to watch, which is land tax, which is the biggest financial crippler in australia at the moment for tenants for tenants, not owners for tenants.
Speaker 2:For tenants, we'll talk about this are you nominating a day or are you gonna leave everyone hanging? Hey, are you nominating a day? We're talking, going to leave everyone hanging. Hey, are you nominating a day we're talking about it or are you going to leave everyone hanging?
Speaker 1:Tomorrow. Are we going to guest on tomorrow?
Speaker 2:No, we're talking about tomorrow.
Speaker 1:Tomorrow we're going to talk about the dirty words land tax.
Speaker 2:Okay, there you go. Have a good day. See you later, thanks, Bill.
Speaker 1:Cheers to everyone. Have a great.