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Podcast: What mixed mask messages really mean

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Elsewhere in this post

This week’s podcast makes a brave effort to pretend life is going on as normal … and almost pulls it off.

We talk about the new DNA for apartment blocks, or the Building Assurance Solution, to give it its proper name, which the NSW government says is going to help track down dodgy developers, just like forensic scientists catching criminals on TV dramas.

Then we talk about a development in one of Sydney’s most affluent areas that has seen work halted until problems with the construction are fixed. 


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The developers and some early off-the-plan purchasers are saying “nothing to see here”. The government is saying fix the problems or you won’t get an occupancy certificate.

And we talk about the areas where residential apartment rents and investment yields are soaring, which is just about everywhere … except Sydney and Melbourne, where most of our apartments are.

But first we get into the nitty gritty of compulsory mask wearing in common property areas of apartment blocks and ask why it was, less than two weeks ago, that NSW Health didn’t even think it was worth suggesting this sensible precaution to apartment residents, let alone ordering us to mask up.

Could it be the rapid spread of Covid-19 in apartment blocks? This episode was recorded before the 29-unit block in Sydney’s Eastern Suburbs, where eight infections across five households were discovered.

This new variant of the virus is spreading so fast that even we almost can’t keep up … almost.  But we’ve managed to bring out a bumper edition of the podcast to help get you through whatever impacts Covid-19 is having wherever you live.

And as of today, the Flat Chat crew will be fully vaccinated and masked to the max, so – fingers crossed – we’ll be here keeping you informed and entertained for a while.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons at the foot of the page.

TRANSCRIPT IN FULL

Jimmy 0:00
So, straight from isolation into lockdown; the never-ending lockdown. But, at least it gives us a chance to catch up on things, like tidying our offices.

Sue 0:12
Absolutely! I completely tidied mine today.

Jimmy 0:14
And then, you couldn’t find what you were looking for.

Sue 0:16
I couldn’t find anything at all!

Jimmy 0:20
Right, so we have nothing to talk about (that’s not true). We’re going to talk about the lockdown; we’re going to talk about mask wearing. We’re going to talk about a thing called the Building Assurance Solution, which sounds like a cleaning product, but is in fact, a brilliant (allegedly), idea to have all new buildings have a kind of digital DNA, so you know everything about what went into the construction. And, we’re going to talk about rents and yields. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue 0:56
And I’m Sue Williams and I write about property for Domain.

Jimmy 0:59
And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

So, last week, after we’d recorded the podcast (complaining about how the government wasn’t taking the casual infection of people living in apartments and meeting each other in common property seriously), they issued an advisory, telling people who were in apartment buildings; in common property, that they should wear masks.

Sue 1:40
They suggested it, that we should.

Jimmy 1:41
It would be a good idea. And that is good; that’s fine. They sent out posters and stuff and then this weekend, they’ve said no; it’s now mandatory.

Sue 1:52
Which is what we’ve been saying. We’ve been saying that apartment residents need special attention, because we’re all kind of chucked in these blocks together and we could potentially be a big risk of being super-spreaders. The government said no, no, no, we’re not a special case; we’re going to be treated exactly the same as people who live in houses. Now, they’ve finally come around to our way of thinking. Why did it take them so long, Jimmy?

Jimmy 2:19
Well, what was it; apart from the intense pressure from us and people like the Owners Corporation Network and our friend, Amanda Farmer (who is a strata lawyer)… Here’s my theory. One of the big outbreaks was a party in an apartment block (serviced apartments, admittedly). They’re calling it a hotel; it’s not a hotel. It’s serviced departments in Alexandria; down that way… Botany, that area. South Sydney, basically and that raised some of the early alarm bells, then the upsurge in family contacts in southwest Sydney, down Canterbury/ Bankstown area, where in the 2016 census, there were 40,000 strata dwellings.

Sue 3:16
They’re paying particular attention to southwest Sydney now, because there are so many people in apartments there…

Jimmy 3:21
Apartments and townhouses; they’re looking at them and going “oops! This could be…”

Sue 3:27
And that was only 2016, you say. I mean, that’s become a place where they’re building an awful lot of new apartments, because it’s one of the most affordable areas in Sydney. A lot of young couples are going out there; a lot of young families, looking for their own apartment and demand has created a real supply.

Jimmy 3:47
Look, I may be misrepresenting the good people of Canterbury/Bankstown, but I’m wondering if there’s a higher percentage there of not particularly well-managed buildings? I’m not talking about the residents, I’m talking about, do they have strata managers; are they good strata managers? Do they have building managers (which not every building has)? Do they have very active committees (which not every building has)? That’s where the whole thing of the advisory falls down, because we’re fortunate (as I’ve said on a couple of occasions); our building is well-managed. Our committee is active and engaged. They were putting up posters, asking people to wear masks (the government was advising people to wear masks) and that’s great, but I wonder about all those buildings and it’s not just Canterbury/Bankstown; it’s all those areas where apartment blocks have sprung up.

Sue 4:51
There’s also a high percentage of people from non-English speaking backgrounds as well and so maybe, the government has been sending out advice, but it’s probably not in many different languages as well. Some of those people will be at a bit of a disadvantage, not quite understanding the urgency of the situation. The government really needed to send out posters with pictures; with people wearing masks, so that everybody could understand it.

Jimmy 5:16
You’re also finding (you’re hearing reports), that in a lot of these areas, people are getting news in their own language from unreliable sources; radio and social media and stuff like that. They’re getting really bad information, like saying that the vaccines are dangerous; that the vaccines don’t work. We were listening to the radio yesterday and people were saying that in some cases, the communities are being told that if they get the vaccine, they’ll never be able to have children and you know, just all this bullshit, basically. We know that that misinformation is out there. Okay, we can’t get into people’s heads as easily as we would like, but let’s make them at least cover up when they’re mingling in common property. That would make perfect sense,

Sue 6:06
Especially in some communities where family ties are really strong; in extended families. I think a lot of the transmission at the moment is through families and through households as well. You kind of look at that area and think, why are the police targeting that area and going in there with police horses and dogs and stuff. You kind of think that’s really unfair. Really, they should have done that at Bondi, right at the very beginning. They should have sent the police in there. It’s not a question of saying “oh, it’s unfair to the residents in southwest Sydney…” This should have been done a long time ago, for everyone, wherever this happened. That’s the issue, really. It should have been treated more urgently, much earlier.

Jimmy 6:50
Yeah and it’s funny, because before the government edict came in, I started researching my column for next week in the Fin Review and basically saying look, we’ve got bylaws across the country (basically similar bylaws), that say ‘you must be appropriately dressed when you’re in common property.’ I’m asking strata lawyers, does that mean during a pandemic, appropriate dress is a facemask? Some of them have come back and said absolutely not. You cannot force people to wear masks on common property, using that bylaw. Some have said you can’t force people to do anything in common property that they don’t want to do. Some lawyers have come back and said “well, yes, but not that bylaw. There’s the other bylaw about not causing a nuisance or harm to other people, by what you do on common property.” There are people saying “yeah, sure! Force people; ping them for not wearing masks, under whatever bylaw you can find;” these are all strata lawyers. They are all highly-respected and basically, they’re split down the middle. When the government came out with the new edict, I thought “well, that’s killed my column.”

Sue 8:11
Because, that overrules everything.

Jimmy 8:12
But then I thought, are we ever gonna have another lockdown? Are we gonna have this creeping control? Are other states possibly in a situation where they would like people to wear masks, but the government isn’t telling them to wear masks, so that they don’t feel they have the authority? I’m still going to do it, because I think it’s really interesting, hearing these lawyers each come at it from a completely different point of view. Some reached the same conclusion; some don’t.

Sue 8:43
Yeah, that’s weird, isn’t it? You kind of think that they would all feel the same way. You know, how hard can it be, to interpret different regulations? But yeah, there’s so much room for maneuver there.

Jimmy 8:54
Well, when you think about it, if your bylaws can insist that you, for instance, don’t have your washing on the balcony, surely making people wear masks is a bit more important?

Sue 9:07
Yeah, absolutely. I mean, just from looking at our building, everybody’s wearing masks and in a couple of other buildings where we know people, it looks like nearly everyone is wearing masks, as well.

Jimmy 9:21
It’s kind of ironic that one of the effects of the pandemic (the closing of the borders), has meant that a lot of people from Southeast Asia who used to live here (or used to be students here, or used to work here), aren’t here anymore. They’re always the first to mask up.

Sue 9:38
Yep, they’re kind of used to it.

Jimmy 9:40
Because of the bird flu scare, back a few years ago,

Sue 9:44
And as well, it’s kind of manners if you’ve got a bad cold, to wear a mask. It’s something we’ve never done, but it’s something in a lot of Asian cultures, that they would do automatically.

Jimmy 9:55
One of the podcasts I listen to from the UK, the host was saying that he was on a train. and the woman next to him on the train, took her mask off so she could cough and he said to her “excuse me; the reason you have that mask is so that you’re not spreading your germs to everybody around you,” and the woman went ballistic!

Sue 10:19
Yeah, of course; they get overly-defensive.

Jimmy 10:22
You know, one of the things that struck me in the reports of how this New South Wales government is dealing with the lockdown, is they’re raiding dinner parties of five people. There’s somebody who’s really pissed off their neighbor at some point. It’s like they’ve gone “oh, I’ve just seen three people walking into that house; I’m gonna call the police.”

Sue 10:44
But the thing is, we’re all kind of trying to do our very best. We realize that it’s a really serious situation. So if your neighbor was flouting the regulations, I’d be really tempted to report them as well. A friend of mine said to me “that is so un-Australian, dobbing; we don’t dob in Australia.” I think for hell, we should! Maybe that’s why we’ve had so much corruption in Australian society, because we don’t have that tradition of dobbing and whistleblowing so much as other societies.

Jimmy 11:16
That’s the other aspect I was going to talk about…Gladys was in despair the other day saying “people have got to tell the truth.” When you’re questioned, who was at the party with you, people are telling lies. They’re saying “oh, there’s nobody else I knew” and that’s part of that not dobbing thing. I mean, half the people who have been found to be infected, have been out in the community for the past few days, so we know it’s spreading. We don’t need to wait for the figures. There will be more and bigger figures for the next week or two.

Sue 11:49
Dob in our neighbors. Especially if they’re a rugby league player and they look as if they’re doing the wrong thing.

Jimmy 11:57
I got in the lift yesterday (we are now allowed only two people in a lift) and there was a nice woman that lives in the building. I was wearing my mask and she said “oh god, I’m sorry; I forgot my mask.” I said “that’s okay, but as of Tuesday, that’s compulsory; you have to wear it, it’s a law.” She said “really?” She had no idea and I said “yeah and in fact, I will be calling the police.” Unfortunately, the lift doors open for me to get out. I wasn’t able to kind of signal that I was joking and of course, you’re wearing a mask, so she can’t see you’re smiling. She’s probably going around saying “that horrible Scottish person is threatening to call the police,” which I wouldn’t do. Not unless you got a real idiot who said “I think mask wearing is bad for you and I refuse to do it. I’m not having people tell me what I can and can’t do.” I’d go “what’s the police number again? You’re getting dobbed in, buddy.” When we come back, we’re going to talk about the Building Assurance Solution. That’s after this.

[MUSIC]

Sue 13:18
So, what is this Building Assurance Solution?

Jimmy 13:20
The New South Wales Department of Better Regulation and Innovation (or Fair Trading)…

Sue 13:28
It’s so much simpler, isn’t it?

Jimmy 13:31
They have come up with this plan where every element of a building… Basically, it’s the developer, the architect, the engineer, the components of the building, the materials, the design, the builder , will all go on one record. They’re calling it a DNA for a building, so that this is an accessible record, where you can go…

I’m thinking of buying into a building in Alexandria and I want to know what it’s like.

“And this building was built by Flat Chat Developments.”

Sue 14:06
Oh my god! Avoid that one!

Jimmy 14:08
Theoretically, what you do is you go “okay, this Flat Chat Developments; what else have they done?” There’s a record of all their developments. Then you go “oh, that builder that they used there, is also the one they’re going to use on this building, so let’s see what else they’ve done.” Eventually, you’re going to find certain builders, certain developers, certain architects, have all worked on buildings that have had problems, and then you’re going to go “right, I’m not going to touch that.”

Sue 14:38
So are they just starting this now from scratch, or are they going to look at it retrospectively, as well? Like, when they talk about Flat Chat Developments; are they going to list the other ones that you’d done beforehand?

Jimmy 14:49
I get the feeling. I mean, this is very early days. They’re using KPMG; are they an accountancy firm?

Sue 14:57
It is, yes.

Jimmy 14:58
So, they’re going to pull in all the information. I guess if they are able to go back and find that information, then it would make perfect sense to include it. I think if they’re waiting around for new developments to come up with their…

Sue 15:16
It would take forever.

Jimmy 15:17
Yeah. Look, it’s early days; it’s quite an exciting prospect. My initial reaction was, this is more window dressing to make it look like they’re actually dealing with the problem of dodgy developments.

Sue 15:30
But is that an excess of cynicism on your part?

Jimmy 15:32
I think it might be. I mean, the fact that they’re collaborating with KPMG and in the initial stages, they’re working with Mirvac… Well, these are reputable people and by reputable, I mean, they have reputations to maintain.

Sue 15:47
It’s interesting, because years ago, they were talking about having a star system for apartments, were’nt they? Many people have talked about that over many years; the OCN talked about it too. You know, it’d be kind of interesting to go around different buildings and say “this building is a three star building, this building is a five star.” But, that always entailed an awful lot of problems, because if you give a building one star, then maybe they’re going to take defamation proceedings against you. On what basis are you going to give those stars? How do you really know how well a building is constructed, until it starts to have cracks and starts to crumble? So, that was always really hard, but maybe, this is a different way of approaching the issue and a much more substantial way.

Jimmy 16:35
It’s totally objective. Giving buildings star ratings, is always going to be subjective at some point. This is basically putting in the parameters and saying “these are the people involved, so you can check; you can follow the trail that they have had in their work career.”

Sue 16:54
Presumably, it would say if they had any orders against them; that kind of thing. If they’d been involved in any court cases, maybe?

Jimmy 17:02
Yeah. Then, you can look at materials. The obvious one at the moment is cladding. You can say “well, they’ve used this model of lift, but we’ve discovered that that model of lift has had problems in the past, so this is a red flag on that building.” I think it sounds quite interesting. It’s a real geeks paradise!

Sue 17:27
Maybe you’ll find a job there, Jimmy!

Jimmy 17:30
I have a feeling that Victor Dominello’s hand is in there somewhere. He loves stats; he loves his data.

Sue 17:39
But you know, data is knowledge; power, really.

Jimmy 17:42
Knowledge is power.

Sue 17:43
When sometimes you look at buildings, it’s really quite hard to find out who the developer is and who the builder was. It’s all very well for us people who are professionals in the industry to say “when you buy new apartment, go and check the developers record; check the builders record.” It can be really quite hard to find out who they are, let alone which other buildings they’ve done and how well they’ve done them. This is a really good start, I think.

Jimmy 18:10
Yep. Let’s check back in a year and see how it’s going.

Sue 18:14
Are they actually going to start now?

Jimmy 18:15
I believe so. I think they’ve made the announcement, I think. They’ve lined up KPMG and Mirvac. I think the Mirvac element is probably a case of KPMG going in and saying “okay; show us what you do.”

Sue 18:32
Okay, so that’s the baseline, really.

Jimmy 18:33
Where does the architect come in; where does the engineer come in? Where does the town planner come in, or whatever? Then they can take that as their benchmark, which would make sense, because Mirvac are pretty good; usually.

Sue 18:48
Good news!

[MUSIC]

Jimmy 18:55
And talking about developments that are problematic… You did a story about The Acre in, where is it?

Sue 19:04
Bellevue Hill.

Jimmy 19:05
Bellevue Hill; posh area.

Sue 19:07
That’s right. Incredibly posh. I mean, it’s one of the most expensive (if not the most expensive), suburbs in Sydney. It has people like Lachlan Murdoch living there at various points; other big celebrities and James Packer lived there at one point.

Jimmy 19:25
I thought they all lived in Vaucluse?

Sue 19:26
No, often they live in Bellevue Hill. Well, Bellevue Hill is very close to Vaucluse; it’s not very far away. Bellevue Hill often has the highest median price for apartments in Sydney (and then probably in the country because you know, Sydney is the most expensive place). This was really interesting, because it was built on a bowling green around Cooper Park. The developers started it and then wanted to build more more buildings (more apartments), because obviously, they could make more money. It was only a really small space. The neighbors were really alarmed at this, but then the developer said they were going to build an extra building of affordable housing units, which obviously, come under a different kind of…

Jimmy 20:15
Planning regulation?

Sue 20:16
Yeah, that’s right and you can change the floor/space ratio, if you’re doing affordable units. Many people their accused them of kind of conning people; just using this so that they could build more apartments.

Jimmy 20:31
As if a developer would do such a thing!

Sue 20:33
Yeah, extraordinary! It was three years behind schedule; nothing was actually happening. It was meant to have been finished in March 2018 and it’s still going! It’s now July 2021, so nothing really has happened. Lots of people bought apartments in this development, despite the neighbors being really angry about it. Nothing was kind of happening and then David Chandler discovered some problems with the building.

Jimmy 21:03
You say nothing was happening; the building was gradually (but slowly), being constructed.

Sue 21:08
Incredibly slowly and there were days where there was just nobody on site at all; nobody quite knew what was happening. The developer who started the development were the ones who ended up giving us the regulations on sunset clawbacks.

Jimmy 21:22
When you say ‘giving us;’ they caused the problem that created the law.

Sue 21:27
That’s right, but then, it was bought out by another developer, Maryland, who I think is family with the original developer. So it’s kind of an associated company. Lots of problems started being discovered and David Chandler discovered some issues and he made some orders. Now I think he’s made some more orders.

Because, you did this story several weeks ago?

Yeah, quite a while ago. I did the first story, I think, last year.

Jimmy 21:59
But recently, you did it again and there was no progress being made, except that David Chandler has come in and said “you will not get an occupancy certificate, unless you fix these problems.” Then, you got a message from one of the purchasers?

Sue 22:14
That’s right. One of the purchasers has got together with a few other purchasers and came to me and said “no, no, no; your story is wrong. Everything’s fine there. We are a bit frustrated that it’s moving so slowly, but basically, everything’s great. We don’t know what you’re talking about.” I went back to my sources and they said “well, no. They’re trying to put a very happy face on a very sad situation.” Now, I think they’ve had even more orders and I think there is a ‘stop work’ order on the place as well, which is very sad, because it’s in a really beautiful part of Sydney. It would have been nice, if nothing had happened there, really.

Jimmy 22:56
If it still had a bowling green; would have been nice.

Sue 22:59
Yeah, that’s right. Now, Cooper Park, where lots of people used to play tennis, has now got this housing complex, which doesn’t look like it’s going to be finished anytime soon.

Jimmy 23:09
Yeah, look, it’s it’s not a happy situation and this is a perfect example of the kind of thing where you would go “here’s a developer… Now, this developer has passed the development on to another company that just happens to have his mother or something as CEO, or whatever,” and David Chandler has said “no, this is the same people.”

Yep, that’s right. He said they are an associated company.

Same problem, same people. So, if this Building Assurance Solution was in place, you’d be able to go “so this developer… oh, that’s also the developer who caused the sunset clause thing and did this and did that” and then go “I will not be putting my money into this.”

Sue 23:52
That’s right. It would be really handy, because you’d immediately find out that perhaps there are issues. You’ll be able to trace those issues and then you can make an informed decision on whether to go ahead or not.

Jimmy 24:02
And maybe, the local council; the planning authority, would be saying to these developers “actually, we’re a bit worried about your track record. What assurances can you give us that you will do X, Y and Z?”

Sue 24:18
That’s right, because it would make the local authority; the planning authorities, a bit more accountable, I think.

Jimmy 24:24
Absolutely; you give them the information, they’ve got to act on it.

Sue 24:27
Yep. It will all be much more transparent.

Jimmy 24:30
That’s good. When we come back, you’re gonna give us a rundown on rents and…

Sue 24:38
Yields, for apartments.

Jimmy 24:41
So I will ‘yield’ the space to you, after this.

[MUSIC]

Jimmy

Okay Sue, so as far as I can tell, we’re in the middle of a housing boom, in terms of prices. House prices are going crazy. Apartment prices are going less crazy, but still going up. Rents are (I’m not sure what’s happening with rents) and yields are… I don’t know; what is happening with all these things?

Sue 25:12
Well, you’re mostly right. Housing prices are obviously skyrocketing and they’re still continuing to rise very, very strongly. Some people think that a bit of the heat’s gone out of the market. They’re still rising strongly, but not quite as strongly. The rise might be slowing down a little bit, but they’re still booming. Rents have been going up too, but by incredible amounts, in lots of different areas of Australia. The two areas where rents in apartments haven’t gone up are Sydney and Melbourne.

Jimmy 25:46
Which is where most of the apartments are.

Sue 25:48
Yeah, but there are increasing numbers of apartments elsewhere now. It’s really interesting; when you look at rents… The latest Domain rents report has just come out for the quarter, up to June 2021. You look at some of the remarkable results from that. In Darwin, rents in apartments have gone up over the last year by 18.4% and in Perth, by 18.8%. They’ve gone up by 5% in Hobart and 6% Canberra. 9% Adelaide, 5% in Brisbane. Sadly in Sydney, they’ve gone down 6% and in Melbourne, by even more, by 12%.

Jimmy 26:31
When you say ‘sadly;’ well, it’s not sad for renters.

Sue 26:35
No, absolutely not. It’s not sad for renters at all, but it may be sad for apartment owners; the investors who bought this apartment, so yep, it’s kind of win/lose.

Jimmy 26:46
So do we know why rents are going up so much in Darwin and Perth?

Sue 26:51
Well, Darwin is seen as a relatively safe place. The Northern Territory has had only two very, very minor short lockdowns. They haven’t had big COVID-spreading events like the southern states have, so are seen as very safe. It’s got a nice climate and it’s got a very kind of languid lifestyle. Darwin is also the most sparsely populated capital city in Australia and people these days don’t want to be crushed up with lots of other people in the cities. They want to go to a much smaller city, where they’re going to have space and room and they’re seeing Darwin as a really attractive place.

Jimmy 27:31
There’s also plenty of jobs there at the moment, because of the gas fields that are being developed. I think the port is being developed, as well.

Sue 27:40
Yeah and it’s a relatively affordable place. You know, looking at rents going up hugely there, but the the average rent is still only $450 a week. You look at Sydney; $470 a week is not very far behind, really, but it is affordable to buy houses.

Jimmy 28:00
If you compare with Adelaide at nearly $350…

Sue 28:04
That’s right.

Jimmy 28:04
Sydney is coming down from a very high peak and Darwin is going up from a very low base.

Sue 28:12
That’s right. Because, their apartment price collapsed a few years ago, after the GFC and it’s now improving, much more strongly, but that’s a record, the 18.4% rise. The $450.00 a week rent is the highest rent for quite a few years, as well.

Jimmy 28:34
Why are rents falling in Melbourne and Sydney?

Sue 28:37
Well, because people are going to Darwin and Perth. There are a lot of people leaving Sydney and Melbourne, but also, there are lots of people who previously were here who were renting; people like overseas students, overseas workers, migrants who are coming here (and renting apartments), who are just not there anymore.

Jimmy 29:00
Then there’s the whole Airbnb thing.

Sue 29:03
The Airbnb thing as well, yeah.

Jimmy 29:05
Because you know, those empty apartments… We’ve got the ‘staycation’ thing happening, which is great, but that’s led to a boom in short term rentals in country and seaside areas, not the city. The people going to the city were coming from overseas, because they wanted to see the Opera House and the Bridge and the trams in Melbourne. So, suddenly, these apartments are empty and they’re coming back onto the residential market. This has been proven by a recent survey done (I think), by the University of New South Wales, showing that areas where previously Airbnb was more active, is where the rents are going down faster, which kind of proves that connection, that Airbnb have always denied.

Sue 29:56
In addition, a lot of people are moving out to the regions. Rents have gone up hugely in the resource areas, because the resources sector is doing so well. In Port Hedland, rents went up by 50%, but they’re also going up in areas which are seen as really nice lifestyle areas. In New South Wales, that would be Byron.

Jimmy 30:21
Port Macquarie?

Sue 30:22
Yep, Port Macquarie and then, also places like Snowy Monaro, because those ski areas (the snow areas), are considered as great lifestyle areas as well. People are moving there and in Victoria, they’re going to the Alpine area, as well. Also, nice places all around Australia, like Victor Harbor and the nicest, scenic places. Places in Tasmania, as well. People can work remotely, or they’re going there and they’re renting there for six months, to just wait out the pandemic and see what happens, before they come back to the cities.

Jimmy 31:00
I got one of these nightmare scenario posts, on the Flat Chat forum the other day, from somebody who owns an apartment in a development in the snowy ski areas. The block is managed by somebody who’s just totally interested in renting out the apartments to people who are there for the skiing, but this person lives there. They recently had a renovation going on above them. It was every day and every night, up until midnight.

Sue 31:39
Until midnight!

Jimmy 31:40
They’ve ripped out the floors; put in timber floors, so now they don’t have any sound insulation from the people above. When they go to the building manager, the building manager goes “well, yeah; what can you do?” Obviously, the building manager is thinking “I don’t care; I just want to rent these apartments out for as much as we can get and get the commission for them.”

Sue 32:03
That’s a problem in a holiday area. They may not be as tightly controlled. But now, the problem is going to get worse, because there are a lot more people going to live permanently in the holiday areas. They might have investment apartments in these areas that they used to rent out to people, but now they’re keeping hold of them, because they can’t go overseas for the holidays. So, they’re staying here. They’re just keeping their places vacant while they go and live there. Their friends may be going for a week or so, but, they want them to be good residential apartments and that may be a problem that’s going to happen in a lot of holiday areas.

Jimmy 32:42
I think so. I think there’s big lifestyle changes happening, for a variety of reasons and there’s a lot of settling to be done. So, did we get to yields?

Sue 32:53
As we know, yields is the the yearly profit made when you…

Jimmy 32:58
Compare your income with your outgoings.

Sue 33:02
Well, the amount you’ve paid for an apartment. It’s the profit, really; the annual profit. In Sydney, it was down 2.9%, over last year and in Melbourne, it was down even more, at 6.5%. Those are the only two places in the country where the yield was down for apartments. Everywhere else it was up and quite substantially. Darwin did the best (as you’d imagine), because their rents are doing so well. They’ve gone up the yields by 11.3%. Perth 11.3%… I mean, the Perth one is mostly because of the resources. Lots of resource companies (because the states are in often in lockdown ), are insisting their workers rent a permanent place, or for six months, or a year, rather than being fly in/fly out. They’re all renting locally, so that’s really helping the rental market. That’s really pushing rents up as well, so that’s been a big change.

Jimmy 34:05
Yes.

Sue 34:06
They were just insisting that they have a local address, because it’s too difficult for them to rely on workers who are flying in/ flying out and they’re not being able to come back again.

Jimmy 34:15
Yeah, that makes sense.

Sue 34:16
Yeah. Everywhere else has been in positive; just Sydney and Melbourne are dragging down the national total.

Jimmy 34:24
Right.

Sue 34:25
That’s not good news for investors in Sydney and Melbourne.

Jimmy 34:29
Good news for renters. It’s got to be good news for somebody; somebody must be getting good news.

Sue 34:35
Things will pick up again, obviously, as soon as we’re out… Things will probably worsen for a bit while Sydney is in lockdown and Melbourne is still kind of recovering after their long lockdown. Hopefully, when all this pandemic is over, things will start to pick up and when our international borders open again, the people who come in; many of those will rent apartments. They’ll go to apartments, rather than houses. So, the apartment market will really pick up.

Jimmy 35:01
Okay, right. That is a bumper edition of the Flat Chat Wrap, which is to keep you all entertained and informed during this new lockdown.

Sue 35:11
A captive audience!

Jimmy 35:12
A captive audience! We’ve got you! You can’t get away from us. There will be links to pretty much all the stories we’ve spoken about on the Flat Chat website, either directly there or in the show notes that accompany this podcast. Sue, thank you once again for your valuable information.

Sue 35:31
Thank you, Jimmy.

Jimmy 35:32
And thank you all for listening. Bye.

[MUSIC]

Jimmy

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website, www.flat-chat.com.au And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favorite pod catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.

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